<B>Small Limo Cos. Thrive</B>
By Lynn Woods
A healthy economy has spurred phenomenal growth and record profits for the big guys in the sedan and limousine industry--the Careys, Dav Els, and BostonCoaches. But what about the little guys? Are such trends as consolidation and implementation of new technologies for everything from dispatch systems to reservations squeezing out the smaller players? In the future, will you have to be big to survive? The answer is resoundingly no.
This always has been, and still is to an overwhelming degree, an industry predominated by mom-and-pop outfits. According to the National Limousine Association, a trade group in Washington, D.C., operators with nine vehicles or less in their fleets account for 80 percent of total business. In fact, owners of small sedan and limousine firms claim that being small gives them some unique advantages--on top of the benefits from new Internet reservation services, which helps create a more level playing field between the guy with five cars and the large branded networks.
For some insights on how smaller sedan and limousine firms are faring, here's a brief look at four companies, ranging from a dot.com firm located in the Silicon Valley to a two-car operator in Augusta, Ga.
Given its location in San Francisco, perhaps it's not surprising that a local ground transportation firm saw a golden opportunity in the Internet. It built an online booking tool and developed a national network as part of its transformation into LimoStation.com. "Online booking is pretty essential with our clientele," said Dale Ganzow, LimoStation's vice president of sales and marketing. "We saw an opportunity and have become an aggregator."
Launched last April, the site accepts reservations for approximately 400 affiliates from around the world. Simply by inputting a zip code, users can find out the rate for a sedan or limousine for a particular destination. A confirmation number instantly is attached to a booking, and the site also can print out a receipt once the trip is completed.
Ganzow said eventually the company plans to enable affiliates also to make reservations over the site. Its relationship with affiliates is nonbinding--they are free to work for other networks, and LimoStation itself gets referrals from Dav El. However, to maintain quality standards, Ganzow and his staff personally visit each affiliate to make sure the level of service is acceptable.
LimoStation also guarantees customers double their money back if they are dissatisfied with a ride. The bricks-and-mortar side of the company features a fleet of 26 sedans, eight stretches and four vans. All drivers are salaried employees; Ganzow believes this enables the company to maintain better control over service.
The company's rates do not include tip, parking, tolls, tax, meet-and-greet service or such extras as coffee or orange juice in the car. However, the company has chosen not to levy a "surface transportation charge," or STC, which Ganzow said had become the norm in at least two markets, Dallas and Houston.
"Supposedly it covers the fuel surcharge and airport fee, but nobody knew what it was exactly," he said, referring to a recent visit to the two cities. LimoStation passes onto customers the $3 airport fee, but "we tell them what it is."
At the other end of the continent, Teddy's Transportation, a sedan and limousine company with $2.2 million in annual revenues based in Norwalk, Conn., is another model of efficiency. In 1986, the company was making an average of 35 trips a day using 26 cars. Today, it's making 85 trips a day with just 25 vehicles. "We've tripled our volume," said owner Charles Wisniewski. "We're getting more economies of scale."
One change that has helped the company to achieve this is a shift from using drivers who are independent contractors to those who are company employees. The switch enables the company to maintain better control of its cars, said Wisniewski.
The firm also has installed GPS navigational systems in each vehicle at $1,000 a pop (plus a fleetwide $350 monthly charge). The devices help drivers with directions and also allow management to track each vehicle, resulting in fewer driver abuses, said Wisniewski. Wisniewski also relies on the Internet to track flights and follow real-time traffic reports for a few major thoroughfares in the New York area. Such services allow him to send a bevy of cars toward the New York airports each day and then begin directing each to the best route once they hit the Whitestone Bridge.
The company has maintained a Web site since 1996. Though it does not feature booking, the site is invaluable in steering new business his way, Wisniewski said. Recently, for example, he received an e-mail from an Australian who was planning to visit the area with his family and needed a car and driver. Wisniewski e-mailed back the price and then made the reservation by fax.
Automated reservations are being transacted with one corporate account through the use of Genisys Reservations Systems, which piggybacks on the computer reservation systems. "We love it," said Wisniewski. More clients haven't asked for Genisys because most are small marketing consultant firms that aren't linked to the CRSs.
