The State of the Industry—one of the CD/NLA Show’s most anticipated sessions that encapsulates the current moment in chauffeured transportation—fully delivered, as three industry giants took the stage to be interviewed by CD President Chris Weiss. President & CEO John Ferrari of the TBL Group, COO Tami Rutter of Commonwealth Worldwide, and President Tim Rose of the Hoffmann Transportation Group spoke candidly about a rapidly changing business climate that has only intensified since COVID shifted the industry off its axis.
L to R: Chris Weiss of Chauffeur Driven, John Ferrari of the TBL Group, Tami Rutter of Commonwealth Worldwide, and Tim Rose of Hoffmann Transportation Group No topic was off limits—soaring insurance premiums, the lack of viable vehicle options, and the sweeping, lightning-fast adoption of new technology (including AI) were all front and center. The powerhouse trio didn’t hold back, sharing actionable advice, real-world anecdotes, and no shortage of forward-looking predictions for the years ahead. The event, sponsored by Driving Transactions, also included a truly prescient look at the industry by Ken Lucci, who explored how companies can prepare for the year ahead—stay tuned for more on that in the coming months.
INSURANCE PREMIUMS: Did they rise, by how much, and what are you doing to keep costs at bay?
Tim Rose: “We’re part of a captive that was structured for all our companies, so we’re working to control costs across the whole group. Overall, reinsurance costs that a captive uses are going up about 8-12% a year. According to a report from the NLA, operators are seeing somewhere between a 10% and 25% increase, depending on how large their fleets are. It’s really a challenge and one of the most important things that the industry is fighting for. Matt Daus and his firm, Windels Marx, did this paper for the association on the insurance crisis and we’re looking to bring that to the states that are friendly to help us with tort reform, because we think that’s one of the biggest things we can do to help try to control these increases.” Editor’s note: You can read more about this on page 52.
Tami Rutter: “Our increase was probably about 5%—but that’s because we’ve managed a lot of our losses. My advice is to pay out of pocket for whatever you can. Don’t put everything through insurance because it’s going to kill your premiums. Focus on safety, focus on dashcams. I know it’s harder for a smaller company, but it’s not as expensive as it used to be, and I can promise you it will save you in the end for training purposes and for accidents. We’re constantly watching the infractions and retraining drivers on what they did wrong. Because we’re constantly focusing on safety and driver training, those are some of the reasons why our costs have stayed lower.”
John Ferrari: “Like Tim, we have our own group captive, and our premiums have gone up in the 10% range. My number one recommendation is to have your broker introduce you to underwriters and the insurance company because, believe it or not, they do want to meet you. It’s a relationship situation. Get to know them well, tell them your story, talk to them, and listen to them. They’re there to protect you because they don’t want to pay these claims. If your loss runs go down, you’re saving money. But, as Tami said, if you don’t have a training policy, if you don’t have dashcams, if you don’t monitor or care about your people, it can get out of control.”
Ken Lucci of Driving Transactions, sponsor of the event, discussed current and emerging industry trends AFFILIATE BUSINESS: What changes have you seen including with tech and the vetting process? What criteria comprise a successful affiliate relationship?
Tami Rutter: “Probably the biggest challenge right now is technology. Not everybody is up on their technology. We use Livery Coach Software, and we are asking all our affiliates to connect on GNet. I don’t want to be emailing back and forth where your reservation agent might make a mistake or change the date. We also need to get status updates for our clients. I don’t want to make 15 calls to you, and I’m sure you don’t want that either. It’s annoying. If you want to do affiliate business, get on GNet and get connected through whatever software you have. Communication is key.”
Tim Rose: “Clients are not booking as far in advance, because they’re used to that from the other companies that are out there. If we look at interacting with affiliates, whether it’s through GNet or something else, many of them have a 12- or 24-hour period where you can’t change the trip, which is a nonstarter in today’s climate. Then we have a team of people calling to try to make changes, cancelations, or whatever.”
Tami Rutter: “That’s where you have to communicate with your affiliates to ask them to change that threshold to six hours or even four or two. And a lot of time, the 24-hour threshold is because they don’t have the staff to monitor these changes, but you’re saving money just by having this technology. You’re not having anybody manually enter trips; it’s just coming through the system. Our industry is so slow on technology, and it always has been, so this is where we have to step up to the plate. But if you’re looking to build your affiliate network, meet people [at the show]. If you need help, start with all the top cities like Chicago, New York, and Boston. Have relationships with your affiliates. Know them and get to know their staff. If you don’t want to do it yourself, get an affiliate manager, somebody who is very personable that wants to get out and make contacts.”
