FlixBus Looks to Change the Bus Riding Experience in the U.S.
With their reputation for skid row stations, grueling rides, and stinking toilets, intercity buses have long been the travel option of last resort. But in Europe, a startup called FlixBus has given buses a trendier, eco-friendly, sharing-economy vibe. Now it is aiming to take on Greyhound Lines Inc. in the U.S.
Since introducing a handful of routes in Bavaria when Germany liberalized its long-distance bus market five years ago, Flix has become Europe’s biggest network, serving 1,700 destinations in 27 countries. More than 100,000 people board one of the company’s 1,500 bright-green coaches every day, embarking for destinations as far-flung as Kiev, Lisbon, and Oslo. With backing from private equity companies General Atlantic LLC and Silver Lake Management LLC, Flix in March added train travel in Germany and is experimenting with long-distance electric buses—an escalating ambition reflected in the change of its parent company name to FlixMobility in 2016. “We didn’t win because we had the most money, and we’re not always the cheapest,” says André Schwämmlein, the company’s co-Chief Executive Officer and one of three founders. “We focused on the customer, the brand, and the technology.”
By that, Schwämmlein means Flix has stayed out of the messy and capital-intensive business of owning and operating buses, instead adopting a model akin to that of Uber Technologies Inc. The company leaves the driving to 300 partners—mostly small, family-owned companies that keep 75% of ticket receipts—allowing Flix to focus on scheduling, customer service, and online ticket sales.
“They’re a marketing machine,” Nico Schoenecker, Managing Director of partner Autobus Oberbayern GmbH, says in his Munich depot brimming with dozens of coaches, including two with FlixBus branding. Like all others in the Flix fleet, they feature Wi-Fi, electric outlets, and aisle seats that can slide over for a little more personal space—paid for by the operators. Before teaming up with FlixBus, Autobus Oberbayern was squeaking by on its route between Munich and Prague. Since handing the line over, the service has grown more than six-fold. “They’re closer to the customer” than traditional bus companies, Schoenecker says.
Schwämmlein and his partners aim to replicate their model in the U.S., with plans to roll out across the Southwest this summer, linking destinations such as Los Angeles, Las Vegas, and Phoenix. In taking on the market, Flix follows Britain’s Stagecoach Group Plc, which in 2006 introduced its Megabus brand in the U.S. After an initial splash, Megabus retrenched as low fuel prices made driving a cheaper alternative. “This isn’t our first rodeo,” says Andy Kaplinsky, chief commercial officer at Greyhound. “The chatter and buzz of an upstart helps build awareness.” Greyhound, owned by British bus operator FirstGroup Plc since 2007, introduced its own hipper, bargain alternative, BoltBus, in 2008, and it has since added Wi-Fi and electric outlets on all its buses.
Flix is confident it can transfer its success from Europe to the U.S. It has, after all, managed to thrive—turning a profit last year for the first time—in an environment where there are ample alternatives to the bus: an extensive train network and plenty of low-cost flights. Schwämmlein likens the U.S. to Europe five years ago, with untapped demand and an array of local operators ready to make buses available. “At the beginning, you’re driven by pain. You grow because you have to,” says Schwämmlein, who went to school with fellow founder and technology chief Daniel Krauss and met co-CEO Jochen Engert when both worked for Boston Consulting Group. “Now we’re more opportunity-driven. We think we can create a market in the U.S.”
Key to that will be prices, and by almost any standard, FlixBus is cheap: just €25 to €50 ($30-$60) gets you from Berlin to Amsterdam, vs. €40 to €150 by train. Flix also takes a targeted approach to setting up routes, going where customers are rather than making them trudge to the bus station. In Berlin the company has 16 stops and frequently revamps timetables and routes to fine-tune the network. That helps keep the buses full—and persuades operators to hire drivers and invest the $350,000-plus that each new coach costs. “FlixBus isn’t a classic bus company but a highly professional sales platform,” says Christoph Gipp, Managing Director of IGES Institute in Berlin, which tracks infrastructure trends in Europe. “They’ve managed to get away from the stigma associated with bus travel.”
How Gen Z Might Change the Workplace
A new generation is starting to enter the workforce, and the office as you know it could be about to change dramatically. Generation Z—people born after 1996—is about to join the working world in a big way. Consulting firm BridgeWorks estimates that Gen Z accounts for 61 million people in the U.S., a number that is already larger than Generation X and two-thirds the size of the baby boomers. Gen Zers have lived a much different life than their parents and millennials. They are a generation that, in many cases, cannot remember a life without a smartphone in their hand—and they have no memory of the 9/11 attacks, beyond the classroom. As a result, companies looking to recruit and retain them may need to adjust their tactics.
