While mall operators argue that parking facilities incur operating and maintenance expenses and they cannot provide parking free-of-cost, this is not the first time that the issue finds itself under legal and civil scrutiny in India.
A recent Hyderabad High Court judgment, stating that commercial establishments cannot collect parking fees from visitors since they are considered ‘public places’, has once again brought the mall parking charges debate into the limelight. The general law governing the development of the malls does not prohibit malls from collecting a parking fee and hence, even as consumers rejoice, mall owners are not happy.
While mall operators argue that parking facilities incur operating and maintenance expenses and they cannot provide parking free-of-cost, this is not the first time that the issue finds itself under legal and civil scrutiny in India.
Shopping centres, especially those which house multiplexes and double up as family entertainment centres – are visited by hordes of people every day. These complexes need to have plentiful parking space for vehicular traffic, and therefore, an efficient parking system is not only warranted but even desirable. For malls, providing a load of facilities even in the parking areas, a nominal fee from car owners makes sense. However, in India parking charges are often decided arbitrarily by the mall management.
Rates can be flat or on an hourly basis and are usually different for two wheelers and four wheelers. While there are some malls which provide parking free-of-cost, and others which waive off parking fees according to the amount a consumer has spent in the mall, there are many which charge flat rates throughout the week. A lot of malls inflate parking rates over the weekend, which sees more incoming traffic.
Much Ado Over Parking
Amidst the inconsistencies of parking fee practices, it has long been debated in India whether commercial establishments should levy parking charges at all. Is it justified or even legal? There are at times complaints of overcharging.
There are many side to the parking debate besides legal and regulatory aspects – the mall management side, the tenant standpoint, parking management companies’ viewpoints and finally the consumer’s cry.
Consumer Perception: Mall-goers can in most cases, afford to shell out the extra cash for parking fee. Also, knowing that their vehicle is secure, they can shop in peace, and enjoy their visit, while not being in a rush to get back to their car. The customer who is visiting a mall for a short time, say just to exchange a product, will appreciate at least a first-hour fee waiver.
Mall Perspective: Low mall traffic is every mall manager’s worst nightmare. Among various strategies, free parking is one incentive that can help increase customer foot traffic. Then why would a mall opt for pay parking system? The rationale behind the move could be:
a) pay parking at malls is a widespread practice
b) to recover the cost of construction
c) to cover parking operation, maintenance and security costs
d) to generate a supplementary revenue stream
Tenant Viewpoint: More customers mean more business and higher profits for tenants (which include stores, multiplexes, and restaurants) housed within the mall complex. If free parking can woo more customers, tenants would only welcome the idea. They, however, may also acknowledge that paid parking serves as a gatekeeper to let in genuine visitors and serious customers, which is in turn good for business.
Parking Management Companies’ Standpoint: Since it is imperative to lure consumers with the best of facilities – including parking – malls need to hire exceptional companies like Skidata for parking management solutions. Skidata provides malls with a high level of reliability, intelligent remote management, pro-active service management and business intelligence via centralized data management, but all these services cost money, and hence malls feel justified in charging a nominal parking fee from the consumer in return.
Regulatory Aspect: In India, public parking falls under the ambit of the Municipal Corporation, which regulates the system within its jurisdiction. The Municipal Corporation usually licenses private contractors to operate pay parking lots in lieu of prescribed amount to be deposited with the civic authority. Mall and shopping centre parking is a private space belonging to its owner. There is no uniform national law to regulate the vehicle parking fees imposed in private buildings as of now.
Mall Rationale and Exposition
In absence of any specific law, most shopping malls and commercial establishments in India practice ‘pay to park’ policy. It’s mall management discretion whether the parking is free or not. While consumers sometimes rue the fact that they have to pay exorbitant parking fees when they visit a mall – even for a very short time – and root for free parking, malls argue that parking facilities incur operating and maintenance expenses and they cannot provide parking facilities free-of-cost.
Elucidating the mall perspective, Executive Vice President and Head – DLF Premium Malls, Pushpa Bector states, “We understand the customer’s viewpoint on free parking, however, from a business standpoint, we have a very strong rational stand to it. Maintenance of a parking lot is an expensive affair due to the operational cost associated with it. It involves engagement of considerable manpower, technology and cleanliness measures, etc, to ensure safety and seamless functioning of the entire space. Therefore, there is a need of certain monetary support from the customers to ensure a hassle-free experience.”
