Chauffeured transportation companies are noting sizeable increases in the number of requests for proposals they receive from corporate travel buyers as more businesses move the service—usually a small fraction of a travel budget—into a managed program.
Bruce Mainzer, senior vice president of marketing for Carey International, said he saw the number of RFPs triple during the fall of 2005 compared with the previous year. That increased pace is holding steady into the first quarter of this year, he said.
Likewise, Dav El Chauffeured Transportation president Scott Solombrino said his company saw a 30 percent increase last year in the number of RFPs seeking to centralize ground transportation programs. BostonCoach sees a similar trend.
"We've been seeing an increase in RFPs, not a lot of RFPs that we respond to, but we definitely see an increase both from existing clients as well as new clients," BostonCoach CEO Jonathan Danforth said. "A lot of our business doesn't come in on pure RFPs, but as far as year-over-year growth, there's been a definite increase in that."
RFPs for chauffeured car services were rare in the industry as recently as three years ago. Growth since then has been exponential, industry sources reported. In the 2005 Business Travel Survey
(BTN, May 30, 2005) for example, Empire International said it had double the RFPs it had the year before.
Some new requests are coming from travel buyers who might have overlooked that part of their travel policy in the past, Solombrino said. Now they're taking more notice of it, both of their own doing and at the encouragement of the ground transportation industry.
"It's smaller than airlines, smaller than rental cars," Solombrino said. "It's out of sight, out of mind. Now people are starting to ask the question: 'Who is driving these cars?' "
Solombrino said he and others in the industry have been working to educate travel managers on the benefits of a managed chauffeured transportation program. As a result, it's changed the ways many buyers have approached the service, and they've abandoned other procurement methods that focus solely on price, such as the reverse auction.
"I haven't seen a reverse auction in months," Solombrino said. "I think people have realized that chauffeured transportation is not a commodity."
Part of that is a move to reduce liability and risk, he said. Booking a chauffeured transportation service based solely on price might be risky because the travel manager will have no knowledge of what sort of training the drivers have received. Issuing an RFP gets all those questions answered up front, so that there's no question whether the chauffeured transportation company is offering a safe and legitimate service.
Along those same lines, corporations that require nationwide or global chauffeured transportation are leaning on the RFPs to ensure they're getting a quality service. Booking cars on a city-by-city basis won't guarantee that.
"They're looking for companies like Carey, looking for having those service standards to be more or less assured regardless of where they're traveling," Mainzer said.
Travelers using chauffeured car services are usually top executives or other VIPs whose experience the travel manager wants to make as pleasant as possible. National Business Travel Association spokesman Caleb Tiller said buyers see the RFPs as a proactive way to ensure that across the board.
"There may be a component of some frustration that travel managers have heard from travelers and executives, a lack of consistency in the chauffeured transportation arena," Tiller said. "Going through a formal RFP process is a way to preempt that kind of problem."
For some businesses, chauffeured transportation RFPs already have become standard practice. Judy Bauer, vice president of global procurement services for JP Morgan Chase Bank in Jersey City, N.J., said her company has just recently completed requests for proposals for the service through a third party, but it's been using that method for years. A managed program has worked well for the company, Bauer said.
The trend also is part of a larger trend within travel management toward RFPs for all sorts of services for which they were not used before, NBTA's Tiller said. Technology allowing self-booking is freeing up travel managers' time for such initiatives, Carey International's Mainzer said.
"The shift generally is part of a shift in business practices that emphasize strategic sourcing techniques and strategies," according to Tiller. "With this shift toward RFPs, travel managers really are uniquely positioned to serve the needs of their companies."
Even so, RFPs for chauffeured car services are far from universal. Mark Walton, principal of Consulting Strategies in Deerfield, Ill., said he has yet to be asked to put together an RFP for that service despite working with a lot of companies that have significant use of limousine transportation.
Walton's clients that need chauffeured transportation usually require it only in a concentrated area. One, for example, uses a large amount of limousine services, but one supplier in its headquarters city of Philadelphia is sufficient to do the job. RFPs would be an extraneous step, he said.
"Sending out a formal RFP is probably more administrative work than is necessary to get the job done," Walton said. "The vendors and the company can get together in a closed setting where it's easy to negotiate."
A shift toward more chauffeured transportation RFPs ultimately could be good news for the giants in the industry. Travel managers might be less willing to do business with smaller chauffeured transportation companies regardless of their quality if they're looking to establish a global managed program for the service.
"How do regional providers fit in this picture?" Tiller said. "As the RFP process becomes something that more and more companies are following, a lot of them won't want to invest the time of doing RFPs for one city and one for another, even if they're the top suppliers in that region."
"There's going to be some consolidation," BostonCoach's Danforth said. "Working with a company that is truly global is truly important."