December 31, 2025 • 46 mins
The transportation industry is at an inflection point — and operators who fail to adapt may not survive the next phase.
In this episode of the Ground Transportation Podcast, Ken Lucci offers a candid assessment of the state of the transportation industry, cutting through noise and speculation to focus on what truly matters for operators today.
Ken explores the pressures reshaping the industry — from insurance and regulatory risk to operational discipline and leadership mindset — and explains why the gap between struggling operators and strong operators continues to widen.
This conversation is designed for owners and executives who want a realistic view of the road ahead and actionable perspective on how to protect profitability, reduce risk, and build lasting enterprise value.
If you want an honest, experience-driven look at where the industry stands — and how to respond strategically — this episode delivers.
At Driving Transactions, Ken Lucci and his team offer financial analysis, KPI reviews, for specific purposes like improving profitability, enhancing the value of the enterprise business planning and buying and selling companies. So if you have any of those needs, please give us a call or check us out at www.drivingtransactions.com.
Pax Training is your all in one solution designed to elevate your team's skills, boost passenger satisfaction, and keep your business ahead of the curve. Learn more at www.paxtraining.com/gtp
Connect with Kenneth Lucci, Principle Analyst at Driving Transactions:
https://www.drivingtransactions.com/
Connect with James Blain, President at PAX Training:
https://paxtraining.com/
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Ken Lucci (00:00):
consistent profitability is what is
(00:01):
selling.
And just because you put yourcompany up for sale and you have
it in your mind that yourbusiness is worth, X does not
mean that your business is worththat.
And it also doesn't mean it'sgoing to sell.
(00:37):
And good afternoon and welcometo another exciting episode of
the Ground TransportationPodcast.
My name is Ken Luci from DrivingTransactions.
We are a financial analysis,business valuation and m and a
advisory service.
And, uh, my partner in crime,James Blaine, from PAX Training
the ultimate.
(00:58):
Chauffeur training and CDLtraining company is not with me
today.
I am.
I'm a little broken up aboutthat, but I'll try to make it
through.
Um, he's out training, uh, a, agroup of chauffeurs, no doubt,
somewhere around the country ifhe's not at some sort of a
convention.
Um, this afternoon you're gonnanotice we, we have a
presentation for you that is abriefing I gave at the
(01:23):
introduction to the state of theindustry session at the
Chauffeur Driven NationalLimousine Association Show.
In Dallas, Texas, and we wantedto do a solo kind of monologue
of this presentation because alot of operators couldn't make
it down to Dallas.
And I wanted to, um, to go intoa little bit more depth than I
(01:48):
could in that 15 minutes that Ihad to introduce this.
So this data is a highlightsfrom our 2025 financial state of
the industry.
Report, which is available for abusiness planning report.
We'll talk about that at theend.
So let's get started.
So, you know, the first thing oneverybody's mind at the show is
(02:09):
the economics, currenteconomics, uh, in the country
right now.
And we pull data from GoldmanSachs, JP Morgan, and Bloomberg.
Now we look at about 10 to 12data points every single week.
And I just pulled four here.
To give you an idea, um.
(02:31):
As of the middle of October, thechances of a recession were less
than 30.
Uh, in 2026, were less than 34%.
Uh, that's a consensus ofGoldman Sachs, JP Morgan, and
Bloomberg.
Now, don't get excited by thatbecause most economists are
known for hedging their bets.
So even in the best economy.
(02:53):
The economists from thoselocations, from those, uh,
enterprises, institutions, ifyou will, uh, will, will fix the
chance of a recession at 20 to25% chance.
So we have a slightly elevatedchance of a recession in 26.
As far as inflation, theinflation forecast for 26 is
(03:13):
less than 2.4%, by year end,2026.
You know, the healthiestinflation is, right around a
2.2%.
So we look good on that score.
US GDP Growth is forecast in2026 and is projected for 2.23%
GDP, which is a little bitlight, but it's still pretty
(03:36):
good.
And federal interest rates.
There is a thought process thatwe're going to see to cuts in
2026 that are gonna take thebank borrowing level to between
3.25% and 3.5%.
What is that gonna mean to theaverage operator?
They're gonna see if you've gotgood credit, you're going to see
(03:57):
some rates that are probably acouple points lower than loans
today.
If all things.
Uh, being equal, and the Fedcuts their interest rates twice
in 2026, which is the forecast.
The only fly in the ointment, ifyou will, is that there is a
reduced look, reduced consumersentiment.
(04:19):
The consumer, consumersentiment's going down.
So for those of you that don'tknow consumer, what's consumer
sentiment is, is, is how theconsumer is spending and how
they feel about the economy.
Well, in 2024, October.
70% of the people felt really,really good about the economy,
and now that's down to 55%, uh,which is a 22% reduction.
(04:43):
And they felt from an economiccondition perspective, overall
economics, they felt.
In October, 2024, like 65% feltvery, very good about it.
And this year it's more like61%.
So it's a about a 6% swing,index of consumer expectations
of what consumers expect for thecoming year.
(05:06):
Last year, that is 74% felt verypositive about it, and the year
over year changed.
Now they feel.
You know, about 51% feelpositive about it.
So that's a Indication thatconsumers are spending more and
they're feeling more hesitantabout the economy.
And believe it or not, thatreally drives a lot of action
(05:29):
by, companies and by economistsand by banks is how consumers
feel and how much they'respending.
This is a specific, Sentiment ofsomeone we follow on a, on a
weekly basis here at drivingtransactions.
We follow about 12 to 15economic stakeholders.
We follow the chief Analyst fromGoldman Sachs, JP Morgan, and
(05:53):
Bloomberg.
We follow JP Morgan's, CEO,Jamie Diamond, and this is a
really good, statement from himthat in October at the end of
October, he was asked whether hefelt there was gonna res be a
recession in 2026.
And he says it's possible, butnot a certainty.
However, they are preparing thebank to navigate any downturn.
(06:15):
You know, that is fantasticadvice for any business owner.
What did he just say there?
It's possible, but it's not acertainty.
We're not heading off a cliff,but we are preparing.
As you should prepare yourbusiness for any downturn.
And all of this in ourestimation, is a result of
tariff and trade uncertainty andthe overall US government chaos,
(06:39):
the DC chaos that's going on,and will continue to go on, you
know, it'll be dysfunctioncentral.
Now the travel sectors that feedour industry are overwhelmingly
positive.
Airline passenger growth.
Domestic passenger growth is forthe next five years, is
scheduled to grow at 3.8%compounded annual growth rate.
(07:02):
International passenger growthis about 5% compounded annual
growth rate.
Now, we pulled data as of.
The Bureau of TransportationStatistics, the last filing was,
September 16th because of thegovernment shutdown.
We're waiting for October formore results.
But you know, the reality is USairlines gained about$4 billion
(07:24):
in the second quarter of 2025.
that's a, net gain over thesecond quarter of 2024.
The domestic and internationalpassengers was up only about a
half a percent in July, butthat's up almost 5% from the
previous two years.
from the average of the previoustwo years, so.
Overall, people are stilltraveling.
(07:45):
When we talk about corporatetravel trends, the next five
years, corporate travel is setto grow at about 7.8% compounded
annual growth rate.
the industry.
Corporate travel is an industry.
The spend on corporate travel isa$2 trillion industry set to be
$2 trillion by and sixcountries.
(08:06):
Produce 67% of that, or thereare six countries.
Spends 67% of$2 trillion.
Now, we looked at the GBTA andtheir revised figures for 2025.
Initially, this time last year,they felt that 2025 was gonna be
(08:27):
a growth year of about 10.9%.
Over 24.
Well, they, they recast thatdown to 6.6%, but they're still
holding fast with 2026, theybelieve growth projections, they
had initially had'em at 9.2%year over year growth, which is
unbelievable, but they revisedthem to just 8.1% growth.
(08:51):
Now, this is very important.
While baseline scenarios assumetrade.
And related disruptions willease quickly any escalations in
the tariff or trade disputeswith the top six countries that
drive corporate travel willtrigger downward revisions.
(09:11):
So we had a chance to talk tothe CEO of GBTA at the, uh, CD
NLA state of the industry.
And we are really monitoring allof the data that comes, out of
the GBTA.
