Breaking New Ground
The future of black car services is being forged today as traditional providers adapt and innovate
| BTE December 2016
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It’s a strange new world in the travel industry. To stay ahead of the curve, providers in all segments of travel are looking outside their traditional silos to see the larger picture developing in the industry and beyond. In the process, innovative products are being born out of surprising – some would say extraordinary – combinations of necessity and invention.
Mobile technology has revolutionized travelers’ expectations. Legacy air carriers are offering services in the private jet space. Hoteliers are exercising newly discovered pricing strategies in online bookings, even as on-demand marketplaces continue to morph into new offerings (Uber for laundry, anyone?).
Which brings us to the ground transportation sector, and what the original Uber, along with Lyft and their ilk have wrought for traditional black car and limousine suppliers. With the advent of the on-demand ride sharing business model, many industry observers foretold the end of black cars services altogether. After all, the argument goes, who would pay the premium price for a black car when a perfectly acceptable – and much less costly – alternative was just an app away?
However, that may be oversimplifying the case, according to Gary Kessler, president and CEO of Carey International. “I don’t believe this is an accurate explanation of the situation,” asserts Kessler. “I think you have to look at the rise of the technology-enabled sharing economy through two lenses: What it means for the marketplace, and what it means for traditional suppliers to the space.”
What on-demand business models have meant for the marketplace has been nothing short of explosive, and while the advent of not merely new competitors, but a new kind of competitor, may be considered an unwelcome development by some, Kessler says the net-net for the industry is beneficial.
“What we have seen is that new technology and new business models have caused exceptional growth in the travel industry,” Kessler maintains. “Services such as Airbnb and Uber have expanded the number of options available as well as the number of specific occasions to use their services. In other words, they are expanding the marketplace and increasing demand, while growing their business.”
Nevertheless, the sharing economy has taken a share of business from traditional providers in the ground transportation space, especially among the ranks of taxis – medallions that were once valued in the millions of dollars are plummeting in price. But the disruption has been less precipitous among limo companies, Kessler says. “Do not misunderstand,” he cautions. “Uber and Airbnb have indeed impacted traditional suppliers but in a more measured and predictable way than you would expect.”
Powered by Technology
The lever that the sharing economy is pulling is technology, and in particular, mobile technology. It’s the wedge that has given on-demand providers the ability to make significant inroads, in part because the developments took place with such lightning speed that competitors were caught flat-footed.
“The ground transportation industry was certainly caught off-guard by how quickly the marketplace grew and adopted this new technology, but such are the fortunes of innovation,” Kessler says. For Carey International, he explains, the key to the future is two-fold: Embracing the new technology, together with “the improvement of the customer experience through innovative use of this technology.”
Ed Silver, president of San Francisco-based iCars, agrees. “There is a wide opening here for tremendous innovation in ground transportation, without a doubt,” Silver says. “Business travelers, employees, are consumers first, and as consumers of travel, they want to use the easiest tools, the most sophisticated tools, they want the ones that work the best for them. And the gap is on the business side, where business travel tools simply don’t keep up with that level of consumer expectation.”
Meeting those growing consumer expectations among business travelers has created a drive for increasingly sophisticated delivery platforms for ground transportation providers. One such example is GroundLink, an early adopter of technology. “We launched our first mobile app in 2011,” says GroundLink CEO Liz Carisone. The company now provides three forms of access; web, mobile as well as phone, Carisone says. “So we have really combined high-tech with high-touch.”
And for corporate travelers, which among these technologies is the most important? “The answer to that question is, D, all of the above,” Carisone responds. “What resonates with our customer is our ability to provide easy access to our mobile and web platforms. But also when customers are in need of support, they like to rely on phone.”
Indeed, one of the defining premium features of black cars is the ability to deliver personalized service across different platforms. However the sharing economy’s business models of mobile-driven on-demand technology is one value proposition that a growing number of players in the chauffeured business are adapting to their own service offerings.
“I think the most significant development we will see in 2017 is the emergence of on-demand solutions among the traditional ground transportation companies,” Kessler predicts. “These solutions will clearly not be as robust as those offered by Lyft or Uber, but they most likely will create significant value for corporate travelers and travel departments.”
