Are bigger vehicles really better?  According to Limocentric, the official LCT blog, the answer is a resounding “yes.”  Sara McLean, publisher of LCT summed it up with this statement:

When you are chauffeur driven, you want BIG.

Martin Romjue, editor of Limocentric and LCT, followed with this:

We shouldn’t even have to say this, but with compact cars creeping into the industry, it can’t be said enough. BIG vehicles ‘R Us.

Considering LCT’s nearly pathological distain for healthy skepticism of the Prius, it’s easy to dismiss these statements, but the question remains, is bigger really better?

To find the answer, I decided to consult the magical Google Trends.

For those of you unaware of this amazing tool, it’s a free service provided by Google that shows the latest search trends.  Most people use it to check the hot trends, but it’s also a great historical search tool.

Let’s Establish a Baseline

As everyone knows, the limo industry is in the tank.  To see this in all its depressing glory, I pulled up a trend search for “limousine.”

As the economy has collapsed, the trend has moved downward.  Fluctuations in the trend curve show increased demand during prom and wedding season, but the trend is steady and predictable.

Another search for “stretch limo” shows the same thing:

Is there hope?

The key is to go big …. really big.

This is the search for “limo bus”:

And the final search for “party bus”:

As you can see, the buses are bucking the trend.  In tough economic times, people are saving money by splitting the cost amongst large groups.  It’s clearly a case of bigger is better.  LCT called it right.

Is it time to buy a bus?

If you run a successful retail limo business with brand dominance in your market, go for it.  If you’re just starring out and think this is the key to success, don’t do it.  A party bus is the icing on the cake of a successful limo business.  It’s a huge investment with considerable risk.  It’s also a sea of DOT regulation that a new operator shouldn’t navigate.

If you’re new, start with a few used stretches, build your marketing, and when a market presence is established, buy a bus.  Party buses may be trending upward, but it’s still a difficult economic environment.  The best move may be to simply preserve cash and dig in for the long haul.

From coast to coast, copious amounts of regulation and taxes have been dumped on the limousine industry in the name of safety and fairness.  With shrinking revenues, limo operators are hurting.

Unfortunately, so are local and state governments.  This means the pain will continue.  Instead of digging in and cutting spending, governments will continue to exact their toll on limo operators.  It wouldn’t be so bad if the bureaucrats cleaned the puke out of the limos, but they contribute nothing but headaches.

Don’t We Need Regulation?

No.  Regulation actually breeds illegal operators and creates a sub-market for cheap limos.   The free market is a superior and efficient regulator.

Although regulation intends to create a safe market, it frequently fails.  A recent report from foxtoledo.com clarifies the problem.

Doug Ramsey, owner of Limo Toledo, said abuse of the [limo] code runs rampant through the city’s limousine companies. Even worse, he said, Toledo loses out by not enforcing its own laws.

“Half the companies in Toledo are probably illegal,” Ramsey said. “If the city wants to make money on issuing tickets, they can make tons of money ticketing these companies. The city and state need to step up and do their job.”

Limo regulations are tough to enforce.  Companies are mobile and can easily evade inspections.  Even when illegal limo companies are caught red-handed, they simply reincorporate and start over.

Within this environment, regulatory fees simply become a tax on honest operators.  This tax is then passed on to consumers and a black market for cheap limo services is created.  It’s a lose-lose situation for everyone.

It’s Not About Fairness

Most regulations are cloaked in fairness, but they’re typically intended to protect entrenched operators.  The Las Vegas market exemplifies this problem.  In order for a new operator to enter the market, they must gain approval from established limousine companies and prove their worthiness.  Sounds fair, eh comrade?

Another example of ridiculous regulation exists in Portland.  A new law was recently enacted to protect the taxi barons.  According to a report in Oregon Live,

Limousines must offer prearranged service. They can provide “on demand” service in direct competition with taxis only if they have a contract with TriMet, the Port of Portland, a major hotel or airline company, and pay an annual license fee of $2,500 for the first vehicle and $1,000 for each additional vehicle. They must charge a minimum $50 for a ride from the airport to downtown.

