67 percent of operators report revenue and profit increased in 1992 vs. 1991
Hope is reigning supreme once again in the livery industry. The reports are in from all across the country—business is up.
The results from the 10th Annual Limousine & Chauffeur Operator Survey have been tabulated. Almost 200 operators from New York, Los Angeles, Canada, Puerto Rico, Hawaii, and everywhere in between sent in information about the day-to-day running of their operations. The survey included a full range of operations—from the home operator with one vehicle to the operator working out of an office with over 100 vehicles.
The industry as a whole generated $3.2 billion from the 169 million passengers transported over 3.3 billion miles in 1992. This year 67 percent of operators answering the survey reported an average 24 percent increase in business over the past year. For 1991, only 42 percent of the respondents reported an increase. The numbers all across the board reflect that the majority of operators are seeing the light at the end of the proverbial tunnel.
Fleet Demographics Changing
Times have certainly changed in the “limousine” industry. Over the years, one of the biggest changes has been in fleet demographics. For instance in 1989, the average fleet contained 8.2 vehicles which included 4.1 limousines, 0.7 formals, 2.7 sedans, and 0.7 vans or buses. As economic conditions changed, so did corporate customer’s vehicle demands.
These new vehicle demands have changed the face of the average livery fleet. In 1992, the average fleet has grown to almost 10 vehicles. Of these, the number of limousines and formals has stayed relatively stable, while sedans (3.73) and vans or buses (1.49) have seen the most growth. This has been an ongoing trend.
It is interesting to note how fleets vary by age of company. The average fleet of a company that has been in business less than one year has 66 percent of its fleet coming from limousines and only 11 percent from sedans. These numbers slowly evolve into a more equally balanced fleet by the time a company has been in business for more than 10 years with the percentage of sedans (41 percent) outnumbering the percentage of limousines (38 percent).
The figures show that even after only one year in business, many operators realize the value of adding sedans to their fleets. In a company that is one to two years old, 49 percent of its fleet is limousines and 40 percent are sedans.
Operators Working Harder
Even though 67 percent of operators are reporting business has increased over that of 1991, they are working harder for their money. The total average number of miles a vehicle is driven annually is up 14 percent over 1991. Another indication that operators are working harder is the fact that the average number of trips per month is up 21 percent over 1991—39 trips per month in 1991 compared with 47 trips per month in 1992.
Home operators average fewer trips and fewer miles per month than their office-based counterparts. Home operators, who have an average fleet of 3.82 vehicles, take 42 trips per month and drive 33,263 miles per year with each of their vehicles. While those who operate out of an office average 52 trips per month and 48,032 miles per year for each of their 15.33 vehicles.
While the number of trips and miles driven are up, hourly rates have remained fairly standard vs. this past year. Up slightly from 1991 is the average hourly stretch limousine rate per hour—up from $48 to $50 in 1992. Formal and sedan rates are $43 and $37 respectively. These numbers are almost identical to 1991 rates. One area that has declined is the hourly rate for vans or buses—dropping from $63 to $52 in 1992. Since the survey doesn’t distinguish between vans and buses, this discrepancy might be due to operators incorporating more vans than buses into their fleets.
Another indicator of increasing business is gross revenue per month per vehicle. In 1992, operators saw a 30 percent increase in monthly gross for their limousines—from $3,014 in 1991 to $3,908 in 1992. Sedan gross was off slightly—from $3,479 in 1991 to $3,249. To offset this, van and bus income rose slightly from $2,925 in 1991 to $3,149 in 1992.
One group that fared well in regard to average gross per month was operators working out of an office. They saw a 43 percent increase in limousine gross over 1991— from $3,284 in 1991 to $4,700 in 1992. Meanwhile, home office respondents saw a 10 percent rise in this same number—from $2,820 in 1991 to $3,107 in 1992. Other numbers for home office respondents: $2,185 gross per sedan and $2,113 per van or bus. Office respondents report $4,020 per sedan and $3,563 per van or bus.
