The Growing Minibus Market

Posted on May 1, 2004 by LCT Staff - Also by this author

Maintaining Your Minibus
Running your minibuses through a strict preventative maintenance program can save you money and headaches. You will have fewer repair bills and fewer breakdowns, which can cost you customers.

By keeping detailed service records and receipts, you also increase the resale value of your vehicles.

The following are recommendations from Ron Olson, vice president of Vista Motorcoach in Colleyville, Texas:

ØBattery maintenance is essential because so many components run off of 12-volt power. Water levels should be checked monthly and filled with distilled water only. It also is helpful to have a battery disconnect.

ØCheck tire pressure monthly and maintain the maximum levels recommended by the manufacturer. Even though the ride may be “softer” with less inflation, it can cause unsafe handling, reduced gas mileage and shorter tire life.

ØFiberglass roofs should be inspected every six months to ensure that the seals are soft and pliable.

ØVehicles used on a seasonal basis should be stored with full fuel tanks, particularly diesel engines. This reduces condensation.

ØDuring the summer months, keep coaches ventilated by cracking a window or roof vent. Between the electronics and dark-colored interiors, they often heat up on the inside, causing excessive expansion and contraction of the glues and sealants that hold the coach together.

ØSteam clean carpets. This requires less detergent, which can actually increase the bonding of dirt particles.

For general engine maintenance (hoses, filters, fluids, etc.), follow the chassis manufacturer’s mileage guidelines.

Limo buses vs. Shuttle Buses
Depending on their market and target audience, operators may choose a limo bus or a shuttle bus. Shuttle buses are more likely to work five to seven days a week, whereas limo buses might work three or four. However, limo buses earn more money per hour.

According to Pete Corelli, president of Lakeview Custom Coach in Oaklyn, N.J., operators often earn between $50 and $60 per hour for a shuttle bus. That same operator may be able to get between $125 and $175 per hour for a limo bus. Most shuttle buses are rented on a daily basis, he adds, often earning about $250 a day.

The price tag on a limo bus is often higher than that of a shuttle bus, but operators may pay less in insurance because they generally seat fewer people. If a bus seats less than 15 people (including the driver), it doesn’t fall under the jurisdiction of the Department of Transportation and is only required by the federal government to maintain $1.5 million insurance to perform interstate work. For 16 passengers and above, federal requirements for interstate work are $5 million in insurance.

“Once you move to 16 passengers and above, your drivers also must have CDLs [Commercial Drivers License] and they must undergo drug testing,” Corelli says. Laws can vary for intrastate work, depending on an operator’s location.

Minibus Stats
According to the research department at Metro magazine in Torrance, Calif., minibuses stay in service, on average, seven to 10 years, based on daily use. Lifetime mileage is between 200,000 to 300,000 miles.

Minibuses: A Growing Trend
A growing corporate trend to move large groups more affordably – without completely sacrificing reliability and customer service – has led many limousine companies to add minibuses to their fleets. With the vehicles already on the street, operators are further expanding their minibus business by competing for contracts to serve hotels, airports, universities and apartment complexes.

By promoting professionally-trained drivers and well-maintained equipment, operators are often able to sell their service at a slightly higher rate than some of the traditional shuttle companies they are bidding against. Between these shuttle contracts and the recent spike in business travel, some operators have seen triple-digit growth on their minibus work since 2002.

“We’re seeing more corporations bringing their sales teams together for meetings, which has greatly impacted our shuttle business and is a good sign for the economy in general,” says Scott Woodruff, president of Majestic Limousine in Des Moines, Iowa. “As popular as they are, stretch SUVs have no real corporate application, which is why we chose minibuses for larger groups.”

Growth Markets
Over the past twelve months, International Limousine Service in Washington, D.C., increased the size of its minibus fleet by over 30%, adding 15 new minibuses. In that same time span, the company has added only one new limousine and its sedan fleet has remained flat.

