How Does Uber Do Vegas?

March, 2017

A so-called ride-sharing, or ride-hailing, service is such an incredibly disruptive business model that it seems as if pretty much everyone is prognosticating about its impact on consumer behavior and infrastructure needs over time.

Couple that with autonomous vehicle development activity, and figuring out any of it seems to be somewhat akin to going “all-in” on 14 red at the roulette table.

Someone’s going to get it right and make a whole ton of money, but most are probably going to get it wrong. I stay away from the betting tables, but, of course, I have my own predictions.

So what is the current effect of ride-sharing services in Las Vegas? A lot certainly is happening — some of it expected, some of it surprising:

Taxi ridership is down by about 60%, say public works folks in the region.

Bus ridership is down about 15%.

Parking revenues are flat.

Special event parking revenues are down, but not across the board.

Close-in parking nearest the event is busier than ever.

Remote parking sites seem to see volume cut in half.

Ride-share drivers are clogging roads and curb space Downtown during peak times.

Parking enforcement officers report that ride-share drivers are exponentially worse than taxi drivers.

Aggression (one of our officers was recently assaulted by an Uber driver).

Drive-offs.

Unsafe passenger drop-off and pickup.

So what does all of this mean?

It looks as if ride-sharing or -hailing service has made substantial inroads in transit, taxi service and event parking. It also seems, because parking revenues are flat and close-in event parking is on the uptick, that the person who commutes daily or doesn’t plan when going to an event still hasn’t changed his habits when it comes to driving and parking at a destination.

What appears to be the case is that ride-sharing service is working well for short hops Downtown, once you’ve arrived and parked your car. You don’t want to drive three blocks to the next destination, because you just paid a fortune for that close-in parking space. But you want to have freedom of movement, and Uber or Lyft fits the bill.

You would end up needing 1,500 more parking spaces than you do today.

While the adoption of ride-sharing services is without question substantial, there are plenty of questions about the long-term financial viability of its business model. Uber, for example, seems to be losing staggering amounts of money, arguably because it is subsidizing rides.

So what happens if ride-sharing folds due to unsustainable losses? Or the elimination of subsidies causes the collapse of the system and people revert to previous habits, instead of paying more?

My boss recently asked me to look at offering developers long-term Uber subsidies paid for by the city. The idea is to entice residential developers with reduced construction costs, while appeasing bankers and planners who want more parking spaces in a residential project. I have pushed back, thinking we might regret that if the business model collapses.

So, let’s assume the ride-sharing gods are smiling upon us and the business model works. What happens in the long run? Here’s my prediction:

Ride-sharing makes mobility incredibly convenient and inexpensive, and the number of people moving around increases exponentially. Those of us who are old enough try to remember when computing power suddenly became a viable way to handle information. I recall predictions that our society would be paperless in no time. Well, how many pieces of paper do you have on your desk right now?

Computers exponentially increased the amount of data we could handle. They also exponentially reduced the amount of paper needed to handle that volume of information. However, just because we need a whole lot less paper relative to the amount of data, we didn’t eliminate or really even reduce the amount of paper we use. I can easily see a similar outcome with ride-sharing. Take the following chart:

Say ride-sharing ends up changing consumer behavior on a very large scale, and the number of visitors to Downtown on a typical Saturday goes from 10,000 to 50,000. At the same time, the percentage of drivers drops by more than two-thirds. You would end up needing 1,500 more parking spaces than you do today.

Like the paper example – that’s a lot fewer parking spaces relative to the volume of people, but you’re actually increasing parking demand.

And then there is the question of the load on our road system. It takes an awful lot of Ubers to move 50,000 people. Plus, they don’t spend a lot of time parked, instead circulating the roads either carrying passengers or getting to passengers wanting a ride. Come to think of it, that one isn’t actually a prediction; it’s happening now.

Just a couple of thoughts. It will be interesting to see what happens.

Brandy Stanley, Parking Services Manager for the City of Las Vegas. Contact her at bstanley@lasvegasnevada.gov.