Beware the Ride Sharing RevolutionApril 1, 2015

What You Should Know Before You Go By
April 1, 2015

Beware the Ride Sharing Revolution

What You Should Know Before You Go

285_2730485Sivley,Dean-Groundlink-110x140Dean Sivley is the chief executive officer of GroundLink, a leading tech-enabled provider of executive black car service in major cities throughout the world, offering the industry’s only on-time guarantee with a focus on duty of care, reliability and exceptional customer service. He also serves on the company’s board of directors and oversees the company’s growing operations throughout the U.S. and in more than 110 countries worldwide. www.groundlink.com

The ground transportation/black car service space has gone through dramatic changes in recent years, driven largely by the explosion of peer-to-peer ride sharing services and the advent of mobile technology. These changes are adding additional risks that need to be addressed by corporations and travel managers. While not an exhaustive list, these additional risks include a lack of regulation leading to security inconsistencies and the potential for employees to be transported by uninsured or underinsured providers.

What corporate travelers and corporate travel managers may not appreciate is that several firms within the traditional car service industry have evolved as well. A number of companies now offer all of the conveniences of the new tech-enabled, ride sharing players, but also a continued focus on safety, security and duty of care. Corporate buyers are discerning enough to understand that there are points of differentiation between the new ride sharing services and these “hybrid” traditional car service providers. However, they may need to focus on asking even more questions to fully understand what is best for their organizations and their employees.

Surge Pricing

It may come as a shock to some to learn that ground transportation is the fifth largest expense category in business travel. In fact, ground transportation actually outpaces car rental — just behind airfare, lodging, dining and entertainment (according to a recent study by Concur). Travel managers are sometimes of the mindset that peer-to-peer ride sharing services generally offer less expensive rates. Frankly, that is not always the case. “Surge pricing” for Uber, or “prime-time pricing” for its main competitor, Lyft, creates a major challenge for travel managers looking to manage costs. Pricing is based on supply and demand, and can be double, triple or more during periods of high demand (e.g. during rush hour, on concert or event dates and during rain and snow storms). Employees typically are not aware of “surge” periods until they request a car, and at that point, they don’t have other viable options. Due to fluctuating pricing based on demand, it is difficult for corporations to negotiate a flat or discounted rate for car service with these types of providers. According to a recent article on Boston.com, customers have felt victimized by Uber’s “surge pricing” practice. In one case, a woman was charged $362.57 after a 20-minute ride in Baltimore. Another customer in Denver racked up a $539 bill after a 25-minute ride.

Corporate travel managers also are becoming increasingly uneasy with at least one of the ride sharing firms’ apparent cavalier attitude toward safety and security. Reported incidents include:

Just last month, as reported in the Denver Post, an Uber driver was arrested in Denver for attempting to break into a passenger’s home after dropping her off at the airport. In January of this year it was reported by the Boston Globe that an Uber driver was indicted on charges that he allegedly kidnapped and raped a female passenger. As reported in the San Francisco Chronicle in September of last year, a passenger accused a driver of being seriously injured by an Uber driver who “bashed him in the head with a hammer.” In July of last year, a New York-based CEO traveling to Washington, DC, was kidnapped by an Uber driver, held against his will and taken on a high-speed chase across state lines (as reported by The Washington Post).

In city after city, Uber has failed to take responsibility for their drivers’ actions, and claims it is not subject to local licensing requirements and ordinances as they are a technology company and not a taxi or limousine company. As reported by National Public Radio in February of last year, when an Uber driver hit and killed a six-year-old girl in San Francisco the company said it wasn’t responsible as the driver was “an independent contractor, not an employee and he wasn’t on the clock.”

Another complaint from many regulators is that ride sharing services frequently do not comply with local regulations and do not consistently complete background checks on all of their drivers. According to a recent article on CNN Money, Uber is getting pushback from local officials worldwide. A judge in Spain temporarily blocked Uber in that country, and Uber has been banned in New Delhi, India. Authorities in Portland, Oregon, recently filed a lawsuit demanding the service be suspended until the company complies with local laws.

Traditional Car Services Offer Technology Solutions

As was mentioned above, travel managers also are often not aware that many traditional car service companies have been busy reinventing themselves with the latest technology platforms. These technology solutions not only feature the “bells and whistles” that the tech disruptors offer, but go one step further to include technological solutions built for scheduled service. They also are tailored for the corporate travel market, integrating with online booking tools and GDS systems. Whether it is developing new booking tools, utilizing data to know more about travelers’ needs or providing that extra level of customer service, corporate travel mangers do not need to accept a one-size-fits-all model (including how the booking is actually made). The peer-to-peer ride sharing services typically do not offer Web bookings and certainly not phone bookings. The “new hybrids” I am referring to typically offer all three, and they work with travel agents.

While a rising number of companies now have travel risk management programs in place, nearly half of those do not include specific requirements/controls with respect to ground transportation. That is alarming, especially considering that 35 percent of frequent business travelers cite “safety of ground transportation” as a major concern, based on a recent study conducted by the Global Business Travel Association in conjunction with AIG Travel Guard. Corporations and their travel executives need to strike a balance between providing employees with the flexibility and convenience they need, with duty of care responsibilities to mitigate risk. A good starting point is a comprehensive travel risk management program that addresses all employee safety and security risks, including ground transportation.

Following are a few additional tips:

On-demand vs. scheduled. While on-demand services might appeal to consumers who are “out on the town” and need a quick lift home whenever the night ends, they don’t make sense for business travelers who have a flight to catch, need to be met at the airport or have an important meeting to attend. Make sure your provider can offer scheduled service, backed by a solid reputation of on-time performance.

Safety and security. Make certain that your ground transportation provider is insured and their drivers are properly licensed, and that they will stand behind their drivers. Passengers should know who is picking them up. A ground transportation company should provide each passenger awaiting pickup with a name and picture of the driver, as well as the car model and continuous vehicle location via GPS.

Technology is power. Look for a company that offers booking and payment capability through a user-friendly mobile app, transactional website and 24/7 customer service center. You don’t want your travelers to have to worry about tipping, having cash on hand, waiting for paper receipts or having to worry about carrying vouchers. A reliable ground transportation company also should provide an automated flight tracking system, so that airport pickup times are based on actual flight arrival times. This will help your travelers avoid waiting for drivers once their plane lands. And, e-receipts from all trips are a nice addition.

 ‘Surge pricing’ for Uber…creates major challenges for travel managers.

Effective cost management. Stay away from ground transportation companies that raise their costs during periods of high demand, bad weather or traffic delays. You want to know all costs in advance and not be a victim of “surge pricing.”

One-stop shopping. Look for a solution provider that serves all of your travel markets — both domestically and internationally. It used to be that the industry was highly fragmented with mostly local and regional providers. Now there are companies that provide service across the country and around the world — providing you with better opportunities for negotiated rates. C&IT

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