Because of higher fuel costs, Wisniewski raised his rates 2 percent in June. However, he said his company--unlike many competitors--doesn't charge extra for making airport pickups between midnight and 6 a.m. Also, there is no fee for airport parking lasting half an hour or less.
The limo operator said access at area airports had improved slightly, with one facility--Bradley International in Conn.--actually charging less for parking. As for servicing customers at the New York airports, "it's been ugly since I've been born."
Teddy's Transportation has dealt with the problem of no parking at the curb by introducing an express pick-up service: Customers are advised in advance to call the limo company's 800 number once they leave the plane. The dispatcher then radios the chauffeur to proceed to the curb. "It's cheaper than parking," said Wisniewski, who noted that 75 percent of airport pick-ups are made using the system.
Rolf Klaussen, president of Barrington Livery in Los Angeles, said that as a general rule of thumb, companies generate from $50,000 to $70,000 of revenue per car. Yet, by relying on automation and strict service standards, his six-car operation "does substantially more than that," although he declined to cite an exact figure. Its business is 95 percent corporate.
"You need to make sure you have essential systems in place to make your operation run as efficiently as possible," he said. The company has an in-house computer reservation system that automatically generates trips for drivers and confirmation numbers for travelers. It includes a database of profiles of regular clients, and though the company can provide corporate clients with data on their car usage, most accounts don't want formal reports, Klaussen said. Such reports routinely are provided by the large branded network companies, but "I've yet to lose anybody to a large network."
Barrington does belong to an informal network of 40 to 50 affiliates, "a huge benefit in terms of getting work from operations in other cities." The open-ended nature of the agreement is an advantage, giving him the flexibility of "moving and shopping around" should there be a problem with an operator. Being small, he added, "allows us to be close to the product." Drivers are salaried employees. If there's a spike in demand, he relies on other operators for cars, just as a Carey or Dav El will use a number of affiliates in a single market. "It's a misconception on the part of corporate travel managers that in order to be good it's best to be a large operator," Klaussen said.
As president of the Greater California Livery Association, Klaussen said he was aware of operator complaints about the new Lincoln Town Car model, which began entering fleets last fall. The complaints concern the car's relatively small trunk and confined head room in the back seat. Klaussen, however, uses those shortcomings to his advantage. "If a client has a lot of luggage, I recommend they upgrade to a larger car," he said. "We're talking about an opportunity to upsell." He has yet to hear a client complain about the car, he added.
Higher costs--magnified in California by changes in worker compensation laws--have caused Barrington to raise its rates. It also adds a 5 percent STC to the bill, which covers "miscellaneous items, such as a free newspaper and bottled water in the car," said Klaussen. "It's become standard in the industry." Klaussen said parking at the airports is definitely a problem, but "informing clients has helped a lot. They know we're doing everything we can to provide the best service."
Exquisite Limousine LLC, based in Augusta, Ga., started business in 1997 with only one car. It now has two vehicles--one sedan and one limo--along with a van that it regularly rents. With $250,000 in annual revenues, a staff of three and six drivers (all of them independent contractors), the company is miniscule indeed, but owner Valencia Sidbury couldn't be more thrilled. "I like to be hands on," said the entrepreneur, noting that she doesn't plan to grow her operation beyond nine cars. "I can do a lot and still be small."
The company's computerized reservation and billing systems and its frequent reliance on rentals during peak demand periods enable it to achieve relatively high volumes of business. "In one week, I did 250 trips," said Sidbury. "I couldn't have done that if transactions were being manually billed."
The company recently signed up with InterRide, an Internet network reservation system, which will enable Sidbury "to book a client all over the world. It used to be only Carey could do that." (The company's also a Carey affiliate.)
Exquisite Limousine recently introduced a 5 percent fuel surcharge on rates for its sedan and van (it is prohibited by state law from levying the fee on the limo). Other than that, rates have remained consistent.
If Sidbury has one complaint, it's the congestion at Atlanta Hartsfield International Airport, which is undergoing major reconstruction. Drivers are required to park and meet incoming passengers at the gate--at an extra cost to customers. "The limo lot is not designated well," she said. "There's no area to pick up people without prearranging the service.