The Center for Generational Kinetics has extensively studied this segment of the population. The good news for companies is this appears to be a group that wants to work hard and learn. They are also a generation that is thinking about their own financial future. “These Gen Zers have seen their parents struggle financially due to the recession and student loan crisis, so parents are having conversations about finances, money and debt with kids earlier. They are having conversations older generations never really had before,” said Denise Villa, founder of The Center for Generational Kinetics. Thirty-five percent of the people surveyed in the center’s most recent study said they plan to start saving for retirement in their 20s. Twelve percent (and keep in mind, many of the people in this survey were still teens) say they have already started saving.
Hiring these people is not just a matter of placing a want ad, though. Recruitment, said Heather Watson, behavioral designer at The Center for Generational Kinetics, is about to become more of a marketing effort. “Think of your company as a brand,” she said. “What makes it unique? What makes it fun? How do you visually show that?” Ryan Marshall, regional manager of human resources at Convergint Technologies, agreed. He leads the company’s Convergint Development Program, which recruits and trains college graduates for careers in the technology systems integration industry, and said the key to hiring Generation Z is less about benefits packages and more about the day-to-day work experience. “One of the things we do is sell our culture,” he said. “It seems to be that this generation is first and foremost looking for the best cultural fit for them. They’re looking for a company where they’re not just a number, but they’re somewhere they can contribute to the company.”
Gen Z also voraciously reads reviews—particularly those of a company they are considering. Glass Door is a valuable source of information for them, so it is wise to regularly check in there to see how employees (and ex-employees) paint a picture of your company. The top thing Gen Z looks for is a fun place to work, with a flexible schedule and paid time off also ranking high. But while they want to have fun, that doesn’t mean they are not serious, said Villa. “They want to work,” she said. “They want to do a very good job at that position. They’re not looking at climbing the ranks quickly. They’re looking at getting value quickly.”
Marshall said that eagerness to work translates to a quicker return on employee investment. “This generation is very, very savvy with technology,” he said. “I think what has been most shocking to me is how quickly they pick up on things and how fast they contribute directly to our business and our bottom line.” But first, many will need to be trained on the skills that boomers and millennials take for granted, like handling calls and writing emails. That is because Generation Z has been less about face-to-face communications—they more commonly communicate via text, emoji and video—and they are unprepared for a field such as customer service, where they could interact with irate people.
“When you’re thinking about retention and training, think about the soft skills these people need to be successful,” said Villa. “They want to come in and do a really good job; they just need skills we grew up with that they didn’t.” Other forms of training will have to take place in different ways, too, added Watson. Short YouTube-like instructional videos are especially effective. The entry of Gen Z into the workforce could also shift the paradigm of the employer-employee relationship. The line between work and life that some companies encourage could fade. “If you manage Gen Z, you’re not only managing their skill performance, you’re also kind of coaching their life as well,” said Watson. “They want buddies and friends, which goes against everything you’re taught in management class. They want to be socially connected with everyone. They want to be socially connected with their boss as well.”
They also want feedback regularly. Having been raised in an instant-reaction world (with “Likes” and other social media rewards), 40 percent surveyed by the center say they want daily interactions with their boss—and if they do not get it, they often think they have done something wrong. That has got some employers worried. In a national survey of workplace managers by mobile communications firm APPrise Mobile, almost one-third of millennial respondents say that it will be more difficult to manage employees from Gen Z compared to older generations. And 28% say it will be more difficult to train Gen Z employees.
The Good News Is . . .
- The unemployment rate fell to 3.9% in April, an 18-year low, even as nonfarm payrolls rose by just 164,000, according to a report from the Bureau of Labor Statistics. Economists surveyed by Reuters had expected payroll growth of 192,000 and the jobless rate to drop by one-tenth of a percent to 4.0%. The official jobs tally showed an increase from an upwardly revised 135,000 in March. A more encompassing measure of unemployment that includes discouraged workers and those holding part-time positions for economic reasons fell to 7.8%, the lowest since July 2001.
