Management & Operations

Industry revenue flat, equipment costs increase, said United Motorcoach Assoc.

Posted on March 1, 2001

Since 1982, annual operating revenue for a motorcoach has remained between $112,000 and $125,000 a year while the cost of a new coach increased from about $180,000 then to $350,000 in 2000.Those figures provided a harsh reality to those attending the United Motorcoach Association’s (UMA) annual meeting in February in Atlantic City. An eight-year expansion of the industry has cooled, causing a diminished value for existing fleets and predicted flat sales for manufacturers during the next one to two years.“The total market is falling due to low revenue, changing habits and new markets available,” said Dale Bunce of IMD, the marketing/consulting firm that compiled information on the state of the industry for the UMA meeting.Several reasons Bunce mentioned for the stagnation in the industry are more charters with fewer long-term trips and a poor business approach. Since many of the operations are family owned, there is very little marketing and operators rely on price to build volume, he says.“We don’t run the businesses as good as we could,” Bunce said. “Everybody’s giving customer service. You need to be better than that.”Out of the $573 billion people pay to the tour and travel industry, only $7 billion of that goes to the motorcoach industry, compared with the $112 billion that goes to the airlines. Most operators target the same core markets—corporate, schools, seniors and commuter—all of which have become more competitive, Bunce said. “Corporate America holds a real future for us, but we’re not doing a lot with it today. Most don’t actively go out and try to get the corporate market,” he said. “In 2004, the tour market will be more attractive, but also more competitive.”The majority of the revenue for the industry (72%) comes from charter services, while linehaul (18%) is growing and tours (10%) are decreasing. To help increase revenues in all of those areas, Bunce suggested focusing on revenue growth and margins and marketing the unique aspects of the services offered. He also recommended becoming more creative and developing untapped markets.“The revenues are not keeping pace with increased expenses,” said Vic Parra, CEO of the UMA. To help alleviate the slowing in the industry, the UMA is exploring with its membership the following four strategies: increasing general business skills, creating a partnership with government, building a brand identity and creating an ongoing new business development program. (Expanded coverage of those four strategies and the state of the industry presentation can be found in METRO’s May 2001 issue.)The UMA also unveiled the executive summary of its first annual Benchmarking & Operating Ratios Study that determines such benchmarks as revenues, fleet size and service type. The study shows that the average motorcoach company (out of the 175 that responded) earns total operating revenue per coach of about $130,000, with the revenue per coach being the highest among operators with 20 to 70 coaches. Companies that earn more than a third of their revenues from scheduled service averaged higher revenues per coach, read the study.“There’s clearly a need to get this information into the hands of operators,” Parra said. “The underlying message is that we’ve got to change our operating model.”Other big news at the UMA meeting centered around the unveiling of some unique motorcoaches. Neoplan’s Intermodal Expeditor is a double-decker motorcoach with the ability to transport a standard 20-foot intermodal freight container or several smaller freight containers.“It was designed to increased revenue for scheduled route operators,” said Neoplan’s James Gaspard. “It gives two streams of independent revenue.”The 35-passenger vehicle can help operators tap into the $140 billion time sensitive freight market, he said. Production on the vehicle will begin in the third or fourth quarter of this year.Motor Coach Industries also showcased its new J4500, an evolution of its previous coaches. The vehicle features a spiral staircase, theater seats, a stainless steel frame, interchangeable windshields, a new engine door, a below the floor cooling system and more driver parcel space.“It has style and simplicity at the right price,” said Brent Danielson, product manager for the J4500.The vehicle has a base price of $348,000 and the first model went to Ozark Trailways in Fort Smith, Ark.

View comments or post a comment on this story. (0 Comments)

More News

Passenger rail, bus service boosts real estate values, report finds

The report explored seven metropolitan regions, including Boston, Los Angeles, and Seattle, that provide access to heavy rail, light rail, commuter rail, and BRT.

APTA names Fernandez chair, new executive committee members

Jeffrey A. Nelson, GM of the Rock Island County Metropolitan Mass Transit District in Moline, Ill., will serve as vice chair.

American Logistics names new VP, transit market development

Ron Brooks previously served as manager of accessible transit services at Valley Metro.

New Flyer's McNeill named to Canada's Clean50 sustainability leaders

She was honored during the Clean50 Summit held in Toronto, and hosted by Delta Management Group.

Van Fossen retires after 40 years with First Transit

He began his career with First Transit in 1980 as an assistant GM in Lynchburg, Va.

See More News

Post a Comment

Post Comment

Comments (0)

More From The World's Largest Fleet Publisher

Automotive Fleet

The Car and truck fleet and leasing management magazine

Business Fleet

managing 10-50 company vehicles

Fleet Financials

Executive vehicle management

Government Fleet

managing public sector vehicles & equipment


Work Truck Magazine

The number 1 resource for vocational truck fleets

Schoolbus Fleet

Serving school transportation professionals in the U.S. and Canada

LCT Magazine

Global Resource For Limousine and Bus Transportation