A harried, tightly scheduled, demanding business executive stands on a busy downtown street in a major city, smartphone in hand, waiting for some word from his limo company that his ride to the airport will, in fact, be rolling up to the curb within minutes. Instead of a phone call to alert him to the whereabouts of his car, however, in the modern world of corporate chauffeured services the executive is using an app on his GPS-equipped phone to track the precise movement of the limo as it crawls through rush-hour traffic toward him.
Wheels of Fortune
Technology changes are giving chauffeured car services a boost. By:Tom Belden
| BTE June 2012
Already, the customer has used the phone to learn what kind of car to expect, the car’s license number and perhaps see a photo of the driver in uniform. But the best part of this scene is what’s going on in the mind of the normally overwrought executive: Since his corporate travel department uses a limo company with the technology to both book limo rides and keep close watch over where its vehicles are, he has faith that he’s going to get to the airport in time to catch his flight.
And, his corporate travel manager hopes, the boss will remember who recommended adopting this hot new app that is helping him have a smooth trip.
At a time when the chauffeured transportation business continues to recover from the great recession, the industry is the fortunate target of what one limo company CEO, Richard Kane of Washington-based International Limousine Services, calls “technological sparring” to develop smart-phone apps and other solutions for a better end-to-end experience.
“Mobile is really setting ground transportation on fire,” says Ann Hoey, president and CEO of Limos.com, a four-year-old San Francisco company, launched by former Hotwire executives with the goal of becoming the hotels.com of the limo business. “People want to do booking on their mobile phones.”
As the phone apps are developing, companies that include Limos.com, GroundLink.com, Groundspan and the Global Ground Automation unit of Rearden Commerce, are steadily expanding in the corporate market, creating greater online and GDS networking of limo service providers in a part of the travel industry that remains highly fragmented. Unlike spending on airlines and lodging, ground transportation continues to be a largely unmanaged area of corporate travel costs. Or as Charles Fraas, CEO of GroundLink and a former officer at 1800Flowers.com, puts it: The $10 billion-a-year corporate chauffeured transportation market “has been the red-headed stepchild of the travel business.”
Trending To Consolidation
As successful as some major limo operating companies have become at networking, able to offer service through franchisees or affiliates in multiple US and foreign cities, the average company still serves only a single metro area, has just a handful of drivers and vehicles, and has an average of less than $650,000 a year in revenue, according to the 2011-12 LCT Fact Book, published by Limo, Coach & Tour Magazine.
Among companies the magazine surveyed, 44 percent of the operators’ revenue came from business and corporate bookings, the rest from leisure customers. Of the 100 largest limo operators in the country, those at the end of that list operate just 20 vehicles, including sedans, stretch limos, SUVs and vans. The recessions of 2000- 2001 and 2008-2009 battered the business, reducing the number of US chauffeured transportation operators from about 12,000 in 2000 to fewer than 8,700 in 2011, the Fact Book reported. The largest operators and affiliate networks, operating nationally and worldwide, remain familiar names, among them BostonCoach, Carey Limousines, the Dav El Network and Empire CLS.
“It’s still a fairly fragmented industry but we’ve seen a lot of consolidation,” says Adam Kupper, manager of GGA for Rearden Commerce. “It seems to have accelerated the last couple of years.”
Industry consultants think additional trimming in the number of limo operators is on the horizon. “I believe there will be continued consolidation within the industry,” says Doyle Gunnell, global project manager for ground transportation at the CWT Solutions Group. ”Financially sound companies will experience greater volume and increased market share as they expand their business through acquisition or new affiliations.”
What industry officials want to talk about the most these days is mobile phone technology, described by Tony D’Astolfo, GroundLink’s chief sales officer, as “a long-term game-changer in travel.” His company by this summer will offer an app in the 10 largest US cities that sends text updates to a customer’s cell phone and lets the customers track the movement of the vehicle they have booked.
“The corporate travel market will really be heavily into apps in the next two or three years,” Kane predicted. “People want to use their cell phones for everything.” And giving the passenger more information on a phone about the car and chauffeur, “I think is a good thing,” he added.
“The ‘blocking and tackling’ with the car and driver has always been an issue: Where is he, the passenger doesn’t know him, he’s worried about it all,” Kane says. “If you know that driver is right around the corner….and has a cell phone, and you know his name, and most importantly … the passenger calls up a photo of the driver, that’s good. The closer you can get to the traveler, that’s where it’s going.”