Some larger limo companies are linking up to develop applications that will be available across a network of providers. For example, Empire CLS and Boston Coach Dav El announced a partnership at last summer’s GBTA conference to create “technology that would provide on demand service or near demand service for our customers utilizing our extensive network that we have all across the world,” according to David Seelinger, chairman and CEO of EmpireCLS Worldwide.
The purpose, Seelinger says, is to offer a more flexible product especially for business. “Our aim is to satisfy a group of travelers which are primarily corporate travelers. This isn’t meant to appeal to the retail consumer that’s shopping price, because this service will be more than about price.”
Let’s Be Careful Out There
One of the main reasons for the cost differential between traditional ground transportation providers and the sharing economy’s newcomers, Seelinger maintains, is the black car industry’s focus on safety. “Duty of Care is extraordinarily important – the liability that goes with putting somebody in a car where the driver has not been vetted properly.” Of his own operators, he says. “These are not just drivers; these are chauffeurs.”
To be sure, Duty of Care is a hot topic these days. In a world where traveling employees are finding themselves in uncertain situations, risk management and traveler care have risen to the top of the travel manager’s list of concerns. And it’s a point of differentiation between black car providers and ride-sharing services like Uber and Lyft which the limo industry is quick to point out.
“You’re seeing a lot more corporate buyers asking about Duty of Care,” Seelinger says. “And I think that’s purely because they’re reading the same information I read about experiences that, unfortunately, some people have had.
However, arguments about risk – as important as the subject may be to corporations – have thus far failed to significantly deter the traveling public’s appetite for less costly car rides. And demonizing ride-sharing providers, Kessler says, is not offering a realistic way forward for the future of the chauffeured limousine sector.
“Many of our peers in this industry view Uber and Lyft as an existential threat to their business, and have vociferously challenged the legality and legitimacy of these players to operate in the ground transportation space,” he says. “We could not disagree more. These services are pushing us forward, forcing innovation in technology and operations as well.”
Looking Down the Road
What’s needed, Kessler argues, is a different way for the black car business to view itself. “I don’t necessarily think that the future is about reinventing ourselves or finding a new niche. Instead, it is how we refine our customer experience,” he says.
“It is no secret. Even the best Carey customers take a taxi from time to time,” Kessler explains. “In light of that fact, if we start looking at our customers on a per/use-case basis, rather than a collection of individuals or companies, then the way forward becomes very clear: Tailor our services to best fit the use occasion – rather than fall into the trap of trying to build your company to be everything to everyone.”
As the industry looks to the future, finding or creating that different array of ‘use occasions’ will depend to a great extent on harnessing today’s technology. To fit into corporate travel programs, that means the limo industry needs to take a hard look at the expectations of business travelers and the companies they’re traveling for.
“We’ve got to concern ourselves with what tools do we need to be able to provide the travel managers and the traveler, and how do we do that in a conscientious way to be able to provide them with the support and the reliability of Duty of Care,” advises GroundLink’s Carisone.
“This strategy sounds easy,” Kessler cautions. “But it actually involves a great deal of understanding on the part of the company. The supplier needs to fully understand the entire trip experience of each individual use case in order to construct a set of valuable features and benefits.”
Marrying up the value proposition for individual travelers with the objectives of their corporation is a balancing act, according to iCars’ Ed Silver. “It’s taking the needs of the risk-averse, traditional corporation and their concerns about safety and security for employees – it’s blending that with the sophistication of that on-demand product that the consumer or employee traveling is expecting,” he says. “So you’re taking that 21st century mindset of on-demand now and mobile, and you’re blending it into a sophisticated tool for the corporation.”
Whatever the future holds for the black car industry, or for travel in general, one thing is certain: Technology has broken down the silos and reshaped the landscape for everyone.
“Technology has fundamentally changed the travelers’ expectations for their travel experience. Modern travelers have found an experience that makes life easier, and are now demanding traditional suppliers incorporate elements of this experience into their offerings as well,” Kessler says.
“This is no different than the rise of e-commerce in the 1990’s or telephones in 1930’s – new technology has given rise to a better travel experience.”