Consolidation is now inevitable in ground transportation
Since markets will not support so many companies offering duplicate services and customers are looking for a consistent experience, it is expected that ground partnerships and acquisitions will continue in the coming years,.
Changes in the hotel and accommodation industry are foreshadowing what is to come in ground transportation.
Specifically, I expect 2016 to be a year of consolidation in the ground travel market.
Looking back at the accommodation industry in recent years, options have greatly increased thanks to companies like Airbnb, Wimdu and OneFineStay.
You can reserve an urban flat shared with strangers, a jungle tree house for yourself, or anything in between.
Hotels have responded, in part, by infusing more local character and offering more extended-stay options.
Similarly, ground transportation has shed the decades-old three-choice model of taxis, rental cars and legacy limousine companies.
Today’s travelers reserve on-demand taxis or privately-owned cars from dozens of companies around the world, reserve a car by the minute, or book a professional driver.
In both cases, customers are the main beneficiaries. Travelers receive more options at better prices in more locations.
Taxi cartels are being broken and professionally driven rides are becoming affordable to millions more travelers.
What is happening?
We are now entering a phase of consolidation and tighter integration.
The accommodation industry is a key predictor, in both the traditional and startup worlds.
1. In November, Marriott International announced that it would acquire Starwood Hotels & Resorts Worldwide. Expedia also agreed to acquire HomeAway.
2. In December, Accor Hotels said it would acquire 155 hotels under the Fairmont, Raffles, and Swissôtel brands
Ground transportation is following a similar path.
1. In the legacy world, taxi owners are uniting their availabilities in apps.
2. Earlier this month, Marcou Transportation Group, owners of the Dav El/Boston Coach Chauffeured Transportation Network, acquired Chicago-based Metropolitan Limousine.
3. In Latin America, EasyTaxi merged with Tappsi in December
Among new players, Ola, Lyft, Didi Kuaidi and GrabTaxi have agreed to partner so that customers can book rides in each other’s apps across their different regions.
We are also is receiving messages – at an increasing frequency – of legacy and startup ground transportation players offering themselves for sale.
Ground partnerships and acquisitions will continue in the coming years for two reasons:
1. Markets will not support so many companies offering duplicate services.
2. Customers are looking for a consistent experience. Travel is inherently global. In the ride space, travelers want reliable, on-time, and convenient experiences, each and every time.
They don’t want to memorize which apps work for rides in which countries. They don’t want to carry local currencies for each trip. They also have more confidence in a global brand they know than a local one they don’t.
Which ground transportation companies do you think are next to be acquired or more tightly integrate in 2016?
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