Industry Research

Luxury Vanpooling: How Profitable?

Posted on February 18, 2009 by LCT Staff - Also by this author - About the author

NORTH HOLLYWOOD, Calif. — After the gas price explosion of last summer and the worsening economic recession, is there a viable market for luxury-level commuter vanpooling? What are the actual costs?

Operators vary on this issue, citing that the costs to commuters would still be too prohibitive to generate any meaningful demand. So we asked Chris Hundley, a veteran Los Angeles area operator and owner of the 30-year-strong Limousine Connection, to crunch some numbers for the following commuter scenario:

An operator runs a weekday six-passenger commuter vanpool from city hall in Torrance, Calif., a suburb of Los Angeles, to the US Bank building, the tallest skyscraper in downtown L.A. (round trip 38 miles). Limousine Connection has a Tuscany-built 2008 GMC 2500 Extended Van equipped with six luxury leather captain’s chairs. What would be the rate per commuter need to be to sustain all the standard costs such as chauffeur’s wages, maintenance, gas, vehicle payment, and a standard profit margin?

Answer: Cost per passenger per day = $67.18; per week based on 5 days per passenger = $335.90

That’s still cheaper than a taking a cab every day for that distance, but definitely more expensive than a city bus, train, or driving your own car.

On the other hand, if clients value time as much as money (especially with onboard WiFi access), and a luxurious chauffeured ride exempts them from the hassles and stresses of traffic, could this be marketed as an overall quality of life value? And if a client’s luxury commuting costs are partially offset by less money spent on a personal car, i.e. gas, maintenance, insurance, daily parking fees in downtown L.A., wear and tear, then who is to say this can’t be a good deal?

Source: Martin Romjue, LCT Magazine

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