According to International’s president Richard Kane, employee, student and tenant transportation account for much of the growth of his minibus division. On average Kane’s 60 minibuses move a total of 20,000 people every weekday, but each minibus racks up less than 50 miles a day, he adds.

During the week, the minibuses do corporate and university shuttles. The company often keeps its minibuses moving on weekends providing service for big events as a preferred vendor for the D.C. Convention Center. In addition, it also transports tenants back and forth from various apartment complexes to mass transit and local shopping malls seven days a week.

Woodruff is seeing a similar growth pattern, just on a smaller scale since Des Moines has a much smaller population: about 350,000.

Majestic’s corporate shuttle work has increased this past year by over 300% and its limo bus also saw a respectable growth trend of 225% from 2002 to 2003. The company saw an overall increase in business of 63%.

Three years ago, the company was filling its schedule with 80% sedan and 20% limousine work. Now its business consists of 60% sedans, 30% buses and 10% limousines.

Woodruff bought his first minibus three years ago, and is currently shopping for his third. In the meantime he added a full-size coach for bigger jobs. He operates a 26-passenger shuttle bus for corporate work, hotels and universities and a 22-passenger minibus with a limousine-style interior for nights out and bachelor parties. Depending on the client, either bus might be used for a wedding or golf outing.

“Our limo bus is on the road every Saturday night,” says Woodruff. “People like the bigger vehicles and want to be able to walk on and move around [in them]. When I do a wedding reception, I can’t get them off the bus because they are having too much fun dancing on the bus.”

Selling the Service
Promotion is an important part of an operator’s success when trying any new niche. Limousine companies are not historically known for operating minibuses, so operators should make an effort to include the vehicles in their company’s identity.

By putting images of minibuses on their Web sites, ads and brochures, operators let potential clients know the service is available. Operators also can include information on their on-hold messages. If their business card lists vehicle types, they may consider including minibuses.

Salespeople also must be familiar with the many services a minibus can provide and promote those services in their corporate sales proposals and presentations. This will help set them apart from competitors with a narrower range of services.

To further increase awareness, operators can keep brochures in their sedans – still the dominant corporate vehicle – to let clients know about the additional services they offer.

Woodruff often brings his limo bus to wedding shows, along with a limousine. “The brides love them,” he says. It’s nice to not have to worry about climbing in a limo and sliding across a long seat with that bulky dress on, he adds.

In International’s marketing materials, Kane promotes his drivers as much as his vehicles. He lets potential and current clients know that International’s drivers undergo background checks, they are professionally dressed, and they receive training in defensive driving, customer service and handling passengers with disabilities.

“We bring to the table a better trained employee than any of our competitors,” Kane says. “We offer a higher-end vehicle and driver. Our customers know it and are willing to pay a premium for it.”

Buying New or Used? Kane always buys new and he always buys the same model of minibus. This ensures that his drivers fully understand how each minibus operates. They also know how the features work, in case a passenger has a question about turning on an overhead light or opening a window, he adds.

Instead of selling his used minibuses privately, Kane trades them in to his dealership after an average of five years in service for new ones.

As a smaller operator with a tinier budget, Woodruff always buys used. He looks for buses that are less than two years old, with fewer than 40,000 miles, ideally from an operator that has documented a thorough preventative maintenance program.

Before Taking the Leap
Steve Carelli, president of Dominick’s Limousine Service in Sleepy Hollow, N.Y. also handles a significant amount of minibus work, but to date has not purchased one. For the past year, he has been promoting minibuses as if he has them in his fleet and accepts the work. He then farms it out to a network of local shuttle services and takes a small percentage of the fee.

Carelli started offering the service when a long-standing client asked for a minibus. Instead of saying “no,” he booked the job and found someone to do it for him. He has subsequently developed relationships with half a dozen local operators that run minibuses.

“We plan to buy several minibuses within the next few years, but right now things are going well the way they are,” Carelli says. “I’ll probably end up adding a few more sedans before I buy my first minibus.”


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