Chauffeured transportation suppliers are reporting greater interest from buyers via requests for proposals in vendors' environmental initiatives and security assurances. Meanwhile, buyers continue to push for multiyear agreements in their car rental RFPs, analysts said.
Although green travel policies so far have been more of a European phenomenon, suppliers said the interest in sustainability in ground transportation, as with other aspects of the travel program, is growing globally. This coincides with an overall trend to make ground transportation a more managed part of travel programs than in the past
(BTN, March 20, 2006)."We've been getting a lot of questions in RFPs, including from U.S. RFPs," said Sylvia Manser, marketing manager for Tristar Worldwide Chauffeur Services, which is based in the United Kingdom but has expanded its U.S. services. "We're trying to approach it from different angles."
Major suppliers have announced initiatives to that effect. Carey International added alternative-fuel cars to its fleet, and EmpireCLS also reported green vehicles available in several of the cities it serves. Dav El Chauffeured Transportation Network told BTN that it's also testing hybrid options, although so far none have proved suitable for fleet use.
Therein, however, lies the biggest obstacle. Unlike the car rental industry, in which major companies are adding significant numbers of hybrid vehicles to their fleets
(BTN, July 23), chauffeured services firms said the auto industry has not made adequate fleet available to make hybrid vehicles a viable option.
"We didn't want a knee-jerk reaction," Tristar's Manser said regarding her company's environmental considerations. "We didn't want to just switch to hybrids without analyzing the facts. Customers want a level of service and luxury, so that has to be taken into consideration."
There has been some movement from auto manufacturers. At the Limousine and Chauffeured Transportation Conference in Uncasville, Conn., this month, Mercury unveiled a new hybrid livery vehicle. Bob Mackasek, CEO of Valera Global—formerly Computer Car—said Lexus also has introduced a vehicle. With a $125,000 price tag, however, it's not feasible on a broad scale, particularly with more comfortable vehicles available for less, he said.
So far, buyers seem to understand that conundrum. When they ask about green programs in RFPs, it's more of a broad question rather than specific requests for hybrids, Mackasek said.
"From corporate, we're seeing a little, but not much," said Jeff Greene, president of the National Limousine Association and president and CEO of Greene Classic Limousines in Atlanta. "The vehicles really are not designed for our industry, and they're uncomfortable, don't have a lot of room and the durability is up in the air."
To that end, chauffeured transportation suppliers are touting other sustainability efforts. Tristar, for example, has improved such internal elements as its car wash and office lighting and also has updated its fleet to include diesel vehicles, Manser said. Valera is joining the Chicago Climate Exchange, through which it will measure and offset the carbon footprint produced by its vehicles, Mackasek said, and the company also has enacted other such internal measures as switching to hand dryers in its restrooms.
BostonCoach also is reviewing possible green initiatives, president and CEO Jonathan Danforth said. "We're in a very serious planning stage," Danforth said. "You're going to see real, tangible solutions beginning in the fourth quarter."
Outside of green questions, ground transportation suppliers also said they are seeing more questions related to safety and security controls within their companies. "With all the gypsy operators that are underinsured—if they're even insured at all—the business travel buyers are getting smarter," the National Limousine Association's Greene said. "They're looking for legitimacy."
Valera's Mackasek said many RFP questions are specific, asking about in-vehicle safety devices, for example. To that end, Valera installed cameras that are triggered to record only after sudden changes in g-force—not only after accidents, but also during rapid accelerations or when cornering too quickly, he said. The devices significantly reduced accident ratios, Mackasek said.
Tristar's Manser also said the safety interests have translated into more investigation of affiliates' standards. BostonCoach's Danforth said that also is a result of travel managers seeking ground transportation programs that are more global in scope.
Danforth noted an increased interest in technology. That area has been a large undertaking for BostonCoach during the past 12 to 18 months, he said, in which the company completely replatformed its organization and reengineered its Web site.
Chauffeured transportation suppliers said they also continue to see the disappearance of the reverse auction in ground transportation procurement. Part of that, Valera's Mackasek said, is because many suppliers won't even respond to them anymore. However, travel managers also are not as cost-focused as in the past, he said.
"I wouldn't say they're not cost-conscious," Mackasek said. "It's still a factor, but it's not the primary factor anymore."
Buyers Target Multiyear Car Rental Deals
The car rental RFP process on a wide scale is much more mature, and buyers are continuing to move toward multiyear agreements, said David Balfour, American Express Advisory Services' senior practice leader for car rental. Although critics warn that multiyear agreements can dilute negotiating power and result in unnecessary price increases, buyers have begun looking at them more often to help with long-term budgeting and to ease the negotiation process
(BTN, April 2)."Under the statement that everything is negotiable—and in most cases, it is—buyers going back to their car rental supplier should investigate multiyear agreements," according to Balfour. "This is even more true if they're going through an RFP."
Every year, Balfour said, car rental requests for proposals become more complicated and more nuances are added to contracts. In some cases, buyers are finding that locking in a two- or three-year deal with fixed price escalators is beneficial, he said.
Still, Balfour said many travel managers continue to operate without any car rental agreements in place at all, viewing it as an insignificant portion of spend. With the average opportunity now for more than 10 percent savings in that spending, particularly if companies use multiple car rental suppliers, buyers with unmanaged programs should be looking to resolve that, he said.
"Attention to this expenditure is an important consideration for all travel managers," Balfour said. "It's frequently overlooked and has been overlooked for many years."