But at the end of the day, thatis the most up-to-date
information is corporate travelis still projected to grow year
(09:32):
over year, 6.6%, and then nextyear about 8%.
growth.
Other sectors that are importantto what we do are the group and
meeting sectors and the USmeeting trends the next five
years, the what's called mice,which is meeting incentives,
conventions, and exhibits.
(09:52):
that industry's, uh, gonna be$175 billion industry by 2030.
It's growing at about 4.8%compounded annual growth rate
year over year.
Boom, 5% every year.
Now, globally, globally,meetings are set to grow at
9.1%, compounded growth rateyear over year, and that's an
(10:13):
$802 billion industry again.
Really focused on the top sixcountries where corporate travel
is taking place.
By the way, our report has.
All of that in it.
Now there is an interestingindustry survey of meetings
abroad by, uh, US corporatemeeting planners, like board
(10:35):
meeting planners, like largegroup planners, like, any
international meetings.
67% of the meeting planners saidthat they wanted a US partner to
manage and coordinate meetingsabroad.
Now that's critically important.
All of the corporations you dobusiness with, primarily the
(10:56):
Fortune 500, if they have anymeetings abroad of any kind.
They are looking for us partnersto manage and coordinate the
travel and transportation, whichis good for us.
Our planning report lists thetop 15 cities for both US and
global meetings, plus a plethoraof other corporate and meeting,
travel sector trends.
(11:17):
In addition, we looked at luxuryhotels, the luxury hotel
business.
Meaning the five star hotels aregrowing at about 11.3%,
compounded annual growth rateevery year, 11% over the next
five, that is gonna be a$230billion industry.
Now this comes directly fromluxury hotel investor reviews
(11:39):
that we've looked at, and that'sbasically today it's$166.4
billion industry.
It's gonna surpass 230 billionby 2030.
What is that telling you?
That's telling you that high networth individual and corporate
executives the hotel industry isbullish on that segment of the
market.
In addition, we reviewed the top10 luxury cruise companies, and
(12:04):
we're not talking about yourfamily.
Carnival cruise.
We're talking about the top 10,the 10 most expensive.
Cruise lines in the world andthey're growing at 12.3%,
compounded annual growth rate.
That's a$23 billion industry by2030.
So all of these things, thesefeeder industries are fantastic
(12:25):
for us now, who's taking thesevery expensive luxury cruises?
It's, it's very simple.
The top.
1% most wealthy couples and thetop 10% wealthiest retirees,
they're taking those cruises andthey're fantastic target for
(13:21):
chauffeur transportation.
In addition to that, we lookedat the private jet business and
that business has a, a.
Five year growth of about 4.1%annual growth rate.
It's a$42.9 billion industry by2030.
And by the way, 67% of allprivate jets are based in the
United States.
that list of jet owners isavailable out there, and you
(13:45):
should be working to haverelationships with every private
airport and fixed basedoperation in your region.
So if you've ever wondered howbig our industry is, there are
37,795 limo operators in theUnited States 8,590 report less
(14:06):
than 250,000 in revenue, 9,174or 24 percent of that number
less than 500,000 and 7,937 or500.
000 to a million dollaroperators.
8,693 are between 1,000,005million, and then 1500 operators
(14:28):
are between 5,000,010, 1100operators or 3%.
Between 10 million and 20million, and then 755 operators
or 2% of the total market areover$20 million.
Now, we've dissected this data,incredibly, 47% of all of the
(14:51):
operators, or 17,764 operatorsout of 37, 795 are less than
500,000 in annual revenue.
The large majority of thoseoperators are uber black or TNC
black operators that have onecar or maybe two cars, 68% of
(15:15):
all operators or 25,701operators.
Our less than 1 million doreport less than 1 million in
annual revenue.
Again, our industry's extremelyfragmented.
So when you look at companiesabove 1 million to 20 million,
you, you're really talking aboutabout 30% of the total market.
(15:37):
Um, if my math is right, 32%.
So while there's 37,795operators out there.
Total, it's more like 10 or11,000 between over$1 million.
Pretty important.
But because the industry is sofragmented with small, tiny
(15:57):
micro operators, it reallycauses price instability because
a lot of them just compete onlow price or they are capacity
for the TNCs.
For Uber, specifically UberBlack.
The industry in total, the USlimousine and motor coach
industry is a$20.3 billion ayear business.
(16:20):
Now, the sedan and SUV businessis 6.6 billion out of that 20.3,
and that's growing at about two0.7% compounded annual growth
rate.
The mini buses, vans, and minibuses are about.
6.9 billion of the total of20.3, and that's growing about
(16:43):
4.2% compounded annual growthrate.
Motor coaches are 6.6 billion.
the charter growth is about 8%compounded annual growth rate,
but tours and sightseeing isgrowing at about.
11% compounded annual growthrate.
Now we have continued concernsabout the growth of sedans and
(17:05):
SUVs.
We believe there's gonna becontinued disruption, even more
disruption than we've seen.
That's going to reduce themarket share of the chauffeur
transportation car going to andfrom the airport.
That's the market that willcontinue to have disruption if
we don't have a better.
Technology solution and customerordering and logistics
(17:30):
experience.
The better news is we seeincreased opportunities in large
vehicles, including vans andmini buses.
We see increased costs and riskthere because the insurance is
going up.
But we see growing market share,very much so.
the same with motor coaches.
We see increased opportunitiesand in the motor coach space,
(17:53):
but we see increased cost andthe insurance risk.
But it's a growing market.
this is not under anycircumstances and endorsement
for every operator to go outthere and to buy a motor coach.
We've seen.
People who have no businessbeing in motor coaches, buy
motor coaches and it practicallyputs them out of business.
(18:13):
That is a tremendous financialrisk.
So you better know what you'redoing going into that market,
and we can help you with that ifyou like.
So we're pleased to announceThis first, uh, state of the
industry intro report that wejust did is, is an ongoing
research partnership withchauffeur driven, whereby we're
taking data from surveys.
(18:35):
As well as data from ourresearch, as well as data from
our clientele.
And we are, we are providingdata on revenue and profits in
the industry.
Now, the quarterly service we dowith chauffeur driven.
will result in data-drivenarticles in the magazine.
We're gonna be reporting on thesurveys in the magazine.
(18:56):
It'll also include bestpractices, white papers and
reports, and expert podcastinterviews and commentaries.
An example is we found in thefirst survey, people were
extraordinarily concerned abouthiring and retaining chauffeurs.
So we are going to includearticles on the.
Uh, post COVID recruiting, aswell as get some recruiting
(19:19):
experts to write articles inwhite papers and perhaps come on
the podcast to talk about clientattracting new chauffeurs and
CDLs, and more importantlyretaining them.
Right?
So we're happy about the ongoingresearch partner.
So The first thing that we askedis which of the following best
describes your outlook forairport revenue in 2025?
(19:44):
And we are concerned that we arerisking market share erosion in
the airport service business.
And, 43.73% said that, you knowwhat, it's gonna be the same as
last year.
30.85% said it's gonna be lower.
In 25 than it was in 24.
(20:06):
Now the good news is 25.42% ofthe operators surveyed and we
got 300 responses from thesurvey as well as about 180 data
points from our own, client datawork that we do.
The companies that are growing,in the airport space, we are
pretty.
(20:27):
Confident that this growth isprimarily a shift in existing
market share from one operatorto another.
It's not necessarily growth incorporate America or private
individuals using chauffeur'sservices to and from the
airport.
(20:47):
In other words, as an industry,we are not doing a fantastic job
increasing market share.
customers are shifting from oneoperator to the other.
Okay.
the, the reason why this iscritically important and we are
really concerned about themarket share is there was a
study done, the NLA and the GBTAfrom Evans PR firm that asked
(21:12):
the question.
What do you use chauffeurservices for?
67% of the corporations saidthey use us strictly to go to
and from the airport.
Airport transfers.
86% of the companies out theresaid they use chafer services
only for sedan and SUVs.
(21:33):
So if we continue to haveerosion in the sedan and SUV and
airport transfer business, wewill lose what I call the milk
and bread.
That it gets people into thestore to buy our, meat and
produce, if you will.
we will lose our ability toattract corporate clients, or at
least our, our value propositionwill be greatly diminished.
(21:56):
39% of corporate America uses usfor shuttle and van services.
