While the limousine service industry is not recession-proof, it may have weathered the current economic storm better than other industries, according to responses to an informal survey of limousine services conducted by Limousine & Chauffeur Magazine.
In contacting limousine services of all sizes across the country, it was found that most were affected by the recession, particularly in regards to their corporate accounts. However, in terms of the use of limousines by private individuals, a common response was, “Those who have always had money to use limousines, still have money.”
So, for limousine services, there was a steadying influence of dealing with a select consumer group that tended to be shielded somewhat from the ravages of a faltering economy.
There was also some good news from those interviewed in that many reported business has picked up in the first few months of 1983 and almost all were genuinely optimistic about their growth potential through the rest of the year.
In reporting on the state of the industry, it must be mentioned that responses to questions varied widely. There are limousine services reporting more than 20 percent growth last year and there are limousine services whose “phone number is no longer in service at this time.”
Many of those contacted said they looked upon the recession as causing something on the order of an industry shake-out, where those companies offering professionalism at reasonable yet profit-generating rates remain as others fall by the wayside. In other words, the strong have survived and will continue to prosper, especially in the event of a genuine economic upturn.
John Rosing, director of operations for Manhattan D.C. Livery, serving the Washington D.C. area, spoke for many of those interviewed when he said, “The limousine business is somewhat recession-proof in that the people who can afford to use limousines aren’t so affected by the economy. However, there is a sector of our market that has to do with the corporate account which is affected by the general economy. Naturally, corporations are tightening their belts in terms of expense account usage and that does affect us somewhat.”
Phil Shaw, president of Wall Chauffeured Limousine Service, based in New York, said, “The corporate community is going on an austerity budget and they’ve been cutting down on their entertaining and business use of the limousines.”
Interestingly, several limousine service operators expressed the belief that much of the reason for the corporate cutbacks may have had more to do with image than with the actual desire to save money. In a time when expenses have been drastically cut and large numbers of workers have been laid off, a number of corporations have restricted their executives’ use of limousines to avoid any problems resulting from a conflict of images.
Steve Spencer, president of London Towncars, serving New York, said, “We’re seeing a trend of corporations not wanting to appear ostentatious. Most of our accounts, for example, will only use a limousine when they’ve got enough people to fill it up. Or, they are sending a car to a client from out of town to provide that extra luxury and let him know that they think that’s the transportation he deserves.”
Another problem arising from the nation’s recessionary ills involves cash flow. Payments on account are slow in coming. Businesses are holding on to their money as long as possible. Leonard Aarons, owner of British-American Limousine Service, in Van Nuys, California, discussed that aspect in relating his views on the state of the industry.
“Limousines will always be around. No matter what condition the economy is in, there will always be a certain amount of the public that still will want to use limousines,” said Aarons. “We didn’t suffer from the recession as such. The only thing we have to suffer with is the cash flow problems of people not paying on the collection of receivables.
“Good customers, who I have had for years, have been slow in paying during the last six months,” he said.
“It’s been a problem where I’ve had to phone them on a monthly basis. This is a particularly delicate problem in such a competitive business because if I start bugging them for money, they’ll go somewhere else.”
As far as trends noted by limousine service operators, it appears that the sense of exclusivity that once came with a limousine ride may be diminishing. The fact is that limousines are being utilized by a growing portion of the public. Of course, this phenomena has been noted for years but according to those interviewed, it continues to gain strength.
Alyce Newton, director of public relations for Wellinging Limousine, serving the Washington D.C. area, said, “Previously, people were not as tuned in to the fact that it’s just not that costly to use a limousine. I think now the general public is a little more tuned in to it.
“There are more and more write-ups about limousine services,” said Newton. “People read about the price and keep it in mind and then use it for weddings and other occasions. I think people are a little less in awe of them.”
In a similar vein, the use of limousines for many one-time-only occasions appears to be increasing...proms, anniversaries, and just an extravagant night-on-the-town for a middle-income couple.
