Operations

Entering Fastest Growing Markets Requires Persistence and Grit

Martin Romjue
Posted on December 20, 2012

The nonstop growth in inter-continental trade and business travel will yield more business opportunities for chauffeured vehicle operators, despite temporary setbacks from economic slowdowns and debt crises.

In this environment, U.S. operators who think globally can benefit from the increasing number of luxury transportation clients heading to other continents to conduct routine business.

Diverse market types
With wider globalization, two general foreign markets for chauffeured transportation have taken shape:

  1. Mature cities and nations that have established business ties with the U.S. going back decades. These would include such perennial foreign destinations such as London, Paris, Frankfurt and most major Western and Central European cities and nations.
  2. Emerging markets sparked by natural resource discoveries such as oil and natural gas, the migration of labor markets, lower, flatter tax structures, and greater freedom to trade — all accelerated by Internet-driven commerce via laptops and smartphones.

It is these emerging markets that are the ones to watch and study, as they bring new opportunities but with some operating challenges that require close attention to details and cultural differences. Key emerging markets would include: New Delhi, Mumbai, Hong Kong, Shanghai, Beijing, Tokyo, Singapore, São Paulo, Buenos Aires, Hungary, Poland, Ukraine, Belarus and Russia, to name a sampling.

Of these, China is projected to match or surpass the U.S. within the next five years in global travel spending, according to studies by the Global Business Travel Association (GBTA).

“There are huge opportunities for successful operators to grow outside of the U.S.,” says Scott Solombrino, CEO of Boston-based Dav El Chauffeured Transportation Network and the President of the Allied Leadership Council of the GBTA. “We look at these as growth opportunities and growth markets as well with a built-in customer base.”

Cardel Global CEO Karim Maachi sees stronger chauffeured demand across Europe, but especially in emerging markets such as Poland, Hungary and the Czech Republic.
Cardel Global CEO Karim Maachi sees stronger chauffeured demand across Europe, but especially in emerging markets such as Poland, Hungary and the Czech Republic.

European gainers
Within Eastern Europe, the nations of Hungary, the Czech Republic and Poland have been leading destinations this year for Cardel Global, a Paris-based chauffeured transportation company, says CEO Karim Maachi, also the co-founder of EuroLimousine.net, a consortium of affiliated European luxury transportation providers. “We increased our volume up to 300% this year and it seems that these three regions are going to be a frequent destination for us.”
Cardel Global is seeing a return to 2007 sales volume levels in its affiliate business with Germany, Scandinavia and Switzerland, Maachi says. Much of the demand is being driven by investment banks and hedge funds.

“The fact that our clients are traveling a lot to these countries definitely reflects new markets,” Maachi says. “We also receive more requests from companies based in Czech Republic and Poland that travel mainly in France and the U.K.”

Among European chauffeured markets overall, the nations of Germany, United Kingdom and Switzerland have generated the most chauffeured transportation business because they generally have fared better economically during the European currency and debt crisis of recent years, Maachi says.

Diligent with details
Solombrino, whose company maintains a vast and deep global chauffeured transportation network based on years of developing relationships and constant vetting, strongly advises operators to do due diligence when affiliating or conducting chauffeured business in emerging markets.

“You really have to do your background [checks] and homework. You need to know who is driving, what the capacities are, safety inspections, licensing, and proving whether or not someone is a felon. You must have local partners on the ground who can walk you through background systems available. It’s not as simple as in the U.S. There are holes in the system when you travel abroad,” says Solombrino, whose packed global travel itinerary included Hungary and Argentina this year.

Courting connections
The only way to build those overseas bridges with reliable affiliates is through solid relationships, says Randy Snider of Worldwide Chauffeur, a Vancouver, B.C.-based affiliate consultancy that keeps large databases of operators in cities worldwide and connects affiliates in different countries. Snider works like a limousine industry version of a high-end matchmaker, intensely mining and correlating detailed information to generate the best business connections. “You never stop calling. That is the best answer to winning an affiliate account. You have to get to know them to build a relationship with them.”

Snider estimates it takes an average of nine phone call conversations with a foreign transportation provider to open the door to an affiliate relationship. Snider will be representing companies from around the world at the 2013 International LCT Show in Las Vegas, where he will sell access to an exclusive catalog of international operators vetted through his research and networking.

“The greatest reason [operators] fail to get business is because they didn’t take the time to build the relationship,” says Snider, based on his research. “They stopped because somewhere in their minds they began to think the efforts they put in were hopeless. Persistence is important in the affiliate business. It takes time to build that relationship. It takes a certain kind of business [person] capable of looking after it.”

Global travel expert and Dav El CEO Scott Solombrino says a resilient and seamless global chauffeured transportation service takes years of building relationships, vetting affiliates, and constantly updating and reviewing the details of arrangements, especially insurance and liabilities.
Global travel expert and Dav El CEO Scott Solombrino says a resilient and seamless global chauffeured transportation service takes years of building relationships, vetting affiliates, and constantly updating and reviewing the details of arrangements, especially insurance and liabilities.

Global guidelines
Solombrino stresses there are some general rules and precautions that U.S. operators must take when doing chauffeured business in diverse emerging markets. He says you need to have your act together and know what you are doing:

  • Insurance: Provide additional insurance coverage for clients, depending on the specific market. The riskier the nation or region, the more you must make sure policies cover necessary specific risks. For example, “Russia is an issue because of crime and a lack of control. You can’t manage liability in Russia like you can in France.”
  • Liability checks: Walk through all liabilities and identify any potential loopholes with affiliate providers step-by-step. “You are as liable as the end provider is because [your client] booked through your system.” Do your legwork and make sure you can handle all contingencies and risks. Liability is not limited or avoided by going through a third-party broker, he warns. Also, corporations depend on operators to do such legwork in conjunction with their compliance departments. “There is contingent liability all over the place,” he says.
  • Security: In many emerging markets, particularly in Third World countries, clients will need security in addition to a chauffeured vehicle. Solombrino emphasizes that a security guard or detail must be completely separate from the chauffeur. Chauffeurs who are trained security guards are useless in a confrontation, he says. “Chauffeurs cannot be security people at the same time. They can’t drive and protect you. Don’t have an armed driver. It’s a silly concept, a myth.”
  • Differences: Conducting chauffeured business abroad is not like doing it in the U.S. Each nation or city has very specific issues and characteristics, and arranging affiliate connections is not a simple black-and-white matter. The congestion of some world cities alone, such as Buenos Aires and Hong Kong, can be mind-boggling, Solombrino says.

Packed potential
Overall, the outlook is bullish for chauffeured transportation in new and growing economic markets. Snider, the consultant, estimates that only about five percent of limousine operators outside of the U.S. know about the International LCT Show, the largest limousine trade show in the world that draws more non-U.S. operators than any other industry gathering.

Solombrino adds, “The emerging markets are still emerging and moving more rapidly than mature markets. It’s hard to get around in India or China without having a car and driver. It’s a necessity in other parts of the world for U.S. corporate travelers going to do business.”

Related Topics: affiliate networks, business travel, client markets, Global operators, international, international business, Karim Maachi, Scott Solombrino

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