For those of you unable to attend our convention this year, you missed a good one. The entire pulse was upbeat and networking opportunities abounded. To christen our trade show each year, Ty Bobit, president of Bobit Business Media, and I host a State of the Industry address. And since this issue is jam-packed with exciting show details, I’d like to use my editorial page to share some highlights from this year’s presentation.
There are currently 11,722 limousine companies in the U.S. The number of operators grew to an all-time high in early 2002, topping 12,300. Then the post-9/11 economy took its toll and we lost about 1,000 in ’03 and ’04 combined. The industry is now on an upswing as finally more operators are entering the business than leaving it. Today there are 127,000 vehicles in use in our industry and the overall increase in size is about 2%. There are about 212,000 full-time, part-time and independent chauffeurs currently working in this business as opposed to 140,000 last year, which is up 34%. That equates to 1.5 drivers to every vehicle in use. Also, the chauffeured transportation industry grew from $3.2 billion in total revenue in 2003 to $4.2 billion in 2004.
On average hourly rates, comparing 2003 to 2004, sedans went up by $2 per hour, 6-packs increased by $4 per hour and 8-packs went up by only $1 per hour. Stretched SUVs are stagnating at $139 per hour on the average. For the second year in a row, the biggest jump in hourly rate increases is in the Van and Shuttle category with a year-over-year boost of $6 per hour.
So what’s the most important issue affecting the industry today? According to what you told us, it’s still vehicle insurance but things have calmed down since last year’s report when 83% of operators told us this was their big gripe. With oil prices in a state of flux, it’s not surprising that fuel is another top concern. Other issues are price wars among competitors, the safeness of stretched limos, the headache of hiring good chauffeurs is back and the battle with gypsy operators is always with us.
We asked key wedding, prom and corporate users of limos what their preferences were for vehicles and service today. Here’s what we found. The biggest turn-on for weddings? Not the bells and whistles in the cars like last year. Their hot button is added services like wedding or prom pre-planning! On the corporate front, according to last year’s NBTA (National Business Travel Association) membership survey, 60% have increased their business travel spending in 2004 and budgets for 2005 have increased, too. However, they are still looking for deals! Corporations are mandating mid-level hotels, bargain airfares and airlines, AND using booking tools such as on-line auctions to shop for ground transportation. In sum, while demand for business travel will increase, the corporate market is still playing it safe and pricing pressures for us will remain high.
In closing, I’ll leave you with the three best ways to save and make money this year: 1. Surcharges. More than half of the nation’s limousine operators have added surcharges to their rates to help pay for added fuel costs, tolls and parking. It seems the entire hospitality industry has embraced surcharges. Just be sure to be upfront with clients on them. 2. The highest overall revenue generator in terms of vehicles is the traditional six-passenger limousine, earning 40% of the business while sedans brought in 37%. 3. Even though 80% of you have a Web site, only 30% take on-line reservations. If you want to be more cost-effective and capture more business, getting up to speed on office automation should be one of your chief priorities!
Sincerely, Sara McLean