Operators Dino Javas and Matt McHugh are examples of industry upstarts who see potential in luxury vehicle service.
IRVINE, Calif. — The career and expertise of Edwin D. “Ed” Fuller bring together many of the knowledge bases and trends transforming chauffeured transportation worldwide. As a keynote speaker at this year’s International LCT Show, the former Marriott International hotelier-turned-consultant and prolific global user of chauffeured transportation will discuss how operators can apply leadership and business relationship skills to become more competitive.
While working at Marriott International, Fuller’s leadership resulted in more than 80,000 new jobs worldwide, 555 hotels opening in 72 countries, $8 billion in annual sales, and the launches of multiple environmental, youth and educational efforts. Staying competitive is an over-arching theme of this year’s Show as Transportation Network Companies and the technology spurring them challenge limousine operations as never before. Fuller, the founder and president of Laguna Strategic Advisors, spoke at length with LCT a few weeks before the Show about how the hotel, business travel, and chauffeured transportation industries intersect in an ever more global economy that must embrace new technologies. As Fuller makes clear, there is much that operators can learn.
LCT: What has been your involvement with chauffeured transportation throughout your career, as a client and a hotel executive?
Fuller: Overseas, we use limousines more for our clients and ourselves. The laws are different in foreign countries. People are not as comfortable driving in emerging markets. Hotels tend to have their own fleets, such as in Hong Kong, Dubai and India. It’s something we seldom see in the U.S. I’ve also gotten used to chauffeured service living in Laguna Hills. Getting to LAX in the diamond lane is the only way to be sure to make your flight. I also almost fell asleep once driving my car back from Los Angeles at night. I found out a chauffeured car is a better value in the long run. If I’m not on an expense account, I still use it on my own. I’m not a huge fan of taxi systems in our cities because of communication problems with the drivers, and drivers taking longer routes. I used Uber only once and that was the last time. It was not a good experience.
LCT: What have been some of your best experiences with chauffeured transportation?
Fuller: The best have been in Asia and the Middle East, with the good quality of cars and staff. Hotels set up their headquarter bases for chauffeur service and there are few problems.
LCT: What have been experiences you’ve had that limousine operators could learn from?
Fuller: When a major brand sub-contracts to an affiliate, there is occasionally a miscommunication. That has been my only complaint. I have never had a problem with a limo company that makes the drive from point A to B. They know where they are going. GPS has eliminated most problems or difficulties. The service I use locally I’ve been riding with to LAX for 15 years. I know the chauffeurs and they know me, my wife and my dogs. The personal attention and level of service is good. I use larger companies outside of my local area.
LCT: What are the most important service requirements for limo operators to understand when working with hotels?
Fuller: If they are luxury tier hotels, the chauffeurs have to appear at a luxury level and with luxury vehicles. The last thing you want showing up in front of the Ritz-Carlton is a Toyota Prius. The hotel and transportation brands must match. That’s automatically done in Asia. If you are dealing with a hotel, the quickest way to lose a contract is to fail to meet the customer on time. If my limo is not there, panic sets in, especially if it’s taking me to a meeting or flight. Most important are on-time delivery, safety, quality and condition of vehicle, and the driver’s skills and communications.
LCT: How do your principles of overcoming differences in multi-cultural business environments apply to chauffeured transportation operations?
Fuller: First, you must understand the culture of who you are serving. You have to understand what the culture expects and what service should be, and whether or not you are dealing with a concierge environment. My business outside of the U.S. culture was everything. Building confidence and trust is hard in some of these markets. There has to be a developed understanding of the market, the culture, and the challenges. Clients often choose limousine transportation because they are coming into environments that make them uncomfortable. If you have Chinese coming in, for example, you must be sensitive to their cultural norms and ways. The number of international visitors to the U.S. is growing by leaps and bounds. We had 1.5 million visitors from China in 2014, and 7.5 million visitors are expected in 2020 (Department of Commerce figures).
LCT: How can chauffeured transportation operations better compete with Transportation Network Companies, such as Uber?
Fuller: That in itself is the toughest question. You clearly have to understand your market base, and the need to take a forward-looking approach to selling and sourcing markets. Limo companies sometimes wait for travel agents to call them. My challenge is to show that they need to go out and seek out the international sources from channels available. Personalized sales efforts will have a payback because this is a sales relationship business. If you are in a luxury market, you are probably not at risk from Uber or Sidecar. If you are in the general market, you are at risk. Understand the differences in markets and price points. It’s like selling a hotel room. With that said, Uber has made huge mistakes with sliding price scales. Limos have fixed rates that will not change overnight just because there is a football game going on, short of the Super Bowl. It is urgent that limousine operations figure out what differentiates them from the greater segment, from the new market competitors. It’s usually not availability. It’s usually price, and it’s also to a great extent driven by the new segment in lifestyle which is the younger executives and travelers today. I think limo companies need to pay attention to the generation coming up. Those who buy luxury often will get it no matter what the age. Uber and Sidecar are having a greater impact in the taxi industry than in the limo industry, but limos are still feeling the effects. A lot of that is about availability. If I have a short term need and I call for a limo, they might say they have trouble getting a car because it’s short notice. But that’s not my fault; that’s my need. At that point is where these cabs jump in and snap you away. Limo companies should be competitive for more short-term needs, such as when I get out of a meeting early and have another one. I need a short-term ride because I’m not comfortable with the cab system or Uber. But If I can’t get a limo, I’m left with those two choices.