DLF Premium Malls comprises of five properties across Delhi NCR and Chandigarh namely, DLF Mall of India, India’s first and largest destination mall, DLF Promenade, DLF Place, DLF CyberHub, India’s first integrated F&B and Entertainment destination and DLF CityCentre, Chandigarh and new upcoming projects.
“Mall parking fee practices differ from state to state and from mall to mall. Some mall charge parking fee because it was a part of their business plan. While some malls may need to reduce it to make it viable, there are some who reimburse their customers. In our case, we were permitted by the DDA to charge parking – it was a part of the auction terms that the parking has to be built and the developer can charge parking,” says CEO and Executive Director, Select CityWalk, Yogeshwar Sharma.
Located in the Saket District Centre, in Saket, New Delhi, Select CityWalk is one of the country’s leading shopping centres. It is a 1.3 million sq. ft vibrant and upscale destination shopping centre and is a part of an overall complex of 54 acres that comprises of three floors of office space; India’s first six screen two Gold Class and four premier class PVR Cinemas, and nearly one lakh square feet of serviced apartments. Running such a huge mall with millions in footfalls requires an intelligent and sophisticated parking system, which costs money to install and operate.
Sharma recounts an instance when the Municipal Corporation of Delhi (MCD) had stated that the malls should charge the same fee as levied by MCD parking lots. However, he says parallels cannot be drawn between the two. “Mall parking is covered, is weatherproof, and there are expenses of lighting and security. Especially, the costs involved to secure and ensure the parking premises are huge. Plus, we also provide free washroom facilities,” says Sharma.
The fact that there is considerable cost involved in running the entire gamut of mall parking, the “pay for parking” rationale does not seem unmerited after all. Gaining insight into the parking operations and costs may also help shed more light on the matter.
Nitty-Gritties of Mall Parking Operating Costs
More often than not, malls enter into a contract with external parking management companies to operate and administer the parking lots at their premises. The likes of Secure Parking, Omnitec Parking, CPS Parking, etc, are some of the leading parking technology and management companies present in India and their clientele include several well-known malls across the country.
Established in Sydney 40 years ago, Secure Parking is a multinational corporation with operations also in Australia, New Zealand, Indonesia, Singapore, Malaysia, China, Cambodia, UAE, Lebanon, USA and UK. It has been in India for 10 years, with offices in Mumbai, Delhi NCR and Bengaluru.
CEO of Secure Parking Solutions (P) Ltd, Arvind Mayar, says, “Secure Parking provides complete parking solutions (a one-stop-shop) for traffic and parking management. This covers consulting services and traffic studies including for Greenfield projects; IT-based and software solutions with equipment for managing car parks; and managing car parks with our own trained manpower team that consists of managers, supervisors, cashiers, wardens and valet drivers.”
In addition to malls, the company also operates car parks at offices, commercial complexes, hotels, exhibition centers, hospitals, for municipal corporations, metro stations etc. It manages the car parks at most of the major malls across the country. They include the Phoenix group malls, DLF, Nexus (Blackstone), Inorbit malls, Brigade, Virtuous Retail, Lulu, Mantri, Infiniti, Pacific, Trillium, Bharti, Lido, 1MG, Oberoi and many more. There are over 100 car parks under our operation, across 25 towns, Mayar shares.
Bengaluru-based Central Parking Services (CPS) is touted as the largest parking management company in India. “We are present in 34 cities across the country with the team of over 3000 employees. We work with some of the best malls in the country, including Select Citywalk, Quest Mall, South City Mall, GVK One, Ampa, Sobha city, Garuda Mall to name a few. We offer complete end-to-end services including design, technology, and management of the parking lot. The employees are on our rolls,” says Managing Director, Central Parking Services, N Sathyanarayanan.
CPS also caters to airports, hospitals, metro stations, hotels, mixed-use developments, etc. It customizes service delivery to meet the specific needs of each parking facility – it may be white-glove valet services, parking attendants, professional cashiers or even equipment maintenance personnel, parking enforcement officer. It strives to ensure and delight all patrons with suitable customer service and training program.
A parking management company’s work is not limited to operations and fee collection only; it is also tasked with regulating the mall traffic, ensuring the safety and other maintenance.
