Changing ground rules

The chauffeured transportation industry has long prided itself on providing white-glove service and comfort. But along the way, some industry insiders feel they may have lost sight of convenience. The explosion of transportation network companies, or TNCs, over the past five years – led by ride sharing companies Uber and Lyft – have reminded all the operators in the traditional industry that we’re living in a mobile, on-demand age.

“There is a spectacular amount of innovation coming into the industry and with it considerable new thinking about the future of travel as a whole,” says Gary Kessler, president and CEO of Carey International, Inc. in Washington, DC.

Kessler says he believes this is an exciting time for chauffeured transportation. “Rapid advancements in technology – especially mobile technology – combined with new distribution models are changing the way we think about ground transportation and allowing companies to deliver services in innovative and exciting ways.”

Historically, the only relationship between the ground transportation firm and the passenger was through the chauffeur, and it occurred 100 percent within the vehicle. That led ground transportation firms to develop technology around booking, management, and reporting solutions for professional arrangers and travel agents only, while focusing solely on the in-car experience for the passenger.

Then, mobile technology changed everything. Technology-enabled travelers are now demanding a direct relationship with their ground transportation supplier, much like they enjoy with providers in other sectors of the travel world.

This demand has led to the rise of a new wave of ground transportation companies that have built technology solutions catering to the needs of all travelers.

Uber and Lyft have refocused the legacy ground transportation companies when it comes to the business traveler, says Patrick Grady, founder and chief executive officer of Deem, and the San Francisco-based Deem Car Service, which is the online and mobile reservation network for the chauffeur transportation market.

“The world has become more rushed, making convenience and ease-of-use of paramount importance. The industry has realized that the old way of doing business simply isn’t realistic any more and that a real-time network with massive coverage is now table stakes for ground transportation,” he says. “But those who are calling the TNCs ‘industry killers’ are incorrect.”

Grady points to the numbers: “The industry generated over $3 billion dollars in revenue last year and has been growing at a steady 10 percent rate for the past 5 years – those same 5 years in which Uber and other TNCs came into prominence.”

Max Crowley, lead for Uber for Business, says Uber was started to fill the gaps in the pre-scheduled slate of black cars and limos, making the experience easier for customers, and millions of rides happen each day thanks to its innovative mobile solutions. More recently, the company has turned its attention to the business traveler.

“We saw there was usage in the business space and we found lots of organic business rides happening. We are already doing millions of business rides each week on the platform,” he says.

“Uber for Business started in 2014 and we’re starting to work on products that appeal to consumers and the companies themselves. We’re continuing to build products that make it easier for the end user or traveler to ride and easier for the business to manage and get insights and make the experience seamless across the board,” Crowley explains.

Amit Patel, director of enterprise strategy at Lyft, says corporate travel spend is shifting towards an increasingly mobile experience which has unlocked a new set of ground transportation suppliers, including Lyft.

“The smartphone is such an essential tool to business travelers, that we’ve seen they increasingly can’t imagine booking rides or organizing ground transportation expenses without it,” he says.

Data from expense management provider Certify shows that 57 percent of business travelers opted to use ridesharing instead of traditional black cars and taxis this year. Patel feels that the convenience of a ride within minutes, paired with a cashless, digital-receipt transaction, is a big reason for the growth of ridesharing usage amongst business travelers.

On the Move

It would be hard to overstate the impact of mobile technologies and real-time ride hailing services, Kessler acknowledges. “Mobile technology has created a new set of expectations on the part of travelers. The driving force is an expectation of personalized empowerment and autonomy – the traveler wants control.”

Some in the industry view the technology developed by these services as disruptive, but according to Kessler, what they have really done is expand the market in several ways.

“First, they have introduced the idea of chauffeured service as a realistic transportation option for many more travelers with more people using chauffeured services than ever before,” he says. “Second, they have expanded how travelers expect to interact with their transportation, which in turn has inspired companies to develop new technology and services for both travelers and arrangers.”

