Spending is estimated to advance another 7.1% in 2018 and will expand to $1.7 trillion total by 2022.
LAS VEGAS — An improving economy and new technologies can create more opportunities, but how well an operator meets customer expectations determines success, according to the annual 2017 State of the Industry Address that opened the International LCT Show March 13.
A limousine operator looking toward the long term should take one action ahead of all others: Befriend mobile technology to ease booking and service for clients. The industry is experiencing a big shift caused by technology and market cycles, said LCT Publisher & Show Chair Sara Eastwood-Richardson, who summed up the latest industry trends in the presentation.
In-Depth: For a white paper, power point, and audio recording of the presentation: www.lctmag.com/soi-2017
Sara first assured the audience the wave of company sales and mergers in the last few years is a cyclical market consolidation, as some companies adapt and grow and others choose to bow out.
After the worst of the Great Recession in 2010, the industry had fewer than 6,000 operators. Now, more than 11,000 are in business, and because the limousine industry is an easy-entry market, it has more pronounced cycles of expansion and contraction. Due to increased competition, some operators are making less money. That leads to consolidations. Companies wanting to stay in the game must invest in infrastructure, while exhausted companies choose to be sold, merged, closed, or passed on to a new generation.
“There’s movement afloat, but a cautionary tale: Don’t mistake the natural ebb and flow of our industry’s head count with false news our entire industry is dying, or we’re all a bunch of sheeple heading for the fatal cliff. That is absolutely not the case,” Sara said.
With those fears addressed, Sara focused on those operators wanting to stay in business and grow.
Chauffeured services must be client-centric first and build more business by meeting the needs of business travel managers and clients now accustomed to Uber-style mobile technology conveniences, she said. That means making technology a “best friend” and streamlining operations to ease all the steps in the booking and reservation process. Above all, listen closely to clients and adjust service to meet them where they’re at. “Your future is to make things easy for your customers,” Sara told a packed ballroom at the Sands Expo. “You’ve got to love technology. You’ve got to geek out on this stuff.”
The one thing Uber did to revolutionize the for-hire transportation industry was make it easy. While they didn’t invent for-hire service, they identified a clunky system for logistics that was difficult to deal with. Taxis were sketchy on just about every point of the experience, including booking, pick up, drop off, payments, and customer service.
“We spend a lot of time focused on Uber – and it’s important to follow them and to stay on their compliance tail,” Sara said. “However, whether Uber stays or goes, it’s no matter. They have successfully changed the consumer’s expectations of for-hire transportation. Until the next best thing, the Uber technology sets the bar for bookings.”
The two most crucial aspects of your business are the booking and the ride. Uber’s technology has created a mindshift in the consumer. They love the ease of the Uber app. “Whether or not your client has come out and said it does not matter, the Uber app is a painless experience.”
Regardless of anyone’s feelings toward Uber, operators still need to invest in mobile app technology that mirrors Uber’s, since it came first and set the bar of expectations, Sara said. While operators should grow revenues via mobile app technology, they first need to “find the easiest means for booking, deploying, and executing your service for your customers. If you work this in the reverse, you may win the battle and lose the war.”
The term “chauffeured transportation operator” means many things to a lot of people, said Sara, with the word “service” yet to be clearly defined by this industry. “Therefore, you have companies only a click above a taxi service calling themselves limo operators. On the extreme opposite side, you have companies that are high-touch, high-tech, and have immaculate fleets and staff. In the middle, you have lots of variations of service.
This creates brand confusion for the industry and affects the overall business model’s image, she said. “This must be fixed. We need to identify who we are, and we need to do that today because our goal this year is to make sure doing business with our industry is easy and consistent.”
The Coming A.I. Revolution
Operators also should start thinking about artificial intelligence as a serious next step in customer service, Sara said. AI “reps” don’t sleep, speak different languages, can interpret client moods, and provide instant answers. “So no more voice mail, no more hold buttons, no more phone prompts — and no more employee challenges in the highest burn-out aspects of this industry.”
AI will be not only be a major mark of distinction for the industry, but it will also quickly become an expectation as call centers replace older systems with artificially intelligent voice systems and bot technology on their websites as a more efficient way to serve customers. Thanks to AI, chauffeured clients soon will not tolerate the “old world way,” she said. Just as when the Town Car body style changed from a boxy frame to the more rounded one forcing operators to upgrade fleets, that is what AI is about to do to the customer service industry.
Opportunities for Operators
• Road Shows: IPOs are expected to be strong in 2017, except for Uber which appears to have no plans this year of going public. The outlook for stocks is positive, but which sectors of the market do better or worse partially depends on policies the new administration implements.
• Health Care: Obamacare is dying, but the pharmaceutical industry should do well this year. Any threat of increased regulation is all but gone now, given the Trump administration’s pro-business stance.
• Military: Expect military-related companies to do well with the administration calling for more military spending.
• Fuel: A pro-fossil fuel administration could mean more drilling, which will increase global supply.
• Infrastructure: Anyone driving American highways, bridges, or tunnels knows the country’s infrastructure desperately needs repair. The new administration wants to spend heavily in this area. Materials companies should do well.
• Business Confidence: President Trump’s promises of deregulation and tax reform have boosted business confidence. About 300,000 jobs were added to employment rolls in the last month, and confidence is flowing throughout the stock markets.
Economic & Market Trends
Sara buttressed the latest trends with updated statistics. “The good news this year is there are no negative reports on the economy, for business travel, and for leisure travel. I have nothing but optimism for you.”
• Overall, the economy looks to speed up this year, growing 2.3% versus 1.5% in 2016, according to estimates from PNC Financial Services Group.
• Compared to five years ago, business travel, comprised mostly of airport runs, is up more than 15% and overall U.S. domestic business travel spending is projected to reach $310 billion in 2017, according to the Global Business Travel Association.
• Demand from the meetings, conventions, and group travel sectors has been increasing for the last five years and is projected to grow in 2017 by 10% compared to 2016, according to Carlson Wagonlit.
• Thanks to on-demand services, charter jet companies like PrivateFly are booming. The demand for private jets is increasing this year in the finance, oil and gas, sports, and entertainment sectors, and among high-net worth leisure travelers. This trend is also spreading into the mainstream, especially among tech workers.
• Look for gas prices to drop as traditional fossil fuel energy is favored by the new Trump administration. This could mean more drilling by major oil companies that boosts global supply and drops crude prices. The price per barrel has dropped from more than $100 in mid-2014 to less than $50 now.
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