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Business Travel Fuels Uber Growth in Arkansas

8 min read

Business travelers needing a ride in Arkansas are increasingly using their thumbs — not to hitchhike, but to tap the Uber app on their smartphones.

And despite class-action lawsuits by drivers and some job actions, Uber’s business has been growing steadily in Little Rock and northwest Arkansas, according to the company and a sampling of drivers.

Trips out of Bentonville have doubled since the beginning of the year, Uber says, as Wal-Mart’s headquarters and vendor centers serve as magnets for business travelers using the bustling Northwest Arkansas Regional Airport. Though the company didn’t provide concrete numbers, it estimated that 20 percent of Arkansas Uber riders are business travelers.

Several Arkansas businesspeople who use Uber extensively on the road say they’ve discovered its utility at home. “I use Uber every time I travel,” Little Rock public relations executive Natalie Ghidotti said. “I love it because I never have cash, and since it’s business travel, I want to use my business credit card, which is the one that I have on file with Uber.”

The nation’s largest ride-hailing service, which takes credit card payments only and boasts hundreds of thousands of drivers nationwide, has also given many Arkansans a job they can do whenever they want. One enthusiastic veteran who was wounded in Afghanistan said driving for Uber had actually helped him overcome post-traumatic stress disorder.

Beyond business travelers shuttling to airports, hotels and appointments, Uber drivers said they are seeing more revelers seeking to avoid driving after drinking.

“I never realized there were that many rich people in Little Rock,” said Peggy Nakamoto, a teacher at Martin Luther King Elementary School who has been driving for Uber since “the day they started in Little Rock, Nov. 6, 2014.” She said three other teachers at her school also drive for Uber.

Nakamoto described a typical weekend-night spree for Little Rock riders: “From these amazing houses way out in Chenal, first they’re gonna go to Hillcrest, then they’re gonna move on downtown, and they don’t want the evening to end. They’re spending all this money on eating and drinking, so they’re willing to spend more to get there and get home. These are not people living paycheck to paycheck — not the ones I drive. But considering the price of a DWI, or a car crash, it’s money well-spent.”

Surge Pricing

Like most Uber drivers, Nakamoto does it part time. Unlike most others, she drives only for Uber XL, which offers bigger vehicles at a premium price — a base rate of $2.15 per mile compared with 70 cents per mile for the basic Uber X, she said. Most of her riders travel in packs, but there are exceptions. “If I’m taking a businessperson from Embassy Suites to the airport, the ride is $35 or $40, but if it’s surging, the same ride might be $100.”

Surge pricing, in which riders pay more when demand is greatest, is something that Uber is trying to phase out. But for drivers like Nakamoto, who has a 2015 Toyota Sienna minivan, the surge is a godsend.

“The other night during a surge, I picked up a rider downtown and took him to the Crowne Plaza, and it was $97,” she said. “Riders have an option to wait till the surge is over, but if they don’t want to wait, it’s supply and demand.”

A non-surge Uber X ride from west Little Rock to the airport is $15 to $21, Uber said. A typical fare from the northwest Arkansas airport to Bentonville is about $25, and a ride from the Bentonville city square to the Arkansas Music Pavilion in Rogers is $15 to $21, the company said.

Uber says that its service, at non-surge prices, is typically 40 percent cheaper than traditional cab rides. Many traditional black car and taxi companies, while conceding that Uber has cut into their business, have countered by advertising that their prices do not surge.

“Customers are catching on now,” said Tim Reynolds, owner of Dynasty Taxi in Fayetteville. “They are calling and asking about it. We tell them we don’t have surge pricing and they won’t have to pay four or five times the usual rate, and they say, ‘Come and get us.’”

Uber has given Reynolds an advantage to pitch on Dynasty’s website: “No surge pricing! We will not take advantage of you when you need us the most!”

He added that his company lets regular customers ride now and pay later in some instances, and will accept coupons and offer lower flat rates to the elderly. “Uber is not going to do that,” he said. “If at some point Uber pushes cab companies out of business, who is going to care for the customers?”

Nakamoto said, however, that more people with disabilities are using Uber to run errands or go shopping since the company cut fares early this year. “Especially the visually impaired,” she said. “It’s a godsend to them.”

Convenience Cited

But business travel is Uber’s bedrock, and executives like Ghidotti say the main selling point is convenience. Drivers say they hear that refrain constantly.

“Except for weekend nights, most of my riders are business travelers who say convenience is the main factor — all they have to do is hit a button,” said Jason Shelby, a 17-year Army veteran who was shot three times in Afghanistan and started driving for Uber while getting his master’s degree at the University of Arkansas. (See Uber Job Helped Veteran Jason Shelby Heal.) He now lives in Bentonville and says he is one of about 35 or 40 drivers who work the area full time.