31% use us for motor coachservices, so we must have a
strategy as an industry to growairport service.
market share.
And our belief is we need abetter technology experience
from new technology providers inthe industry, or, people that
(22:19):
can influence the technologyproviders to get us a.
A better customer portal, acorporate portal, consumer
portal, as well as customer appthat's akin to the TNCs.
You know, there's a clearindication by this survey that
we need to do a better jobeducating corporate travel
professionals about the widerange of vehicles and service
(22:42):
types and use cases to grow ourcorporate market share.
Well, what do I mean by usecases?
stop.
Promoting a vehicle and starttelling your clients how to use
them.
Promote service use cases likeemployee engagement, outings,
uh, business dinners andmeetings, meetings, events and
(23:04):
board meetings.
We have one client we workedwith that has a slogan that more
business is done in the back ofhis vehicles than in his
boardroom.
More businesses done in the backof our vehicles than at any
client meeting.
So it's promotion of the serviceand use cases, not necessarily
(23:26):
showing pretty pictures ofvehicles.
We are very concerned if we losemore sedan and SUV business and
market share and airporttransfers to the disruptors out
there and there are more comingthat.
$20 billion in total chauffeurtransportation, including motor
coach is gonna go down so manybuses and motor coach revenue.
(23:49):
Which describes your outlook forbus and motor coach revenue in
20 25, 36 0.73%?
It's said it's, it's the sameand 34% say it's up.
20, 25 year to date compared to2024.
Now, this trend is a combined,the increase in revenue in, mini
(24:11):
buses and motor coaches It's acombination of moving market
share from bus only companiesinto the chauffeur sector
because we do a great jobdemonstrating that we have
better service and perhaps newerequipment as well as growth in
new user market share.
There's a lot of last mile frompublic transit to corporate
(24:33):
shuttle work going on, there isa lot of employee shuttle work
being done that is boosting theuse of these vehicles.
There's, also a lot of group andmeeting charter work and even
private event work going on.
So, total revenue, performancetrends.
Considering your revenueperformance this year to date,
38.72% of the operators, whichis over 300 operators surveyed,
(24:57):
plus 180 financial reviews we'vedone.
Um.
38.72% say revenue's gonna behigher.
And what we are seeing is thatrevenue growth is a result uh,
the companies that are growing.
It's a result of a proactivesales effort every single day
promoting their businessesproactively.
(25:17):
It is also by promotingadditional service types and
yielding to larger vehicles, forexample.
and promoting those largervehicles, not just airport
service.
And when we looked at ourinternal data, we saw that the
average increase of a company'swhose revenue is going up is
about a 12% increase year overyear, 12% year to date, 25
(25:42):
compared to 24 Now, 29.29% ofthe companies are flat.
And 31.99, let's just call it32% or lower.
I'm gonna flat out tell you why.
It's because they're beingreactive.
It's because they're spendingand promoting in the wrong
places.
It's because they are notproactively telling the story
(26:04):
and building value theirservices.
They're just sitting waiting forthe phone to ring either from
inbound affiliate or networkwork.
They are not expanding theirmarket share, and promoting
their brand, plain and simple.
So from a profit perspective,about 34% of the companies are
less profitable in 25 year todate.
(26:27):
Less profitable than they werein 2024.
Roughly 40, 41% are the same.
when you look at it, they're thesame as 24 And by the way, if
you look at the blue columnshere, we asked the same question
last year, and about 40% wassimilar to 23.
so year over year, we're seeing,compared to last year, 2024.
(26:53):
29% of operators were moreprofitable than 23.
Same question this year.
Only 25% of the operators aremore profitable in 2025 compared
to 2024.
Now, Why are these trends theway they are?
Number one, where people arelower profit, it's because their
cost to provide the service areincreasing more rapidly than
(27:18):
they can increase their end userprices.
Let me give you some examples.
When your insurance bill goesup.
By 25%.
It's tough to raise your pricescorrespondingly to abor absorb
all of that increase.
So that's what we mean by that,of the companies that are more
profitable.
(27:38):
It's very straightforward to uswhen we review that data
granularly, when we look at thecompany specifically, those
companies that have increasedprofits above this year compared
to last, are priced in the topone third of their market
overall.
Meaning that when you look atall of the services they offer.
(28:00):
They're priced in the top onethird on a blended basis.
They may be more competitive onsedans and SUVs, but they're
charging more for their largerequipment.
At the same time, about 50,greater than 50% have revenue
from charter business.
When I, the commonality of allof the companies that are more
(28:20):
profitable that we deal with isthat greater than 50% of their
business is not transfer.
It's not airport sedan and SUV,it's charter.
It's as directed.
in addition, we're seeing peoplepivoting to larger vehicles.
very much so.
The companies that are the mostprofitable have strategically
(28:42):
pivoted to buy mini buses andsprinters and, the most
profitable of buying motorcoaches and the most
sophisticated operationally.
And also they're granularlymanaging their financials on a
monthly basis.
They're not waiting to see howthey did at the end of the year.
They're managing and budgetingand forecasting, which is,
pretty critical.
(29:03):
Again, being proactive.
The gross margins we're seeingin this space are for 2025.
The sedan and SUV margins are onthe low side between 30%, and
the highest we've seen is 35%gross margin on transfers, on
charters as high as 40% grossmargins on bands and mini
(29:24):
coaches.
35% to 40% is the average.
we're seeing.
A little bit greater than 30%gross margins on shuttle
contracts.
We've had some people who havemade grave mistakes on pricing
shuttle contracts that arebarely making 20% on shuttle
contracts and, and it's, uh, notworth doing.
(29:45):
and then motor coaches, theprofits are holding 35 to to 40%
on transfers and charters.
45 to 50% on tours when peopleare doing, when operators are
doing tours and selling by theseat, it is incredibly
profitable, like 45 to 50%margins on each trip rather.
(30:05):
we're seeing, uh, shuttlecontracts using motor coaches,
about 30% average gross profitmargin.
Again, we, we are reallyconcerned on market share and
gross profits.
on the sedans and SUVs.
We see more disruption comingwith ride share and autonomous
vehicles.
So our advice to operators thatare financially capable is to
(30:27):
move into larger equipment, whenyou're ready and operationally
savvy.
Move into the higher capacityvehicles.
They last longer, they costmore.
So you need a profitable companyto start with, but that's where
the margins are the safest.
Growing by the way.
Uh, if you don't know your grossprofit margins on each service
(30:48):
you, you sell, please visitdriving transactions.com and buy
our financial course.
Okay, so we are seeing the costof goods trends for 25 over 24.
Interest rates were about thesame.
We do expect a 1% rate cut in 26in 2025.
Chassis prices were up 7%.
(31:08):
We believe that we've been toldby manufacturers another 7%
increase in chassis because oftrade uncertainty and tariff
chaos.
We've been told by the best inthe fleet insurance business.
That 14% was the averageincrease in 2025.
Expect another 10% increase in2026.
(31:31):
It's a continued hard market.
Do not blame the insuranceagents and only as part of it
has to do with your loss runs,but you need to run the safest
operation you can, but asseveral guests have said, we are
in a permanent.
Hard market for a variety ofreasons on commercial fleet
(31:52):
insurance.
Uh, CDL Labor went up about 10%in 2025, and we expect in 2026
to see the same kind of kind ofthing.
It's going to be a challenge to,uh, attract CDL labor.
The only way we can really seedoing, to increasing, hiring is
to have better wages and betterquality of life.
(32:15):
Whereas if they're an over theroad trucker.
Um, you know, they're not homeall the time.
When they work for us in the busbusiness, we, they're getting
home every night, but there are81,800 open bus drivers in the
United States, including schoolbuses and a 237,000 openings in
the truck space, including.
(32:36):
The last 10 mile delivery.
So at the end of the day, that'sgoing to be a pain point for us
moving forward is hiring andretaining CDLs.
Another pain point we saw,repair cost went up in 2025 by
about 18% over 24, but in 26we're expecting another 78%
(32:57):
increase.
And just so you know.
Repairs and maintenance are up43% above 2019 because of the
supply, chain issues caused bythe COVID that period.
And now the tariffs on repairparts and, and parts
manufactured overseas.
The, the silver lining, if youwill, as we see fuel went down
(33:20):
over 5% in 2025.
