Are you ready for the New Year? It looks like 2004 will be a good one for the chauffeured transportation industry. After surviving the fallout of more than two years of distressing, if not tragic, economic and political events, there are a number of signs that we are entering a period of steady and solid business growth.
Let’s start with the big picture: The stock market is up and the rally seems to be a sustained one. Even technology stocks, the sector that fell the hardest when the bubble burst in 2000, have become the new darlings of Wall Street.
The New York Stock Exchange is up more than 20% this year and the growth of NASDAQ was up even more.
Then there was the recent news that the U.S. economy raced ahead at a 7.2% annual rate for the third quarter, its best gain since 1984. The growth was in large part fueled by a long-awaited burst of corporate investment, a sign that business was finally coming out of its cocoon.
Business investment increased at an 11.1% pace in the July-September quarter, up from 7.3% in the April-June quarter.
“Business is finally coming out of its cocoon, and not just with technology spending but across to board,” Gerald Cohen, a senior economist with Merrill Lynch & Co., told the Los Angeles Times. “This is just what we were looking for.” And that should translate into good news for the chauffeured transportation industry.
Closer to home, there were encouraging signs that the anticipated rebound in business travel was happening. An American Express official told those of us attending the LCT Leadership Summit in Florida that more corporate travelers were taking to the air again. He said that data from a number of sources point to a return to a long-term trend of gradual, incremental growth for the business travel industry. Take a look at the story on Page 16. And while you’re at it, the articles starting on Page 40 and 52 offer a glimpse of the valuable information that delegates attending the two-day Summit gained.
So what’s the word from our backyard? Limousine operators shouldn’t count on an industry-wide return to the free-spending days of the late 1990s; it’s probably not going to happen.
But many of the operators we have talked to in recent months – large and small and in most areas of the country – say that corporate and retail business is up; dispatchers and chauffeurs are staying busy.
Granted, not every sign of business and limousine industry growth is entirely positive. The American Express expert warned that corporate managers were expected to keep a close eye on travel spending. And many operators, especially those working in the corporate travel arena, bemoan that their profit margins are as slim as they’ve ever seen them because of troublingly high expenses and continued pressure to keep rates low.
As we close the books on 2003, we hope you are ready for the challenges, surprises, hard work and rewards that lie ahead. From everyone on the staff of LCT, we wish you a bright – and profitable - New Year.