Operations

Good Reasons To Get Into Motorcoach Service

Posted on September 15, 2014 by - Also by this author

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Mike Haggerty, chairman and co-owner of CH Bus Sales and founder and previous owner of Ryan’s Express charter bus company and Stardust Limousine, both of Los Angeles, led a seminar at the 2014 International LCT Show titled Tour Bus Operations: How to Get Into the Charter Bus Business.
Mike Haggerty, chairman and co-owner of CH Bus Sales and founder and previous owner of Ryan’s Express charter bus company and Stardust Limousine, both of Los Angeles, led a seminar at the 2014 International LCT Show titled Tour Bus Operations: How to Get Into the Charter Bus Business.

LAS VEGAS, Nev. — Two primary differences between chauffeured transportation and charter and tour bus service should be understood before venturing from the first to the second: It’s easier to get into limousine service, but charter buses yield stronger overall payoff and market potential.

That was the main point of a Feb. 17 seminar at the International LCT Show led by Mike Haggerty, the chairman of the board and co-owner of CH Bus Sales, and the founder and previous owner of Ryan’s Express charter bus company and Stardust Limousine, both of Los Angeles. Titled “Tour Bus Operations: How to Get Into the Charter Bus Business,” Haggerty offered a point-by-point primer for limousine operators who want to tap the growing opportunities in running motorcoaches for charter and tour service.

“Motorcoaches are a commodity, limousines are a service provider,” Haggerty told attendees. “There is a world of difference.”

Limousine operators who expand into motorcoach service retain a competitive advantage over traditional charter bus only operations, Haggerty said. “You are in a great position to attract a different type of client. People are lazy by nature, and they like going to one company and getting everything from a van up to a large motorcoach. One-stop shopping is a competitive advantage.”

Limos To Buses
Haggerty started in the limousine business 30 years ago, buying a stretch to serve the Olympic Games in Los Angeles and creating Stardust Limousine. Ten years later, after growing Stardust and acquiring other limousine services, Haggerty bought his first motorcoaches. In 1998, he sold Stardust and the next year founded Ryan’s Express, a full-service charter bus and tour company based in Los Angeles and Las Vegas. By 2006, Ryan’s Express had grown to 150 buses and $34.6 million in annual revenues. In 2010, Haggerty started CH Bus Sales, the U.S. distributor of Turkish-built TEMSA buses, and in 2011 sold his majority stake in the 180-vehicle Ryan’s Express to a private equity firm called Century Park Capital Partners. Ryan’s is now based just one block from LCT Magazine in Torrance, Calif. Haggerty has been chairman of the board of CH Bus Sales since 2011.

While there are greater barriers to entry in the charter bus business, there’s also less competition than in the limousine industry, he said.

“You take the limousine mentality and put it on the motorcoach side,” said Haggerty, whose limousine operation ran 63 vehicles, mostly in Los Angeles. The company also was involved with the Destination Management Company (DMC) market. “If you have good chauffeurs and great equipment, they will find you. Many times a year, there just aren’t enough buses in this country. If I can do it, you can do it.”

Appreciable Assets
Haggerty said he liked limousine service, but in that business “you are only as good as your last service.” Once his company grew into buses, it saw a 30% EBITDA — earnings before the deduction of interest, taxes, depreciation and amortization expenses.

A new, top-of-the-line charter bus costs about $580,000 now, compared to $350,000 in 1994, but buses now are of much better quality. New bus prices rise an average of 2%-3% per year. But motorcoaches last longer, due to their monocoque construction, which have 20-year lifecycles compared to chassis cutaway buses. The monocoque body styles are less likely to be radically redesigned over time since motorcoaches are less trendy than limousine vehicles, which are driven more by popular preferences and vehicle styles. “You have an asset on hand that has great value at beginning of term and at the end of the term,” Haggerty said.

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