Tuesday, March 19, 2019

cd0415 Dawson Rutter Commonwealth Worldwide Dawson Rutter of Commonwealth Worldwide Chauffeured Transportation

Dawson Rutter of Commonwealth Worldwide Chauffeured Transportation has made quite a name for himself in the transportation industry since his days of driving taxis around Massachusetts in the ’70s and early ’80s. He entered the chauffeured side of the business on the advice of a friend, buying a brand-new Cadillac limousine in 1982 in the hopes of simply making a living with a modest fleet; however, a series of fateful run-ins would lead to much bigger things for Rutter.

After driving Boston Magazine’s then-Senior Editor John Brady on a number of chance occasions over the course of a few months, Brady recognized Rutter’s services by naming him the city’s best chauffeur in the publication’s 1983 Best of Boston issue in no uncertain terms: “Suave, attentive, knows the city, and is grace behind the wheel.” After that, business skyrocketed—and Commonwealth would be named Boston’s best car service four more times, even after Brady left the magazine.

More than 30 years later, Commonwealth has offices in Boston and New York City, with roughly 85 cars in the former and 165 in the latter—which means it runs nearly 250 vehicles between, around, and beyond two of the industry’s biggest markets, not to mention the 80 countries outside the U.S. it did business in last year. Rutter, who’s also the NLA’s First Vice President and was named Taxicab, Limousine & Paratransit Association’s (TLPA’s) Limousine and Sedan Operator of the Year in 2014, has a unique perspective on the industry’s present state and his expectations of its future, which he recently shared with Chauffeur Driven.

Chauffeur Driven: Other than obvious things like traffic congestion, what are a few of the biggest differences between operating in New York City and Boston?
Dawson Rutter:
I pay $30,000/month for rent in Boston; I pay $86,000/month for rent in New York for exactly the same amount of space. Everything is more expensive in New York. In Boston, if a guy has a two-hour break between jobs, we take him off the clock; in New York, it takes him an hour to get back from one job and get to the next one, so we have to pay him straight through the whole day.

CD: What percentage of your annual revenue is outside Boston and New York City? How much is outside the U.S.?
DR:
Sixty percent of our business is outside Boston and New York. Approximately five percent of our business is international—we did work in 80 countries last year.

CD: What vehicles have been most successful for you in the past two or three years, and why?
DR:
There’s been a big move to SUVs in the past six or eight years because people don’t want to ride in a limousine anymore. They’re too ostentatious and too uncomfortable to get in and out of—I only have two limousines left, one in Boston and one in New York. Our SUV population has grown significantly. We run 50 SUVs in New York City and 20 or 25 in Boston. I think it’s a very smart thing for small operators to get involved in the minibus and bus business. Everybody I know who buys buses and minibuses is thankful they got into that side of the business.

CD: When did you first realize the potential revenue stream that exists with outbound affiliate work, and what has it meant to Commonwealth since then?
DR:
My first real break came with a road-show account in 2001 in Boston. They started using us for local jobs. For the next eight months, we did a great job for them in Boston; in the beginning of 2002, we said, “Hey, how about some national work?” They said yes, and liked what we did for them nationally. Once we got them, then we could approach other potential road-show accounts and talk to them about our work for this account: They knew the account was a tough one that demanded high-quality service. So you make your call center a sales team: “Can we get you a car when you land? Are there any other cities you need help with?” Gradually, we picked up one account, then another account, then another account, and now we have nine of the top 10 equity capital markets banks in New York City.

One of the things that our customers speak to us most emphatically about is consistency. When they call for a car from Commonwealth, they know they’re going to get a clean vehicle driven by a trained and knowledgeable chauffeur."


CD: Why did you decide to focus on the niches that Commonwealth is known for, like road shows and high-end hotel properties? How do you ensure their loyalty?
DR:
We were always looking for more high-end businesses. When I got out of the cab business in 1984 after owning my company for two years and driving a cab that whole time, I was very reluctant to do what I considered taxi work in the limousine business. One of the things that our customers speak to us most emphatically about is consistency. When they call for a car from Commonwealth, they know they’re going to get a clean vehicle driven by a trained and knowledgeable chauffeur.