Other industry officials are equally enthused about the potential of mobile technology to grow their business, although not all are sure about the utility of putting a driver’s photo on a message sent to a customer. Limos.com’s Hoey, as passionate as she is about mobile’s future, thinks that including a license-plate number with the other information a passenger is sent about an upcoming ride might be more useful than trying to match a driver’s photo on a phone’s screen with his face as he sits behind the wheel.
Rounding Up The Herd Of Cats
What most observers agree has not changed in the limo business are aspects that make it challenging to include in managed travel programs. For starters, chauffeured ground transportation accounts for a tiny fraction of overall spending. In most organizations, it’s reserved for senior executives and needs to be available in a limited number of destinations. It’s often handled by C-level administrative assistants without travel department involvement. It’s largely sourced on a local basis, and the majority of bookings are still made by phone and for service on the same day. Costs tend to vary substantially and many of the end users are high enough in the corporate food chain that they typically don’t concern themselves with shopping for the best price. They just demand the best service.
Many corporations, even some that closely manage other aspects of travel, tend to use numerous service providers, scattered around in the cities where they’re needed. Often the passenger is allowed to choose whichever he or she likes. “They leave it up to the end user,” says GroundLinks’s D’Astolfo, “and that can be very expensive, or very inefficient, or both.” In contrast to the way the same companies work to control air and lodging costs, chauffeured transportation is “lightly managed or even unmanaged,” he says.
Several companies have been striving for more than a decade to round up this herd-of-cats market by innovating in the areas of automating corporate ground transportation management, booking and spending. Global Ground, or GGA, and its predecessor companies have been working on technological solutions since the late 1990s. Ground Span has been doing the same in recent years, as have the largest limo operating companies.
GGA’s Saturn software is used by travelers whose companies use booking tools developed by Deem, Concur, Orbitz for Business, Get There and others, and by travel management companies and GDSs. It’s designed to make the process similar to air, hotel or rental car bookings. GGA has other solutions it sells to limo operators to help them with reservations, dispatching, accounting and billing. Last year, a GGA study of limo provider networks estimated that operating companies could be saving $70 million a year by automating the nearly seven million network reservations they book annually.
GGA’s technology is already used by three quarters of the country’s largest corporate travel spenders, and its network of service providers includes a third of the 100 largest companies in the business, says Kupper. For travel managers, GGA management reports on spending patterns “allows them to make more informed decisions” in contracting with the service providers, he added.
“We’re basically a vendor-neutral application,” Kupper says. “We bring down costs for operating companies … We’re always looking for ways to grow the value proposition.” For TMCs, he adds, “We’ve cut the booking time for ground transportation from a 15-minute manual process to an automated two-minute process.”
Formulas For Growth
In the same way one person’s trash can be another’s treasure, Limos.com’s Hoey says the fragmented nature of the limo market actually was an incentive for the Hotwire veterans who launched the Web-based service to tackle ground transportation. What the team from Hotwire put together is an online marketplace that – so far – includes 370 destinations in 62 countries, with listings that Hoey says represent more than 20 percent of all available limo companies. Each service provider has been inspected and approved by Limos.com staff and given a star-rating, based on the quality of its vehicles, its rates and its service level.
A year ago, the company launched Limos.com for Business, a shopping and booking area for corporate accounts; it can be integrated with corporate booking tools and GDSs. For both the business and leisure travelers, the creation of such a large, transparent network has brought increased competition and lower rates among limo companies in many cities, Hoey says.
“We’ve got the corporate travel managers really excited about doing something they’ve never been able to do before,” she added.
Another growth formula over the last decade, used by independent operators such as Kane’s International Limousine, the largest provider in the nation’s capital, has been to find like-minded partners that meet its operating standards in other major US cities and business destinations abroad. Kane, a past president of the 2,000-member National Limousine Association, says the group’s annual conventions are “massive networking opportunities,” where owners of limo companies from across the country and around the world meet their peers and size up their suitability to become each other’s affiliate.
For Kane, it took several years of sending representatives to meet and vet other operators to establish a network of 130 companies that can now meet clients’ needs in major US cities. It has international affiliates in 35 countries. The industry’s biggest players have even more international franchisees or affiliates.
As operating companies seek to grow their networks, Kane and other experts say, one of the biggest challenges is the fact that limo services, similar to the taxicab business, are regulated on a state or local basis. With no overarching federal regulation, requirements for licensing, training and testing drivers and standards for vehicle maintenance can vary from city to city.
CWT’s Gunnell says that corporate travel and procurement managers “should always look beyond the price itself.” More importantly, “Potential suppliers and their affiliates should always be vetted to ensure they carry adequate insurance, have impeccable service, and implement ongoing drug/alcohol and background checks of their drivers.” Today, exciting, new mobile apps make that possible.