It's expected to drop another 4%in 2026.
Uh, diesel will remain a littlehigher than gasoline, but we
expect to have some good news onthat front.
Um, so we should still becharging our fuel surcharges.
Don't go down on those.
Operators should expectpermanent disruption in the
(33:41):
sedan and S SUV V space.
every single day we get data onthe autonomous vehicle industry,
which now includes Google Waymo.
it includes Tesla's, robo taxis,and Amazon Zu X.
Those are only in the UnitedStates.
There's another half a dozencoming into the states from
around the world, and we arefollowing how the TNCs, how Uber
(34:06):
and Lyft, how Uber is respondingand getting into the autonomous
space.
At the end of the day, this isgoing to be the most disrupted
space over the next five years.
(35:23):
we expect autonomous liveryvehicles, that's what we call
them.
We don't like calling them robotaxis.
We believe there will beautonomous premium vehicles
available in the top 20 citiesin the United States between
over the next four to fiveyears.
(35:44):
Perhaps New York will drag alittle bit, you know, perhaps
it'll be five, seven, or eightyears out.
But they are becoming more andmore commonplace and they will
take a portion of the lower endof the chauffeur business.
Um, and we're concerned aboutthat m and a trends.
It's no secret that there's aton of merger and acquisition
(36:07):
activity out there.
Mostly acquisitions.
It's high activities.
In the space, there's a lot ofbuyers and a lot of sellers, but
I have to share with you thatconsistent profitability is what
is selling.
And just because you put yourcompany up for sale and you have
it in your mind that yourbusiness is worth, X does not
(36:27):
mean that your business is worththat.
And it also doesn't mean it'sgoing to sell.
So what is selling is companies,the top 10 elements include
consistent profitability.
Accurate financial records andprofitable revenue growth,
meaning that just because you'reputting on revenue, if you're
(36:48):
not making profit, it doesn'thelp the value of your business.
Additionally, buyers are lookingfor a low inbound affiliate
work, meaning of your totalrevenue, it should be less than
20% total.
They're looking for low revenueconcentration among your highest
clients, so your biggest clientsshould not be more than five to
10%.
(37:08):
Of your total, income.
they're looking for newer fleetsand larger vehicles.
They're looking for the majorityof revenue coming from charter
and profitable contracts.
They're looking for a managementteam in place, not a business
that's dependent upon its owner.
They're looking for qualitybrand in growing markets.
You know, really they're, tryingto buy the top three to five
(37:30):
companies in the top 50 metroareas.
And they're looking for no oneclient making up more than 10%
of their revenue, and they'rescrutinizing the type of
clients.
If your largest client is, is,uh, you know, a series of
airport crews and that's yourlargest client type, is, uh,
airport crews, that's a veryvulnerable client type to have.
(37:52):
and they're looking for ideally,greater than of revenue coming
from.
National or global trips orrevenue production that's not
associated with in-housevehicles.
that's the best of all worlds.
Those are the top 10 elements.
our best advice is to be readyand realistic.
There are currently 47 chauffeurbusinesses listed for sale.
(38:16):
Have been for sale for over 18months, and the odds of selling
at this point are less than 15%because either the price is too
high or the business hasinherent problems that were not
solved prior to going on themarket, which is a big problem.
Those two things, sellers areunrealistic on their price
because they've gotten badadvice on what the business is
(38:38):
worth, or the business isdependent solely on the owner
and the business can't runwithout the owner.
and the business has flaws.
That's why they sit on themarket that long for 2026.
Our initial recommendations are,number one, increase profits
don't increase low marginrevenue.
(38:59):
don't take on shuttle contractsat cost plus.
that don't have significantgross margins, like above 30%.
Your overall gross marginsshould be somewhere.
35 to 45% depending upon themakeup of your company and your
fleet and your market.
But it's very difficult to makeany money if your gross profit
(39:21):
margins are below 35%.
We're recommending people lowertheir debt.
the banks would like to see.
It's a balance sheet ratio notto get boring, but they don't
want to see more than 30% ofyour total income in long-term
debt.
Well, what does that mean?
A million dollar company thatdoes a million dollars in total
revenue a year should have nomore than$300,000 in fleet debt.
(39:46):
Let me say that again.
A million dollar company does.
Somebody that does total incomeof a million dollars in total
revenue should not have morethan$300,000 in total debt.
Extrapolate that out.
A$10 million company should haveless than$3 million in long-term
debt if you have debt, that's anEIDL loan, an S-B-A-E-I-D-L loan
(40:09):
from the COVID era and.
That is pushing your debt ratioabove 0.3, start paying it down
aggressively.
If you ever wanna sell yourbusiness, if you don't wanna
sell your business, you know itis still a problem.
But if you wanna sell yourbusiness, you need to have that
definitely paid down.
And if all you're paying down isinterest only on that EID loan,
(40:33):
something is wrong, that you'renot generating enough cash to.
To make principal paymentsincrease your cash liquidity.
just as Jamie Diamond said, he'spreparing his bank for any
eventuality in relationship torecession, and you should
prepare your business.
You should have at least threemonths of all of your base
(40:54):
expenses in cash liquidity,three months at minimum.
Set aside in cash and everymonth you should have more cash
than you started with.
and if you don't, and we havethe exact numbers in our course,
but if you don't, if there's anydownturn, you're going to be,
uh, potentially in trouble,increase your proactive sales
(41:16):
efforts by three x.
What do we mean by that?
We don't mean increase your payper click ads three times, 300%.
No, we don't, but we do mean.
Proactively increase yourcustomer communications with
your existing clients and theoffers you send to your existing
dormant clients.
And reach out to like thecompanies you do business with
(41:38):
three times more than you'redoing now because 26 might be a
challenging year.
Get hyper-focused on superiorservice delivery It's to
separate your company furtherfrom the TNCs that you know
their vehicle may look justsimilar, to yours, but
hyperfocus on superior servicedelivery, hyperfocus on selling
The value of what you provideguaranteed on time service, the
(42:02):
safest mode of transportationand not low price, and mitigate
against the loss of sedan andSUV revenue.
I still think we can increasemarket share.
I believe we've not even hit thetip of the iceberg of people
that are in the, demographics touse our chauffeur service.
(42:22):
We just have an antiquatedtechnology set in this industry
and an antiquated mindset thatwe need to, Fix because, people
are aging out and the youngerpeople like to use apps and so
do the corporate travelcoordinators and so do the
executive assistants.
They want to use corporateportals and they want to track
(42:43):
their trips, track theirreceipts, track everything.
They don't wanna make phonecalls to find drivers and.
And fine receipts.
So those were ourrecommendations for 2026.
At this point, we're pretty,bullish on 26, but we're
cautiously optimistic and cashwill be incredibly important.
if you would like to order ourfinancial state of the industry
(43:07):
business planning report, it isonline in terms of a.
Very much elongated video, witha lot more information.
But it also is a PDF, whichgives you operator statistics
and financial KPIs and economicsentiment, but more importantly,
(43:28):
it gives you corporate buyersentiment and travel trends.
Gives you the top 100 corporatetravel.
By industry as well as bycompany, as well as their
competitors, gives you currentprofit and growth,
opportunities.
A lot of areas of growth givesyou the busiest airports, the
busiest FBOs, gives you a futureforecast in every aspect of all
(43:51):
the feeder industries.
And it does talk a little bitabout how to mitigate against
the disruptor trends that arecoming.
Including TNCs, autonomousvehicles, motor coaches, and it,
gives you some competitivestrategies on how to improve and
increase revenue in yourbusiness.
So if you have interest, clickthe link and check out that,
(44:12):
business planning report.
And it also comes with planningsessions.
If you're interested in thatoption, we can help you create a
business plan for 2026.
We appreciate your time today.
if you know anybody else in thebusiness, have them subscribe to
the podcast, tell all of yourfriends about it.
(44:32):
we're doing extremely well asfar as video snips and videos on
YouTube and the podcast aregrowing every single week.
We hope we're adding value.
And hopefully my, esteemedpartner, James Blaine from P'S
Training will be here with menext week.
But until then, this has beenKen Lucci.
(44:54):
I'm the principal analyst atDriving Transactions.