The changes are opening up access to a wider variety of transportation solutions in new markets. As a result, not only ride sharing services but also chauffeured transportation are being viewed as appropriate in more situations and attracting a growing number of users all over the world beyond the traditional business traveler.

Furthermore, the business models behind these services have brought new transparency to how vehicles get matched with travelers and how standards of driver safety and overall trip quality are enforced. Today’s travelers are now taking a deeper look at particular aspects of ground transportation including quality, Duty of Care and consistency. “They are seeing differences in providers that they never noticed before, and starting to question which factors they value most in a service,” Kessler says.

Meanwhile, ride sharing providers say they are not standing still in pursuing a better traveler perception of safety and convenience factors. “On the safety front, we do a rigorous criminal background check and recurring driving record checks,” says Lyft’s Patel. “We have also improved access to ride data for travel managers, which provides them with more visibility and Duty of Care. When it comes to convenience, we have made it simple to request a ride within minutes and pay for that ride through the app which removes the burden of carrying cash or holding onto receipts while traveling. This eases the expensing and reimbursement process for business travelers.”

The Young and the Restless

Hand-in-hand with the technology comes a change in the overall demographic of ground transportation riders. “As the workforce skews towards Millennials and the so-called ‘mobile revolution’ permeates more and more demographic groups, the profile of the modern traveler has fundamentally changed,” Grady says.

These changing ridership demographics – Millennial and otherwise – are keeping providers of every stripe on a constant hunt for ways to remove the wrinkles from the ground transportation experience.

In 2015, Lyft introduced more features for business travelers, including an in-app integration with Concur. Concur users can instantly expense Lyft rides they take for business within the app.

“Lyft was the company to introduce peer-to-peer ridesharing to the world. Our business was designed with people in mind, and that has increasingly grown to include business travelers specifically as travelers have recognized that the convenience and reliability afforded by ridesharing can make their trips more efficient, cost-effective and even enjoyable,” Patel says.

Uber for Business offers travelers the ability to enter an expense code or client code and allows the company to have insight into the trip in real-time. The information can be sent to a back end system that collects the data, streamlining expense reporting and allowing more detailed insight into the scope of the trip.

“It’s all designed to make it easier to travel,” Crowley says. “When you land at an airport, the destination is pre-loaded and expensed and it makes things convenient for the traveler.”

Grady acknowledges that the initial response from the traditional providers to these newcomers was slow out of the gate. “Many operators did recognize the need for a technology solution, particularly a mobile technology solution, for ride reservations. But the approach was largely to build homegrown applications, white label an existing ‘solution,’ or join one of the several small networks that never came even close to the scale and density required for reliable, convenient ride hailing.”

In response, the National Limousine Association (NLA) and its members were the first to jettison this individual or small-network approach. They recognized that to achieve the scale and vehicle density required to deliver a real-time network that would meet the standards for mobile technology set by the TNCs, they would have to forge some sort of cooperative arrangement.

As a result, the NLA has entered into a strategic technology and marketing alliance with Deem to develop and deploy a network open to all operators. “Deem is leveraging its $200 million investment in its one-of-a-kind cloud and mobile platform to deliver a highly-scalable real-time network and mobile application, Deem Car Service, effectively leveling the technology playing field against the TNCs,” Grady explains. To date over 100 operators, including over 50 percent of the top 100 operators by volume, have signed up.

Grady notes that while the industry as a whole has made strides, it’s still behind the technological curve. Nonetheless, legacy transportation providers are not as weak as many feel, he argues.  “The chauffeured transportation industry is behind the 8-ball from a technology and efficiency standpoint but really not that far,” he says.

But the clock is ticking. Technology, demographics and market forces are all conspiring to change the customer’s expectations for ground transportation – and those changes are coming at a breakneck pace. Legacy providers will have to jump on board the speeding train – or be left at the station.

“A large majority of chauffeured transportation operators still rely on the telephone to accept and modify reservations,” Grady warns. “And in the mobile app-driven world we live in, those phones will stop ringing sooner rather than later.”  

By Keith Loria