CharterUP Looks To Revive Pandemic-Pummeled Motorcoach Industry
Three years into the Covid-19 pandemic a travel industry that was decimated by abandonment of public and group transportation is slowly rebounding but remains in dire straits. The irony is while demand for motorcoach services via charter buses and shuttles is on the upswing, the industry lost so many operators, vehicles and drivers during the depths of the pandemic it cannot keep up with demand.
According to a report by the American Bus Association, an industry trade organization, the motorcoach industry suffered an 82.6% loss in business in 2020, an improvement to a 62% loss in 2021 as Covid slowed. But the president of the ABA Foundation predicted recovery might not occur until some time this year.
But the founder and CEO of CharterUP, an online charter bus leasing service says the situation is actually much grimmer than that and his company is working to help revive the motorcoach industry.
In an exclusive interview, Armir Harris said realtime data provided by its clients revealed a wide disparity between the size of fleets and demand.
“So at its peak, over 90% of companies were utilizing less than 5% of their fleet,” said Harris. “From April of 2020 to end of July in 2020 we saw over a 95% decrease across activity from all bus companies. Over 70% of bus companies fully stopped operating their vehicles in the summer of 2020. There were about 3,200 bus companies, private bus companies, motorcoach companies pre pandemic. Right now there’s a little bit over 2,000 plus companies in business.”
As ridership begins to rebound, motorcoach companies are having a hard time finding drivers for their buses and shuttles because so many left the industry during the pandemic, Harris said. Cash-strapped operators also need assistance financing purchases of vehicles to replenish fleets lost during the pandemic to loss of business or repossession.
Armed with a ton of data, expertise, strong cashflow and capital courtesy generous investors and knowledge a strong motorcoach industry is also good for CharterUP’s business, Harris has made it a mission to bring that industry back to life.
For one, his company is helping recruit new drivers by covering the marketing costs it takes to attract talent. It’s also providing clients interest-free financing to purchase new or used buses that can cost $500,000-$700,000 for a new bus and $300,000-$450,000 for a used one.
It’s not purely charity, Harris notes, but rather savvy business sense, explaining, “we’re giving them interest free financing for a few years to help them build their business back up and in return, we’re also making money because we’re growing the supply side on our platform.”
When Harris talks about the “supply side” of the business he’s referring to CharterUP’s second revenue stream. Aside from revenue it makes from charter bookings, which he calls the “demand side” the company also sells clients software to help them manage their businesses—CharterUP’s supply side.
That software provides valuable data—data CharterUP can use to further assist motorcoach operators return to profitablity by better planning in the face of the industry’s cyclical nature—busy in the spring and summer, slow in the winter.
“It’s really this variability in demand that prevents operators from scaling. So we help them with forecasting or just the ability to forecast their business so much better,” said Harris. “The other thing is historically, there were, call it a handful of national bus companies, that owns these long term large shuttles, but over 80% of the industry is made up of operators that have 10 buses or less so what we’re doing is we’re helping these operators win long term more predictable recurring business and this predictability in business allows them to really scale their business back up.”
Founded in 2018, CharterUP is, itself scaling up. More than 600 companies operating over 4,000 vehicles are connected to CharterUp’s platform, according to Harris. Groups or businesses looking to charter a bus or shuttle do so on the CharterUP website. Payment goes to CharterUP which then sends it over to the operator minus its fee.
The company currently operates in 25 markets California, Georgia, Texas, Florida, Virginia, Ohio, Connecticut, North Carolina, South Carolina, Kentucky, Nebraska and Oklahoma in major markets that include Atlanta, Dallas, San Antonio and Austin. The company expects to expand this year into major markets including New York City, Houston, Chicago and San Francisco.
Further expansion is in the longer range plan with Harris declaring, “Stay tuned as our goal is to be able to serve every every zip code in the U.S.
That expansion, plus Harris’s efforts at propping up the industry is being partially fueled by $60 million Series A funding raised last fall, with Harris noting, “we had some of the largest growth, equity and private equity funds reach out to us.”
While the motorcoach industry is still far behind where it was pre-pandemic, things are looking up in at least one sector.
“On the corporate shuttle side we’ve seen over a 200% growth from year over year and a big push of this is return to office,” said Harris. “They’re saying hey, we want to bring our employees back to the office, we want to provide them with a dedicated solution a private solution.”
That’s a start, said Harris, but “our end goal is to really raise the standard of the industry.”