If you'd like to improve yourprofitability, if you'd like to
have you a financial review doneof your business, please give us
a call if you need, uh, customerservice or chauffeur or driver
training.
Please give my partner in crime,James Blaine, a call at PAX
Training and visit our websites.
(45:15):
And thank you very much for, uh,listening and watching this
podcast, uh, watching us onYouTube and have a great day.
Thank you for listening to theground transportation podcast.
If you enjoyed this episode,please remember to subscribe to
the show on apple, Spotify,YouTube, or wherever you get
your podcasts.
For more information about PAXtraining and to contact James,
(45:38):
go to PAX training.com.
And for more information aboutdriving transactions and to
contact Ken, Go to drivingtransactions.com.
We'll see you next time on theground transportation podcast.
consistent profitability is what is
(00:01):
selling.
And just because you put yourcompany up for sale and you have
it in your mind that yourbusiness is worth, X does not
mean that your business is worththat.
And it also doesn't mean it'sgoing to sell.
(00:37):
And good afternoon and welcometo another exciting episode of
the Ground TransportationPodcast.
My name is Ken Luci from DrivingTransactions.
We are a financial analysis,business valuation and m and a
advisory service.
And, uh, my partner in crime,James Blaine, from PAX Training
the ultimate.
(00:58):
Chauffeur training and CDLtraining company is not with me
today.
I am.
I'm a little broken up aboutthat, but I'll try to make it
through.
Um, he's out training, uh, a, agroup of chauffeurs, no doubt,
somewhere around the country ifhe's not at some sort of a
convention.
Um, this afternoon you're gonnanotice we, we have a
presentation for you that is abriefing I gave at the
(01:23):
introduction to the state of theindustry session at the
Chauffeur Driven NationalLimousine Association Show.
In Dallas, Texas, and we wantedto do a solo kind of monologue
of this presentation because alot of operators couldn't make
it down to Dallas.
And I wanted to, um, to go intoa little bit more depth than I
(01:48):
could in that 15 minutes that Ihad to introduce this.
So this data is a highlightsfrom our 2025 financial state of
the industry.
Report, which is available for abusiness planning report.
We'll talk about that at theend.
So let's get started.
So, you know, the first thing oneverybody's mind at the show is
(02:09):
the economics, currenteconomics, uh, in the country
right now.
And we pull data from GoldmanSachs, JP Morgan, and Bloomberg.
Now we look at about 10 to 12data points every single week.
And I just pulled four here.
To give you an idea, um.
(02:31):
As of the middle of October, thechances of a recession were less
than 30.
Uh, in 2026, were less than 34%.
Uh, that's a consensus ofGoldman Sachs, JP Morgan, and
Bloomberg.
Now, don't get excited by thatbecause most economists are
known for hedging their bets.
So even in the best economy.
(02:53):
The economists from thoselocations, from those, uh,
enterprises, institutions, ifyou will, uh, will, will fix the
chance of a recession at 20 to25% chance.
So we have a slightly elevatedchance of a recession in 26.
As far as inflation, theinflation forecast for 26 is
(03:13):
less than 2.4%, by year end,2026.
You know, the healthiestinflation is, right around a
2.2%.
So we look good on that score.
US GDP Growth is forecast in2026 and is projected for 2.23%
GDP, which is a little bitlight, but it's still pretty
(03:36):
good.
And federal interest rates.
There is a thought process thatwe're going to see to cuts in
2026 that are gonna take thebank borrowing level to between
3.25% and 3.5%.
What is that gonna mean to theaverage operator?
They're gonna see if you've gotgood credit, you're going to see
(03:57):
some rates that are probably acouple points lower than loans
today.
If all things.
Uh, being equal, and the Fedcuts their interest rates twice
in 2026, which is the forecast.
The only fly in the ointment, ifyou will, is that there is a
reduced look, reduced consumersentiment.
(04:19):
The consumer, consumersentiment's going down.
So for those of you that don'tknow consumer, what's consumer
sentiment is, is, is how theconsumer is spending and how
they feel about the economy.
Well, in 2024, October.
70% of the people felt really,really good about the economy,
and now that's down to 55%, uh,which is a 22% reduction.
(04:43):
And they felt from an economiccondition perspective, overall
economics, they felt.
In October, 2024, like 65% feltvery, very good about it.
And this year it's more like61%.
So it's a about a 6% swing,index of consumer expectations
of what consumers expect for thecoming year.
(05:06):
Last year, that is 74% felt verypositive about it, and the year
over year changed.
Now they feel.
You know, about 51% feelpositive about it.
So that's a Indication thatconsumers are spending more and
they're feeling more hesitantabout the economy.
And believe it or not, thatreally drives a lot of action
(05:29):
by, companies and by economistsand by banks is how consumers
feel and how much they'respending.
This is a specific, Sentiment ofsomeone we follow on a, on a
weekly basis here at drivingtransactions.
We follow about 12 to 15economic stakeholders.
We follow the chief Analyst fromGoldman Sachs, JP Morgan, and
(05:53):
Bloomberg.
We follow JP Morgan's, CEO,Jamie Diamond, and this is a
really good, statement from himthat in October at the end of
October, he was asked whether hefelt there was gonna res be a
recession in 2026.
And he says it's possible, butnot a certainty.
However, they are preparing thebank to navigate any downturn.
(06:15):
You know, that is fantasticadvice for any business owner.
What did he just say there?
It's possible, but it's not acertainty.
We're not heading off a cliff,but we are preparing.
As you should prepare yourbusiness for any downturn.
And all of this in ourestimation, is a result of
tariff and trade uncertainty andthe overall US government chaos,
(06:39):
the DC chaos that's going on,and will continue to go on, you
know, it'll be dysfunctioncentral.
Now the travel sectors that feedour industry are overwhelmingly
positive.
Airline passenger growth.
Domestic passenger growth is forthe next five years, is
scheduled to grow at 3.8%compounded annual growth rate.
(07:02):
International passenger growthis about 5% compounded annual
growth rate.
Now, we pulled data as of.
The Bureau of TransportationStatistics, the last filing was,
September 16th because of thegovernment shutdown.
We're waiting for October formore results.
But you know, the reality is USairlines gained about$4 billion
(07:24):
in the second quarter of 2025.
that's a, net gain over thesecond quarter of 2024.
The domestic and internationalpassengers was up only about a
half a percent in July, butthat's up almost 5% from the
previous two years.
from the average of the previoustwo years, so.
Overall, people are stilltraveling.
(07:45):
When we talk about corporatetravel trends, the next five
years, corporate travel is setto grow at about 7.8% compounded
annual growth rate.
the industry.
Corporate travel is an industry.
The spend on corporate travel isa$2 trillion industry set to be
$2 trillion by and sixcountries.
(08:06):
Produce 67% of that, or thereare six countries.
Spends 67% of$2 trillion.
Now, we looked at the GBTA andtheir revised figures for 2025.
Initially, this time last year,they felt that 2025 was gonna be
(08:27):
a growth year of about 10.9%.
Over 24.
Well, they, they recast thatdown to 6.6%, but they're still
holding fast with 2026, theybelieve growth projections, they
had initially had'em at 9.2%year over year growth, which is
unbelievable, but they revisedthem to just 8.1% growth.
(08:51):
Now, this is very important.
While baseline scenarios assumetrade.
And related disruptions willease quickly any escalations in
the tariff or trade disputeswith the top six countries that
drive corporate travel willtrigger downward revisions.
(09:11):
So we had a chance to talk tothe CEO of GBTA at the, uh, CD
NLA state of the industry.
And we are really monitoring allof the data that comes, out of
the GBTA.
But at the end of the day, thatis the most up-to-date
information is corporate travelis still projected to grow year
(09:32):
over year, 6.6%, and then nextyear about 8%.
growth.
Other sectors that are importantto what we do are the group and
meeting sectors and the USmeeting trends the next five
years, the what's called mice,which is meeting incentives,
conventions, and exhibits.
(09:52):
that industry's, uh, gonna be$175 billion industry by 2030.
It's growing at about 4.8%compounded annual growth rate
year over year.
Boom, 5% every year.
Now, globally, globally,meetings are set to grow at
9.1%, compounded growth rateyear over year, and that's an
(10:13):
$802 billion industry again.
Really focused on the top sixcountries where corporate travel
is taking place.