Sathyanarayanan says, “We design the traffic flow for the entire mall using our proprietary software which can simulate the actual conditions of the mall. We provide the parking management and guidance systems for the malls. Safety of the customers is a key aspect which is kept in mind in training as well design of the parking.”
The car park is the first and last point of customer contact. So a positive customer experience is very essential, underlines Mayar. “To achieve this traffic flows (entry and exit) are designed in a way to minimize waiting. The circulation is designed to be conflict free with safety measures like mirrors, speed breakers, bollards, pedestrian ways, sufficient lighting and security, especially for ladies and families. There are special reserved parking areas for differently-abled persons, ladies and the elderly. All our car park staff is equipped with all major personal protective equipment (PPE) like reflective jackets and batons,” he explicates. The payment experience should also be fast with various options like credit/debit cards, e-wallets, prepaid cards and NFC. Secure parking provides and maintains the management systems and deploys its own trained manpower to ensure a pleasant parking experience, he affirms.
Modern parking lots use a variety of sophisticated equipment and technologies that need to be updated with the latest. Sathyanarayanan notes that technology has evolved by leaps and bounds and the simple system installed earlier is no longer relevant. Most exit cashiers are now getting replaced with central cashiers or auto pay stations that make the exit super quick for mall visitors and reduce operational costs drastically. Also, a mall-specific app can be integrated to make the entry and exit seamless for the regular customers.
According to Mayar, technology is developing rapidly in parallel across two streams:
– Customer experience at entry, exit, payment and guidance
– Financial fidelity by ensuring that all transactions are recorded in an audit trail and any pilferage attempts are immediately highlighted
“This is extremely important to the developer as car park revenues are increasing significantly and is an important part of the revenue. He also points out to the increasing popularity of automatic number plate recognition (APNR) systems in China and South East Asia.
“R&D is working to introduce it in India where the main challenge is nonuniform license number plates. There are also many changes in the offing to shift to digital payments. Currently, cash is 95 percent of the collection,” he says.
The Rationality of ‘Free’
As far as customer psychology is concerned, one cannot overlook the ‘power of freebies’ and ‘feel good factor’. Discounts, free/complimentary gifts enhance customer delight and increase loyalty. Free parking too is an added incentive for the shoppers. Nevertheless, the idea may fall short on several counts.
“A good parking space is a must for every mall shopper, as it gives them a comfort that they are parking in a relatively safe and secure place as compared to an open car park. We are not in favour of exorbitant charges, but at the same time, the mall parking cannot be made free because in that case people will park there forever and there is no incentive for the shoppers,” opines Select CityWalk’s Yogeshwar Sharma. He, however, also suggests that the malls may choose a middle path where parking cost can be reimbursed to facilitate shoppers.
DLF Premium Malls’ Pushpa Bector maintains, “All our initiatives are customer-centric and aimed towards enhancing their entire mall experience and hassle-free parking is one of them. From our past experience, we have witnessed that customers don’t mind paying a little extra if that guarantees them the convenience of a secure and safe parking. We feel that convenience is a bigger factor driving footfalls as against an unkempt free parking space.”
Building a car park is an expensive proposition. There is the cost of real estate, construction, IT systems, lighting, ventilation, security, traffic guidance and housekeeping. There is a lot of effort in ensuring that a customer has a pleasant experience. This is done by continuously training the staff in customer etiquette customer handling. So, they should not mind paying, feels Arvind Mayar of Secure Parking. He also thinks that ‘anything free is misused’. There are malls near metro stations whose car park fill up before 10 am by rail travelers as it is free, leaving no place for retail customers. Nobody minds paying for convenience and service. Malls may provide free parking for the first 2-3 months or arrange for redemptions on a purchase. Anything more would be leaving money on the table, he says.
N Sathyanarayanan of CPS agrees. “Over 80 per cent of the parking collections are a cost that ensures the parking area is managed well, feels safe, light well and is well ventilated. This number is increasing with changes in power and manpower costs,” he says.
Free Parking is irrational, according to him, and not something that a customer owning a Rs 10 lakh+ car desires. Today, customers expect a well-managed parking lot and are willing to pay a nominal sum for the safety of the car. India has some of the lowest parking tariffs in the world, even lower than developing countries like Brazil which is at least three times more expensive, he points out.
