The dismal 2009 industry numbers show the low point of the recession. It should be mostly up from here.
The rear-view mirror this year offers the industry’s most hopeful view, since the worst of times are gradually receding into the distance.
LCT’s annual Fact Book, the touchstone of industry trends and numbers, captures the challenges operators faced in 2009. The good news is that as this Fact Book went to print, the first quarter of 2010 was already showing signs of better times ahead with increased operator, coachbuilder, and advertising activity in the industry.
2009 could well go down as the craziest year in industry history, a turbulent time wracked by recession, political uncertainty and paralysis, and an opportunistic hit job by government officials against the business travel sector. Such volatility obviously had its effect, as LCT’s annual operator survey numbers indicate.
Some of the most notable stand-outs from this year’s survey, which mostly reflects the state of the industry through December 2009, include:
• For 2009, 56% of operators reported an annual revenue decrease, while 33% reported an increase. For 2008, 38% of operators reported a revenue decrease, while 50% reported an increase.
• 36% of operator revenue in 2009 was derived from business/corporate travel, a significant drop from 50% in 2008. With the meltdown/slowdown in the financial services and banking sectors, along with the crackdown on corporate business travel, this number is no surprise.
• The average gross revenue for respondents in 2009 was $1,057,488 (median was $374,500), down $284,000 from the average gross revenue in 2008. The median figure, which more accurately reflects the status of small to medium size companies, however, held steady.
• The number of operators reporting revenues of less than $100,000 rose from 17% in 2008 to 22.4% in 2009; those reporting revenues between $100,000 and $249,000 rose from 19% in 2008 to 25.9% in 2009. Meanwhile, those operators reporting annual revenues in categories between $250,000 and $2.9 million all fell by several percentage points, indicating that more of the larger operators got shoved down into lower revenue categories for 2009.
• Sedans, the daily workhorses of the chauffeured transportation sector, generated on average 40% of operator revenue in 2009, down from 48% in 2008. Meanwhile, revenue share from stretch limousines rose slightly, from 12% in 2008 to 13.8% in 2009. Revenue share from non-stretch SUVs climbed from 8% in 2008 to 9.9% in 2009. Revenues from limo, party, shuttle, and mini-buses generated about the same share of revenue for operators from year to year. Some of the more positive glimmers include:
• Although operator profits took a hit, they didn’t completely tank as was the case in other retail and service sectors. The median operator profit margin for 2009 was 10%, down from 15% in 2008. Given the severity of the recession, any profit margin in two digits seems positive.
• 48% of operators said they get reservations from third party industry web sites such as limos.com, compared to 46% in 2008, a sign that online commerce continues to grow despite economic contraction.
• Average fleet sizes did not decline from 2008 to 2009, but median fleet size went down from 8 to 7.
• Although not part of LCT’s official survey, NLA membership miraculously grew year over year despite a dropoff in the overall numbers of operators in the chauffeured transportation industry. As of March, membership registrations were 4.7% ahead of March 2009.