Very off topic - limousine business as an economic indicator.
(This is from the "Economeister" economeister.com ).
If you are not among the population of SI Qualcomm thread readers (one person (?)) who are making "buy / hold / do nothing" decisions on New York City real estate, just skip this.
(Yes, I am aware that this is an excellent candidate for a private message ...)
REALITY CHECK: LIMOUSINE CO'S SAY US ECON FLATTENING; NYC
DOWN
--Less Conspicuous Consumption in '90s Upturn Than in Swinging '80s --Limo Companies Among First to Lose Out When CEOs Cut Budgets, Staff --'90s Recovery Seen as Dungarees With a Minimum of Caviar
By Gary Rosenberger
NEW YORK (MktNews) - Limousine company officials say the U.S. economy is beginning to flatten, with visible signs of a coming decline in New York City -- and the economic upsurge of the '90s has nothing on the swinging '80s when it comes to conspicuous consumption.
Limousine operators around the nation say they've been busily replacing gaudy stretch limos for more demure sedans and town cars in keeping with an anti-excess sentiment among their customers.
But while most companies say they have been expanding and expect the economic expansion to continue albeit at a slower pace -- some are already facing dangers, such as corporate budget-cutting, mergers and ensuing layoffs that translate to lost business.
Worsening times are particularly being felt in New York City, where corporate executives are becoming increasingly cost-conscious and weekend merry-making is hardly the experience it was during the bygone Studio 54 days, one official said.
"The corporate image today is 'let's not be seen in a stretch limousine,'" said John Zanfardino, manager of Celebrity Limousine Service in New York City. "The night life and tourist business is almost non-existent."
Zanfardino observed that mergers among banking and investment houses have bruised his business because senior executives "are cost-cutting and laying off and can't be seen by their own employees getting into a stretch limo."
"This February was the slowest I've ever seen," he said, adding that except for an upward blip in January, the business has been soft since late October. "We're down about 10%," he said.
Zanfardino considers his business a leading indicator of economic times on the premise that spending by the rich eventually trickles down to everyone else. "We always feel it a quarter before the fall," he said.
Right now, in New York City, "the rich are holding on to their money," Zanfardino said.
Zanfardino has made adjustments in keeping with less free-spending times by changing the make-up of his fleet.
"In the 80s we had 45 cars -- only three town cars and everything else was stretch," he said. "Today we have 50 cars but only three stretch limos."
He said the only time corporations hire a stretch limo is when it can be cost-justified -- such as fitting a group into a $70 an hour limo instead of two $50 an hour town cars.
Another difference between the 90s and the 80s is that "Saturdays are now the slowest day," with the majority of the scant weekend business consisting of young people "piling into cars, chipping in a hundred dollars each for a night on the town."
Zanfardino remembers a time when wealthy South Americans, Asians and Arabs would come to town and fill the best hotel rooms, restaurants and clubs -- stretching the capacity of the local
limousine industry.
"Those days are gone, they stopped coming in the late 80s and nobody has replaced them," he said.
"Today cost is more important than style," he said. "People don't want to draw attention to themselves."
"Everyone's in dungarees -- there is no more jewelry or fur coats," he said. "Anyone out there trying to get looked at gets the same reaction -- 'what a jerk!' -- even the caviar is generic."
In the '80s Zanfardino stopped taking business from the music industry, the last bastion of attention-getting, because billing became a hot potato between the stars, the promoters, the record
companies and the broadcasters -- none of whom wanted to pay.
He said a big indicator of trouble is that the U.S. Open tennis tournament in Flushing, which used to be his busiest day of the year, is now just another day.
"New Years Eve also isn't what it used to be -- we were always sold out...but no more," Zanfardino said.
Elsewhere in the nation, however, limousine officials say business remains solid.
Randy Wilcox, general manager of Arizona Limousines in Phoenix, expects his business to remain strong for the next decade.
"This is a terrific market, the tourism and corporate business in this market hasn't matured yet," said Wilcox, who has serviced the Phoenix area for 20 years.
"I may be going out on a limb, but I think business here will be super for the next 10 years," Wilcox said.
He noted that business has been consistently strong for the last five years -- averaging 25% annual growth in revenues.
Wilcox said his only alarm is the increased competition coming from limousine companies entering an attractive local market.
He noted that prices have moved up very modestly in the last five years -- only about 10% in total -- due to competitive constraints.
He, too, has also been affected by corporate cost-cutting and has responded by focusing on sedans rather than stretch limos.
"Stretch limos are a necessary ingredient, but they've become a less important part of the business," he said. "Unlike L.A., people here want to be incognito and discreet -- we're very conservative."
In Dallas, a strong convention and corporate business is supporting local limousine operators -- despite some nagging worries about the merger of Exxon and Mobil, two Dallas-based oil giants, said David Nazem of Ambassador Limousines of Dallas.
Nazem, who has been in business for 15 years, said depressed oil prices have not particularly hurt the local economy -- "oil doesn't drive our economy the way people think it does."
In fact, he noted that while oil prices continue to stagnate, his sales are up 30% from the prior year and that sales last year "doubled from the prior year."
Despite the strong recent performance, Nazem observed that his best year was 1984, the year of the Republican Convention in Dallas.
Even though the economy is strong, Nazem said he was not expanding his fleet as he is worried about the potential hazards of the stock market.
"I'm bracing for the big crash -- I'm really worried about overvalued stocks and company shares rising even though they're losing money," he said.
"Right now I'm just taking advantage of when things are good -- interest rates are low, people are in a buying mood, I just hope it keeps up," Nazem said.
In Chicago, business is also up -- unimpeded by corporate bottom-liners, said a local limousine company official.
"Business is fine, we're not seeing any cost-cutting yet," said Frank Stoeberl, vice president of National Limousine in Chicago, which has been in business for seven years.
"We have price increases every year and people seem to take it in stride," he said.
He said, however, there are some doubts about the continuing strength of the business when the Bulls are in town -- noting that at present, even without Michael Jordan, "people are still going to the games."
"But if the Bulls lose many more games, I don't know," he said.
Editor's Note: Reality Check stories survey sentiment among business people and their trade associations. They are intended to complement and anticipate economic data and to provide a sounding into specific sectors of the U.S. economy.
09:10 EST 03/08
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