Luxe – On-demand valet service anywhere you want*
Never search for parking again! Luxe provides an easy to use on-demand valet service that will change the way you park in major cities.
Building upon the mobility revolution started by companies like Uber and Lyft, Luxe has taken a different approach to streamlining your transportation needs. Imagine…stop hunting for parking spots downtown, avoid overpriced parking garage fees, and forget searching for quarters to feed the meter!
Luxe provides an on-demand valet service that takes the headache out of parking in a big city. While you may still have to put up with gridlock to and from, Luxe operates in 9 major U.S. metropolitan cities and will valet your car from virtually anywhere. Luxe partners with parking garages and other secure parking facilities to provide secure parking at rates similar to city street-parking prices with the added convenience of ending the parking hunt using a personal valet (rates average $5/hour and are linked to city surface spot prices).
Luxe’s door-to-door experience takes the hassle out of planning, finding, and paying for parking. Similar to Uber, Luxe offers cashless transactions. Fees are charged upon valet completion and are processed securely through the easy to use mobile app. Luxe maintains liability insurance to protect vehicles while driven by valets and in the parking garages. Additionally, Luxe screens valets for criminal history and valets must have a clean driving record. Luxe also offers additional services – get your gas tank filled up, car washed, or even your car driven home, should the occasion necessitate.
Here’s how it works
The user downloads the mobile app, hops in his or her car and drops a pin on the map where they are going (and where they will get out of their car), and then drives to that location. Waiting at that location upon arrival is a certified Luxe valet in a blue jumpsuit, greeting you with a smile, taking your keys, and driving your car to a nearby Luxe parking garage where your car is kept safe. When you are ready to leave the city, you notify the Luxe app where you want to depart from (drop a new pin), your valet meets you with your car, and then drive away in your car.
Luxe connects a cities’ excess parking capacity with vehicles entering the city. Luxe contracts with parking garages and other secured parking facilities. (Without seeing these contracts, I will assume capacity is paid when used, but at a discounted rate. Luxe does not pay for unused capacity.) In return for filling excess parking capacity, Luxe helps partners capture incremental value they would not otherwise capture. Luxe can arrange discounted parking fees with partners. This works especially well for parking garages/facilities on the outskirts of dense city areas struggling with unfilled capacity. In talking with their Boston GM, they have also begun working on partnerships with businesses in the city in which they operate. Some businesses are offering advertising/promotion opportunities and other businesses are partnering to sell excess parking capacity (namely, hotels).
Through the easy parking experience, Luxe enables users to drive themselves when they may have not otherwise. This, in turn, unlocks new value potential for parking facilities and businesses who may have seen their capacity go un-utilized due to substitutes such as Uber, Lyft, taxis and public transportation.
Currently, Luxe has weak direct network effects (although this may change as users are able to “split” parking fees with their peers) but strong indirect network effects. As Luxe generates more user demand, the cross-side network effects will begin to grow stronger. Growing demand will increase partnership opportunities among parking providers/businesses, filling more unused capacity, and increase the negotiating power Luxe has with its partners. This will translate to a cost advantage among other transportation alternatives and similar valet competitors. If they can pass these cost savings to users, the demand will grow. The typical user is agnostic to where his or her car is parked, provided it is secure and cheap. Currently, their additional services and various promotion programs are attempting to drive more usage but a critical mass of repeat valet users will be hard to find.
Luxe’s operating model will scale well (mobile app and cheap labor) but the challenge will be generating an adequate supply of users. They also have the challenge of making the experience more sticky for users over alternatives like Uber and Lyft – perhaps through added services like car washes or refueling. They are currently offering promotions for current users to share discounts with friends. Their challenge will be finding the right critical mass in the right user groups (those that commute to the city often and don’t use public transportation).
*in 9 cities.
Student comments on Luxe – On-demand valet service anywhere you want*
Thanks for this well-written post. It seems to me that the market Luxe is targeting may be too small to ever truly realize the indirect network effects. In the major cities where it operates (NY, SF), the percentage of people who own cars is quite small (compared to more spread-out sub-urban or rural areas), and of those, it is an even smaller percentage that would be willing to pay for valet parking. While a subset of people will own cars, live in dense cities where parking is difficult, choose to drive their cars vs. taking Uber or public transit, and value the convenience of Luxe enough to pay for it, this just seems too niche for it to scale well. As you mention at the end of your post, I’m not sure they can find that critical mass of users for network effects to take off. I’m putting my money on Uber / Lyft (and eventually Google car!).
I mostly agree with the comment made above. That being said, I truly believe that this service solves a pain point that I experience at least 2-3 times a week. If there is any other ways they could create and capture value for the users, I still think that they could service a niche target market. One suggestion would be driver service to prevent drunk driving.
I should have read the other comments before reading the post…because I share many of the same thoughts 🙂 That being said, seeing these employees in their blue jackets and scooters always makes me smile, so I want to see them do well. Unfortunately, I do not own a car, so I cannot personally be helpful. I do see services as their (only) way of potentially expanding outside of their existing niche market. I wonder if they can take a RelayRides approach and facilitate a peer-to-peer car sharing when the cars would otherwise be parked.
Very interesting company, and maybe we just have to admit that a company can be considered a success without a $1b valuation.