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Tourists Are Major Capital Bikeshare Funders

The Washington DC economy benefits heavily from tourism. Some businesses benefit directly while others take advantage of tourism spillovers. Is Capital Bikeshare in the same boat? I took a look at membership and trip data for one year from April 1, 2011 through March 31, 2012 to get to the answer.

Capital Bikeshare offers a variety of products, from one-day memberships up to annual memberships. Annual and monthly members (registered users) have plastic red keys that allow them to access the system. Everyone else (casual users) use their credit card to access the system for short-term periods. Though not perfect, this makes a nice proxy for locals (registered users) and tourists (casual users).

More short-term memberships were sold during the 12 month study period than for full-memberships. But since full-memberships cost more they ultimately generated more estimated revenue*.

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*This is a good time to mention that these are not actual revenue figures. These are estimates that I'm calculating based on membership, trip and price data. The actual numbers are probably slightly different. For example, the revenue statistic for registered users is likely inflated because I'm not taking into account the Living Social deal that Capital Bikeshare ran last year; but for the sake of this post I'll assume a "best case scenario". A more detailed methodology and caveats is posted here.

The real difference comes when you look at how registered and casual users are utilizing the system. Prior work has shown that casual users have a much higher propensity to take rides that incur fees. In fact 97% of registered user trips were less than 30 minutes and therefore generated no revenue. Only 59% of casual member trips were under 30 minutes.


The histogram below breaks down the distribution of trips for registered and casual users by time intervals (which correspond with price breaks).

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This is not a negligible difference. Even though registered users made four times more trips than casual users, it's the casual users who generated five times more revenue from those trips than registered users.

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Another way to think about it is this: the average trip for a casual user generated $3.45 compared to a measly 16-cents for registered-users.

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What's the implication of this? During the study period, taking into account both membership costs and usage fees, casual users proved to be bigger funders of the Capital Bikeshare system than did registered users.

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I'd argue that tourists are clearly key to the success of Capital Bikeshare, at least from a financial standpoint. They tend to use the bikes less but they generate significantly more revenue. Prior research has shown that casual users tend to use the bikes in the middle of the day while registered users hit the system hardest during the morning and afternoon rush hour.

Capital Bikeshare was likely smart in creating a separate pricing schedule for casual and registered users that went into effect last November. Given that registered users appear to be much more price sensitive than casual users, the higher prices for casual users will probably generate even more revenue from this group. In any case, a more detailed look at the elasticity of demand is required to fully answer this question.

Lastly, this raises questions about station balance. Previously I've written that the Reverse Riders experiment last summer didn't do an especially effective job at rebalancing the system. Given the apparent price sensitivity of registered users, it's worth exploring whether a "rush hour surcharge" would better accomplish this goal. It's probably a political non-starter, but it's worth considering, at least in the theoretical world.

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