I think TNCs are building a whole new market for chauffeured transportation. I think there’s going to be a segment of the population who never rode in chauffeured transportation before TNCs, which will help to expand our market. There are people who can afford us who will be disappointed by the inconsistent service they get from TNCs. I don’t know what the turnover plan is for Uber cars but I think they’re on 52-month leases, which is almost four and a half years—those cars are going to be pretty beaten up. We turn over our cars every 25 or 30 months in New York because they get so roughed up.

CD: What advice would you give to a smaller operator who’s looking to penetrate the luxury properties in a small market?
DR:
You’ve got to have a very high quality of service. Every single day, somebody’s riding in our cars who could be a huge customer for us, and most times we don’t recognize it. Do the best job you possibly can for everybody. I literally have $4 million of revenue from one company alone just because we took care of them in a blizzard back in 2002. We’re sort of an essential service: When everything else shuts down, people need us to get around. And if you don’t take advantage of those opportunities, your company just isn’t going to land those prestigious accounts.

Limousine companies also need strong relationships with their customers and to develop champions, people who will talk about you to their friends. That’s the best way I know of to grow a business. Get involved in your local area. If we can’t find another NLA company to get a car for us, we’ll call the FBO or a hotel and ask who their regular car company is. Develop a relationship with your FBOs. You will get referrals, and if you do the best you can with those referrals, you might just get a contract out of it.

CD: What would you say has been the biggest shift in the way that you see your clients negotiating rates and contracting with you and booking services in general?
DR:
I think it’s still pretty much the same for the most part. We do a lot of electronic reservations through Deem, which is a huge way for the corporate world to make reservations.

Mobile apps are still in their infancy. I know our mobile app didn’t operate that effectively when we first got it a year and a half ago but now it just hums. It lets you see exactly where your car is: The ability to see where their car is something that people love. We’ve been linked up with companies that also use Livery Coach, and are now able to do so with companies that aren’t using it.

A big feature we didn’t use before last year is texting. Now, every time a chauffeur is on location, he’ll text the passenger. It’s so convenient and there are far fewer misses.

CD: What’s the percentage of people who make reservations through online portals versus people booking through an app versus people calling in? DR: I would say it’s about 15 percent online, close to 50 percent of our reservations come through straight email, and 35 percent are over the telephone.

CD: What does Tami Saccoccio mean to the Commonwealth brand and how has she helped elevate the company?
DR:
I don’t know of a better affiliate manager anywhere in the world. She is on top of her affiliate department. She has a personal relationship with hundreds of our affiliates and she has really become the gold standard of affiliate managers. In my opinion, there’s no one who knows as much, no one who cares as much, and no one as effective as Tami.

CD: Can you give us your outlook on the economy and how you see things in the next 12 months for chauffeured transportation?
DR:
I’m cautiously optimistic. I think that the outlook for our industry is good. I’m not going to say that it’s great, but I think it’s good. I’ve been in the business for 33 years now, and I’ve been through four recessions—and throughout all that turmoil, the limousine business has always been here. It’s a pretty resilient industry.

CD: When you’re talking about TNCs with politicians and regulators, what do you feel are the most important points to drive home?
DR:
Public safety and lost revenue are the two main issues. When you talk to a politician, legislator, or regulator, those are what they care about. They don’t care about a level playing field. TNCs are paying no revenue to states, the cities, or the federal government. Being all independent contractors, there’s a significant problem in collecting federal income tax from these people. All Uber’s doing is sending them a 10-99 that’s up to the drivers to pay. They have 10,000 drivers in Boston, 20,000 drivers in New York City—you’re talking maybe hundreds of thousands of people who’ve been added to the black-market economy as far as taxation goes. And, honestly, I don’t think they’ll even be able to afford to pay taxes. Uber says that their drivers average $22/hour but that’s before they pay for the car, gas, insurance, parking tickets, and taxes. What are you left over with? It whittles down to poverty level, and the way drivers are going to deal with it is that they’re just not going to pay their taxes.

