Industry Research

SOLOMBRINO: A Pivotal Industry “Game Changer”

Posted on January 20, 2010 by LCT Staff - Also by this author - About the author

BOSTON — Whether a traveler wants a rental car, a chauffeured luxury vehicle, or both, a new partnership between two major ground transportation companies now makes such seamless booking possible.

By co-branding, co-booking, and co-selling its services, Dav El Chauffeured Transportation Worldwide and Hertz Corp. are providing a one-stop shop for corporations and business travel buyers to arrange rental and chauffeured vehicle travel.

The deal announced last Wednesday joins two ground transportation giants in marketing and promoting services in a business travel climate that has become more cost-savvy and choosy in its options following a devastating financial meltdown in 2008 and a drop-off in business travel spending in 2009. Both the rental car industry and the chauffeured transportation industry saw steep declines in revenue in 2009.

Dav El was ranked the largest fleet-owned operator on the annual LCT 100 Largest Fleets List, with 879 vehicles reported as of July 2009. CEO and owner Scott Solombrino acquired Dav El in 1986 after running his own company, Fifth Avenue Limousine, since he started as a chauffeur in 1978. He then grew Dav El into a major global luxury transportation provider for corporate clients. Solombrino also has been one of the industry’s most active voices and advocates, including several stints as president of the National Limousine Association.

Hertz is the world's largest general use car rental brand, operating from about 8,100 locations in about 145 countries worldwide. Hertz is the number one airport car rental brand in the U.S. and at 42 major airports in Europe, operating both corporate and licensee locations in cities and airports in North America, Europe, Latin America, Australia and New Zealand. In addition, the company has licensee locations in cities and airports in Africa, Asia, and the Middle East.

“The goal on our end is to become a complete end-to-end mobility solution on ground transportation for [business] and leisure travelers,” Solombrino said in an interview with LCT. “People should have the ability in the marketplace to buy all of their solutions from one entity.”

Solombrino cited what he called the synergies of bringing together the largest rental car agency in the world and the chauffeured luxury service that has been ranked among the largest fleets in LCT’s annual 100 Fleets List.

Because of publicity restrictions involving a fresh deal with a public company, Solombrino said he could not divulge financial or daily operational details of the arrangement, nor address any questions about possible co-location set-ups and branding at airport and hotel facilities.

However, Solombrino said the deal clearly differs from the ownership arrangement between Avis and Carey International, in which the rental car agency owns a $60 million, 45% stake in the global operator. It also does not resemble in any way the dwindling business model of Avis WeDriveU chauffeured service, where clients contract separately for a rental car and a chauffeur to drive it. That business model has been gradually rolled back across the nation as industry associations and lobbyists prevail upon legislators and regulators to bring WeDriveU under the same regulatory umbrella as chauffeured transportation providers.

Solombrino underscored the fact that Dav El will retain its distinct private corporate status and identity as a premium luxury chauffeured service. Ergo, Dav El chauffeurs will not be driving Hertz rental cars.

The two companies mutually approached each other about 18 months ago to pursue a partnership, Solombrino said, taking advantage of existing relationships and mutual interest. The discussions took about 15 months, prolonged of course, by the financial upheavals on Wall Street and in the banking sector during the fall of 2008. He characterized the partnership as one of the most pivotal “game-changers” of the last 30 years in the chauffeured transportation industry.

“The marketplace should know the good news is you have a guy who has done more for chauffeured car than anyone in history involved in a transaction that could be a game changer in the marketplace,” Solombrino said. “It’s much better that I’m doing it than someone not from the industry.”

Solombrino doubted similar deals between chauffeured transportation providers and other rental car agencies would necessarily follow. “I would not be surprised if people do not partner,” he said. “They will do their own things.” Operators are not the only entities that can independently provide chauffeured transportation in the marketplace, he added.

Solombrino also asserted that the timing of the Hertz-Dav El deal shortly before the International LCT Show was a pure coincidence.

“This had zero to do with the LCT Show,” said Solombrino, who will be participating in an all-day board meeting of the NLA in Las Vegas on Sunday. “I know it looks like it, but it was not a consideration. . . This means I will show up at my own trade show after 20-plus years and I will get pummeled with questions. When you deal with public entities, you can’t pick the timing.”

LCT asked key industry players and longtime observers for their take on the Hertz-Dav El deal:

George Jacobs, Windy City Limousine of Chicago:

“I applaud Scott and Hertz for their forward thinking. Unless something changes, this is not an issue as the Avis We Drive U situation. Each company has the ability to sell two products where they each only sold one before. There could be a tremendous synergism. I can see operators hooking up with all sorts of big companies; sports teams, news bureaus, etc.“

Richard Kane, International Limousine Service, Washington, D.C.:

“This is a logical move for the car rental groups and is providing opportunities for the chauffeured car market. Dav El is getting in front of it. . . . This is more of a Hertz issue as to where they are going. . . These firms are using car service to grab market share from each other. . . That will drive where our market will go. It’s a textbook business move as it relates to identifying your customers and realizing what else they buy, and bringing that into the fold.”

Dawson Rutter, Commonwealth Worldwide Chauffeured Transportation, Boston:

“It does give [Solombrino] access to procurement departments of a lot of major corporations. There could be some benefit, but he’s got a long climb ahead of him. . . It commoditizes us — what many of us are trying to avoid. I’m sure there’s going to be a big stink in the industry, but I’m not sure it’s worth the time or effort to worry about it.”

Joe Cirruzzo Sr., A Elegant International Limo, New York City:

“The rest of the rental car companies have to follow suit. You will have a bunch of them trying to play this. Will they try to get into airports to pick up clients? What does it mean for our industry? Scott [Solombrino] made a smart business decision. I don’t fault him for that. But why does Scott need Hertz’s client list? Why does Hertz need Dav El’s client list? Are they going to market a chauffeured car the same time they market a rental car? How does that help us? I’m not in the rental car business. . . .The NLA has been fighting the Avis WeDriveU theory, so here we have an [NLA] board of director going in the other direction with Hertz. . .What happens to the rest of the rental car agencies out there? What will they do next? You think Budget, Dollar, and the others will be left outside? We could end up having nine rental car agencies inside our business without having to go through all the legalities we go through. No one knows what this deal really is.”

Source: Martin Romjue, LCT Magazine

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