- GrubHub Inc., the nation’s leading online and mobile takeout food-ordering marketplace, reported earnings of $0.52 per share, an increase of 79.3% over year-earlier earnings of $0.29 per share. The firm’s earnings topped the consensus estimate of analysts by $0.25. The company reported revenues of $232.6 million, an increase of 49.0%. Management attributed the results to strong growth in the number of active diners and an increased order rate from those diners. It also cited a rapid broadening of its restaurant partnerships.
- Marriott’s timeshare business is buying rival ILG in a cash-and-stock deal valued at about $4.7 billion. ILG has more than 250,000 owners in its Vistana Signature Experiences and Hyatt Vacation Ownership portfolios. The combined company will have the rights to develop, market, and sell under the Hyatt Vacation Ownership programs. The combined company will include approximately 650,000 owners and seven upscale and luxury brands. ILG shareholders will receive $14.75 in cash and 0.165 shares of Marriott Vacations Worldwide stock for each ILG share.
Tips for Renting a Vacation Home
If you are looking to rent a vacation home but do not know where to start, you are not alone. Finding the perfect holiday getaway is not easy, but there are ways to set yourself apart from the herd and guarantee you get the residence you want without breaking your budget. As with most endeavors, planning ahead and being organized are the keys. Below are some easy steps to follow steps that can take to secure the rental vacation home you want at a great price. Be sure to work with your financial advisor to help you plan your vacation home rental.
Start Your Search Early – You can avoid some of the stress and excessive costs that can go with trying to secure a vacation home, particularly during peak season and on short notice, by thinking, researching and planning at least six months (but preferably a year) in advance. Your first goal should be to nail down your destination and the approximate timing of your trip. Once you have made these decisions, a real estate agent who specializes in your area can be helpful in finding a vacation home rental. Consider contacting popular brokerages that have a large presence or looking for individual agents that are known and respected in the area you are visiting. Also, online local newspapers can be a great resource (some rentals don’t go through a real estate agent), and so can websites that specialize in vacation rentals.
Consult Multiple Sources – It is very important to consult a variety of sources when vacation-house hunting. By shopping around and talking to many different people, you will not only learn more about the area you are visiting, you may also find yourself a better deal. Leave your options open by talking to several real estate agents and consulting multiple websites. If you do not live too far from your vacation destination, you might consider driving around the neighborhoods where you are looking to rent to see to there are any homes advertising for the season. While these strategies can be a lot of work, finding rentals in this manner may be cheaper in the long run because no brokerage fee will be involved. Although the owner is responsible for paying the fee, this cost will typically be factored into the home’s rental price.
Read the Whole Contract – Unfortunately, people are often so happy that they landed the vacation home they wanted and so eager to start having fun that they overlook the importance of the contract. But, this document should not be ignored, as it explains what you are on the hook for. It will outline not only your payment schedule, but also your liability in case of damages or if extra cleaning is needed. Make sure you understand who pays for:
• Utility bills
• Phone service
• Propane/gas – if outdoor grilling is available
Keep in mind that the costs involved in air conditioning or heating a vacation rental can be sizable, so be sure to factor those into your budget if the owner has not already included them in the rent. You should also be aware of the landlord’s policies regarding pets and subleasing. It is important to get a checklist of what is included in the rental. For example, are beach chairs and a grill part of the deal? If they are, that could save you money. If not, factor that into your budget (or consider bargaining for them; more on that in a bit). As a general rule, before signing a vacation rental contract, you should consider having it looked over by a competent and licensed attorney that you trust, preferably one that specializes in real estate. This should certainly be done if you are unclear about any aspect of the contract. While attorneys can be expensive, spending a couple of hundred dollars for a review of the contract makes sense if it’s going to put your mind at ease and allow you to fully enjoy your vacation. (For tips on finding a good counsellor, read The Benefits Of Using A Real Estate Attorney.)
You Can Always Negotiate – Almost every cost of a vacation home rental is negotiable, from the amount of the deposit to the weekly or monthly rent. If the person renting the home out is unwilling to budge on either of these items, see if they’ll throw in an extra day’s or week’s rental at a slightly lower price. If the property isn’t booked and you know it, this can be a great leverage point when negotiating.
Don’t Forget the Deposit – Seasonal rentals may require a large upfront security deposit. Don’t forget to factor this into your budget. Also, be aware of the process by which your deposit will be returned. Understand what conditions must be met (i.e., if the home must be clean and all rental payments made) in order for you to get your deposit back. This will help prevent arguments at the end of the rental agreement period.