Motorcoach Operators Draw from Past to Survive the Crumbling Economy

Posted on April 21, 2009 by Alex Roman, Managing Editor

Fresh on the heels of last summer’s soaring fuel prices, the nation is now in the grips of a recession, the effects of which have had a severe impact on just about every form of business, with the motorcoach industry being no exception. But, facing difficult times is nothing new for coach operators.

Following the severe impact that 9/11 had on the nation, it took several years for motorcoach operators to rebuild their businesses. Long thought of as a solid, stable industry, the abrupt drop in business following the terrorist attacks in New York and Washington, D.C. forced many operators to re-assess. “9/11 made me re-think the way we did business,” says Marcia Milton, President/CEO First Priority Tours Inc. in District Heights, Md. “I became much more conservative, and have not gotten away from that.”

Nearly eight years later and with a deeper sense of resolve, motorcoach operators appear better equipped to deal with adverse situations after learning some very important lessons from 9/11. The confidence that operators have that they can and will weather this new storm has allowed them to simply take a step back, re-assess the situation and readjust their game plans.

9/11 vs. recession

“If you ask me, personally, 9/11 was ten times worse than it is right now,” says Stephen Story, president of Richmond, Va.-based James River Bus Lines, of the impact the current recession is having on business.

Story explains that following 9/11 about 40 percent of his business — mostly airport and school work — disappeared seemingly overnight, which took about two-and-a-half years to recover from. Judging on how business is currently moving along, Story says that if everything continues on its present course without too many more shakeups, 2009’s revenue will be down slightly, compared to the large drop his operation experienced in 2001. 

“This time around, we knew the recession was coming,” Story points out. “We could see that [business] was slowing down, we had time to prepare and now we are moving along.”

First Priority’s Milton agrees. “It’s not as bad as it was post-9/11, because post-9/11 everything just stopped. All transportation, literally, just stopped,” she says. “With this current recession, business hasn’t stopped; people are just doing things differently.”

Chris Donnelly, president/owner of Sugar Tours in West Dover, Vt., a tour operator that sets up motorcoach trips, says that he noticed business beginning to slow toward the end of last summer as gas prices were well above $4 a gallon. He adds that while his business, overall, is off about 25 percent compared with 2008 numbers, the spring season — a peak travel time for various customer markets — is looking promising for his company and the operators he works with, while summer and fall business is trending downward.

With operators such as Story, Milton and Donnelly, able to clearly see this trend coming ahead of time, many have taken the new tools and lessons learned after 9/11’s disastrous impact and employed them to not only keep their heads above water but, hopefully, keep business flourishing during the economic downturn.

Make cuts or invest?

In the wake of 9/11’s negative effect on business, many operators began to panic and slash prices, forcing them to actually lose money when they made certain runs. All of the operators METRO spoke to for this article agree that price cutting is like cutting your own throat.

“I learned years ago that you cannot work for cost, because if you do you’re going to be out of business before the end of the year,” says George Childers, president of Magic Carpet Ride in Vero Beach, Fla. Childers, like the other operators, stresses the importance of knowing your numbers, enabling you to play with your profit margins at certain times, but not always.

“Know your numbers. Figure out how to calculate your costs — your operating costs, vehicle costs, maintenance costs, fuel, labor and stuff like that,” says Story. “Once you know what those costs are, you can price your trip. And, OK, you’re not going to make much money sometimes on a particular trip, but you want to be competitive; that’s fine. But, know where your cost is, know where your bottom line is and don’t go below it.” Story adds that another very important thing is to not sell your trips based on price, but rather sell on the quality of your operation by stressing what sets you apart.

Rather than significantly cut costs or reduce staff, planning ahead and knowing his numbers enables Story to maintain his workforce during the current recession, choosing instead to accept making a lower profit, which is something he was able to do after 9/11 as well.

Proving his point about not selling at the lowest price, Story explains that his operation is one of the most expensive in the area, but stresses to customers the investments they make to be better and safer, such as spending more than $200,000 on a driver simulator. “We’re trying to make sure our customers and potential customers know what we’re doing for training, safety and upgrading the level of customer service we provide,” says Story. “You don’t get noticed by cutting your prices like everybody else. You get noticed by being better or doing something differently, which usually means providing better service.”