By the way, our report has.
All of that in it.
Now there is an interestingindustry survey of meetings
abroad by, uh, US corporatemeeting planners, like board
(10:35):
meeting planners, like largegroup planners, like, any
international meetings.
67% of the meeting planners saidthat they wanted a US partner to
manage and coordinate meetingsabroad.
Now that's critically important.
All of the corporations you dobusiness with, primarily the
(10:56):
Fortune 500, if they have anymeetings abroad of any kind.
They are looking for us partnersto manage and coordinate the
travel and transportation, whichis good for us.
Our planning report lists thetop 15 cities for both US and
global meetings, plus a plethoraof other corporate and meeting,
travel sector trends.
(11:17):
In addition, we looked at luxuryhotels, the luxury hotel
business.
Meaning the five star hotels aregrowing at about 11.3%,
compounded annual growth rateevery year, 11% over the next
five, that is gonna be a$230billion industry.
Now this comes directly fromluxury hotel investor reviews
(11:39):
that we've looked at, and that'sbasically today it's$166.4
billion industry.
It's gonna surpass 230 billionby 2030.
What is that telling you?
That's telling you that high networth individual and corporate
executives the hotel industry isbullish on that segment of the
market.
In addition, we reviewed the top10 luxury cruise companies, and
(12:04):
we're not talking about yourfamily.
Carnival cruise.
We're talking about the top 10,the 10 most expensive.
Cruise lines in the world andthey're growing at 12.3%,
compounded annual growth rate.
That's a$23 billion industry by2030.
So all of these things, thesefeeder industries are fantastic
(12:25):
for us now, who's taking thesevery expensive luxury cruises?
It's, it's very simple.
The top.
1% most wealthy couples and thetop 10% wealthiest retirees,
they're taking those cruises andthey're fantastic target for
(13:21):
chauffeur transportation.
In addition to that, we lookedat the private jet business and
that business has a, a.
Five year growth of about 4.1%annual growth rate.
It's a$42.9 billion industry by2030.
And by the way, 67% of allprivate jets are based in the
United States.
that list of jet owners isavailable out there, and you
(13:45):
should be working to haverelationships with every private
airport and fixed basedoperation in your region.
So if you've ever wondered howbig our industry is, there are
37,795 limo operators in theUnited States 8,590 report less
(14:06):
than 250,000 in revenue, 9,174or 24 percent of that number
less than 500,000 and 7,937 or500.
000 to a million dollaroperators.
8,693 are between 1,000,005million, and then 1500 operators
(14:28):
are between 5,000,010, 1100operators or 3%.
Between 10 million and 20million, and then 755 operators
or 2% of the total market areover$20 million.
Now, we've dissected this data,incredibly, 47% of all of the
(14:51):
operators, or 17,764 operatorsout of 37, 795 are less than
500,000 in annual revenue.
The large majority of thoseoperators are uber black or TNC
black operators that have onecar or maybe two cars, 68% of
(15:15):
all operators or 25,701operators.
Our less than 1 million doreport less than 1 million in
annual revenue.
Again, our industry's extremelyfragmented.
So when you look at companiesabove 1 million to 20 million,
you, you're really talking aboutabout 30% of the total market.
(15:37):
Um, if my math is right, 32%.
So while there's 37,795operators out there.
Total, it's more like 10 or11,000 between over$1 million.
Pretty important.
But because the industry is sofragmented with small, tiny
(15:57):
micro operators, it reallycauses price instability because
a lot of them just compete onlow price or they are capacity
for the TNCs.
For Uber, specifically UberBlack.
The industry in total, the USlimousine and motor coach
industry is a$20.3 billion ayear business.
(16:20):
Now, the sedan and SUV businessis 6.6 billion out of that 20.3,
and that's growing at about two0.7% compounded annual growth
rate.
The mini buses, vans, and minibuses are about.
6.9 billion of the total of20.3, and that's growing about
(16:43):
4.2% compounded annual growthrate.
Motor coaches are 6.6 billion.
the charter growth is about 8%compounded annual growth rate,
but tours and sightseeing isgrowing at about.
11% compounded annual growthrate.
Now we have continued concernsabout the growth of sedans and
(17:05):
SUVs.
We believe there's gonna becontinued disruption, even more
disruption than we've seen.
That's going to reduce themarket share of the chauffeur
transportation car going to andfrom the airport.
That's the market that willcontinue to have disruption if
we don't have a better.
Technology solution and customerordering and logistics
(17:30):
experience.
The better news is we seeincreased opportunities in large
vehicles, including vans andmini buses.
We see increased costs and riskthere because the insurance is
going up.
But we see growing market share,very much so.
the same with motor coaches.
We see increased opportunitiesand in the motor coach space,
(17:53):
but we see increased cost andthe insurance risk.
But it's a growing market.
this is not under anycircumstances and endorsement
for every operator to go outthere and to buy a motor coach.
We've seen.
People who have no businessbeing in motor coaches, buy
motor coaches and it practicallyputs them out of business.
(18:13):
That is a tremendous financialrisk.
So you better know what you'redoing going into that market,
and we can help you with that ifyou like.
So we're pleased to announceThis first, uh, state of the
industry intro report that wejust did is, is an ongoing
research partnership withchauffeur driven, whereby we're
taking data from surveys.
(18:35):
As well as data from ourresearch, as well as data from
our clientele.
And we are, we are providingdata on revenue and profits in
the industry.
Now, the quarterly service we dowith chauffeur driven.
will result in data-drivenarticles in the magazine.
We're gonna be reporting on thesurveys in the magazine.
(18:56):
It'll also include bestpractices, white papers and
reports, and expert podcastinterviews and commentaries.
An example is we found in thefirst survey, people were
extraordinarily concerned abouthiring and retaining chauffeurs.
So we are going to includearticles on the.
Uh, post COVID recruiting, aswell as get some recruiting
(19:19):
experts to write articles inwhite papers and perhaps come on
the podcast to talk about clientattracting new chauffeurs and
CDLs, and more importantlyretaining them.
Right?
So we're happy about the ongoingresearch partner.
So The first thing that we askedis which of the following best
describes your outlook forairport revenue in 2025?
(19:44):
And we are concerned that we arerisking market share erosion in
the airport service business.
And, 43.73% said that, you knowwhat, it's gonna be the same as
last year.
30.85% said it's gonna be lower.
In 25 than it was in 24.
(20:06):
Now the good news is 25.42% ofthe operators surveyed and we
got 300 responses from thesurvey as well as about 180 data
points from our own, client datawork that we do.
The companies that are growing,in the airport space, we are
pretty.
(20:27):
Confident that this growth isprimarily a shift in existing
market share from one operatorto another.
It's not necessarily growth incorporate America or private
individuals using chauffeur'sservices to and from the
airport.
(20:47):
In other words, as an industry,we are not doing a fantastic job
increasing market share.
customers are shifting from oneoperator to the other.
Okay.
the, the reason why this iscritically important and we are
really concerned about themarket share is there was a
study done, the NLA and the GBTAfrom Evans PR firm that asked
(21:12):
the question.
What do you use chauffeurservices for?
67% of the corporations saidthey use us strictly to go to
and from the airport.
Airport transfers.
86% of the companies out theresaid they use chafer services
only for sedan and SUVs.
(21:33):
So if we continue to haveerosion in the sedan and SUV and
airport transfer business, wewill lose what I call the milk
and bread.
That it gets people into thestore to buy our, meat and
produce, if you will.
we will lose our ability toattract corporate clients, or at
least our, our value propositionwill be greatly diminished.
(21:56):
39% of corporate America uses usfor shuttle and van services.
31% use us for motor coachservices, so we must have a
strategy as an industry to growairport service.
market share.
And our belief is we need abetter technology experience
from new technology providers inthe industry, or, people that
(22:19):
can influence the technologyproviders to get us a.
A better customer portal, acorporate portal, consumer
portal, as well as customer appthat's akin to the TNCs.
You know, there's a clearindication by this survey that
we need to do a better jobeducating corporate travel
professionals about the widerange of vehicles and service
(22:42):
types and use cases to grow ourcorporate market share.
Well, what do I mean by usecases?
stop.
Promoting a vehicle and starttelling your clients how to use
them.
