That burning question is front and center at the upcoming LCT Technology Summit.
Diversification is here. If you want to be successful, you’ve got to be all things to all people. Executive transporters (vans), limousine coaches (minibuses), and touring coaches (buses) are working their way into the fleets of many operators. Others have established farm-out relationships with operators that have existing executive transporter, limousine coach, and touring coach fleets.
According to Tom Martin, president of 707 Industries in Elkhart, IN, an operator has to analyze his market niche, expertise, and client base.
“Diversification is equal to expansion,” he says. “If an operator has vehicles that are successful servicing intended markets, he really doesn’t need to diversify. You need to diversify if you want to grow. Simply buying a vehicle is not enough. You need to buy it with the intention of growing your business. Buying an executive transporter, limousine coach, or touring coach says that you’re after new and different customers. You don’t necessarily want to diversify to service your current customer base. They are already happy. Diversification is a commitment to growth.”
Greg Dick, owner of Lima Limo in Lima, OH, and Ohio Limo and Coach, a limousine, executive transporter, and limousine coach dealership, says the limousine coach market is definitely up and coming.
“The limousine has its own niche and its own image,” says Dick. “Coaches also have their own niche. In a sense, the 120-inch limousine is still perceived as a party vehicle. The unique thing about the limousine coach is that you can actually market this vehicle as a seven-day-a-week vehicle. You can still use it as a party vehicle or you can use it for corporate work. The Wall Street image has changed. Corporations can transport large numbers of people comfortably in a limousine coach, just as they can in a limousine. However, the limousine coach has a much different image.”
With executive transporters and coaches playing such a prominent role today, there are several issues operators must address to maximize this part of their business. How does an operator effectively market his executive transporter, limousine coach, and touring coach service? Who rents these vehicles? What are appropriate hourly rates? Do maintenance practices differ from a sedan or limousine? What kind of operating costs are involved for each vehicle?
These are some of the issues you have to strongly think about if you are considering integrating executive transporters, limousine coaches, and touring coaches into your fleet mix.
MARKETING APPROACHES DIFFER
Operators nationwide have experienced success with a wide range of marketing approaches. “I spend most of my time marketing my shuttle buses and charter buses to destination management people,” says Brent Bell, operations manager for Bell Trans in Las Vegas, NV, a company with 288 vehicles in its fleet that includes 95 coaches. “I’m in constant communication with destination management companies. We do a lot of tour business.”
David Nock, general manager of International Limousine in Washington, DC, and Baltimore, MD, a company that operates eight executive transporters and 32 coaches, relies on his company’s established reputation.
“We do very little advertising,” he says. “Most everything we do is word of mouth. We’ve been around for about 16 years and we get a lot of referrals.”
Charlie Horky, owner of CLS Transportation in Los Angeles, New York, and Las Vegas operates six executive transporters and four coaches out of his Los Angeles office and 17 executive transporters, from his Las Vegas location.
“Our marketing strategies for our larger passenger vehicles are targeted toward large groups and conferences,” he says. “These are our contracted hotels, incentive companies, destination management companies, and third party planning services. We have found this to be a very successful revenue producing market over the past few years.”
“I market my van and bus service just like I market my other services,” says Bob Euler, president of King Limousine in King of Prussia, PA, who has nine executive transporters and 14 coaches in his fleet. “I market via advertising, salespeople, managers, and reservationists.”
Craig Del Fabro, owner of Indy Connection Limousines in Indianapolis, IN, owns three executive transporters and 12 coaches. Del Fabro sells his executive transporter and coach service to his existing corporate clientele. “I sell airport and shuttle service to our corporate clientele who already use our limousine and airport services,” he says.
OPERATORS USE DIFFERENT METHODS OF ADVERTISING
If you decide to make that financial commitment and purchase an executive transporter, limousine coach, or touring coach, you have to also commit yourself to marketing your expanded services.
“You cannot just decide to diversify your fleet and think it will automatically make you money” says Martin, whose company manufactures the “Executive Carrier,” a vehicle that competes with regular limousines and features a high-end interior that includes a conference table, amenities for an office, and is a high-level corporate vehicle. “After you decide to diversify, you must market the new vehicle effectively.”