LCT: How should the hotels/hospitality industry stay competitive against such app-based services as Airbnb?
Fuller: The issue there is virtually the same. You don’t have the same safety requirements. In hotels, that’s very important, such us having fire sprinklers. We have not lost a life in a managed Marriott Hotel in the last 40 years. With Airbnb, you don’t have the security, sprinkler systems, insurance and levels of service that you do with hotels. Likewise, I don’t think Uber is bonded in any way shape or form. There is a liability issue. In established hotel companies with brands, there can be mistakes, but brands are checked on so regularly and challenged to maintain customer service levels. Hotels have several checks and balances to make sure the hotel is doing well, and if it’s not, that hotel is gone. The quality of the individual deals with training, experience, and background support. Branded hotels and limousine companies have those advantages over Airbnb and a TNC.
LCT: What major global travel and hospitality trends should owners of chauffeured transportation companies be prepared for?
Fuller: The tops trends are the globalization of visitors coming to the U.S., and the growth in international travel worldwide. The growth is coming from emerging markets, such as China, which is supposed to have 200 million travelers per year coming from mainland China. Other countries are growing, such as India and Russia. Everyone is traveling more. And China is always referred to because of its size and scope, but you will find people from smaller companies in smaller volume traveling because of a high degree of interest in what’s happening in the world today. More and more annual income in the middle classes and up is now spent on travel. Middle classes are growing worldwide. China expects to have 600 million people in the middle class by 2020, and other emerging countries from Africa, the Middle East, Latin America, and Asia are all growing with opportunities to travel. When people reach middle class, there is a trip in the offing. The major chauffeured customer is the global traveler who doesn’t have the confidence to rent a car but is not on a bus tour. That’s where business can grow.
LCT: How does this affect the limousine industry?
Fuller: We will see more limousine business, just not as extravagant as before. But people want the convenience of a limousine to make business more effective and efficient. Limousines offer time-saving opportunities for business. It’s not cash out of pocket. It’s a billed item that can be handled. Limousine vehicles are more comfortable for multiple uses and offer more safety factors. Vehicles need to continue to be safer, with more focus on that. There is real value in making sure the industry has high standards for safety. With the changes in the economy and opportunities, branding is also critical. Once I leave this area, I go with a branded company. Those branded company networks will become increasingly more important, especially ones that use technology well. Branding and consolidation happened in the hotel market a long time ago. It’s happening in the limo industry, but there are still a lot of different [companies] out there right now.
LCT: What is your advice on pursuing solid business relationships in a more global business environment full of social media, gadgets and distractions?
Fuller: You need to continue to market to a high volume of potential clients through direct sales. It’s not just about going on the Internet. I’m a big proponent of selling in global markets, other than the U.S. The U.S. is getting out of the hands-on selling mode, which is wrong. If you have a high-volume customer, you need to be out there and have the relationship with them. With social media, you try to pick up the business customer. If you have branded networks, you can use social networks to your advantage, for B2C and B2B. Without that, an operator is limited in what can be done. Running an ad in China for a local company won’t work. It’s a waste of money. But if you own a destination, like Raleigh, N.C., for example, and you have a good fleet and affiliate network, you can use social networks to build your brand. But make sure you own the local market and have local sources doing booking for you. Everyone runs to social media channels to advertise, but if you don’t do branding, you are somewhat stuck.
LCT: What are the most vital topics of continuing education/training for service providers in the business travel and hospitality sectors?
Fuller: Service education for a more global market and service education for your staff. Understanding service standards is critical. Clear business practices are very important in this industry, for both people management and assets. With the limousine industry, you have a cluster of entrepreneurial and corporate franchising models. Each of those are in play and can be used in combination with a network or company, and an owner has to be able to do the analysis of the combination of assets (vehicles), labor (chauffeurs) and revenue management to just figure out what is their best business model instead of reacting to the market. Because of new competition that did not exist before, you can’t just react to the market. The education skill in the company office must be there for revenue management, which we have not seen much in the past. We have that in airlines and hotels, but we’re not sure how deep it goes in the limousine industry. On the educational side, it’s also a matter of understanding the changes in the products out there and the ability to provide more comfortable vehicles. Party buses have gotten more sophisticated. The builders have developed exciting and unique products, so the owners have to put pressure on the sources to ensure the limos are there.
Related Topics: business travel, business trends, corporate travel, Global operators, ILCT 2015, industry education, industry events, industry trends, international business, keynote speakers, limo tradeshows, tradeshow preparation
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