Leonard said that’s designed to thwart the practice of limousines “poaching” taxi passengers from hotels. Hotels will pay a $500 fine for allowing a guest to obtain limousine service without the required one-hour reservation.

It’s a shame hotels guests in Portland no longer have the “luxury” of last minute ground transportation.  The only people who benefit are the taxi barons and bureaucrats.  These regulations do nothing but degrade service and stifle competition.

Time To Act

The time has come to deregulate the industry.  Illegal operators are nothing but straw men.   The real problem is the regulatory environment that creates them.

At one time it could have been argued customers had no means to investigate operators and regulation was necessary, but the Internet has changed everything.  Review sites like Yelp, Citysearch, and limos.com create a digital track record and puts the bad guys out of business.  The free market works perfectly.

To quote Ronald Reagan , “The most terrifying words in the English language are: I’m from the government and I’m here to help.”

Regulation is nothing more than a means for entrenched taxi barons to protect their markets and government bureaucrats to collect more taxes.  It’s un-American and unfair.  It’s time for government to get out of the limousine business.

In recent months, the limousine industry has handed Avis/WeDriveU a series of stunning defeats.  Due to regulatory inequities, administrative agencies have ruled that Avis must follow ordinances that require licenses, fees, background checks, and other regulations that apply to luxury chauffeured vehicles.  As a result, Avis/WeDriveU has pulled up stakes and abandoned operations in New York, Newark, Miami, Atlanta, Phoenix, and Houston.

Considering Avis’s strength as a fortune 500 company, this turn of events is amazing.  If inclined, Avis could have filed injunctions and dragged this through the courts for years.  So why did Avis roll over?  Most will argue the regulatory barriers created by the limo cartels were insurmountable, but the reality may be much simpler – Avis realized it couldn’t compete.

Why WeDriveU Can’t Compete

Despite national brand recognition, the Avis/WeDriveU split business model creates a serious competitive disadvantage.  By forcing the customer to rent a car from one company and a chauffeur from another, the service is inherently compromised.  As early as September 2007, Avis acknowledged the response to their new service was slow.  This is why:

Overpriced Airport Transfers – Transfers are the heart of corporate limousine work.  By placing three hour minimums on chauffeured services, they priced themselves out of the market.

Reservations must be made 24 hours in advance – This is unheard of in the corporate limousine world.  Most reservations are made ahead of time, but travel coordinators frequently place ASAP orders for busy executives.

Lack of Infrastructure – Avis may provide chauffeurs, but they don’t provide the dispatchers, QC, trainers, dedicated account executives, and proprietary technology that supports great limousine service.

Poor Customer Service – Rental car companies are notorious for their poor customer service.  If you google “Avis Customer Service,” the front page results are littered with unhappy customers.

Confusing Split Reservations – When a customer rents a car, he must first book a car and then add a chauffeur as part of a separate transaction.  This system is confusing and prone to error.

Limited Fleet – Avis has a variety of nice vehicles, but they don’t have limousines and minibuses.  This dramatically reduces Avis/WeDriveU’s ability to provide event services.

Inadequate Marketing – With the exception of a few articles in national publications, the Avis Chauffeur Drive program has been invisible.  With Avis’s recent financial problems, it’s likely WeDriveU has suffered.

It’s in the Refrigerator

The industry has positioned WeDriveU as its biggest threat in 40 years, but AVIS is a troubled company with major liquidity problems.  As the travel industry has faltered, Avis/Budget has lost money in each of the last three years and in 2008 lost $1.1 billion on revenue of $6 billion.  With continuing losses and a non-competitive product, AVIS/WeDriveU will likely throw in the towel.  It’s a competitor that can’t go the distance.