Operator Finds Niche In Funeral And Corporate Markets

Posted on September 1, 1993 by LCT Staff - Also by this author

After 41 years in business, Bob Levine understands where to find profitable ventures

Forty one years ago, the cemeteries weren’t full in West Haven, CT. In those days it was a breeze to make sure the entire funeral party got to the cemetery.

However, over time, as the in-town cemeteries filled, new ones were built on the city’s outskirts. And that has occasionally created problems for Bob Levine of Hy’s Livery Service in West Haven, CT. “In order to get to the funerals these days you need to take a highway. Once we were going down the road and half the funeral broke off and joined up with another procession. We didn’t realize what happened until we got to the cemetery and half of our procession was missing,” he explains.

Over the past 41 years, Hy’s has evolved from a company that handled funerals and some weddings to one that now caters to mainly the funeral and airport transfer segments of the market. As both the funeral and corporate markets changed over the years, Hy’s has kept pace and learned how to best serve these profitable areas.

Changing With The Times

When Levine’s father started the company in 1952, the Korean War was soon to end. Prior to entering the livery business, the elder Levine was delivering the local newspaper and selling used cars. Meanwhile, the owner of the paper had his own private limousine that he put up on blocks before shipping off for war. When he returned to this country, he decided he no longer wanted the vehicle and asked the elder Levine to sell it.

“My father had a friend who was already in the limousine business. He told my father that if he bought that vehicle, it could be used as a spare car for the business,” says Levine, who joined the company on a full-time basis in 1973. “All through the 1950s and the better part of the 1960s, the majority of funeral homes in the area had their own equipment-both hearses and limousines. So a livery vehicle was a seldom-used extra. As far as wedding calls were concerned, people just borrowed limousines from the funeral home. There weren’t that many limousine services. White cars were nonexistent.

“The company realized over time that both society and the church were changing and that opened new transportation markets. Levine adds, “We now have weddings on Friday evenings. In the 1950s and 1960s, that was unheard of. In the late 1960s, we started to get some business from the summer theaters that are located just outside of New Haven. Then in the 1970s, there was the advent of rock concerts. But still, you had an awful lot of dead space in between. Your vehicles went out in the morning on a funeral call and then on a weekend you might have a couple of calls for a rock concert. That’s what brought about corporate service to the airports. I imagine that holds true regardless of the city.” Today, funeral service makes up about 50 percent of the company’s business; airport service makes up 40 percent; the remaining 10 percent still comes from weddings, proms, nights out, etc.

Funerals Mean Profits     

Even though funerals are still mired in tradition, one aspect has changed—most funeral homes are deciding not to own their own equipment any more, according to Levine. This has opened a huge door for many operators who specialize in this market.

“We’re presently doing just shy of 12,000 funeral calls per year, including both hearse and limousine rentals. We service an average of 15 funeral homes each day,” he says. Beginning in 1978, the company began to purchase small livery companies that also served the funeral market. “Along the way, we bought a number of companies in order to specialize in the funeral market in this area. Additionally, there has been a number of funeral homes that, over a period of time, have decided not to own their own equipment. In our area we’re basically the only one providing funeral service,” he adds.

The company has used some aggressive sales techniques to garner service from the many funeral homes in the surrounding areas. “Obviously we know the funeral homes that still operate their own equipment. If we are servicing them as a second or third vehicle, we have daily contact with them. As their vehicles get to an age where we consider they need to be replaced, we make the homes a proposal not to do so. Some accept, others continue to own,” Levine says.

To meet the needs of the approximately 70 funeral homes Hy’s works with, the company maintains a diverse fleet. It consists of 35 limousines, 13 hearses, 12 sedans, and two 10-passenger vans. Included in the limousine totals are two 24-hour cars and seven “bar-car- type” vehicles. “The remainder of limousines are flip-seat vehicles that can be used for either funeral service or airport transportation,” he explains. This fleet allowed Hy’s to gross $2.8 million this past year.

According to Levine, the funeral market is so profitable because it keeps the cars on the road six days a week. “The New England area is very traditional. There’s obviously a recession and livery services have been hit unmercifully, but as far as the funeral trade is concerned, we haven’t seen any less buying power. People who rented three cars for a funeral before the recession will still hire those same three. Funerals in this area are as traditional now as they have ever been,” he explains.

One perk of this type of business is that most funeral homes are very good on the collection side. All of Hy’s clients are billed net 30 days. “We haven’t taken on a funeral home in the past five years that hasn’t been an excellent payee,” he says. All funerals are billed on a flat hourly rate of three hours at between $38 and $45 per hour plus mileage for out-of-area funerals.

Another benefit of funeral service Levine cites is the wear-and-tear factor on the vehicles. “There is very little wear and tear on the cars. They don’t get one-quarter as abused as they do going to the airports or on local service. During local service, the clients really abuse the car’s interior,” he adds.

