Industry Research

SOLOMBRINO: Luxury Here To Stay

Posted on September 16, 2009 by LCT Staff - Also by this author - About the author

BOSTON — As the recession thrashes the chauffeured transportation and business travel sectors, more voices are speculating about a permanent shift in luxury tastes and services among corporations and consumers.

For now, the downscale movement is in full swing amid job losses, budget cutbacks, and populist anger at excesses. Simple and cheap are in, while business travelers insist on lower profiles.

America’s highest profile and most vocal limo CEO, however, says don’t count on any radical, permanent shift in ground transportation demands or preferences. As the economy slowly rebounds, Americans will still want the best money can buy.

In other words, luxury will thrive amid more vehicle diversity.

“Luxury vehicles will endure,” said Scott Solombrino, owner and CEO of Boston-based Dav El Chauffeured Transportation Network, the second largest operator in the U.S. “Unless the entire country goes into poverty, people will want the Escalade, the Town Car, limousines. People will use high-end cars. Period. Some segment may want something different, but it won’t change the industry.”

Customers and consumers will always strive for the best in amenities and services, Solombrino said. While clients might temporarily pull back on spending and luxury tastes, such withdrawal does not last very long. Americans fundamentally don’t want to give up their lifestyles, recession or not, and resist going backward, he said. “They may take a reprieve.”

Solombrino, who had a leading role at the National Business Travel Association convention in San Diego last month, said he notices that every time he flies in first class, all seats are taken.

“People are still staying at the Ritz-Carlton. Every airline has a first class. People want the best in every category they can get,” he said. “The downward pricing pressure has to come to an end. People are sick of being forced to use lower products, hotels, airlines, and cars.”

“After 12 months of hell on the road, [business travelers] will try to find every way they can, as profits improve, to go back to where they were,” he added. Americans are saying, “I need to get back to the Four Seasons by hook or crook. I want to get back there.”

Solombrino said Dav El has noticed an uptick in demand and customer flow in recent months. The NBTA convention had its third-highest attendance on record.

So, current micro-trends in business travel and chauffeured transportation are not permanent, and do not represent a paradigm shift, Solombrino said. “This is a temporary blip on a long screen. It will come back over the next year or two."

But in a world where Air Tran, Jet Blue, and Southwest clobber United, American, and Delta, Solombrino cautions: Where do you want to position your company? High end, middle, and low ends. There is room for everybody in that market. It’s important to diversify with multiple product offerings.”

— Martin Romjue, LCT editor

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