And then there’s licensing taxes. You have 100,000 cars out there all over the United States: How much money is that costing these municipalities in terms of lost revenue? When you’re talking to politicians and you say, “You’re losing revenue,” they go, “How much revenue are we losing? How much revenue could we be getting if we do it differently?” That’s what resonates with a politician.

CD: Why do you think it’s taking so long for us as an industry to react to TNCs and on-demand service in terms of answering the call with something like an industry-wide app?
DR:
We’re a very small industry and there’s just not a lot of money in writing code for us. Uber had a big jump on everybody, and it has great software that’s not easy to duplicate. Uber has the money, the lobbyists, the PR firms, and the locked-in social media. It’s spent millions and millions of dollars on its software development, and this industry doesn’t have that kind of money. So our response is going to be much more muted than its aggressive marketing. Additionally, 55 or 60 percent of us have employee chauffeurs. If Uber ever has to change its model from independent operators to employees, it would be gone.

CD: Congratulations on recently being elected as the NLA’s First Vice President. What are some of your goals and objectives for the association in 2015?
DR:
There are always so many new initiatives. We raised $90,000 for the charity fund. That will continue. The PAC fund has $65,000, and we’ll continue to raise money for that, especially going into the next election cycle. We always have the membership committee trying to bring in new members, and I think that everything we do to make it a more membership-friendly board of directors and organization, the more members we’re going to bring in.

We’re making a huge push to elevate the NLA and to bring the public safety issues and regulatory issues to the public’s attention about TNCs. We just hired a new PR firm to work with the NLA and we’ve just launched the Ride Responsibly ad campaign to get the information out to the public about the public safety of Uber. It’s a huge thing that we’ve done: You can tell that we are hurting the TNCs because they’re responding. Uber is its own worst enemy. It’s not being accepted in many countries around the world: France, Germany, China, and India, to name a few. There are so many lawsuits against the company and so much bad publicity. The more information the public has about the way Uber operates—and not the falsehoods that it spews out about how great everything is—they’ll see what really goes on behind the scenes and not just what Uber tells them.

One of the big initiatives this year is to offer electronic voting, which I think will get a lot more people to vote. We had 400 people out of 2,000 vote in the NLA board elections this year. I want to do as much as I can to get people involved and get people voting.

CD: You were very passionate about the recent amendment to the NLA bylaws regarding members who were receiving multiple ballots and voting multiple times in the NLA Board of Directors elections (one vote per company, which passed on March 16). Why did you feel that change was necessary?
DR:
I felt it was unfair that elections could be decided by one or a handful of individuals. There was a loophole in the bylaws that made it perfectly legal for those people to have multiple votes; I just thought we needed to close that loophole. Given the very small numbers we vote in for the NLA Board Member elections, there was a possibility that a company with multiple votes could swing an election one way or another, and I don’t think that’s fair. We felt it was necessary for the members to decide if they want people to have multiple votes or not.

CD: Do you plan on working more closely with TLPA, not only through Commonwealth but also through the NLA in 2015 and beyond?
DR:
Absolutely. With NELA (New England Livery Association)—along with Mike Fogarty, who’s the president of TLPA—we have committed to help fund a lobbying and PR effort to get regulations for TNCs in Massachusetts. I’m certainly committed to funding the TLPA—to the tune of $10,000 so far this year. The NLA has committed to working with TLPA, and Mike Fogarty has committed TLPA to work with NLA to coordinate our efforts, especially in the TNC arena. It’s very important that we all speak with the same message to the public: regulations, revenue, and safety.

CD: Do you have any plans or aspirations to open up in any other cities?
DR:
No. Emphatically no! I’m 63 years old. I don’t want to go through that again.

CD: You’ve built a solid business over 33 years. Do you have an exit plan or exit strategy?
DR:
No. Nobody does. We continue to have conversations with investors and these are just not saleable businesses. So, basically, my exit strategy is just to save money every year, just like the whole population and some day, I’ll have enough to retire. [CD0415]