Industry Research

State of Industry Shows A Solid Comeback

Posted on February 13, 2013

LAS VEGAS, Nev. — LCT Publisher and Show Chair Sara Eastwood-McLean gave her annual State of the Industry presentation during the International LCT Show last week, with plenty of helpful stats and insights for limousine operators worldwide. Below is an edited version of her remarks:

Carlson Wagonlit Travel recently published a white paper on Business Travel Trends for 2013 and those that are relevant to our industry include:

  • Brazil, India and China will continue driving growth in business travel spend at almost twice the world average.  
  • 2013 is presenting a foggy outlook — helped by the European debt crisis, the fiscal cliff looming over us here in the states and downgraded global growth. Business travel budgets are expected to rise only slightly over last year to account for increased prices, not increase volume.
  • In 2012, business travelers spent $254.9 billion, up 1.6% from the prior year. This year, the travel association expects another 4.6% increase to $266.7 billion.
  • Fewer business travelers are likely to hit the road this year as the travel industry is challenged by corporate America's persistent economic fears.
  • Fewer people traveling do not mean lower costs. Airfare, hotel rooms, meals and car rentals have helped to push up the overall price of business travel.  Limousine service is lagging behind the entire travel pricing structure.
  • Business travelers are expected to take 431.8 million trips in 2013, the Global Business Travel Association said.  The latest estimate would mean a 1.1% decline from the 436.5 million trips taken in 2012.
  • Service reviews will play a key role in travel negotiations.  One in two business travelers already posts reviews online. These reviews will hold more sway in the business travel program with the adoption of new corporate review sites.
  • New virtual agents that add a personal touch to assist travelers will become more popular.  
  • Online booking will continue its growth momentum across all travel sectors.
  • The top travel management priority is deriving air and ground transportation savings.  
  • Social media strategies will be implemented by two-thirds of the global travel managers as a key action to improve the traveler experience.
  • Technology will be the traveler’s best friend with mobile/WiFi connectivity and a growing range of business travel apps.
  • Unmanaged travel programs will tempt companies with a low-control culture. The Gen Y business travelers are by nature social, mobile and keen to manage their own travel and expenses while on the go.
  • Wellbeing: Increased awareness of traveler stress is leading companies to review their travel policies to improve the work-life balance.
  • Worries over the tax and budget battle in Washington were blamed for some of the 2012 declines. Now that tax changes have been approved, the business travel group is cautiously optimistic that travel will improve. “'Even with an agreement to avert the fiscal cliff in the near-term, there are still many issues that need to be addressed; however, companies should now have somewhat greater confidence in their spending decisions,”' Michael W. McCormick, executive director of the group said in a statement. He expects conditions to improve in the second half of the year, when “pent-up demand to get back on the road should hopefully fuel accelerating growth in business travel spending.”'

Who is the business traveler?

  • 50% are women
  • Business travel in the U.S. is responsible for $246 billion in spending and 2.3 million American jobs; $100 billion of this spending and 1 million American jobs are linked directly to meetings and events. For every dollar invested in business travel, businesses experience an average $12.50 in increased revenue and $3.80 in new profits. A 10% increase in business travel spending would increase multi-factor productivity, leading to a U.S. GDP increase between 1.5% and 2.8%. (Source: The Return on Investment of U.S. Business Travel)
  • Mature travelers (those born before1946) comprise 14% of business travelers. Mature business travelers take an average of eight business trips each year. Older boomers (those born from 1946 through 1954) represent 16% of all business travelers and these travelers take an average of 10 business trips each year.
  • Young Boomers (those born from 1955 through 1964) amount to 22% of business travelers. Young Boomers also take an average of six business trips per year.
  • Gen X (those born from 1965 through 1980) makes up 36% of all business travelers. Gen Xers take an average of seven business trips per year.
  • Gen Y (those born after 1980) represent 13% of all business travelers and take an average of four business trips per year.

WHO ARE WE?

Well we are mostly guys….
Owners by Gender: 85% male; 15% female

And we are mostly having a mid-life crisis with the median age of 48:

Owners by age: 40% between the ages of 24-44; 60% between the ages of 45-65

Nearly two thirds of us work in an office.