This year, numbers were also broken out for operators who only have limousines. This group’s numbers weren’t as healthy. They reported making only 28 trips per month and travelling 26,550 miles annually per vehicle. At $49.51 per hour, these numbers translate into a monthly vehicle gross of $2,857. The average fleet size of this group is 2.17 vehicles.
Chauffeur Treatment Split
This year, operators were split directly down the middle on their classification of chauffeurs. It was 50/50 between classifying as employees or independent contractors. The breakdown between home and office respondents for 1992 is similar to the numbers for 1991. This year, 66 percent of home office respondents classified their chauffeurs as independent contractors—1 percent more than in 1991. While only 36 percent of office respondents classify their chauffeurs as independent contractors—down 1 percent from 1991.
In order to remain profitable during a time of decreasing revenue, many operators found ways to cut business-related costs. One group that has been affected by these cuts is chauffeurs. Of those who are treated as employees, the average pay rate is $7.63. This number is down considerably from 1991 when chauffeurs were paid an average $10.75. For 1992, the average chauffeur’s tip is 18 percent. Only 27 percent of operators include the tip in the client’s bill.
Fewer chauffeurs were employed in 1992—5.9 full time and 6.6 part time in 1992 vs. 10.2 full time and 9.1 part time in 1991. Home operators, on the other hand, employ 1.1 full-time and 3.3 part-time chauffeurs who are paid an average $7.24 per hour. While office respondents report they employ 10.2 full-time and 9.5 part-time chauffeurs who they pay an average $7.94 per hour.
Another cost area that affects an operator’s bottom line is insurance. The average operator carries $1.1 million in liability insurance and has a deductible of $893. This translates into an average annual per-vehicle premium of $2,671.
Office respondents pay higher premiums and have higher deductibles and more coverage than home operators.
With business once again looking good, operators now have time to become involved with the issues that affect the industry. Because of this, association involvement is on the increase. This year, the number of operators who report they belong to the National Limousine Association (NLA) is up to 34 percent vs. 28 percent in 1991. Local association membership has also seen an increase from 37 percent in 1991 to 44 percent in 1992. Office respondents report even higher numbers—46 percent belong to the NLA and 50 percent to local associations. Home office respondents seem to be devoting more time to their businesses. They report only 20 percent belong to the NLA and 36 percent to local associations.
The survey represents a cross section of L&C subscribers. Since the survey is based on the magazine’s subscription list, operators who do not receive the magazine cannot be included.
$3.2 billion was spent on livery service in 1992.
169 million passengers were transported by the livery industry this past year.
Over 54 million corporate travellers were transported by the livery industry in 1992.
Livery operators drove over 3.3. billion miles this past year.
The average trip is 72.7 miles long.
The average trip home operators make is 66.1 miles long.
The average trip for operators who work out of an office is 77.3 miles long.
47 percent of operators work out of their homes.
The average chauffeur trip is 18 percent.
The average fleet has 9.89 vehicles-which includes 4.25 limousines, 0.42 formals 3.73 sedans, and 1.49 vans or buses.
Home operators have an average fleet of 3.82 vehicles-including 2.13 limousines, 0.25 formals, 1.13 sedans, and 0.31 vans or buses.
Operators who work out of an office have an average 15.33 vehicles-including 6.15 limousines, 0.57 formals, 6.06 sedans, and 2.55 vans or buses.
The average monthly limousine payment is $587. The average monthly sedan payment is $485.
Office based companies carry $1.3 million in liability insurance, have a $1,016 deductible, and pay a $3,112 per-vehicle premium.
Home-based companies carry $920.000 in liability coverage with a $757 deductible and have a $2,173 per-vehicle premium.
50 percent of all livery fleets are between two and five years old.
The average monthly gross from each limousine was $3,908, $3,249 from each sedan, and $3,149 from each van or bus in 1992.
The average chauffeur pay rate is $7.63 per hour
The average hourly rates are $50 for limousines; $43 for formals; $37 for sedans; and $52 for vans or buses.