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Former Carey CEO Vince Wolfington now serves as chairman and senior managing director of Global Alliance Advisors, based in Washington, D.C.
WASHINGTON, D.C. -- The spread of Transportation Network Companies (TNCs) challenges the core dynamics of the limousine industry more than any prior business shift. TNCs thrive with on-demand wireless technology, a revolutionary development transforming the relationship between clients and service providers.
For the limousine industry, mobile technology forces a fundamental question: Will chauffeured transportation remain more of a service or become more of a commodity? That topic took the lead at the 2014 LCT Leadership Summit on May 20 in Miami Beach, Fla., as a panel of executives dissected how technology will affect business models, company consolidations and the basics of providing luxury transportation from point A to point B.
One of those panelists — Vincent Wolfington — clearly comes down on the side of service, but one that adapts to change. Wolfington, who served as Chairman and CEO of Carey International Inc. from 1974 to 2004, could well be an industry senior statesman. Carey International, founded in New York in the 1920s, still ranks as the largest chauffeured transportation service in the world, holding the No. 1 spot on the LCT 50 Largest Fleets List for the last two years. Under Wolfington’s leadership, Carey became the only major limousine company in U.S. history to be publicly traded, going from $50 million in value when it went public in 1997 to $400 million when it was sold and taken private again in 2000. With the power of Wall Street, Wolfington led the industry’s single largest buyout of companies in a three-year sweep, turning operators into millionaires and growing the Carey network to 480 cities in 75 countries.
Since leaving Carey 10 years ago, Wolfington has led the World Travel and Tourism Council from 2005 to 2007, a global organization and forum composed of the CEOs, Chairmen, and Presidents of the world’s largest international companies engaged in the travel-related service business. Wolfington also now serves as chairman and senior managing director of Global Alliance Advisors (www.ga-advisors.com), based in Washington, D.C. By drawing upon the experience of world-class global travel and tourism thought leaders, Global Alliance brings together companies and investors via research and strategic planning in an industry full of opportunity. It often acts as a liaison between business executives and funding sources.
Among Wolfington’s major accomplishments since leaving Carey is visiting China 40 times over five years to build service-related businesses, including a business plan for a national limousine network.
With those credentials in mind, LCT interviewed Wolfington at length on the overarching theme of, “What’s next?” To answer that, Wolfington sums up a core truth: “The limousine industry is a travel service related business. Its customer base is flying in airplanes, living in hotels, and going to conventions and meetings.”
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Service vs. Commodity
Q: Please elaborate further on your comments during the LCT Leadership Summit: Why do you believe chauffeured transportation should be more of a service than a commodity?
A: Commodity companies meet needs: i.e., fundamental necessities like needing a place to sleep, eat, and/or transport from point A to point B. Service companies go beyond meeting needs by providing the wants, i.e., the psychological drivers which are sensitive to the treatment one receives and the experience related to meeting the needs. In meeting a need, one must provide something fundamental or basic for day to day survival. A want is, “I want to be recognized, respected, treated with dignity, anticipate my wants,” where you trust them to “handle my problems.” They are always exceeding needs and expectations. Service used to be about customer satisfaction; today it’s about customer experience.
Uber provides a value proposition by getting something better than a cab. But they do it on demand, from one point to another. That’s a commodity. Uber is in the better value, lower price market. Its technology provides the consumer convenience of access and payment which is hassle-free where the transport from point A to point B can be made on-demand, generally in a later model vehicle than a taxi or black car, at a very competitive price point.
However, Uber faces challenges which are unmet like quality of driver, safety and security level, and regularity issues as well as others.
The idea of service, especially consistent, reliable, safe, and secure service in the high end livery business, still counts in the mind of the consumer. Brand recognition is a part of the consumer psyche and there is a sustainable niche in the local and national marketplace for companies willing to anticipate wants and can cater to them. During the recession, Four Seasons held prices but offered [guests] an extra night. The Ritz lowered its price by a small discount. [Once] Bill Marriott turned to me and said you have to be careful not to lower price. If you lower them, you compromise brand and may never get it back up again. The fastest growing hotels after the recession are high-end hotels and boutiques.
The challenge of our industry today is electing to be a commodity or a service company. If we become a commodity, we will not get a premium price. If we are a service, we get paid a premium price to meet needs and wants, and will get paid for meeting expectations and delivering those wants.
The big companies are thinking with the mindset of a commodity provider, not a luxury service provider. That will be their downfall. Every company in the travel-related service industry whose mindset was that they were in the business of providing commodity service depending on price, ended up making little to no money. That’s the future of companies that think they are in the commodity business. That’s been the history of the travel business. The airline industry has become a commodity. They became one because they believed the consumer wouldn’t support the price of being a service industry. Service is a niche market. It’s always been there, and will be there today and tomorrow. The larger companies are tied to their legacy systems and their tendency will be to somehow introduce aspects of the TNC model to compete locally. That caliber of thinking is not bold enough to meet the demands of the digital age to accommodate savvy and wired consumers. There must be an industry-wide initiative in the long term.
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Q: How does the chauffeured transportation industry avoid commoditization?
A: People have to understand their market first of all, their business, and then figure things out for themselves. They must show customers that they are thinking about them, advancing for them. Sometimes you have to deal with the way things are, not the way you think they should be, or the way others think it should be. Business comes back after a downturn. For those who were in the service business, customers do come back.
It is appropriate for owners and operators to ask themselves about their objectives with respect to the size and location of their business. Am I a small local business where I comfortable staying that way; or am I a large local or regional business or a business which is national in scope? While asking the questions, it is also appropriate to analyze the nature of their business in the context of “as directed” versus point to point. The role of the “app” has to take the answers to these questions into account. The challenge of offering “ASAPS” or on-demand service is a daunting one. Vehicle availability on demand, pricing, customer experience, the competition, the customer base (business, leisure, individuals, groups), technical platform -- these and much more come into play when you are trying to figure out how far you go to convenience your customer with Mobile apps. If you decide you are a commodity type service, you will have to adopt and determine what that means in the context of meeting needs and wants.
Younger clients, for example, are more attuned to technology. If you see a transition in the customer base, you have to recognize that and make tech components available so it’s easy for them to do business with you. In instances where young people head companies, their needs and wants change; wants trump needs. Being on time for a meeting trumps the type of vehicle. The more people move up the hierarchy of a company, wants start to trump needs. Wants is all about relationships. You have to stick to your core competency. Don’t distract from that. In the corporate world, you have managed travel. They want price. In non-managed travel, such as in corporate executive suites, and among private aircraft users, you have many good small companies that have to emphasize the service.