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  July 12, 2013
Shake, Rattle and Roll...

 

 

Be the change that you wish to see in the world

 ~ Mahatma Gandhi

Due to the nature of what I do for a living, I am often forced to travel to visit customers and suppliers who are scattered across the globe.

Now I don’t consider myself much different from the millions of other business travelers.

As a group, we all want to get to our final destination, safely and on-time. We want a clean, comfortable, and quiet room to sleep in.

We want to experience the very minimum of inconveniences such as long lines, cramped middle seats, bad weather, and/or traffic delays.

We would like to interact with friendly people, who wear smiles on their faces (they are in a chosen profession called "hospitality" after all).

We ask for this minimal level of service at an affordable price, which is not unreasonable.

I recently traveled to Chicago to visit with some key customers and a supplier who was visiting from Asia.

I drove my car to the airport, parked in long-term parking, took a shuttle to the terminal, stood in line to check-in my bag and another to clear security.

The terminal was packed with summer travelers, who helped to create more long lines... but that’s the price I pay to travel in high-season.

The plane left and arrived on time. My bag also arrived.

I took a shuttle to the car rental terminal where my reserved car was waiting for me. After a long wait, I finally was at the counter where I gave the agent my confirmation number. As he reviewed the car rental contract with me, I noticed that the rental rate was much higher than my confirmation stated.

When I questioned him about this, he explained that my confirmed rate was just for the car and did not include the governmental fees and taxes. As I compared the two rates, it became painfully clear to me that my new rate was now nearly TRIPLE that of my originally confirmed rate... my $32 /day rate was now $88 /day when all of the taxes and fees were added to the contract.

There were fees for using the airport, the new rental car terminal, the local fairgrounds, and the new football stadium. There were also state and local sales taxes on the entire charge including the imposed fees (sales taxes on fees).

With no recourse, I begrudgingly drove off in my car to my hotel.

When I arrived at the hotel, I was told that there would be a "resort fee" added to my bill to cover the maintenance of the pool, exercise room, and internet. In addition, there was now a 14% transient occupancy tax added to each room night to cover the city’s cost of promoting itself to out-of-town guests, plus state and local taxes. My confirmed room rate of $85 / night was now going to cost me $131 / night.

After thinking about it... it made perfect sense for the politicians to impose taxes in this way... travelers can’t vote local politicians out of office... and once the traveler has arrived, what can they do, except to pay the taxes and fees or get on a plane and go home.

Now I happened to be in Chicago... but this happens in every large city across the United States including my home town of San Diego. It’s simply a way for the government to take more money away from the public... and add it to their coffers...

After a week on the road, it was time to go home...

I arrived safely back in San Diego... took the shuttle to the long term parking lot... got in my now filthy car (of course it was sitting outside all week)... and pay the $25 / day parking fee... feeling a lot poorer than when I started...

(Aside:  One time I did the math... at $25 / day for a 150 sq. ft. parking space... this comes to $750 / month... the median price for a 900 sq. ft. apartment in Manhattan is $3,200... or $1,300 less than that of a small piece of asphalt with no roof, electricity or plumbing at the San Diego Airport.)

Enter a few really smart entrepreneurs...

I was recently reading the business section of our local newspaper when I happened across an article about a new service in San Francisco and now in Boston called FlightCar.

FlightCar rents out people’s cars when they are traveling and gives them a share of the rental proceeds. Instead of paying the airport to rent you a high cost park spot, you essentially rent out your car when you’re out of town and FlightCar pays you for lending them your car.

When you return from your travels, they pick you up at the terminal in a town car, take you to your freshly washed car, and give you a check.

Your car is fully insured for mechanical damage, dents or dings caused by the renter. FlightCar also carries a $1 million liability policy in case a renter damages property while driving your car.

Of course, the City of San Francisco has filed a lawsuit against FlightCar. The City doesn’t make any parking money in this arrangement. And since FlightCar doesn’t technically operate at the airport (but rather about 10 miles away), their customers don’t need to pay the $20 per rental plus 10% airport rental tax to the city. 

The large car rental companies are looking to the City to shut down this service as to squelch the competition.

FlightCar has shaken up the way the rental car business operates.

The City of San Francisco is also home to ride-sharing companies Lyft and Sidecar, two companies that operate a ride sharing service where passengers find available drivers to take them somewhere using a peer-to-peer smart phone app.

Drivers make themselves available via the  phone app and are contacted directly by the customer looking for a ride. There are strict rules that prohibit fee-for-service. The drivers essentially work for tips.

The City of San Francisco has determined that this service is really just a taxi service and needs to be governmentally regulated (and of course taxed). Taxi companies, needless to say, are behind the City’s efforts.

San Francisco’s overpriced and highly taxed taxi fleet is undoubtedly rattled.

Not to be outdone, the hotel industry is up-in-arms about another sharing service based in San Francisco called Airbnb. Airbnb’s web service matches travelers looking for a room with local residents with an extra room to rent. Airbnb now operates in 140 cities worldwide and has over 250,000 room listings.

Once again, the City of San Francisco has filed suit against the company claiming that they are operating illegal hotels without paying the transient occupancy taxes.

The hotel industry is thankful that they have the City of San Francisco to help them fight this battle to protect their turf.

Unfortunately for the City of San Francisco (and the car rental companies, the taxi companies, and the hotel industry), the travel genie is now out of the bottle.

Forward thinking entrepreneurs have rolled up their collective sleeves and have discovered a market where its population is sick and tired of the status quo and wanted a change.

In the end, these entrepreneurs have found a better way to deliver what people want.

These entrepreneurial success stories remind me of the old tale about the company that manufactured and sold high-quality industrial drill bits... the company truly believed that they were in the drill bit business... they were wrong... they were in the hole making business and as soon as someone figured out how to make holes a better way... it signaled the beginning of the end for the drill bit company.

This story begs the question, are you looking for ways to bring new innovations to your customers or are you happy with the status quo?...

...or maybe when innovation does happen in your industry you can get the City of San Francisco to file a lawsuit on your industry’s behalf...

Thank you very much for your support of OptiFuse, where we wish you safe travels to your destinations this summer... 

 

Jim Kalb
President

Email - jimk@optifuse.com
Website - www.optifuse.com

Blog - www.optifuse.blogspot.com
Twitter - @OptiFuse


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