Alan Fisher, co-owner of London Livery in Atlanta and New Orleans, believes Limousine & Chauffeur Magazine is the most effective marketing tool for an operator looking to get the word out on his executive transporter and coach business. He also recommends the following marketing strategies:
Advertising in a city’s convention planner that is published by its Tourist Commission. Advertising via direct mail. Donating service to high profile charities in exchange for an equal amount of publicity. Advertising in high income publications such as opera or symphony programs, Junior League, City Business Journal, and synagogue or church directories.
Bell includes all three types of the services his company provides in all of his advertising materials. “We provide sedan, stretch limousine, and shuttle bus services,” says Bell. “I use color brochures. However, most of my advertising budget is used on our Yellow Page advertising. I also do some advertising at the Las Vegas airport on the video wall behind the baggage claim. I’ve got a flashy commercial that shows what you have to do to get to a Bell Trans vehicle. I also advertise on top of the luggage carousels on the reader board. We also have a Web Page where we promote all of our services including our coaches.”
Nock also advertises in the Yellow Pages. “The only advertising we do is in the Yellow Pages,” he says.
“Even that ad is small and inexpensive. I’ve tried airport advertising and it really didn’t work for us.”
Euler’s advertising consists of direct mailers, the Yellow Pages, and corporate sponsorships. “I also market to the convention centers and the sports complexes,” he says.
Del Fabro advertises in the Yellow Pages, as well. “We really don’t advertise our services except in the Yellow Pages,” he says. “We sell our fleet to existing Customers or create self-sustaining markets for our coaches.”
Horky maintains relationships with hotel sales and conference service departments for direct referrals. “We have employees at our company that focus on this market,” he says. “Our corporate brochure also has a section dedicated to this market. The brochure has really been effective and has been a tremendous marketing tool. It lets prospective clients know what types of vehicles and services they can expect for their meetings. We have been able to create a tremendous amount of repeat business from meeting planners who have utilized our services for their past programs.”
Charles Wisniewski of Teddy’s Transportation in Norwalk, CT, utilizes 10- and 15-passenger executive transporters in his business. “When we initially began to diversify our fleet, we targeted our markets, mostly through print media, and were delighted with the response.”
Wisniewski has developed a unique marketing method for his executive transporters. “When I bought my first van, the best source of sales was my competitors,” he says. “I designed a postcard and did a direct mail campaign to every member of my association, the Limousine Operators of Connecticut (LOC), and the LIC of Westchester. Most of my business was generated from other limousine companies via referrals.”
According to Martin, if you’re going to provide transportation to a one-time customer, then it doesn’t matter what type of vehicle you use. “That is why effective marketing is so crucial,” he says. “If you show a client something special, the customer will come back.”
Martin also says that when an operator is considering purchasing a new executive transporter, limousine coach, or touring coach, he must a consider vehicle versatility. “You cannot buy a vehicle and have it sit while you are waiting for a specific telephone call. If an operator is diversifying, any vehicle he is considering must be versatile and those characteristics must be emphasized in his company’s marketing efforts.”
RATES DIFFER IN CERTAIN REGIONS OF THE COUNTRY
Rates vary significantly across the country. Factors such as climate and operating costs determine pricing.
Bell Trans charges $36 an hour for its 20-passenger coaches and there is a one hour minimum. “Charlie Horky’s company, CLS Transportation, is my competitor here in Las Vegas. He runs all 12-passenger vans. So we kind of complement each other. If people want a van, I’ll refer the business to him. If the client wants something bigger, he’ll refer that business to me.”
Nock provides discounted pricing for clients who frequently utilize his executive transporters and coaches. “Our average hourly rate for vans is $45, for cutaways is $55, and for minicoaches is $60.”
Nock cautions operators to be sure their executive transporter and coach pricing is in line with what it takes to operate the vehicle. “Three motorcoach companies have recently gone out of business in this district because of their pricing,” he says. “You can’t buy a $325,000 motorcoach, charge $50 an hour, and expect to stay in business. If your pricing is right, this type of work is certainly profitable. However, be sure your pricing is in line with what it takes to operate the vehicle. Many motorcoach operators do not. Coaches that seat 47 to 50 passengers should be running at $125 an hour.”
Euler’s average hourly rates for a 14-passenger limousine coach is $45 and for a 21-passenger limousine coach is $55 an hour. “My 36- and 47-passenger coaches are rented by the day,” he says. “I get $500 to $700 a day for those vehicles. I have a three hour minimum on my smaller buses and vans.”
