Chauffeured Service Selectively Ups Its Game

In addition, the percentage of respondents who do not have a chauffeured ground transportation contract decreased to 43 percent this year from more than 45 percent in 2023. Of those who do, about 29 percent have one or two contracts, up from 26 percent in 2023, but those with three or more contracts dropped slightly to 19 percent from 20 percent last year.

Chauffeured Ground Transport Companies Serving Travel Programs

On a scale of 1 (poor) to 5 (excellent); 319 respondents

Clean, well-serviced, new-model cars remained the highest-rated category, improving 0.02 points to 4.19. Close behind was duty of care, where the average score jumped 0.17 points to 4.15 and which was the most improved category from last year's report.

"Coming out of Covid, people were buying vehicles that were two to three years old for the cost of a new one," said Brett Barenholtz, who in March was elected as the new president of the National Limousine Association. "It's much easier now. Everything has opened up recently. You still have to be careful in planning when you want vehicles, but [chauffeured suppliers'] fleets are being upgraded."

Regarding the increase in duty of care, "the most impactful thing that happened was a lot of companies unfortunately didn't make it," EmpireCLS COO Joey Phelps said. "Some smaller companies didn't, and some that depended on the independent operator network. Whereas in the employee model, you have much greater control over all aspects of duty of care. What you saw is a shift toward that model with the overall operators in the industry, so that naturally will improve. … When we see prices increase as a result of increased costs, most operators realize they have a responsibility to increase the level of service and duty of care they are providing."

The score for drivers who are independent contracts also significantly improved, by 0.14 points year over year to 3.96. One reason for the increase could be that some companies are "holding them to a higher standard, and they want that standard to be the same as they have with their employees," said Barenholtz, who also is the Boston-based CEO of Above All Transportation, Boston Car Service, ETS International and Maine Limousine. "Everybody is finding more time now to go out and vet all their independent contractors a lot better than they used to. Coming out of Covid, people were very shorthanded."

Another category with significant improvement was availability and ease of booking, with an increase of 0.11 points to 3.99. "We have noticed that ease of booking is increasingly important," EmpireCLS EVP of sales Marissa Criaris said. "We give our customers multiple ways to book—via app, a web dashboard, email distribution by industry, a toll-free phone number, in addition to using any of the online booking tools that we have a direct interface with. There's not one solution that fits all customers or all bookers. In today's climate, you want to be able to offer as many options [as possible], and it has to be fast."

Despite better scores this year in more than half of the rating categories, others notably declined, and there is room for improvement for the segment.

Of the four categories with ratings that dipped this year, two focused on pricing: negotiating pricing and amenities, down 0.15 points, and pricing transparency, down 0.12 points. All sources agreed that the cost to do business has increased in the past year or two.

"Driver costs have gone up, the [independent operator] insurance is higher than in the past, vehicles are more expensive, fuel is not as crazy [as it has been], but drivers are trying to earn the same amount, and given inflation, they want to make more," said Jeff LaFave, managing director of ground transportation technology platform HQ. "That puts pressure on operators. It's a tough spot for corporations and operators at the same time."

LaFave said he has seen corporate clients become much more cost-conscious across the board. "They're not cost-cutting yet, but they are really looking at the types of service people are taking," he said. "They don't want to cut back because people are traveling and in front of clients and customers, so [they want] to get people to make better decisions."

Corporate clients also are "really looking at pricing," LaFave added. "Through the pandemic, they had to accept pricing suppliers were putting out there. Now they are really examining and analyzing the price increases. … Companies are trying to negotiate rates, and suppliers are pushing back. They're hard discussions, they're not easy. But we have seen suppliers slow down their price increases."

Barenholtz concurred: "Everybody is more price-conscious today, and the costs of doing business has gone off the charts for everyone in our association," he said. "The costs are 30 percent to 40 percent higher than they were four years ago, so that is reflected in the pricing."

One supplier who requested anonymity said that some pre-pandemic negotiated prices weren't sustainable. "The sticker shock came from some of those accounts that may have been heavily discounted, and now there was a need to correct that," they said. "But overall, we are seeing stabilization now, and don't foresee any drastic increases in the near future."

As for the lower transparency rating, Barenholtz suggested one cause might be because of line-item breakdowns for fuel, airport toll charges and other costs. "There are some companies that might play games," he said. "The base is $100, but when all is said and done, it's $140. It's very important that companies let their clients and customers know the price they are going to pay, however they break it down. Some states have certain taxes, some companies have admin costs. People just want to know what they will pay in the end. [They should] ask, 'What is the all-in cost for this?' That way it won't be confusing."

One move EmpireCLS made during the pandemic to address pricing transparency was to move to all-inclusive flat-rate pricing "to ensure one more area where we could raise the bar," Phelps said. "The only time there is open-ended pricing is when you don't have all the details." That pricing also includes standard features such as bottled water, complimentary Wi-Fi and chargers in the vehicles with multiple ports for each type of phone.

The other category with a notable drop was complaint/problem resolution, down by 0.12 points. All the suppliers interviewed for this report said that any issues should be addressed immediately.

"In chauffeured transportation, you have more high-touch, where you should reach someone," Barenholtz said. "You find out how good a company is when you have a problem. Obviously, there are certain things. Cars can have a breakdown. Things can happen. But how does that company deal with it? That's when you learn about the company you are dealing with and if it's the right company."

For the second year in a row, the percentage of respondents who said they had a sustainability component in their chauffeured program dropped, to 18 percent from 22 percent in 2023. Of that 18 percent, 34 percent said their primary supplier meets all their companies' sustainability needs, and 28 percent said most of their needs were met. Only 12 percent said none or only a few sustainability needs were met by suppliers.

And yet, sustainability remains an important topic.

LaFave "definitely" has more customers asking HQ to measure CO2 emissions, and "we are starting to see more clients trying to get more options about sustainability during the booking process," he said. "It's not a big part of anyone's overall sustainability program yet. Chauffeured is always the last formally being built in, but it's an area you can control more than other areas."

EmpireCLS' Phelps said his company is seeing "tremendous pressure from clients to provide alternatives to gasoline vehicles." EmpireCLS made a "massive investment" into electric vehicles and introduced more than 60 of them in Los Angeles alone, and "we just ordered 10 Lucids for New Jersey to start with, and there will be more orders coming very soon," Phelps added. "The decision was driven by clear feedback from our clients. They indicated a strong demand for environmentally friendly vehicle options. They are busy constantly, and we will be adding a lot more."

EmpireCLS' Criaris added that when the company began purchasing EVs, "we also added superchargers in each of our office locations," she said. "Since many companies have sustainability departments and goals set, we offer carbon-emissions reporting upon request. As time goes on and there's a greater understanding of the impact of emissions on the environment, the better the data will be, and the reporting will be much stronger. Customers are more focused on airlines and other parts of travel for carbon emissions, but we have a handful that are asking for reporting on their chauffeured rides."

Berenholtz agreed that customers are moving toward sustainability, and the NLA last year announced GreenRides, an initiative to promote and implement environmentally responsible practices across the industry. "The problem that is coming up is the infrastructure," he said.

"In California between Los Angeles and San Francisco, there might be more charging stations than there are in the rest of the country," Berenholtz added. "We need that on the East Coast, in New Jersey, New York, Boston, Philadelphia. We need to have it everywhere to have the comfort of going electric more."