“The whole culture is changing up here with the museum [the Crystal Bridges Museum of American Art in Bentonville], the airport and Wal-Mart’s national and international influence,” Shelby said. “We now have microbreweries and clubs, and we’re finding that business travelers aren’t just staying in their hotels. They’re going out for dinner, going out to microbreweries. People coming from New York, Los Angeles and Dallas, they’re excited that Uber is here.”

Uber says that waiting times have steadily decreased in northwest Arkansas. In Fayetteville, average waits are down to five minutes, the company said. Daytime calls for rides in Little Rock led to average waits of less than eight minutes, according to an informal sampling of more than a dozen rides.

Still, Uber’s cruise into Arkansas has had some bumps. Its decision to slice fares cut two ways. Ridership increased, but drivers’ pay fell, leading to disgruntlement and a strike by some drivers in Little Rock on May 5 and 6 — if indeed a job stoppage by people who work at their own discretion can be called a strike.

One anonymous driver told KTHV-TV, Channel 11, that he can work six hours and clear only $45. Uber typically takes 20 percent of Uber X drivers’ fares and 28 percent of Uber XL fares, Nakamoto said. Uber X drivers who started more recently can face a 25 percent take. There is also a small per-ride fee.

Last Tuesday, Uber Technologies Inc. agreed to work with a guild representing up to 35,000 drivers in New York City. While the group would not be a union and would lack collective bargaining powers, representatives said that it plans to pool money to pay for benefits like paid time off and retirement accounts.

At times, Uber cars can be scarce. Hilary Hunt, the KARK, Channel 4, and KLRT, Channel 16, reporter who recently took a job in Fayetteville, landed in Little Rock on a delayed flight about midnight on May 2 and tweeted a screen shot noting that no Uber rides were available. “It was pretty frustrating,” she said later.

Court Challenges

Uber has also faced court challenges. Last month, it settled class-action suits by drivers who sought to be classified as company employees rather than independent contractors, and other suits are in the works. The privately held company agreed to pay up to $100 million to some 385,000 drivers in California and Massachusetts, settling a dispute that many observers saw as a significant threat to Uber’s model, which uses independent contract drivers to avoid paying for gas or providing health insurance, overtime or sick days.

Uber also agreed to let drivers accept tips and to allow transparency in its disciplining and dismissing of drivers.

Drivers like Shelby wave away all the negatives. “You see all this stuff on the news about Uber, but it’s been a life-changing experience for me,” he said.

Shelby estimated that 250 Uber drivers work in northwest Arkansas, but the overwhelming majority are part time. He ranges from Bella Vista all the way to Fort Smith, but his main weekday hub is the northwest Arkansas airport.

“On a given day, there are five to 10 Uber cars at the Bentonville airport,” he said. “The airport originally didn’t want us there. We were getting harassed by the taxi drivers out there, and by the police, so finally I went in and asked to speak to the general manager of the airport and the police sergeant who was on that day. I told them that Uber was going to be there, that it was legal and that all these business travelers were calling for rides. Delta Airlines even had an ad in their magazine telling travelers that Uber would be available when they land.”

Shelby said his argument was persuasive. Now Uber drivers have their own lot at the airport, with a digital display board allowing them to keep track of arriving flights.

The average ride from the airport is about 25 miles, Shelby said. “If it’s late at night, these businesspeople go straight to their hotels. If it’s morning, they go to Wal-Mart offices or other places where they have meetings or presentations.”

Nakamoto often signs on in Little Rock at 4 a.m. to give rides from hotels to the airport. “When I do that, I’m almost sure to get somebody wanting to take that 6:30 a.m. flight,” she said. After drop-off, she has time to get home and get ready for school.

When she is serious, Nakamoto said, she can make up to $500 a week. The week she spoke to Arkansas Business, her total was earmarked as a graduation present to her son, Ryan, who graduated last week from the University of Arkansas with degrees in physics and computer engineering. “I made $240.78 in 24 hours, so that’s what he’s getting.”

Shelby said he earns $700 to $1,200 a week, depending on how much he chooses to drive. He plans to continue driving full time for Uber.

To business travelers, Shelby said, Uber means never worrying about whether they can get a taxi. To him, a veteran who withdrew into isolation after his combat experience, it means social contact, and freedom.

“I like the people,” he said. “Riders on Uber want more than getting from Point A to Point B. They want to talk. I like to call it Facebook on wheels. And out of maybe 2,900 rides I’ve given, only two went bad. Driving for Uber has let me stay in my comfort zone, in my own vehicle, dressed the way I want to be. It puts me in contact with people who are excited to see me. It’s like going home to a puppy.”

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