Global Express Limousine thought its troubles were over when the U.S. economy emerged from recession in 2009. Then a wholly different maelstrom hit the 26-year-old business: the rise of ride-sharing companies such as Uber and Lyft.
Sales, which had once exceeded $5 million a year at the Rockville company, dropped by nearly half.
“The transportation industry was hit very hard,” said Ashfaq Shah, president of Global Express. “When Uber and Lyft came in, business got slashed another 25 percent.”
To win back some of its executive clients, the company two months ago introduced a mobile app. It seemed to help. Within 40 days, Global Express had racked up $250,000 worth of business.
Throughout the region, traditional limo companies and car services have had to shift their business models to compete with newcomers that promise quick, affordable and hassle-free rides. Some have adjusted their pricing methods or tweaked their cancellation policies, while others have shifted their focus to brewery tours or shuttle services to make up for dwindling demand.
It hasn’t been an easy transition for the companies, which tend to be regulated with a heavier hand than their ride-sharing counterparts. Mom-and-pop limo services, the ones that rely on small businesses for much of their revenue, have been the most affected, but even the larger ones say they are feeling the impact as more executives grow accustomed to picking up their smartphones and summoning Uber.
“I’d be an ostrich with my head in the sand if I said, ‘No, everything’s fine,’ ” said Robert M. Alexander, president and chief executive of RMA Worldwide Chauffeured Transportation, a Rockville company. “It’s something I think about every day.”
After years of study — enough, Alexander jokes, to have earned “a PhD in Uber” — the 49-year-old says he has deciphered the secret to its success: Transparent pricing.
“What people like about Uber is that there’s a sense of fairness there — and that’s [Uber’s] magic,” Alexander said. “Their rates have been deemed fair.”
To that end, he has begun looking for ways to adjust his company’s fare system. Instead of offering flat rates based on Zip code and general destination — Silver Spring to Dulles International Airport, for example — Alexander is planning to implement an Uber-like system that charges by the mile. The new pricing structure, he says, will be in place by the end of March.
He has made other changes, too, spending upward of $100,000 to update software systems and create a mobile app. The company’s cancellation policy, which once required several hours’ advance notice, has been shortened to a 45-minute window.
But, he says, there are aspects he just can’t compete with. The sheer number of Uber vehicles on the road means his rival can pick up passengers within minutes, compared with the 45 minute it generally takes RMA drivers. Uber vehicles are also subject to fewer government regulations, and they don’t have to carry insurance policies with $5 million worth of coverage, as Alexander’s do, allowing for cheaper fares.
“Companies out there are starting to tell their employees, ‘You can use Uber,’ ” said Alexander, who also owns Orange Taxi in Rockville. “So what do we do, do we become better than Uber? No, as Steve Jobs said, we need to be different.”
Which is why, even though cars can be booked and dispatched entirely on a mobile app, Alexander continues to keep his call centers staffed around the clock. There are enough high-level executives and celebrities coming through town who still want the traditional white-glove experience, he says. Not everybody is ready to pull out their phones to request a car just yet.
“When a rock band comes to town, they still call us,” Alexander said. “People want to talk to somebody, they want to know they’re being taken care of.”
In the years since the recession, Reston Limousine has tweaked its focus a number of times. First, the company began looking to new lines of business, offering car washes, safety seminars and courses to help small firms bid on government contracts alongside its traditional shuttle services and bus rides. Then came the brewery tours and shopping excursions to New York to make up for dwindling corporate and wedding business during the economic downturn.
“We really felt [the recession] across the board,” said Kristina Bouweiri, president and chief executive of Reston Limousine. “Everybody was cutting expenses. And almost always, transportation was one of the first to go.”
The latest opportunity came late last summer, when the Silver Line opened to the public. Reston Limousine began offering shuttle services for office parks and residential buildings in Northern Virginia that were looking for ways to transport people to and from Metro stations. By year’s end, the company’s sales had risen nearly 20 percent, to $22 million.
“Just about every part of our business was increasing last year,” Bouweiri said. “I’m sure Uber has affected us, but not as badly as it has affected limo companies that are all cars.”
During another recession, in the early 1990s, executives at Reston Limousine had decided to sideline their two limousines and sedan in favor of larger buses and vans. That helped insulate the company from the whims of the economy, Bouweiri said, and may have also unwittingly helped soften the blow from Uber and other ride-sharing companies.
That focus on group transportation is likely to become even more pronounced in coming years. Additional Silver Line stops could mean a larger shuttle business, and the 2016 presidential election is likely to generate a stream of campaign staffers, lobbyists and revelers in need of group transportation, Bouweiri said.
Chariots for Hire in Sterling has followed a similar trajectory, relying on the Silver Line to prop up shuttle business by about 10 percent in the past year. The company, which has annual revenue of about $10 million, is also fine-tuning its mobile app and beefing up its winery tours.
Co-owner Courtney West says that until Uber allows users to book rides days, or weeks, in advance, he will hold at least one advantage.
“When it’s time for a wedding, people are still going to call us,” West said. “A bride and groom aren’t going to pull out an app and order a car at the end of their wedding night. Nobody is going to roll the dice on that.”