With a recent $10 million cash injection, Limos.com is working to bring its online ground transportation reservations system to the corporate market. "There's a lot of investors now circling around this category," said T.J. Clark, Limos.com president and CEO. "They're looking at it and saying, 'Why hasn't this been figured out?' "
Corporate procurement professionals probably have asked similar questions.
By Clark's estimates, chauffeured transportation in the United States is a $17 billion market, $10 billion of which is corporate. Yet, the category remains lightly managed by companies, the supplier base is dominated by thousands of mom-and-pops and reservations continue to be made mostly offline.
"It is really one of the most unmanaged areas out there," said Partnership Travel Consulting senior vice president Dave Kilduff.
Limos.com would not be the first to bring automated reservations to the corporate market. Global Ground Automation, formerly GT3, for years has been active in that space. A firm called GroundRez joined the market in 2005. Both link their ground reservations systems to corporate online booking tools, global distribution systems or travel management companies, and both can load private rates, favor preferred suppliers in listings and create spending reports. However, corporate adoption remains limited, especially when compared with air and hotel.
Ever hear corporate travel buyers compare their online adoption rates for chauffeured transportation? Neither has Clark. "If you look at online air, you have a couple big players that are intermediaries, the systems are advanced, pricing is transparent and easily available online," he said. "Then you go over and look at car service, and you see that less than 5 percent of bookings are done online."
[PULL_1]Limos.com, which claims about 2,000 chauffeured providers in its system, is using the cash infusion from venture capital firm Austin Ventures to upgrade its user interface, build mobile applications--both expected this year--and establish a greater corporate presence.
The firm already offers corporate clients a private-label version of its online tool through which businesses can add branding, manage policy, promote preferred suppliers, block nonpreferreds and receive reports on spending and usage.
Other players also see opportunities in chauffeured transportation. For example, using Global Ground Automation technology, GetThere recently launched a preferred network of ground transportation providers offering discounted rates, including bookings with Carey, Dav El, EmpireCLS and others. "It's our first foray into getting rates for the GetThere network," said GetThere general manager Suzanne Neufang. "We've had a lot of interest already from customers who've said, 'That is the one area of my program that I don't spend a lot of time on.' " GetThere estimated customers could "realize an 8 percent to 10 percent savings."
How Much Do You Spend?
A plethora of challenges complicate direct buyer efforts to secure discounts, notably the fragmented supplier base. "Part of the initial problem is people don't recognize the amount being spent," said GroundRez president and founder Tony Bonanno. "Corporations are really starting to look at this, and I see it going one of two ways: Either they'll look at the technology first, get that in place, then do an RFP, or they'll do an RFP first, get the vendors and then get the technology."
Chauffeured transportation generally represents between 3 percent and 5 percent of travel spend, Kilduff said.
Just under half of the respondents to Procurement.travel's "The Buyer" survey of 294 buyers--conducted last summer--claimed direct involvement in negotiating with chauffeured car providers, while 20 percent indicated their companies did not engage in the practice. One corporate travel executive said, "I manage more than $100 million in air, and only $240,000 in ground."
That ground transportation is not among most buyers' top priorities seems clear. What's not clear is whether a new generation of tech providers and venture capitalists can reinvigorate the industry, build enhanced technology, inspire competition, expand automation to buyers and suppliers and change the priorities of corporate travel procurement.
Noting how retail-focused players like Uber and GroundLink are catching the eyes of investors, GGA CEO Gregg Tuccillo said, "This space seems to be heating up. It's gratifying that this is finally getting some recognition."