NOV. LCT: What operators can learn about building a steady client base from a leading fleet vehicle seller.
BOSTON — Ask Scott Solombrino about any industry topic, whether business or political, and you’ll get a thorough and often entertaining answer. There aren’t many simple yes/no responses from someone who will talk about anything.
At the 2012 LCT Leadership Summit in Puerto Rico, for example, the CEO of Dav El Chauffeured Transportation Network held an entire meeting room spellbound and tickled for an hour with off-the-record analytical riffs and wisecracks on politics, as he batted around questions. He can deliver a state-of-the-industry summation almost on command, or at least sans notes and scripts. He speaks, without any awkward pauses, to massive ballrooms of attendees at the annual Global Business Travel Association, for which he serves as President of the Allied Leadership Council. As a longtime National Limousine Association board director and founding member, Solombrino can opine about any topic at hand, and often redirects and steers the discussion at board meetings.
Such talents are only fitting for a limousine industry and business travel leader who chauffeured his first limousine in 1978 while studying government and communications at Suffolk University. Solombrino soon got his big break after he went to New York and made a pitch to David Klein to become the Boston franchisee of Klein’s New York-based “Dav El” limousine company, then the largest limo service in the U.S. He bought the company in 1987, and grew it into one of the leading global chauffeured transportation networks.
His legendary gift of gab is backed up by the substance of a three-decade career touching upon all aspects of business and ground travel. His intense focus and discipline enables him to average 180 days on the business road per year. You could say he’s picked up a few pointers along the way, which he can recall and expound upon in vivid detail.
Solombrino chimed in recently for a roulette wheel of a conversation with LCT, his first extended interview since the Great Recession. He can wax profusely about whichever topical number the question ball lands on. The topics provide an apt summary of the key trends and challenges facing the corporate chauffeured transportation sector:
Uber And On-Demand Mobile Apps
Uber is creating an unprecedented paradigm shift in the chauffeured transportation sector, one that might bring some short-term pain but long-term opportunities, Solombrino says. You cannot change a climate of instant gratification based on informed real-time consumer commerce always available on wireless gadgets, he adds. “I can’t think of any innovation in last 35 years that has shifted the mentality of travel users quicker in ground transportation than Uber.”
While Solombrino believes the core chauffeured clients will stick with traditional reservation based service, younger generations weaned on mobile apps and the Internet will want more flexible on demand service as they get older and move up the corporate ranks, he says. “The high end market will get smaller for chauffeured car while the new younger, high-end [clients] will become more demanding. . . I predict most operators will be offering a similar Uber-like product to end-user customers to meet the public’s demand for ease of use, and the process will improve the overall ground transportation experience.”
The drawback to Uber is the “complete lack of quality control, complete lack of understanding of who is driving the vehicle and what their background and record would be,” he says. He warns there are still many twists to come for Uber, with lawsuits and regulatory inroads brewing that could set new precedents and practices in the mobile app transportation market.
But the concept and usage of mobile on-demand app technology will stay, he emphasizes. “The good news for chauffeured transportation is that many people have upgraded from taxi and are paying a higher price point to use a Sedan Magic or Uber-type product. We’re actually selling up in the marketplace. It’s creating end-user customers because of the ease of how it is booked and transacted.”
On the controversial and growing practice of limousine operators supplying Uber, Solombrino remains neutral: “The financial meltdown proved one thing: You must do what you have to do to generate revenue and make a profit. I have no problem with anyone using fleets for Uber as long as you do it legally and follow the law. Anyone who tries to dictate that to other people doesn’t know what capitalism is about. People have to do what’s best for business. Who am I to say what one operator can do versus another?”
Hand-in-hand with mobile apps comes dynamic pricing. It requires operators who can consistently meet demand levels at peak times, Solombrino says. “The hotel market has had dynamic pricing, so why doesn’t [chauffeured] pricing go up between 5 a.m. to 9 a.m. and 4 p.m. and 8 p.m.? I think it’s a new way to look at the market. We may start to see corporate contracts get written with dynamic pricing, as long as you can guarantee delivery on demand.”
The key questions, he says, include: “We have to rethink how we calculate what we are getting paid here. Will corporate America allow us to do what rental, hotel and airline industries have done for years? Is ground transportation big enough to be able to manage dynamic pricing like the hotel industry? What does the low end look like when it is slow? Are you costing yourself more money than you are making to meet that demand?”