The Challenge
Noticeably, the Municipal Corporation in any state is the only authorized agency to collect any parking fee within its city limits. Parking lots or common areas in multi-storied commercial complexes are regarded as public places and the owners cannot levy and regulate fees. Going by the logic of ‘public place’, mall owners cannot levy and regulate fees. This, however, seems to be a contradiction in itself as pay parking is common at the bus stand, railway station, airport and even hospitals, which are all public places. Private operators are allowed to operate pay parking facilities at airports, railways stations, etc. under an agreement with the government. Municipal corporations maintain parking spaces by licensing them to contractors who are asked to charge the pre-determined rate.
The Way Forward
Although a specific parking fee regulation policy for malls, shopping centres, multiplexes, etc. is yet to see the light of day, attempts have been made to remove ambiguity and bring clarity. The issue time and again has come under various authorities’ (Courts and Municipal Corporations) scanner across India. But, is it feasible to devise a parking fee structure based on some common denominator(s) for malls across the country or at least within the states?
Malls and civic bodies like Municipal Corporations can work towards this proposition – this might help remove inconsistencies and perhaps will also have wider acceptability among the public.
Arvind Mayar (Secure Parking) asserts that the cost of a product (parking tariff in this case) has to be based on the cost of inputs. A major cost here is the cost of real estates. And this is not uniform across the country or the city. The tariff should be high enough to ensure that the parking revenue, so generated, provides an adequate return on the capital employed. Unless this happens the private sector will not build standalone multi-level, car parks and it will continue to be subsidized by the Government. He asserts that private participation is necessary to solve the parking problems faced in the country, adding, “A lot of consumers complain about paying Rs 50 for parking in India, whereas the same comes to $30-$50 in most western countries”.
N Sathyanarayanan (CPS) says municipalities nowadays are discovering the need for pay and park and the tariff suggested by the municipalities are closer to market pricing. “Municipalities realize that right pricing and not subsided pricing ensures optimum use of the parking asset for the city and ensures a much better traffic in the downtown areas. Parking tariff will be market driven based on the location, utility and the facilities thereof and I don’t see a subsidized tariff in the making.”
On the other hand, Pushpa Bector (DLF Premium Malls) is of the view that the operating cost across malls varies, but it is still feasible to arrive at a state-wise fee across mall properties in conjunction with municipal bodies. “Mall operators and Municipal Corporations can look at working together on this. However, the idea of a national mall parking fee policy does not look practical nationally, as it is highly complex but each state can have one policy for external and mall parking.”
To conclude, it goes without saying that an efficient, secure parking system and a nominal charge is what people want and appreciate. Safe parking at a reasonable charge is citizen’s right; however, no one can ‘expect’ free services from mall operators. Malls can charge reasonable parking fees if not disallowed by some express law or its arrangement with civic authorities.
Malls may also be governed by the simple rule of demand and supply and in the current world receding public spaces are creating more demand for parking spaces in their complex.
The services in the mall such as assisted parking; security and equipment may further determine the charges. Any mall operator will consider all the factors and will arrive at a charge, which will allow parking spaces to visitors at a sustainable charge.
Authorities’ Cognizance, Action
• As per a recent report, the Hyderabad High Court has pronounced that the commercial establishments cannot collect parking fees from the visitors as they come under public place. Section 115 (40) of Greater Hyderabad Municipal Corporation (GHMC) Act also defines parking places or common areas in a multi-storied commercial complex as `public place’ and nobody can claim absolute right to regulate and levy fees. Also, refer to the New Building Rules (2012) that only mentions about the provision of a parking facility in multi-storied complexes. Addressing the issue of private parking and multi-level parking complexes, in July this year, the municipal administration and urban development department introduced its parking policy for Hyderabad and other urban areas of the state. The policy states acceptable parking fees and a regulatory mechanism.
• The Mysore City Corporation decided to compulsorily make parking of vehicles free at all malls and commercial complexes in the city. The resolution also took note of the issue of overcharging the customers for parking at some malls.
• Reportedly, Deputy Controller Consumer Protection, Department of Legal Metrology recently served notice to a reputed mall’s management in Jammu for charging parking fee from customers visiting premises of the mall for making purchases. The LMD notice served under the J&K Consumers Protection Act 1987 said that every commercial building is mandated to have a parking space based on build-up area and collecting parking charges from the customer is an unfair trade practice and a restrictive trade practice as well.