Tim Rose: “Those relationships with affiliates, as Tami said, are so important. You must become close friends and have each other’s backs.”
FLEET: Which vehicles are you adding, and which had diminishing returns?
John Ferarri: “We’re so diversified that we have every vehicle type you can imagine, except for a hearse. We dove into the motorcoach side many years ago, and we saw that to be a very large profit maker. When I first started in motorcoaches, I wondered why I would get one when I could buy 10 Town Cars [for the same cost]. But at the end of the day, it was actually kind of our fortune, because now we have hundreds of motorcoaches. When you’re moving tens of thousands of people, it adds up, and there’s not many companies that can handle large groups like that. Diversify and stick to your plan. Go after your local business and just kill it. Don’t let off the throttle and continuously push, push, push. Learn what your profit margin is, what your true costs are on every single level, and figure out your model, because every vehicle type has a different cost. That’s my big advice.”
Tami Rutter: “We’re doing a lot of road shows, which is hourly all day, airport to dinner, and then to the next city. Everybody wants ‘good’ hourly work, but in order to get that, you have to do your point to points. These transfers can be horrible, so if you’re going to raise your rates on anything, do it on your sedan transfers. And I know a lot of people think they’re upgrading a client by sending an SUV, but don’t do it without calling the client first. We have gotten stuck so many times where it’s an elderly person who can’t get into an SUV. We may end up being an industry of SUVs, vans, and buses, because I don’t think there are sedans anymore, but we need to push hard for a proper car for our industry. We’re stuck.”
Tim Rose: “Yes, sedans are an issue. The Volvo [S90] is going away. The two Lincoln products are very solid, but as Tami said, they’re crossovers. The workhorse of the industry—the Town Car—is long gone, but the car was so durable that people kept it forever. But we have to protect airport business, because, as John mentioned, diversifying into larger vehicles is great but not for everybody. It’s very expensive, and the insurance companies, in many cases, will not allow you to go into buses unless you have experience. Without airport work, we’re going to end up a one-trick pony, and we’re not going to be able to provide all those levels of service to our clients who are demanding that from us. We need to have shared supply and technology in order to do this.”
John Ferrari: “But don’t forget the basics: When they call you for that airport trip, you should get four out of that. Where are they going next? When are they returning? That’s basic 101.”
Tami Rutter: “Absolutely, have your agents ask. A lot of people offer incentives on how much farm-out work they can bring in just by asking the question. Again, that comes back to affiliate work and having that network.”
WORK FROM HOME: What percentage of your team is remote, and what are the pros and cons? What about offshore talent?
Tim Rose: “Prior to COVID, we weren’t interested in the work-from-home model, but the dynamic has changed. Finding people who will come to work at an office is challenging, so I think all of us have adopted the ability to find great people, no matter where they are, and equip them with the technology to do it. We have a good percentage of people who used to work in our office but are now working remotely for us and supplementing the staff that’s in the office. We’ve succumbed to it, and the work-from-home model has been successful for us.
“If the person had experience working with you before, you’re not worried about their productivity because you can see it. Newer people are the biggest challenge because they haven’t experienced your office culture or worked with your team dynamic, which really makes it hard because you’re constantly monitoring them. It’s really important to try and get them immersed into the culture of your company.”
John Ferrari: “We’re more of a hybrid situation now. Of course, everybody that works from home loves it, because they can just get up and be in their pajamas and get right in front of a computer, but we’re seeing that people want to be with other people. There are options out there if you are struggling to hire locally. One of our locations uses some Serbians to do reservations. They speak English very well and they’re low cost, which is good. As for productivity, if you have the right software system that will actually track your people, it’s fantastic.”
Tami Rutter: “Going remote saved our business during COVID. We were renting a huge office in Boston and one in Long Island City, N.Y., and the rent was ... I don’t even want to tell you. We had to get rid of those buildings and everybody started working remotely after that. I’d say 95% of our people are now remote, although we don’t use offshore workers because our clients like to talk to the same people that they’ve talked to forever. We have people all over the place, and we got to keep the staff who have been with us for 15 or 20 years. Boston was way too expensive for them, and now they can work from anywhere. And what’s great is no one calls in sick. That’s one of the big benefits that we’ve seen.”