Promote service use cases likeemployee engagement, outings,
uh, business dinners andmeetings, meetings, events and
(23:04):
board meetings.
We have one client we workedwith that has a slogan that more
business is done in the back ofhis vehicles than in his
boardroom.
More businesses done in the backof our vehicles than at any
client meeting.
So it's promotion of the serviceand use cases, not necessarily
(23:26):
showing pretty pictures ofvehicles.
We are very concerned if we losemore sedan and SUV business and
market share and airporttransfers to the disruptors out
there and there are more comingthat.
$20 billion in total chauffeurtransportation, including motor
coach is gonna go down so manybuses and motor coach revenue.
(23:49):
Which describes your outlook forbus and motor coach revenue in
20 25, 36 0.73%?
It's said it's, it's the sameand 34% say it's up.
20, 25 year to date compared to2024.
Now, this trend is a combined,the increase in revenue in, mini
(24:11):
buses and motor coaches It's acombination of moving market
share from bus only companiesinto the chauffeur sector
because we do a great jobdemonstrating that we have
better service and perhaps newerequipment as well as growth in
new user market share.
There's a lot of last mile frompublic transit to corporate
(24:33):
shuttle work going on, there isa lot of employee shuttle work
being done that is boosting theuse of these vehicles.
There's, also a lot of group andmeeting charter work and even
private event work going on.
So, total revenue, performancetrends.
Considering your revenueperformance this year to date,
38.72% of the operators, whichis over 300 operators surveyed,
(24:57):
plus 180 financial reviews we'vedone.
Um.
38.72% say revenue's gonna behigher.
And what we are seeing is thatrevenue growth is a result uh,
the companies that are growing.
It's a result of a proactivesales effort every single day
promoting their businessesproactively.
(25:17):
It is also by promotingadditional service types and
yielding to larger vehicles, forexample.
and promoting those largervehicles, not just airport
service.
And when we looked at ourinternal data, we saw that the
average increase of a company'swhose revenue is going up is
about a 12% increase year overyear, 12% year to date, 25
(25:42):
compared to 24 Now, 29.29% ofthe companies are flat.
And 31.99, let's just call it32% or lower.
I'm gonna flat out tell you why.
It's because they're beingreactive.
It's because they're spendingand promoting in the wrong
places.
It's because they are notproactively telling the story
(26:04):
and building value theirservices.
They're just sitting waiting forthe phone to ring either from
inbound affiliate or networkwork.
They are not expanding theirmarket share, and promoting
their brand, plain and simple.
So from a profit perspective,about 34% of the companies are
less profitable in 25 year todate.
(26:27):
Less profitable than they werein 2024.
Roughly 40, 41% are the same.
when you look at it, they're thesame as 24 And by the way, if
you look at the blue columnshere, we asked the same question
last year, and about 40% wassimilar to 23.
so year over year, we're seeing,compared to last year, 2024.
(26:53):
29% of operators were moreprofitable than 23.
Same question this year.
Only 25% of the operators aremore profitable in 2025 compared
to 2024.
Now, Why are these trends theway they are?
Number one, where people arelower profit, it's because their
cost to provide the service areincreasing more rapidly than
(27:18):
they can increase their end userprices.
Let me give you some examples.
When your insurance bill goesup.
By 25%.
It's tough to raise your pricescorrespondingly to abor absorb
all of that increase.
So that's what we mean by that,of the companies that are more
profitable.
(27:38):
It's very straightforward to uswhen we review that data
granularly, when we look at thecompany specifically, those
companies that have increasedprofits above this year compared
to last, are priced in the topone third of their market
overall.
Meaning that when you look atall of the services they offer.
(28:00):
They're priced in the top onethird on a blended basis.
They may be more competitive onsedans and SUVs, but they're
charging more for their largerequipment.
At the same time, about 50,greater than 50% have revenue
from charter business.
When I, the commonality of allof the companies that are more
(28:20):
profitable that we deal with isthat greater than 50% of their
business is not transfer.
It's not airport sedan and SUV,it's charter.
It's as directed.
in addition, we're seeing peoplepivoting to larger vehicles.
very much so.
The companies that are the mostprofitable have strategically
(28:42):
pivoted to buy mini buses andsprinters and, the most
profitable of buying motorcoaches and the most
sophisticated operationally.
And also they're granularlymanaging their financials on a
monthly basis.
They're not waiting to see howthey did at the end of the year.
They're managing and budgetingand forecasting, which is,
pretty critical.
(29:03):
Again, being proactive.
The gross margins we're seeingin this space are for 2025.
The sedan and SUV margins are onthe low side between 30%, and
the highest we've seen is 35%gross margin on transfers, on
charters as high as 40% grossmargins on bands and mini
(29:24):
coaches.
35% to 40% is the average.
we're seeing.
A little bit greater than 30%gross margins on shuttle
contracts.
We've had some people who havemade grave mistakes on pricing
shuttle contracts that arebarely making 20% on shuttle
contracts and, and it's, uh, notworth doing.
(29:45):
and then motor coaches, theprofits are holding 35 to to 40%
on transfers and charters.
45 to 50% on tours when peopleare doing, when operators are
doing tours and selling by theseat, it is incredibly
profitable, like 45 to 50%margins on each trip rather.
(30:05):
we're seeing, uh, shuttlecontracts using motor coaches,
about 30% average gross profitmargin.
Again, we, we are reallyconcerned on market share and
gross profits.
on the sedans and SUVs.
We see more disruption comingwith ride share and autonomous
vehicles.
So our advice to operators thatare financially capable is to
(30:27):
move into larger equipment, whenyou're ready and operationally
savvy.
Move into the higher capacityvehicles.
They last longer, they costmore.
So you need a profitable companyto start with, but that's where
the margins are the safest.
Growing by the way.
Uh, if you don't know your grossprofit margins on each service
(30:48):
you, you sell, please visitdriving transactions.com and buy
our financial course.
Okay, so we are seeing the costof goods trends for 25 over 24.
Interest rates were about thesame.
We do expect a 1% rate cut in 26in 2025.
Chassis prices were up 7%.
(31:08):
We believe that we've been toldby manufacturers another 7%
increase in chassis because oftrade uncertainty and tariff
chaos.
We've been told by the best inthe fleet insurance business.
That 14% was the averageincrease in 2025.
Expect another 10% increase in2026.
(31:31):
It's a continued hard market.
Do not blame the insuranceagents and only as part of it
has to do with your loss runs,but you need to run the safest
operation you can, but asseveral guests have said, we are
in a permanent.
Hard market for a variety ofreasons on commercial fleet
(31:52):
insurance.
Uh, CDL Labor went up about 10%in 2025, and we expect in 2026
to see the same kind of kind ofthing.
It's going to be a challenge to,uh, attract CDL labor.
The only way we can really seedoing, to increasing, hiring is
to have better wages and betterquality of life.
(32:15):
Whereas if they're an over theroad trucker.
Um, you know, they're not homeall the time.
When they work for us in the busbusiness, we, they're getting
home every night, but there are81,800 open bus drivers in the
United States, including schoolbuses and a 237,000 openings in
the truck space, including.
(32:36):
The last 10 mile delivery.
So at the end of the day, that'sgoing to be a pain point for us
moving forward is hiring andretaining CDLs.
Another pain point we saw,repair cost went up in 2025 by
about 18% over 24, but in 26we're expecting another 78%
(32:57):
increase.
And just so you know.
Repairs and maintenance are up43% above 2019 because of the
supply, chain issues caused bythe COVID that period.
And now the tariffs on repairparts and, and parts
manufactured overseas.
The, the silver lining, if youwill, as we see fuel went down
(33:20):
over 5% in 2025.
It's expected to drop another 4%in 2026.
Uh, diesel will remain a littlehigher than gasoline, but we
expect to have some good news onthat front.
Um, so we should still becharging our fuel surcharges.
Don't go down on those.
Operators should expectpermanent disruption in the
(33:41):
sedan and S SUV V space.
every single day we get data onthe autonomous vehicle industry,
which now includes Google Waymo.
it includes Tesla's, robo taxis,and Amazon Zu X.
Those are only in the UnitedStates.
There's another half a dozencoming into the states from
around the world, and we arefollowing how the TNCs, how Uber
(34:06):
and Lyft, how Uber is respondingand getting into the autonomous
space.