Home-based vs. office-based: 33% work from HOME; 67% work from an OFFICE

Industry size: 7,963 Owners (source:  Polk)

And most of our business is coming from the East Coast:

TOP 5 busiest chauffeured transportation markets:

  1. Boston
  2. New York
  3. Chicago
  4. Washington DC
  5. Los Angeles

Best U.S. airports for ease: The travel trends survey was conducted by Plymouth-based Travel Leaders Group and included responses from 1,045 U.S.-based travel agency owners, managers and frontline travel agents from the flagship Travel Leaders brand, as well as some other affiliates.

  1. Atlanta 
  2. Charlotte
  3. Dallas/Ft. Worth
  4. Houston Intercontinental
  5. Detroit
  6. Minneapolis/St. Paul
  7. Chicago O’Hare
  8. Phoenix
  9. Denver
  10. New York (JFK)

Worst U.S. airports for connecting flights: When asked, “If your clients are flying and need to connect through a hub airport, which hub do they try to avoid?” the top responses were as follows. (Again, those polled were able to choose up to three different airports.)

  1. Chicago O’Hare
  2. New York (JFK)
  3. Atlanta
  4. New York (LGA)
  5. Newark
  6. Miami
  7. Denver
  8. Philadelphia
  9. Dallas/Ft. Worth
  10. Los Angeles

Business Travel Revenues

  • 2012:  $263.4 billion
  • 2013:  $277.2 billion

Source:  GBTA

10 Best Cities for Business Meetings
Meetings & Convention New Magazine recently presented its list of the 10 best cities in which to hold business meetings, based on a poll of meeting professionals, airline executives, business travel experts and others from around the world. The cities were cited for a variety of criteria, as noted below.

  • Best overall: New York City
  • Best city for conventions: Denver
  • Best buzz: London
  • Most exotic: Mumbai, India
  • Most pro-business: Sao Paulo, Brazil
  • Best sightseeing: Istanbul, Turkey
  • Best music scene: Nashville
  • Freshest downtown: Los Angeles
  • Best comeback: New Orleans
  • City to watch: Shenzhen, China

Industry Revenue Sources:

  • Retail: 20% (weddings/promos/nights out)
  • Meetings/groups/tours: 13%
  • Business travel (including airport runs and FBO): 63%
  • Leisure:  4%
  • One-third of all operators use affiliate networking and/or verifications sites.  
  • Slightly more than half of all companies derive 10% of their corporate revenue from affiliated farm in/out services.

Fleet Trends

  • Buses are hot!  5 years ago only 19% of limo operators owned at least one motor coach.  Today it’s up to 71%.
  • ADA compliant vehicles must be taken into consideration.  Only 1 in 5 operators own a vehicle that meets the Americans with Disabilities Act.
  • Stretch limos — the #1 vehicle in need of replacement.  
  • Vehicle turnover — Most operators are turning over vehicles every 45 months or 200,000 miles.
  • Fuel: The average operator buys 1,800 gallons of fuel per week.

Staff  wage averages (not including tips and benefits)

  • Chauffeurs: $12.79/hr
  • Dispatchers: $13.36/hr
  • Reservations: $12.23/hr

Technology

  • 21% of operators use the internet for booking reservations.
  • 80% of chauffeurs now use smart phones.
  • 50% of operators use Internet-based lead referral services such as Limos.com
  • 72% of chauffeured transportation companies have a Facebook page
  • 47% have a Twitter account.

Where Do All The Electronic Leads Come From?

  1. Personal company website
  2. 3rd Party Generators (Limos.com)
  3. Social Websites (Facebook; LinkedIn)
  4. Regional travel and tourism partnerships (CVBs)    
  5. NLA Directories  
  6. Travel booking websites (Orbitz/Expedia)

Top MUST HAVE Tech Services

  • Flight Tracking        
  • Smartphones
  • Booking software/Dispatching
  • Power outlets
  • Internet phone service
  • In-Car WI-Fi
  • Onboard video camera
  • Tablets

Related Topics: business travel, business trends, ILCT 2013, industry trends, Sara Eastwood, state of industry

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