• Of late, a well-known mall in Telangana state was booked by the police for charging parking fees. Refer to a 2003 High Court judgment passed in 2003 in unified Andhra Pradesh, complexes like malls, theatres or shopping complexes have no right to lease or rent out parking areas for commercial purposes which actually come under the common utility areas. Commercial complexes are public spaces which operate by the flow of public, so the public spaces must be free of cost, the court stated.
• A few months ago, the civic authorities in Gurgaon exempted commercial properties on MG Road and Sohna Road from paying property tax levied on their basements so that they could waive parking fees without incurring losses. The properties that have been granted exemptions include six malls.
• As per the Guwahati Municipal Corporation (GMC) notification issued in late 2016, the commercial complexes have to provide parking space to customers free-of-cost. Moreover, high-rises, the malls, in particular, will have to follow the GMC parking rate norm. Malls not complying with the norm shall face the monetary penalty. The civic body also notified that the customer can avail parking fee exemption by producing a document issued by the shopping mall. However, the GMC policy does not restrict malls from charging the non-purchasing customers.
• Taking note of a Public Interest Litigation filed in August 2016; the Madras High Court had asked the Tamil Nadu government to consider regularizing the parking fee. The petitioner had pleaded that the High Court had in 2011 given the government the permission and rights to fix the parking fee for different types of vehicles in cinema theatres. The government was yet to implement the 2011 High Court order.
• The South Delhi Municipal Corporation (SDMC) resolution in 2015 stated that malls and hospitals under the corporation’s jurisdiction cannot charge parking fees from individuals. SDMC underlined that when it passes building plans for malls, hospitals and other commercial establishments, the basement is not considered as a commercial area and not included in the floor area ratio.
The other side of the story: Some Respite for Malls
– There have been some complaints filed with consumer forums against mall operators for parking fee being levied. One such instance is of Kerala where the consumer disputes redressal forum (CDRF) directed the mall operator to deposit the parking fees collected by them. However, this order of CDRF was stayed by the Kerala High Court. In their petition, the mall authorities contended that there is no provision in building rules which states that parking space to be provided as per the rules should be given free of charge to anyone. Notably, CDRF’s order had concluded that the collection of parking fee is a restrictive trade practice as per Consumer Protection Act. However, the mall authorities petitioned that levying of parking fee cannot be considered as a restrictive trade practice. If it has to come under clause (b), somebody should have adopted a trade practice which makes the buying of a good or hiring of a service as a condition precedent to buying goods or hiring a service. Here, nobody insists that if one has to avail any goods or service from the mall, one has to bring a car and park the same in the parking lot and shall pay a parking fee as a condition precedent, they said.
– In Delhi also, municipal corporations have been ordering malls to not collect parking fees. Those malls that have taken some benefit from the development authority or Municipal Corporation on the basis of the promise to provide free parking may be asked by civic authorities to desist from charging parking fees. It depends on the contract such as approved development plan or other agreements between the mall owners and the civic authorities and if such document provides that no parking fees can be levied then such activities can be prohibited. Malls that have not represented that it will not charge any parking fee and have a valid license to operate commercial parking spaces will have no effect and in case it is being prohibited a writ court may give adequate relief to the mall operators.
• Malls cannot collect any fee from visitors because the parking area is provided by the mall, as per the requirement of building rules.
• In a private commercial building, the parking area space is not a part of floor space index and is not considered while assessing property tax. A private establishment like mall cannot levy parking fee because it will be deemed as a commercial activity for which they don’t have permission.
• MC is the only authorized agency to collect any parking fee within its city limits. Parking lots or common areas in multi-storied commercial complexes are regarded as public places and the owners cannot levy and regulate fees.
• Collection of parking fee as a condition precedent for availing the services of the entire mall is prima facie restrictive in nature, as per Consumer Protection Act, 1986. Basis this, ‘pay to park’ policy is held as a restrictive trade practice in case of malls and shopping centres.
• The provisions of the Indian Penal Code are not applicable to parking fee violations.Obviously, the issue has multiple layers and there is general confusion over this matter. However, under the general law or the law governing the development of the malls, there is nothing, which prohibits malls from collecting parking fee.
