Is it a sign of the new times? Operators buying other companies in the taxi and limousine world? For all the industry challenges arising from TNCs like Uber and Lyft nationwide, no operators must maneuver smarter than those in the San Francisco Bay Area, birthplace of Uber, Lyft, and the growing app-on-demand culture. The ‘Belly of the Beast’, so to speak. LCT Mag reports.
Operator Harry Dhillon, owner and founder of Ecko Transportation Worldwide in San Jose, has spent the past 18 months buying three local limousine operations while launching a complementary industry start-up. A look at his strategy provides some insights for operators figuring out how to survive and succeed as the on-demand mode of commerce sweeps through the global economy.
Dhillon, a 2015 LCT Operator of the Year Award winner, deploys a strategy that brings together several trends seen among limo operators: Buy smaller companies, create service niches or tiers, diversify the client base, upgrade the chauffeured fleet, expand into complementary regions, and start new, preferably tech-oriented, businesses. Altogether, this approach can fortify a limousine company for the long-term while giving it advantages over Transportation Network Companies (TNCs) like Uber and Lyft.
“You need young energy to make sure you’re on par with the competition,” Dhillon told LCT. “You don’t put all your eggs in one basket but have different businesses and revenue generating pipelines.”
Altogether, the three purchased companies will boost Ecko’s overall fleet to 35 vehicles and enable it to expand into the Napa region. Most recently, Dhillon closed a deal Sept. 9 to buy Limo Stop of San Jose. Dhillon plans to rebrand it as El Worldwide Transportation, doing business under Ecko. The company gained two vehicles as part of the deal, which adds $600,000 to its revenue stream. A month before, Dhillon acquired Air One Transportation Worldwide of San Jose, a small-fleet operation with four vehicles owned by Olga Spirina and Russell McGillicuddy. The $400,000 annual revenue operation specializes in a high-end VIP local clientele. As a result, Dhillon is keeping the company running under its name and website as his elite service tier. “I bought the company because the profit margin was higher and it had a clientele in place with many airport round-trips,” Dhillon said. “The rates are higher than for a normal limousine service because of its elite level clients.”
In March 2015, Dhillon bought the largest of the acquired companies, Excel Limo & Sedan Service of Mountain View, a 16-year-old operation that added $1.4 million and 10 vehicles to the Ecko fleet. The company did mostly airport runs and group trips.
Combined, the added companies boost Ecko’s overall estimated revenues this year to $5.5 million with a combined fleet of 35 vehicles. Between now and the end of 2017, Dhillon will be upgrading his fleet exclusively to BMW 740i sedans, Mercedes-Benz S Class sedans, Lincoln-Continentals, and Cadillac Escalades. Those premium level luxury vehicles will complement his Grech Motors minibuses and Mercedes-Benz Sprinter Vans.
Ecko’s farm-out business has grown since last year from zero to about 8-10 reservations per day, making up about 12-15% of his annual business. Overall, the client mix divides 70% corporate/business versus 30% retail/leisure. To grow his market reach, Dhillon joined a private aviation association to connect with charter jet providers to serve more FBOs and private aviation markets. Long-term, Dhillon wants to consider buying more smaller limousine operations in the $500,000-plus annual revenue range and grow to $15 million during the next three years.
Complementing his operations, Dhillon launched a start-up in July called Dhillon Enterprises, doing business as Hashtag Business Solutions in Chandigarh, India. The five-employee company provides a one-stop shop for all small to mid-sized fleet operators needing 24/7 on-demand answering services, website designs, logo designs, presentation PDFs, and quality checks of operations. Hashtag assigns one employee per client company, who can focus exclusively on that company’s service needs. Dhillon plans to introduce the company at upcoming trade show exhibits.