‘Uberisation’ And The Future of Global Chauffeuring

‘Uberisation’ And The Future of Global Chauffeuring

Uber and other transport network companies have transformed the global chauffeuring market. But opportunities remain in the sector for enterprising businesses that can offer a bespoke service.

Uberisation – it’s one of those buzzwords that provokes an instantaneous monologue about ‘disrupters’, or the reeling out of observations that the Chinese symbol for crisis is also the one for opportunity. Well, whatever else it means, Uber and other transport network companies (TNCs) have melded a series of processes: (cab) driver geolocation; management and distribution; price-to-availability fare calculation (with its infamous ‘surge’ pricing); and seamless and cashless payment. All in one little mobile phone app.

The development of that software and platform is the biggest paradigm shift the travel industry – both business and leisure – has seen in a very long time.

It also coincides with, and indeed is an artefact of, the ascendancy of millennials. According to Expedia, 49% of them use mobile devices when planning trips, with 35% booking on tablets and phones. As this generation reaches influential executive positions in all sorts of organisations, are millennial attitudes and the proliferation of travel-management platforms circumventing aeons of company practices, contacts and partnerships, especially in hired car and minibus travel?

Strengths and weaknesses of the TNC model

In their favour, TNCs offer many attractive features, including quick ETAs and keen pricing (often less than half the price of a taxi). They also allow account management transparency and, through their software, greater control of employee travel. Firms can manage employee access, monitor trip activity and arrange adaptable payment methods with automated expense codes.

But there are a few caveats.

“Uber is a game changer in the market, but not suitable for business [travel],” says Mark Bursa, editor of Professional Driver. “You can’t be sure what you’ll get and you can’t pre-book. Most corporate travel is pre-planned. It must be as deliverable and reliable as an airline; [a car] must pick up on time every time. If the chairman is catching a flight to Frankfurt at 5am, he needs to know the car will be there – he can’t do it in the morning.”

 

“In the second quarter of 2015, Uber overtook traditional taxis for business customer receipts for the first time in the US”

 

 

Bursa cites other app-accessed services such as Blacklane (which offers both pre-booking and international service) as far more suitable for business use.

Knowing “what you’ll get” throws up other issues in an age where companies are putting ever-greater emphasis on risk management and duty of care. Whose car are your people jumping into outside the office plaza? Is it insured, fit for purpose, or even who it purports to be (although that applies to any taxi service)? Peer review incentivises ‘sharing economy’ businesses to perform well, but telling an inquiry you were satisfied a driver’s rating of five smiley faces was good enough before they disappeared off the map with your export director might not cut it.

Security and duty of care

“SMEs often don’t have basic policies around hotel, Airbnb, Uber, taxi, or airline use in place,” says a spokesman for Washington DC-based international travel management and consultancy company MacNair. “Policies or practices around duty of care and risk management are often largely missing. And who will book this service – is it on a per employee basis, or does your travel management company take on this task?”

Remember, too, that every outsourced operation enhances or detracts from your image. Is your biggest overseas client being collected from the heliport by a bulletproof Bentley with an ex special-forces driver, or a tatty blue Renault Espace driven by a geezer wearing a jumper with a hole in it?

Okay, that’s a little unkind – the TNCs are stepping up to the limousine market with professional-looking offerings. Indeed, in the second quarter of 2015, US expense management system provider Certify that Uber overtook traditional taxis for business customer receipts for the first time. By the fourth quarter it had even overtaken the hallowed hire car – 41% to 39%.

“The use of cars in business travel is growing,” observes Bursa. “If you’ve got, say, two people going from Bristol to London, the high cost of train tickets makes it viable to hire car and driver for the day – with all the convenience of multiple drops, waiting and privacy.” And he maintains that bricks-and-mortar firms with cars and drivers are still the lifeblood of the business. “[London operator] Addison Lee went from 250 cars in 2004 to 4,800 in 2016. There’s a lot of consolidation in the business. Big operators are getting bigger.”

Bespoke opportunities

The TNCs are still largely software-wielding enablers with only loose connections to their drivers. Such technologies are being integrated into more traditional operations. Companies small or large can add their services to limousine/minicab price comparison sites such as Karhoo. And, even if the volatility of the mass markets is too harsh for many, there are still bespoke opportunities in the many niches that business travel presents.

“There’s a demand for a personal service where the drivers know their customers and the customers know the firm,” says one Birmingham operator wishing to remain discreet about his identity. The firm started in 2009 with three Daimlers. It now has eight new top-line Jaguars and three Bentleys (bought used). “Our clients like it that we know which water they want in the back, what newspaper. They like it because they know how our people drive.

“We did wonder about Uber when it first appeared,” he admits. “Was it going to put us out of business – or should we try it, even? But we didn’t want their stickers on our cars for a start; it doesn’t go with our image. And their [Uber’s] customers don’t know you [as a firm] – they don’t come back. You just happen to be in their vicinity when they look at the app.”

 

“Most corporate travel is pre-planned. It must be as deliverable and reliable as an airline”

 

Mark Bursa, editor, Professional Driver

He cites good service, referral building and cultivating a particular type of image – “a mini-brand, I suppose” – as the main factors in his company’s expansion. “I wouldn’t like to be a bog-standard cabbie at the moment, though,” he observes.

The firm has just signed up to Karhoo, and, like many smaller operations, admits that keeping abreast of app and web possibilities will become an increasing factor in winning contracts and fares.

With companies once again finding the confidence – if not quite the same amount of cash – to pack their executives off overseas, niches are opening up for SMEs with strong USPs.

Thinking back to the bulletproof limo with the ex special-forces driver, an ex-Household Cavalry officer, Charlie Bowman, has set up a chauffeur company (Capstar) boasting long-wheelbase Jaguar XJ saloons driven by suited and booted, ex-military drivers. As Bowman himself says, Capstar is the antithesis of Uber – a tailor-made service offering high security, discretion and trustworthiness with a style of delivery only available from highly trained professionals. Even though it isn’t backed by an app, the firm has the confidence to launch in New York later this year.

Nuanced and thoroughly planned travelling will always require specialists, though travel management companies may see their relationships with hotels and hire car companies (and their ability to secure discounts) undermined as the likes of Uber and Airbnb cut them out of the loop in some areas. Software, mobile and big data will allow for greater tuning and connectivity in every aspect of the industry, but must be managed with care. Players in the market will need to be more far-sighted and informed than ever before if they’re not going to be in for a bumpy ride.

 

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