Arkansas Motorcoach Industry Desperate for Aid

Arkansas Motorcoach Industry Desperate for Aid
Cary Martin, president of Little Rock Coaches, sits behind the wheel of one of his buses. (Karen E. Segrave)

Cary Martin says his industry is close to the point of no return, a victim of the COVID-19 pandemic.

Martin is the president of Little Rock Coaches, a charter motorcoach company that has basically seen its business shut down since mid-March. It is not a Little Rock or an Arkansas phenomenon; the pandemic has hammered motorcoach businesses across the nation.

It is a bigger industry than you might expect. According to the American Bus Association, the motorcoach industry employs more than 350 in Arkansas with a direct economic impact of $42 million; indirect impact is another $110 million.

Martin’s fleet of 16 56-passenger motorcoaches — sale price $600,000 each — has been sidelined except for some ad hoc excursions tied to hurricane relief. Many of his 42 employees have been reduced to part-time work.

Martin said that since the shutdown he has had to refund $250,000 in deposits and cancel approximately $2 million in bookings.

“It is hanging by a thread,” said Martin, the vice president of the South Central Motorcoach Association’s board of directors. “What we are talking about is, nationwide, the downing of an entire industry. Arkansas is right in the middle of it.”

Arkansas’ motorcoach companies include Mountain Home Charter Services and Arrow Coach Lines in Little Rock. They provide transportation for a host of groups and activities, ranging from high school and college athletic teams to churches and military personnel.

“We are all in the same boat,” Martin said. “None of us have done any real business since the middle of March. We are thinking it may be next March before business really opens up to us again. No business is able to go 12 months without revenue, and ours is particularly highly capitalized.”

Martin said he was able to receive money from the federal Paycheck Protection Program but that was a short-term stopgap. Congress has been debating relief aid directed to the motorcoach industry specifically but the $10 billion bill, the Coronavirus Economic Relief for Transportation Services Act, hasn’t passed yet.

“It is important that people realize how dire the situation is,” Martin said.

Martin said federal aid is needed because even if the economy restarts and business revives to a pre-pandemic state, it will take even longer for people to recover financially to a point where they will start taking charter excursions.

“Pretty much everyone is wondering where this is going to go and if we are going to survive until the end of the year,” Martin said. “That’s one of the challenges.”

The motorcoach industry is vulnerable to the economic pinch because it is a leveraged business. Martin used the analogy that when a person rents a car he or she wants a current model, and the same is true of a group that charters a motorcoach.

Motorcoaches are expensive, and keeping the vehicles as current as possible for today’s clientele is a loan officer’s dream. Martin said his company had a healthy cash reserve but the long duration of the business shutdown has drained that account, even with government assistance.

“Everybody wants new coaches and they demand it, so we go into debt to purchase these and that debt service is part of our plan,” Martin said. “But now there is no revenue. I can tell you, like every motorcoach company, we were highly leveraged. We had a reserve and we are just about out of that reserve. We are hanging on with the help of PPP money and a little bit of hurricane work here.”

Martin said he created a vehicle-sanitizing business called The Virus Buster to “keep things going” but it isn’t a company-saving venture.

“It is a drop in the bucket compared to what it takes to keep a motorcoach company going,” Martin said. “We are trying to be innovative and proactive and aggressive just to make it to the spring of 2021.”