Business Travel Trends
Overall business travel purchasing and procurement has gotten flatter and less exclusive, with more corporate positions being involved in the process than just traditional travel managers, Solombrino says. Buyers look for more consolidated contracts and services, with travelers expecting information in real time. “We’ve seen the advent of doing everything online, so it’s online for hotels, airlines, chauffeured car, and rental car. The online stuff started with the GDS systems of airlines and morphed into the Internet, where everything is managed from tablets and smartphones. That has been a remarkable paradigm shift in the way the average consumer or corporate traveler views travel.”
Solombrino brings a libertarian sensibility to regulations: Government should regulate for certain safety measures, but nothing more. While the merits of that approach would make for vigorous debate in the industry, his views, honed from decades of dealing with government interferences, cut to the core. The chauffeured transportation industry is the most overregulated industry in all of ground transportation, he says. “Regulations cost money and cause problems, and suppress the ability to operate a business. I’ve never seen a regulation I liked. I think the market should be open and free. You should regulate safety, but not anything to make it more difficult to operate a chauffeured car operation. Regulation never goes down. They always find ways to charge operators more, not less.”
Legitimate limousine operators who think regulators will ward off the illegal “gypsy” operators are buying into a “fool’s argument,” he says. Governments never have the time, money or budgets to do what the industry expects, he adds. “The customer ultimately does regulating for you. If someone is illegal with an old car and a bad driver and no insurance, a [corporate client] will not do business with you. I don’t worry about hustling. If someone is stupid enough to get in a car in New York City at 1 a.m. after a flight from Singapore with a guy who says the ride is $10 and he’s in a beat up car, whose fault is that? If someone chooses that, then that is their problem because they did not make an intelligent decision. . . Would you buy a Rolex watch off the street for $100? No you wouldn’t, because you know better. Gypsies prey upon unsophisticated travelers and I don’t lose sleep over it.”
Boston Coach/Harrison Global Deal
The chauffeured transportation industry lost some of its stature in the eyes of corporate America and Wall Street when Fidelity Investments sold Boston Coach to Harrison Global, Solombrino says. The deal closed July 8, uniting two chauffeured powerhouses based in the Boston area. “Fidelity owning Boston Coach was a very positive thing for the chauffeured transportation sector. Fidelity is one of the world’s number one brand names and one of the largest financial institutions. When they took notice of our boutique industry, it only increased the value and legitimacy of every chauffeured car company in business.”
While the Boston Coach brand will remain but be run by Harrison Global, he praises the new owners and CEO Russ Cooke, who was CEO of Boston Coach from 1995 to 2005. “Having Russ there running it is the most logical thing they could have done,” he says of his competitor. “It will be well run by someone who has run it before. We wish them the best.”
Dav El Chauffeured Transportation Network is planning a major, “complicated” technology overhaul and rollout set for Sept. 1. While considered one of the original founders of the modern day organized limousine industry, Solombrino is a realist who believes the limousine industry should accept technological advances and changes and find ways to adapt to them. “We’re going to a competitive product to Uber and change our back end that will really improve how we are operating into the future. We’re getting out of the tech business and letting someone else with deep pockets manage our tech growth development. It will be a sea change for the whole company.”
Next Limo Generation
Nothing brings Solombrino more satisfaction than seeing his two young adult sons work in his company, whether they stay there or not. Anthony Solombrino, 27, works in the global reservation center, while Zachary, 22, works in corporate, special events and airport-related services. Both have accompanied their father to International LCT Shows in recent years.
What’s more, Solombrino’s two older stepdaughters and a stepson worked at Dav El during their younger years before pursuing other life plans. “All of them had jobs here. All five kids have come through the business at one time or another,” he says. “I adore my kids and am thrilled that I can spend time with them. I’m not sure if I wish this business on them. It’s a hard grind 24/7 business, and I would be thrilled if they went on different career paths. But I’m just glad to have time with them while I’m here.”
Related Topics: business travel, business trends, Dav El Chauffeured Transportation, Global Business Travel Association, industry trends, mobile technology, New England operators, Scott Solombrino, Uber, vehicle apps
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