Like Story, Childers is also trying to get by without making any significant cuts in trip prices or costs, by making only minor adjustments to what he considers “frills,” such as newspaper advertising and Yellow Pages listings. He has also decided to invest in the company by purchasing a Bitimec power wash system, which he says will save him money in the long run, and is looking at adding a sixth coach to his operation as long as business continues to support it.

“You can’t go out and spend a hell of a lot of money, but you can’t crawl into a shell either,” he says. “I’ve found that in some of the hardest times, you can do that if you have the patience, wisdom and are willing to move forward with something that there may not be a 100 percent guarantee on.”

Focusing marketing practices

While everybody in the nation is feeling the impact of the recession, there are still many potential customers that must either continue to provide travel or are simply able to continue traveling. The most important thing that 9/11 taught operators was to diversify their businesses, so that their bottom lines don’t decline significantly when one sector slows down.

First Priority’s Milton learned this important lesson when the combination of 9/11 and the D.C. Sniper slowed down her student trips, significantly, for a long period of time. Now, she is focusing her marketing practices where she sees significant opportunities. “We’re just focusing on different markets and looking at expanding areas like our college athletics market, because fortunately those things don’t change,” she says.

Her operation is also becoming more proactive by following up on quotes given over the Web with phone calls, hoping to encourage the customer to give the operation their business or, at the very least, finding out the offer they received from a competitor and matching it if their operation’s equipment is similar. “You can’t just wait for the phone to ring; you have to get more involved in the community, as well,” says Milton. “I’m also doing more local advertising, such as taking out ads in community papers or advertising at local functions where there are a significant amount of potential customers.”

Keeping up with his ideal to “spend money to make money,” Childers recently hired a marketing manager to help him explore new areas of opportunity. Some of the areas of focus include schools, increasing business with tour operators, hotels, clubs, civic organizations, churches and local golf clubs. “Can we do it all at once? No. But, we’ll sit down and take a look at everything and pick out the areas that we need to explore immediately,” he says.

Along with identifying which sectors of business to go after, Magic Carpet Ride is also planning to reach out to existing customers through such things as cards with personal notes to reinforce its dedication to service and remind them that the operation is there to provide the services they need.  

James River Bus Lines is also focusing its marketing practices on sectors where there are plenty of opportunities. In addition, the company tracks which advertising tactics are successful at generating business. “We’ve created special phone numbers for different emails, newsletters, Yellow Pages and postcards that we send out, so that we can track where the phone calls we receive are coming from and then decide what makes sense for us to keep doing, tweak or eliminate altogether,” says Story.

Using online networking

A marketing technique beginning to gain interest in the industry is the usage of online social networking. Many in the motorcoach industry are not familiar with the differences between Twitter, Flickr, Facebook or MySpace, but it may be time to learn how these social networking sites work and what they can do for your business.

“I’m not great at it, and there are some people that can really use it to their advantage, but social networking is definitely a key right now,” says Sugar Tours’ Donnelly.

To enhance his skills, Donnelly attended seminars on Facebook and has been spending about two hours a day for the last several months on it and other social networking sites. In fact, Donnelly explains that he recently picked up a tour through Facebook after an operator saw a post he made about a new culinary tour and gave him a call to work with him on it.

Donnelly says that the most important thing with social networking is to find the proper groups, then become friends with that group. For example, since Sugar Tours has extensive experience with culinary tours, Donnelly has focused on finding foodie and culinary groups, since he says that aspect of his business is still flourishing. Once he finds the right group to market to, potential customers can visit Sugar Tours’ page and view upcoming events that may be of interest. Once they click on a trip they are interested in, the page brings them directly into Sugar Tours’ Website where the interested can view that trip as well as the many other services the operation provides.

At a recent seminar, Donnelly saw how the Commonwealth of Virginia’s Web marketing staff uses Facebook to generate interest in the state’s various events and tourist draws by creating a fan page, which more than 30,000 people are now a part of. Donnelly explains that with a ready-made database, anytime something is going on in the area, a YouTube video is sent out to all of the commonwealth’s “friends,” targeting people that are interested, instead of blindly sending out emails or mailers.

Donnelly feels the potential to grow your customer base using this tool is exciting. "Social networking sites can help you build a database free of charge, so you can narrow down and hit the targets you're trying to market much easier. I think it will work for any business, you just have to learn how to get the most out of it."


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