At the end of the day, this isgoing to be the most disrupted
space over the next five years.
(35:23):
we expect autonomous liveryvehicles, that's what we call
them.
We don't like calling them robotaxis.
We believe there will beautonomous premium vehicles
available in the top 20 citiesin the United States between
over the next four to fiveyears.
(35:44):
Perhaps New York will drag alittle bit, you know, perhaps
it'll be five, seven, or eightyears out.
But they are becoming more andmore commonplace and they will
take a portion of the lower endof the chauffeur business.
Um, and we're concerned aboutthat m and a trends.
It's no secret that there's aton of merger and acquisition
(36:07):
activity out there.
Mostly acquisitions.
It's high activities.
In the space, there's a lot ofbuyers and a lot of sellers, but
I have to share with you thatconsistent profitability is what
is selling.
And just because you put yourcompany up for sale and you have
it in your mind that yourbusiness is worth, X does not
(36:27):
mean that your business is worththat.
And it also doesn't mean it'sgoing to sell.
So what is selling is companies,the top 10 elements include
consistent profitability.
Accurate financial records andprofitable revenue growth,
meaning that just because you'reputting on revenue, if you're
(36:48):
not making profit, it doesn'thelp the value of your business.
Additionally, buyers are lookingfor a low inbound affiliate
work, meaning of your totalrevenue, it should be less than
20% total.
They're looking for low revenueconcentration among your highest
clients, so your biggest clientsshould not be more than five to
10%.
(37:08):
Of your total, income.
they're looking for newer fleetsand larger vehicles.
They're looking for the majorityof revenue coming from charter
and profitable contracts.
They're looking for a managementteam in place, not a business
that's dependent upon its owner.
They're looking for qualitybrand in growing markets.
You know, really they're, tryingto buy the top three to five
(37:30):
companies in the top 50 metroareas.
And they're looking for no oneclient making up more than 10%
of their revenue, and they'rescrutinizing the type of
clients.
If your largest client is, is,uh, you know, a series of
airport crews and that's yourlargest client type, is, uh,
airport crews, that's a veryvulnerable client type to have.
(37:52):
and they're looking for ideally,greater than of revenue coming
from.
National or global trips orrevenue production that's not
associated with in-housevehicles.
that's the best of all worlds.
Those are the top 10 elements.
our best advice is to be readyand realistic.
There are currently 47 chauffeurbusinesses listed for sale.
(38:16):
Have been for sale for over 18months, and the odds of selling
at this point are less than 15%because either the price is too
high or the business hasinherent problems that were not
solved prior to going on themarket, which is a big problem.
Those two things, sellers areunrealistic on their price
because they've gotten badadvice on what the business is
(38:38):
worth, or the business isdependent solely on the owner
and the business can't runwithout the owner.
and the business has flaws.
That's why they sit on themarket that long for 2026.
Our initial recommendations are,number one, increase profits
don't increase low marginrevenue.
(38:59):
don't take on shuttle contractsat cost plus.
that don't have significantgross margins, like above 30%.
Your overall gross marginsshould be somewhere.
35 to 45% depending upon themakeup of your company and your
fleet and your market.
But it's very difficult to makeany money if your gross profit
(39:21):
margins are below 35%.
We're recommending people lowertheir debt.
the banks would like to see.
It's a balance sheet ratio notto get boring, but they don't
want to see more than 30% ofyour total income in long-term
debt.
Well, what does that mean?
A million dollar company thatdoes a million dollars in total
revenue a year should have nomore than$300,000 in fleet debt.
(39:46):
Let me say that again.
A million dollar company does.
Somebody that does total incomeof a million dollars in total
revenue should not have morethan$300,000 in total debt.
Extrapolate that out.
A$10 million company should haveless than$3 million in long-term
debt if you have debt, that's anEIDL loan, an S-B-A-E-I-D-L loan
(40:09):
from the COVID era and.
That is pushing your debt ratioabove 0.3, start paying it down
aggressively.
If you ever wanna sell yourbusiness, if you don't wanna
sell your business, you know itis still a problem.
But if you wanna sell yourbusiness, you need to have that
definitely paid down.
And if all you're paying down isinterest only on that EID loan,
(40:33):
something is wrong, that you'renot generating enough cash to.
To make principal paymentsincrease your cash liquidity.
just as Jamie Diamond said, he'spreparing his bank for any
eventuality in relationship torecession, and you should
prepare your business.
You should have at least threemonths of all of your base
(40:54):
expenses in cash liquidity,three months at minimum.
Set aside in cash and everymonth you should have more cash
than you started with.
and if you don't, and we havethe exact numbers in our course,
but if you don't, if there's anydownturn, you're going to be,
uh, potentially in trouble,increase your proactive sales
(41:16):
efforts by three x.
What do we mean by that?
We don't mean increase your payper click ads three times, 300%.
No, we don't, but we do mean.
Proactively increase yourcustomer communications with
your existing clients and theoffers you send to your existing
dormant clients.
And reach out to like thecompanies you do business with
(41:38):
three times more than you'redoing now because 26 might be a
challenging year.
Get hyper-focused on superiorservice delivery It's to
separate your company furtherfrom the TNCs that you know
their vehicle may look justsimilar, to yours, but
hyperfocus on superior servicedelivery, hyperfocus on selling
The value of what you provideguaranteed on time service, the
(42:02):
safest mode of transportationand not low price, and mitigate
against the loss of sedan andSUV revenue.
I still think we can increasemarket share.
I believe we've not even hit thetip of the iceberg of people
that are in the, demographics touse our chauffeur service.
(42:22):
We just have an antiquatedtechnology set in this industry
and an antiquated mindset thatwe need to, Fix because, people
are aging out and the youngerpeople like to use apps and so
do the corporate travelcoordinators and so do the
executive assistants.
They want to use corporateportals and they want to track
(42:43):
their trips, track theirreceipts, track everything.
They don't wanna make phonecalls to find drivers and.
And fine receipts.
So those were ourrecommendations for 2026.
At this point, we're pretty,bullish on 26, but we're
cautiously optimistic and cashwill be incredibly important.
if you would like to order ourfinancial state of the industry
(43:07):
business planning report, it isonline in terms of a.
Very much elongated video, witha lot more information.
But it also is a PDF, whichgives you operator statistics
and financial KPIs and economicsentiment, but more importantly,
(43:28):
it gives you corporate buyersentiment and travel trends.
Gives you the top 100 corporatetravel.
By industry as well as bycompany, as well as their
competitors, gives you currentprofit and growth,
opportunities.
A lot of areas of growth givesyou the busiest airports, the
busiest FBOs, gives you a futureforecast in every aspect of all
(43:51):
the feeder industries.
And it does talk a little bitabout how to mitigate against
the disruptor trends that arecoming.
Including TNCs, autonomousvehicles, motor coaches, and it,
gives you some competitivestrategies on how to improve and
increase revenue in yourbusiness.
So if you have interest, clickthe link and check out that,
(44:12):
business planning report.
And it also comes with planningsessions.
If you're interested in thatoption, we can help you create a
business plan for 2026.
We appreciate your time today.
if you know anybody else in thebusiness, have them subscribe to
the podcast, tell all of yourfriends about it.
(44:32):
we're doing extremely well asfar as video snips and videos on
YouTube and the podcast aregrowing every single week.
We hope we're adding value.
And hopefully my, esteemedpartner, James Blaine from P'S
Training will be here with menext week.
But until then, this has beenKen Lucci.
(44:54):
I'm the principal analyst atDriving Transactions.
If you'd like to improve yourprofitability, if you'd like to
have you a financial review doneof your business, please give us
a call if you need, uh, customerservice or chauffeur or driver
training.
Please give my partner in crime,James Blaine, a call at PAX
Training and visit our websites.
(45:15):
And thank you very much for, uh,listening and watching this
podcast, uh, watching us onYouTube and have a great day.
Thank you for listening to theground transportation podcast.
If you enjoyed this episode,please remember to subscribe to
the show on apple, Spotify,YouTube, or wherever you get
your podcasts.
For more information about PAXtraining and to contact James,
(45:38):
go to PAX training.com.
And for more information aboutdriving transactions and to
contact Ken, Go to drivingtransactions.com.
We'll see you next time on theground transportation podcast.
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