Magazine for the professional limousine, charter and tour industry.
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20 LIMOUSINE, CHARTER & TOUR SEPTEMBER 2016 WWW.LCTMAG.COM BUS/VAN: ILCT SEMINAR SERIES: VEHICLES New Or Used, There's A Bus to Get You In The Game Operators are adding motorcoaches to gain clients, but to succeed you first must understand the business. By Tom Halligan, LCT East Coast editor M otorcoach manufacturers and distributors want first-time buyers to succeed. They know limousine companies that want to sample the bus business will fail if they don't understand the differences and costs of running a motorcoach versus limo fleet vehicles. For successful seasoned opera- tors, today's state-of-the-art motorcoach- es are loaded with safety features and amenities that enhance their large-group service to clients. Representatives from major motor- coach companies talked about various aspects of the business during a panel discussion March 1 at the International LCT Show in Las Vegas. "We see the limousine industry as a growing market for motorcoaches, but it's our job to make sure they know the nuts and bolts of the business be- cause we need them to succeed," said Mitch Gurainick, MCI's vice president of pre-owned coach sales. "Our job is to educate them on the pros and cons of the motorcoach business so they know what they are getting into. We don't want the bus coming back to remar- ket and having to deal with the finance companies and all that, so failure is not an option." Steve Zeigler, director of business de- velopment at Prevost, said, "My advice is first-time limousine operators shouldn't try to become a bus company. You don't need to change your business model. You already provide professional trans- portation services; now you're just add- ing another vehicle to your portfolio you can market to your clients." However, Gurainick and Zeigler stress doing homework before entering the mo- torcoach business. Talk to your insurance company for quotes, find a repair facility, figure out how you will wash the bus, and dump the lavatory — a few issues specific to motorcoaches. "Most important is to plan a budget to get into the business," Gurainick said. "You have to know your overhead costs upfront so you don't get in over your head right away. That includes paying your drivers, which can average around 25% of your operating budget. And main- tenance costs more than for a sedan fleet. Bus tires can run $4,000 to $5,000, so you have to budget for routine maintenance and repairs." The big upside is properly maintained motorcoaches can run a million-plus miles, and older refurbished vehicles can keep running 10-plus years. Zeigler not- ed he knows of Greyhound buses that have clocked two million miles. Tryouts Both experienced executives pointed out first timers can get in over their heads fast. It's best to ease into the market buy- ing a used bus. "Get your feet wet first with a used bus and buy from a reputable U.S. bus dealer — someone who is going to sell you a quality used bus that has been inspect- ed," Gurainick said. "We do a 217-point inspection and provide some warranties on parts and labor. The last thing a new operator needs is to start dumping mon- ey into an old bus that needs work." Roman Cornell, executive vice presi- dent of ABC Companies, suggested small operators who can't afford a full-time bus mechanic should consider shared maintenance services. "Small operators should look at possibly working with other operators to share a mechanic or form an affiliate bus network to share maintenance services as a way to reduce costs," he said. Another cheaper way to test the wa- ters is to lease a used bus. "We think it's a good way to get into the game," Gu- rainick said. "A new operator can lease a used bus for six months to get com- fortable with the vehicle and market it to clients. If it works, then they buy the bus and we credit them for the lease. It's a safe way to enter the business and we have a 60-70% conversion rate from the lease program." Zeigler noted operators who hesitate to step up to the plate might want to try a mid-size, 27-passenger motorcoach. "That's a great way to buy pre-owned to test the vehicle with your clientele and see how they react and then you can move up to a full-size motorcoach." New Coaches Considering a new motorcoach? Today's vehicles are equipped with state-of-the-art technologies and safety features, passen- ger comfort amenities, and various cabin designs. For example, Cornell said his company offers luxury custom galleys to any customer specification. "We have recently delivered a large rear horseshoe lounge with custom con- ference table and we also offer tables that have self-adjusting flaps that can be extended to make the table larger," Cornell said. "We also offer 110v outlets equipped with USB outlets or just full