Wear and tear isn’t the only factor that makes funeral-service vehicles profitable. Because of this service, Hy’s doesn’t need to invest in expensive, fully loaded limousines. “Clients judge our vehicles more on the transportation side than on the amenity side,” he explains.

Moreover, funeral service is beneficial because of the labor pool Levine has to choose from. He has found great success in hiring retired and semi-retired individuals—especially those who came from other ends of the transportation trade, such as truck drivers. “They already know how to operate a vehicle, have respect for the rules of the road, and have dealt with the public,” he explains. “These people are looking to work a minimum amount of time, so we aren’t involved in providing full- time benefits. We also don’t have to worry about providing them with a great volume of work.” Levine currently employs 15 full-time and 60 part-time chauffeurs.

Expanding His Horizons

Since Hy’s already deals with most of the funeral homes in the surrounding area, to expand any more means the company has to open new operations. “We are looking to open up two additional offices strictly for funeral service—one to the north and one to the south,” he says.

While the company hasn’t yet opened these new offices, the plans are on the drawing board Levine is investigating office space and additional vehicles. “Funeral service is very much attune to having the vehicles appear in a clean and pristine fashion—especially in New England in the wintertime. You can’t provide that from far away. If you’re local you can minimize the winter dirt,” he adds.

Levine is investigating this expansion due to client demands. According to him, funeral directors from outside the immediate service area actually came to him with the idea. “Everybody makes promises, but there is obviously a certain amount of risk involved. We believe the risk isn’t that great because if it doesn’t work out, the vehicles are still very saleable and we can just close the operation,” he says.

Levine believes that by concentrating solely on funeral work from these satellite offices he can reduce overhead. The company won’t need to staff a dispatching department 24 hours a day and it can also minimize vehicle cleaning.

How To Do It

For other operators looking to get into the lucrative funeral market, Levine suggests, “The easiest way to get into it is to go to funeral home operators who have their own equipment. First, see if you can get their overflow work, if they have any. Then, if they have older vehicles, see if you can purchase them. But remember, most funeral homes don’t want to rent their old equipment back. You’ll have to have some avenue to get rid of the old vehicles. Funeral homes are looking to you to provide them with new equipment, otherwise they would have bought the vehicles themselves.”

He also advises that funeral homes are usually looking for six-door limousines. “Not specifically a Cadillac or Lincoln. But maybe a Buick or comparable vehicle. It has to be a limousine without all the *bells and whistles.’ They are looking for a traditional six-door vehicle.” He adds that the cars don’t necessarily have to be black. Often pearl gray, silver, or dark blue are acceptable.

Funeral homes are often looking for continuity in service. “Number one, many funeral directors look for the same chauffeurs who know the system. Also, we run two different color vehicles—gray and black. Funeral directors like the vehicles to match the ones they have,” he adds.

“We find that the hearses generate dollars because they’re out so often. It is rare when any of our equipment collects dust. We have at least an 80 percent to 85 percent rental rate. Other vehicles, like the white stretches, may only go out two or three times a week. But even though that vehicle might not be making money we have to have it. If we don’t, we stand the risk of losing other business. It’s important to be a full-service operator,” he explains.

Going After Cooperate

In 1973, Levine concentrated on changing the operation from a mainly local service to one that also incorporated corporate airport transfer work as well.

“The airport work provides a volume. No question about that,” he admits. “It keeps the drivers busy and enables you to hold a certain number of drivers. On the other side of the coin, it’s tedious work in that it puts a lot of mileage on the vehi­cles. In the past few years, we saw the public look for what we considered to be an exorbitant amount for a minimal dollar. They were very aware that livery services were in trouble and that they could negotiate on a much better term than they could in the past.”

The vehicles Levine operates for the funeral side of the business are ideally suited for corporate work. These days, corporate clients are specifically looking for vehicles that are more subdued. Levine finds that especially when corporate clients are traveling in groups of four or more, they have no problem with using the six-door limousines. “These cars work great, especially since they have the flip seats. They need to have the ability to talk to one another. These cars do have phones, and that is one thing they look for. We have been able to keep our service competitively priced because we aren’t paying as much for our vehicles as a company that runs amenity-filled limousines,” he adds.

The company bills airport transfers at a flat rate that begins at $110 to Kennedy or LaGuardia airports. The price goes up from there depending on the distance. But the “big money making vehicles are the sedans.” According to Levine, “Sedans not only make money, they generate money. They have a tendency to do more airport trips than stretches. I would say that 99 percent of the corporate community is not looking for limousines.”

To boost this service, Levine hired a salesperson in the late-1980s. After a few years, sales couldn’t sustain a dedicated salesperson. The company has not had a sales force since. “After having been in the area for over 40 years, our name is well known. We have a good repeat business. We also pay full commissions to travel agents and work with them to incorporate our service into any packages they might offer,” he says.

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