Tim Rose: “We’ve had offshore folks since Flyte Tyme [Rose’s former company that was acquired by Addison Lee in 2017] when we ran out of space for our call center. We needed some help in Europe for our call center agents, and that’s how we started with them. Their English is perfect and they’ve been a great help to support our growth. By the way, we’ve also banned the term ‘Serbian’ in our office. They’re ‘remote workers.’”
GENERATIONAL ATTRACTION: How does our industry remain relevant and meet the changing expectations of younger clients?
Tim Rose: “We’ve seen many fantastic legacy companies that were in operation for 50 years go out of business because they never adapted—whether it was technology or understanding how to deal with the next generations. It’s a big problem, because how do we get younger travelers to be one of our clients? How do we get them to aspire to be part of that ‘club’ for premium service? The only way we can do that is through technology, being able to offer near-demand, and never saying no. If you have 12-hour restrictions on bookings, you’re not going to get it done.”
Tami Rutter: “We have a two-hour threshold, which seems to work, but it’s hard to do near-demand because you have to have the equipment and chauffeurs. That’s tough for smaller companies with a few cars. Our app is probably one of the best things that we implemented because younger clients don’t want to call you—they’re so used to doing everything on an app. They want to find out where the driver is, if they’re going to be late, if they’ve arrived, which they can see in the app. We’re getting GPS from companies all around the world.”
John Ferrari: “If you know you’re getting last-minute pickups in certain areas, position vehicles near there to make them readily available—if you have the ability to do so. The younger generation is about now, last-second bookings. So, if you want to take advantage of it, then you’re going to have to think out of the box and do things that you’re uncomfortable with and see if it works for you. And if it doesn’t, scrap it. Go to the next thing. It’s all about understanding your demographics and the geographics of your city or town.”
M&A: Will the industry continue to consolidate?
Tim Rose: “I think consolidation will continue. The motorcoach industry weakened after COVID and lost a lot of providers that had been around a long time. Operators in our industry took advantage of it to peel off that premium work. Now, many limo companies have matured to the point where they’re best-in-class providers in their markets, but a lot of owners don’t have a plan for succession. So, I think that those operations that are providing an entire suite of services to premium clients, if possible, from sedans to motorcoaches, will have opportunity for growth.”
John Ferrari: “The industry is definitely going to consolidate, and not just livery. It’s also happening in the motorcoach and school bus industries. If you’re just going to stand by and not do anything, you’re going to be left behind. If you feel like you want to grow and don’t have the capacity, talk to somebody that’s in your city and see if they want to join forces. Put your pride aside because sometimes two heads are better than one. Come together and make it better. We’re going to continue buying companies because we’re having a blast, but we’re doing it because we love the people that we’re dealing with. Think about this now because it’s not something you can do overnight. Plan everything you do five years out. Have a strategy. Have your house in order.”
AI: How is your business using it, and how it is reshaping your organization?
Tami Rutter: “AI is going to be a big part of this industry very soon, so I suggest that everyone looks into it as much as you can. I use ChatGPT to send a much more professional email, like an apology letter. We’re implementing it in training wherever possible, which frees up so much time for our staff. It takes a lot of time off your hands too.”
John Ferrari: “Also look at products like [Microsoft’s AI] Copilot for emails. I get inundated with emails every day, so I let the software reorganize and categorize it by importance to pay attention to what I really need to respond to. Jump on it. AI is actually going to get better.”
Tim Rose: “AI is going to be a game-changer for operations. We’re already using it to monitor safety through dashcams, and you can also use it in reservations, drafting proposals, and other things like that. The tougher ones are setting up an auto dispatch situation. Before it was difficult to configure by zones, but now with with AI, it’ll be much more friendly. Technology should improve dramatically, and that’s what we’re looking for: to be able to source and help those near-demand opportunities that clients want. We’re behind the curve as an industry, but AI will simplify things a lot. Plus, the safer your yard, the lower your insurance, the more revenue you make, the more profits you make. Simple math.” [CD1125]
