Operations

How To Lure More Luxury Charter Business

Martin Romjue
Posted on January 16, 2018
(LCT photo)
(LCT photo)

ATLANTIC CITY, N.J. — Operators getting into or pursuing more of the motorcoach business can already tap some built-in benefits.

Most reputable chauffeured transportation companies offer luxury standards, high-touch customer service, 24/7 access, fleet management, and corporate and group contacts. The main hurdles are the finances, maintenance, and regulations for larger buses.

In a session titled “Sales Strategies for the Luxury Charter Market,” three operators with experience in motorcoaches and minibuses explained how operators can leverage their in-house expertise to gain more motorcoach business from different group transportation client markets. Panelists included Brett Barenholtz, co-owner and CEO of Above All Transportation and Boston Car Service in Boston, Mass; Michael Barreto, COO of Eagle Chauffeured Services in Upland, Penn., and Jason Kaplan, co-owner of the The Driver Provider in Phoenix, Ariz.

Panelists Brett Barenholtz, co-owner and CEO of Above All Transportation and Boston Car Service in Boston, Mass; Michael Barreto, COO of Eagle Chauffeured Services in Upland, Penn., and Jason Kaplan, co-owner of the The Driver Provider in Phoenix, Ariz.
Panelists Brett Barenholtz, co-owner and CEO of Above All Transportation and Boston Car Service in Boston, Mass; Michael Barreto, COO of Eagle Chauffeured Services in Upland, Penn., and Jason Kaplan, co-owner of the The Driver Provider in Phoenix, Ariz.
“I’ve learned there really are different niches within the motorcoach class,” Kaplan told an audience of about 70 attendees on Nov. 7. “Who do you want to be in the motorcoach market? Because of TNCs, many chauffeur transportation companies are looking more and more to the bus market as a way to be in a safer niche. Obviously, the competition will grow.”

Motorcoaches may be far more expensive than a traditional chauffeured vehicle, but they last longer and retain more equity, the panelists said. A three or five-year old motorcoach may sound old compared to a sedan or SUV, but they often run more than a million miles, Kaplan said. “That bus almost has to move every second of the month. So you can be the person who buys the eight-year-old coaches that are refurbished that still are a very nice product, and you go after a different type of business.”

DMCs
Destination management companies (DMCs) are leading candidates for using upscale motorcoach service, the panel agreed. “I would highly recommend if DMCs are of any value in your markets, it’s a perfect match because the DMCs are selling service and that’s what we do,” Kaplan said. “Know who you want to be and know who you are.”

With fleets ranging from sedans to motorcoaches, operators who routinely handle large group transportation movements in a sense perform DMC functions and/or closely partner with them, Baretto added.

“I literally have an in-house DMC that can help me with management, help me create tours, and of course, I’m the first choice for transportation logistics for that DMC,” Baretto said. “We’re a very resourceful industry. Look in your markets, especially if you have smaller-sized DMCs because they can be an outsourced [way] for you to create better tour packages or event movements you didn’t have before. And it could be as simple as offering them a nest to land in.”  

By solving overall transportation challenges for clients, you become a more helpful and convenient problem-solving asset to them, Kaplan said. “Just by presenting that, you’re moving up your value in the perception of your clients.


Colleges
Barenholtz advised colleges and universities are major takers of bus business. “They’re trying to attract foreign travelers and foreign students to come in. So there’s a lot more opportunity for our industry to be able to get more large groups moving to and from transportation centers, train stations, or airports.”

The challenge for operators is to know where to look for clients and then research them, especially leads on social media, he said. “You can’t just start kicking up rocks and it’s going to be there. You’ve got to be almost a geologist or an archaeologist at a certain point, and really get forensic. I’m not a stalker, but I can get anyone’s name in this room, and in a matter of two minutes of doing a search, I know your Facebook profile and LinkedIn profile. I know your birthday; I know the last time you went out to party with your friends; the whole nine yards. Use that to your advantage. It’s free, open information.”

The same concept applies to hospitals and major employers, all of whom need reliable bus service. “Keep up with the news in your market,” Barenholtz said. “In our market, there are many companies now moving back into the city. So they now have 500, 1,000, 1,500 employees who were used to driving to a suburban location, and now they have to get transportation into the city every day. Most won’t have parking spots, and they’ll have to take some kind of public transportation. You can set up shuttle service with them.”

Financing
Before venturing into motorcoaches, an operator needs a strategic plan, given the high costs and the high volume needed to earn a profit, Kaplan said. “When you’re making the expenditures on a minibus or a motorcoach, those big dollars can eat away at your bank account real fast. So you really want to have a strategic plan before dipping your toe into this niche.”

Aside from the higher six-figure costs of even a used motorcoach, operators should plan on repairs and maintenance costs that well exceed those of traditional black luxury vehicles. A blown out window can cost $400 to $500 to replace. An alternator can go for $2,000. A tire can run into the hundreds.

“If you really pride yourself on analytics and finance, you have to delve in and do a mock perspective for a whole year or 18 months of what your costs will be to see if you are fully financially capable of doing this,” Baretto said. “Once you understand the finances, then you can see the operating costs per vehicle per month, and where your bottom line per hour of movement has to be. That’s very key. Because people will get a brand-new bus or a used bus, and they want business, and then they realize they’re undercutting themselves by $20 to $30 an hour that is eating into a complete profit. They end up paying more to have that vehicle operate out of their pocket than coming from the client.”  

There’s also a value to having a bus after five years that Barenholtz admitted he’s just recently learing about. “You can operate a bus, make some money on it, and in five years down the road, that bus, because you’ve been paying it down on either a five or a seven-year note, you now have this equity in this bus that might be worth more than what you actually made on it the five years you were working on it.”

Tips On Running Big Luxury Buses
Throughout the discussion, panelists offered helpful tips and various aspects of running motorcoaches:

Pick your niches: You have to know what type of business you want to go after. Is it hotels, retail, tours, corporate contracts, hospitals, colleges, DMCs, etc.?

Grow a diverse client market base: Any client that has 15%, 20%, or more of your business could make your revenue stream vulnerable to big losses if that account disappears. Operators should get many small or medium accounts as well. While not as profitable as big accounts, they can stabilize an operation.

All-inclusive services: Don’t charge motorcoach clients extra for chauffeured-style amenities such as greeters. Treat the bus clients like chauffeured ones and include high-touch service attributes. That will give you an advantage over traditional motorcoach-only operations.

Go for small accounts: Don’t be put off by the $20,000 account versus the six-figure ones. Larger fleet operators often don’t want the small accounts, which means small- to medium-size fleet operators have the right scale to match the transportation needs of lower volume clients.

Do your farm-out math: If you are farming out a growing bus client business, determine the revenue volume versus the costs of a motorcoach and its operation. Looking closely at the data helps you make the right decision and eventually get profitable results.

Get the word out: Market, promote, and advertise your motocoaches, especially to your long, loyal client base that thinks you only have black luxury chauffeured vehicles. It takes effort to educate your client base and update your public.

Related Topics: Brett Barenholtz, charter and tour operators, corporate travel, How To, Jason Kaplan, LCT-NLA Show East, Luxury Coach & Transportation, luxury tours, Mike Barreto, motorcoach operators, tour buses, tourism

Martin Romjue Editor
Comments ( 2 )
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  • Daphne Alexander

     | about 7 months ago

    Thanks for sharing. This has reassured me on may topics I was battling with self as well as one of my business partners. My eyes are open ,Im on the right road, Thank you!

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