Industry Research

Recession May Permanently Change Limo Biz

Posted on July 29, 2009 by LCT Staff - Also by this author - About the author

FORT WORTH, TX — Metroplex limousine and executive Town Car companies are seeing continued downturns in business, and the drop in customers may be evident of changing trends in corporate travel and the lasting effects of the recession.

Throughout 2008, companies reeled in corporate travel expenses and began using Web conferencing tools or conference calls to hold meetings in order to save money. And while luxury transportation companies still are watching business dwindle, DeAnne Dale, vice president of global sales and account management for Travelocity Business, said corporate travel is beginning to rise, but companies are sticking to strict budgets.

In North Texas, concerts and other events at the new Dallas Cowboys Stadium in Arlington, and the upcoming Superbowl, are expected to be moneymakers for area transportation companies. Matthew Johnston, president of Fort Worth-based AJL International, a corporate ground transportation and private jet services company, has seen about a 30% drop in the industry during the last year, he said, but expects big changes during the Superbowl. AJL International opened in 1994, and operates in 450 cities around the world.

“The past couple of months has really been slow,” Johnston said.

“We’re hoping that when the Cowboys Stadium opens up, that for us it will be a positive thing. Transportation is always big around there, and we’re hoping the first part of 2010 should turn around for us.” Silver West Limousines, which operates a fleet including limos, buses, luxury cars and SUVS across Dallas and Fort Worth, has seen a continued drop in its business throughout 2009, owner Gary Olson said. In 2008, Olson began seeing a drop in customers in July and August.

“We’re definitely not in an uptick for this year,” he said. “But it’s not really just that the corporate market is down, and that’s what’s hurting the industry as a whole, but the economy is down, too.”

Olson added he hasn’t seen a shift in the types of vehicles customers are asking for, but Johnston and Vincent Stewart, owner of Fort Worth-based Lavish Limousines, have seen a move toward lower-priced vehicles.

“People are not able to afford limousines like they did years ago; people like Hummers and Chrysler 300s and the buses, but they can only afford Lincolns,” Stewart said.

Johnston said he is seeing customers move down a step from vehicles they rented in the past. For example, a person who used to rent a stretch SUV may now rent a van.

Dale said Travelocity Business, a sister company to the personal travel-planning company Travelocity, is seeing signs the downturn in business travel is leveling off.

Companies are now beginning to limit expenses a number of ways, the most common of which include allowing only executives to rent limousines, creating a cost cap for hotel fees, and limiting executive car services only to certain cities.

“What was happening before was that people were just jumping into the car service at the airport… and now they’re very much limiting [that],” Dale said.

Dale also is seeing trends in how companies arrange flights, she said.

“On the flight side, it’s more along the lines of supporting… discounted carriers,” Dale said. “The other two trends on the air side, most of our clients and corporations across the board are demanding the purchase of non-refundable tickets. And, the third one would be a very heavy focus on advance purchase, because there’s a significant difference in the fares in booking three days out versus seven to 14 days out.”

As opposed to banning travel outright, a number of companies are moving toward more efficient travel, which includes lower-cost hotels, such as Courtyard by Marriott and Hilton Garden Inn, and traveling by cabs instead of limousines or Town Cars, Dale said. As companies shifted their rate structures, a number of top-rated hotel companies have noticed the need for cheaper rates, Dale said, and hotel officials are beginning to call companies to spread word that they will match lower-priced chains to keep rooms filled and hold onto business.

“We’re also seeing a shift in that full service hotels are really hurting capacity-wise, so their rates are becoming almost at par with those mid level hotels,” she said. Hotels “have to fill up those rooms… And companies are looking at travel management companies that have technologies that can take them into this economy in the same way, and still be able to run their business and grow.”

Source: Fort Worth Business Press

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