“I don’t think that people in the business are surprised but I think other people tend to be surprised at the types of people who use us,” said Gale Baskin, president of Luxury Coach, based in Atlanta. “We’re more affordable than they might think.”
Another factor that should increase limousine service business in general is a renewed national emphasis on eliminating the danger of drunken drivers. States across the country have passed much stirrer drunk driving laws in recent years and the trend will continue.
“We’re getting more of the middle income group, rather the just the upper-income people, largely because the drunk driving laws have become so strict,” said John Bruno, vice president of American Coach Limousine Services, based in Hollywood, Florida. “It’s going to save a lot more lives and increase business.”
In order to remain successful over the next 12 months, limousine service operators offered a variety of advice. Ed Smith, general manager of Plaza Limousines, of Chicago, warned of narrowing the scope of the business. “Diversity,” he said. “Don’t get locked into one type of vehicle or one type of business,”
Steve Liddington, president of Elegance Limousine, of Seattle, emphasized promotion as critical to future success. “We advertise in all the bridal fairs around here. We’ve also put our limousines on display in shopping malls around the country and let the people in them. They just go bananas. We provide public exposure for the cars as much as possible. We trade out with radio stations for advertising.
“We want to get people curious to call. Once they call, they find out the limousines are affordable. Then, once they use us, they tell their friends and that effect snowballs for you.”
Finally, though, those interviewed were unanimous in the most basic step to take in order to remain successful: provide quality service and build a reputation.
“The trend, I think, is that the reputation of the company warrants who’s getting the business,” said Jed Dellerman, owner of JED Limousine Services, serving the St. Louis area.
Spencer, who also is president of the New York Association of Private Limousine Operators, said, “I think the main thing a limousine service has to do is to build a reputation for reliability. The number one complaint that we hear about other companies is that they let the client down. They didn’t, for some reason or another, make the call or else arrived too late. It’s very often the result of a communication problem between the customer and the limousine service. But there are companies who take on more work than they are prepared to handle.”
“Service and personal contact is very, very keen,” said Newton. “I keep an eye out for the satisfaction of the customer; spot check periodically and follow through on any complaints. It’s also important for the clients to know that they can call you and you can have a car there in half an hour.
“Mainly, you have to build up a clientele that knows they can rely on you. They get to know the drivers and feel comfortable with them and, if anything does go amiss, they know that everything will be corrected.”
“The best advice I can give,” said Bertha Watts, of J. Watts Limousine Service, serving the St. Louis area, “is that whatever you promise the customer, deliver what you promise. If you do that, people will always come back to you.”
“Cater to the client,” said Baskin. “That’s what sewed it up for us. We cater to the client. People aren’t used to that anymore. It’s gone out of style.
“The people we deal with are not looking at just how much they’re paying but what they’re getting for it,” she said. “When we hire a driver, he’s told then that while our car is in charter, the client is treated as if he owns the limousine and you are in his personal employ. Of course, we don’t allow abuse to either our driver or our automobile. But, in general, as far as the driver is concerned, his job depends at that moment on satisfying that client.”
Don Dalley, senior vice president of Carey Systems, with headquarters in Washington D.C., said, “Maintain quality control on your service. Give the customer what he’s paying for and what he deserves. The extra service is why you use a chauffeured car.”
In conclusion, then, the state of the limousine service industry appears to be one in which vigorous growth is very possible in the near future. Corporate cutbacks in the use of limousines seem to be by no means permanent; just a temporary measure until room can again be found in company budgets for a truly cost-effective way for the executive to travel. The restrictive problem of corporate image will subside in better economic times. Add to this the continued expansion of the consumer base from which limousine services draw customers. As always, service and reliability will be the foundation of attempts to capture this market, although inventive promotion techniques will also play an important role.
The trigger to an explosive growth stage will of course be the economy. Many of those interviewed reported good months for the beginning of 1983, but it is too soon to predict economic recovery. Still, there is a genuine optimism concerning the next several months. Many companies have streamlined their operations; further strengthened ties with their client roster and are poised and waiting for better times and the opportunity for an important new stage of growth.