Industry Research

Operators Must Act And Adapt With A Maverick Mindset

Martin Romjue
Posted on March 16, 2018
Sara Eastwood-Richardson at annual State of Industry Presentation, Monday, March 12, 2018, Mandalay Bay Convention Center, Las Vegas (LCT photo)

Sara Eastwood-Richardson at annual State of Industry Presentation, Monday, March 12, 2018, Mandalay Bay Convention Center, Las Vegas (LCT photo)

[NOTE TO READERS: This is an expanded version of an article that appeared in the March 13 edition of the International LCT Show Daily].

MANDALAY BAY, Las Vegas — Forget about how old you are or how long you’ve been in this business; all that matters is your ability to spot the signals of change and react faster in adjusting your operations, according to the 2018 LCT State Of The Industry Presentation.

“Companies that can truly let go of old notions and get unstuck and are willing to “learn” no matter what age you are, will own the marketplace,” LCT Publisher and Show Chair Sara Eastwood-Richardson told a packed ballroom Monday at the opening of the three-day International Luxury Charter & Transportation Show. The 24-year veteran publisher said that means using every technology and tool available to pinpoint data about clients and cater to their customized needs.

Operators should shift their focus to disruptive mavericks and entrepreneurs who run fast-changing companies, and stop focusing on the moves of their traditional competitors, Sara said.

“The customer wants easy. You need to adapt and react quickly to change and that means running things at our businesses in a team, or collaborative, way. You need to outsource. The future of this industry requires all of us to embrace technology. I don’t mean begrudgingly; you’ve got to learn to love it.”

Sara urged operators and business owners to question the status quo of their people and systems, and be able to "rethink all that you thought you already knew.

"If this sounds daunting, well, look around this room. No one is here today because they haven’t changed a thing. You are here because you have."

Uber Won't Kill You

Operators also need to realize Uber is not the downfall of the industry, and instead learn from the technology it uses.

“Despite their notoriety, today’s Uber and Lyft ridesharing services have been used by less than 15% of the population,” Sara said. “Back in 2016 and again last year, I warned you all arrogance is a formula for leadership failure. It was March 2017 when I stood on this stage and said Uber’s founder Travis Kalanick was on shaky ground, and by June, he was out.”

Whether Uber stays or goes, its technology has radically changed the consumer’s expectations of for-hire transportation, she said. Consumers love their phones and they love the ease of booking.

“Until the next best thing, the Uber technology is what sets the bar for bookings. It’s technology you and your competitors must not ignore. Uber and Lyft grew in the business travel sector while favorability ratings were in the tank for both, and worse for Uber. This just goes to show how much consumers love the technology over the company that owns it. To be fair, most of that gain was at the expense of taxis, but still, there is definitely bleed over to our industry.”

Sara warned operators to ditch the “doom and gloomers,” the gripes and whiners who can’t out-maneuver the disruptions caused by the transportation network companies (TNCs). “Remember, misery loves company. They will not help you make more money. You must look for the mavericks and follow them.”

Driverless Cars? Not So Fast

As for all the speculation about driverless cars replacing driven fleets? Timeline predictions of within a few years are way overblown, Sara said. More likely, driverless cars will arrive after 2030. They still lack a sensing system that can deal with almost anything humans might do. The technology’s “critical failure rate” is one in 1,000 miles. To be acceptable for public roads, that ratio needs to drop to one in five million, she said. “The reality is very different than the hype.”

What Holds Back Revenue?
Operators can offset higher costs and boost profits using the following approaches:

1) Spending on vehicles, technology, and people is a good investment, but it needs be matched by sales that bring in revenue.

2) Do not do more than 30% of your business as affiliate work. Depending on someone else’s clients at a discount is not a good business model. Rate card rates must offset discounted rides. Too much referral work drives down margins.

3) Reduce client turnover by improving outreach. Use technology to better understand their expectations. "Don’t make guesses about what service they value, you need to know. Your top accounts need to see and hear from you more frequently, and not just when it’s contract renewal time."

4) Monetize your empty seats; figure out how to keep vehicle inventory booked solid.

Growth Areas
The markets most like to generate more revenue for operators this year include:

1) Meeting business; new events doubling in 2018
"The meetings business has also been on an upward swing for the past five years and this year it’s looking very strong. New events are expected to double in 2018, according to M&C, the industry trade magazine for meetings and conventions."

2) Private aviation/FBO
"Private aviation and FBO Business has exploded to the point of being challenged by pilot shortages and lack of OEM innovation – their version of growing pains. However, YOUR opportunity to service those tarmacs is ripe."

3) Business travel spending increases, up 18% since 2012
"For the fifth straight year, the Global Business Travel Association predicts budget and spending increases for 2018 across the board. So compared to six years ago, business travel is up over 18%. Translation: More airport runs for you and that should continue." The Global Business Travel Assoocation is advising travel managers to create sustainable relations with vendors, leading to a win-win blend of fixed and dynamic pricing with suppliers.

Furthermore, “duty of care” and “travel risk management” are top priorities of business travel managers, she said. In 2018, Amex warns that we’ll be hearing a lot more about “cybersecurity” as well. Forbes reports this year is expected to bring unprecedented data breaches.

Related Topics: building your clientele, business growth, ILCT 2018, industry trends, research and trends, Sara Eastwood-Richardson, state of industry

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