Appropriate pricing is extremely important because you must have the resources to be able to efficiently operate and maintain your executive transporters and coaches.
“Our operating costs are 88 cents per mile,” says Bell. “That’s probably going to be a little bit high compared to other operators in the country because of the costs associated with our air conditioning and the additional generators we use on our buses. That figure includes everything from gasoline to repairs.”
Nock estimates that executive transporters and coaches can cost up to $1.25 per mile to operate. “My vans and buses run me anywhere from 50 cents to $1.25 per mile,” he says.
Fisher’s monthly costs range from $1,300 to about $2,000. “Our approximate monthly operating costs for our minivans is $1,300, vans are $1,500, minibuses are $1,800, and the Luxor is about $1,950,” says Fisher.
According to Del Fabro, his touring coaches are cheaper to operate than his limousine coaches. Indy Connection’s executive transporters cost approximately $1.15 per mile, limousine coaches cost $1.50 per mile, and its touring coaches run $1.40 per mile.
“Minibuses cost more to operate because they are built on a smaller chassis,” he says. “You add considerable weight to the chassis when the minibus is complete. You also have to take the weight of people into consideration. All that extra weight creates all kinds of front end problems. Motorcoaches are solid and built to last forever.”
“When all is said and done, you only get to run a minibus two or three years and repair and maintenance costs are higher over that time frame,” continues Del Fabro. “You can run a motorcoach for 20 years and the cost to operate the bus is much less the first several years you own it. Even when you begin to experience maintenance costs, they are not nearly as high and you can amortize that cost over the life of the bus. I got into the bus business in 1992 and it has been an education. I was naive in the beginning, but I have learned a lot.”
PREVENTIVE MAINTENANCE CRITICAL
“Take care of your vehicles and they’ll take care of you,” says Euler. “Every 3,000 miles do a complete check of fluids, visually check everything, inspect your brakes, check, your tires, etc. It is not necessary to do a tuneup every 3,000 miles, but you should check everything. If a tuneup is necessary, have one done.”
Bell services his coaches every 4,000 miles. “I service my minibuses similar to my limousines,” he says. “A good oil change program is very important. We are on 4,000-mile intervals.”
Bell has installed a separate generator system on his 20-passenger coaches. “We have a separate generator just to operate the air conditioning units because it gets so hot in Las Vegas,” says Bell. “In climates like Las Vegas or Phoenix, operators should consider this for their buses. Otherwise, trying to operate the air conditioning with the regular equipment just puts too much strain on the generator. You just won’t get cool air. The generator will end up breaking down or will just be unreliable.”
Maintenance checks are conducted by both drivers and mechanics at CLS. “We check tire pressure, oil level, lights, and brakes on a daily basis,” says Horky.
Fisher suggests following the manufacturer’s recommended preventive maintenance schedule. “You should also consider trading in your van or bus every three years or 150,000 miles,” he says.
Del Fabro has a preventive maintenance program executed every 7,500 miles. “Front-end alignment on a regular schedule will save big dollars on tire replacement,” he says.
Nock gives his vehicles a thorough check every 5,000 miles. “My preventive maintenance program includes a tuneup, oil change, brake check, etc. Many vans and buses can go through brakes in 3,000 miles.”
Another expense operators must consider is executive transporter and coach storage. According to Euler, executive transporter and coach storage can be very costly. “We have our own facility, garages, lifts, and mechanics,” he says. “We house all of our vehicles on our two acre site. It is very expensive. We also employ high end diesel mechanics. They work on the bigger coaches. I purchased two acres and a 15,000-square-foot building.”
Fisher also houses his luxury coaches. “We house our vehicles at our new facility which used to be a Greyhound maintenance facility,” he says. “Our luxury buses are under cover and the regular minibuses stay outdoors.”
In the Las Vegas climate, vehicle housing is not a concern for Bell. “In our climate, which is very dry, we don’t have to house our vehicles,” says Bell. “We keep our vehicles right on the facility’s parking lot. We house our limousines in the parking garage, but we keep the buses on the exterior lot.”
Nock chooses not to house his executive transporters and coaches because of the expense involved. “We don’t house our vans and buses. We have a huge garage we use primarily for our limousines and sedans. We will house 14 or 15 of our minivans in the garage if there is snow in the forecast so I don’t have to shovel them off in the morning. It is just too cost prohibitive to house vans and buses.
That burning question is front and center at the upcoming LCT Technology Summit.
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