Bus Brokers: Parasites or Expanding Business? Operator Debate Grows
Bus brokers are changing the way people book motorcoach charters, but their practices are causing many operators to re-think the way they do business with them.
Operating over the Internet where their easy-to-find and alluring Web pages are drawing more attention these days, the brokers are often the first to be contacted by groups looking to charter buses.
While operators debate whether the third-party trend has truly provided new opportunities or expanded the market for charter bus services, there’s no question that coach operators are being routinely bombarded with e-mails and faxes from brokers looking for rate quotes. For many, it has left them with a financial dilemma.
The reason? Most brokers try to book charters on 30- or 60-day credit, and some operators worried about losing business are giving it to them. A few of the brokers, however, have been lax about paying their bills.
Bus & Motorcoach News has received complaints about one broker in particular, US Coachways of Staten Island, N.Y. The Better Business Bureau of New York reports it has gotten more than a dozen complaints about US Coachways in the past year and 85 percent of the complaints left the customers dissatisfied.
While complaints about bus brokers to state and national industry trade groups don’t appear to be too numerous yet, concerns among carriers are everywhere evident. A number of operators say they have had a tough time collecting their money, while others say they haven’t been paid at all and at least one is preparing to sue to get his money.
“I’ve just sent the paperwork to my attorney for collection,” reported Bill McCreary of American Charter Coach in Naperville, Ill, who said he is owed $5,000 for two charters he did for US Coachways in February and March. “I’ve tried to contact them numerous times, but I can never reach the right people and they don’t return phone calls.”
Repeated efforts by Bus & Motorcoach News, both by phone and e-mail, to obtain comment from US Coachways also received no response.
To ameliorate the problem, many coach companies are beginning to heed the advice of industry veterans who urge operators to turn down credit requests from bus brokers and insist on getting their money before they put their equipment on the road.
“Every legitimate motorcoach company in the country should require payment in advance and then no one would have a problem,” insists Steve Kirchner of the National Motorcoach Network and a long-time industry executive. “If you don’t have your money, then your bus isn’t going to show up.”
Thirty-year industry veteran Mike Waters of Coach America and president of the California Bus Association, agrees, noting that airlines have always operated with up-front payments and the motorcoach industry should too. “I don’t fly unless I pay for the ticket,” he said.
Twice burned McCreary endorses the idea and said he won’t be offering brokers credit any time soon. “I did it twice, but I won’t be doing it again,” he said, adding that he still is receiving requests for rate quotes from brokers, including the one that has not settled with him yet.
Pat Bernal of Colonial Coach Lines in Chicago said she, too, will be asking for payment in advance in the future after losing $3,000 to a broker for a charter her company did in October. “We’re down to a point where if we do any more business with them, they’ll have to pay in advance,” she said.
Some operators even have trouble getting their money when the broker agrees to pay upfront.
Jim Weber of Personalized Coaches north of Milwaukee said he accepted a charter from a broker in May and was told he would receive a check a week in advance of the assignment. When it didn’t arrive, he called the broker, who promised to overnight it to him.
However, when the check came, it was unsigned. A second overnight check was promised, but it never showed. The broker finally offered a credit-card number the day before the scheduled charter, and the payment went through.
“I appreciate the business, but we need the money up front,” he said. “I didn’t know those people and I was afraid I could have a problem if I didn’t ask for the money in advance.”
Other operators have gone further, ignoring the e-mails and faxes from brokers and refusing to do business with them.
“We don’t like dealing with them because they’re a middle man and most of them are just trying to get a price so they can jack up their own prices,” said Dennis Prigge of Discovery Coach Lines north of Milwaukee. “Then we don’t get the job anyway.”
Motorcoach companies that respond to rate requests from brokers often don’t hear back and that’s become another concern among carriers.
“I think our biggest complaint from small companies is that they take the time to provide the quotes and then they don’t hear anything from them,” said Elaine Johnson of Cross Country Tours and president of the Motorcoach Association of South Carolina. “Many of them would like to know why they didn’t get the business.”
Personally, she said she isn’t bothered by the deluge of requests for rate quotes because she knows brokers are just shopping around looking for the lowest prices. “If someone is seriously looking for a quote I believe they’ll call on the telephone,” she said. “Most professionals call.”
Gwen Elmore of Fun Tours Inc. and president of the Virginia Motorcoach Association, said she receives numerous requests for bids from brokers, but never gets booked when she responds with quotes. “They always go with the cheapest operator not knowing what their equipment or reputation is like,” she said.
Most members of her state association said they don’t do much business with brokers, and those that do insist on getting paid first.
Bob O’Brien of Time Lines in Oklahoma City and president of the Oklahoma Motorcoach Association steers away from using brokers because they prevent him from doing something he says is critical to sustaining and building a good business — engaging in conversation with customers.
“We don’t get to tell them about what our coaches are like, the amenities we offer, our drivers, our safety record, anything about our company,” he said. “The broker ends up selling our company and we don’t know if they’re doing a good job or not.”
O’Brien added that brokers contribute very little — if anything — to the business and organizations that use them would get a better deal in most cases if they went directly to individual companies.
“They are the parasites of the industry and I don’t think they belong in our business.”
While collecting payments up front might be the immediate answer to the problem, the industry needs to address the issue of brokers with the idea of reaching a long-term solution, says Victor Parra, president and chief executive of the United Motorcoach Association.
“This is an area of our industry that needs some attention,” he said. “It is an emerging business and we need to find out what type of relationship we can have with them that works for everyone.”
He noted that brokers can pretty much free wheel their deals and work because, unlike carriers, they are not regulated in any manner. “They might not have insurance or follow Department of Transportation rules,” he said. “Maybe we need something like a code of ethics or code of performance.”
In the meantime, he said collecting payment up front appears to be the best way to address the problem today. “Tell them before you will move your equipment, you need to be paid,” he urged.
Kirchner buys that advice.
“I don’t favor government involvement because when you have government intervention, you run some legitimate carriers out of business,” he said. “The best thing is 100 percent payment up front and then there would be no need for government intervention.”