Business First Article

Coach Quarters rolling along on bus rentals, setting sights on executive rides

Business First – by Brian R. Ball
Date: Friday, August 12, 2011 .

Michael Middaugh started Coach Quarters in 2005 to rent, and hopefully sell fractions of, executive coaches, which are housed in the Plain City company’s garage.

Sometimes the kernel of an entrepreneurial idea doesn’t sprout as quickly as expected, but the business owner makes it work another way.

When the Custom Coach outfitter of executive motor coaches ceased manufacturing operations in 2001, sales and service manager Michael Middaugh took his 13 years of experience and went to work for Oregon-based Marathon Coach as national sales manager.

But in the back of his mind, he began nurturing the idea to develop a surface transportation equivalent to the NetJets fractional aircraft marketer and operator that’s based out of Port Columbus International Airport.

“I think the concept is great,” said Middaugh, who formed Coach Quarters in 2005 hoping to develop the idea. “Like a corporate airplane, it’s hard to justify an executive coach.”

But the regional market already had several businesses that owned luxury wheels thanks to Custom Coach’s several decades of marketing customized motor coaches, putting a dent in the potential market for shared coach ownership in Columbus. The subsequent declining economy also made selling off 25 percent interests in a motor coach daunting.

So Middaugh has set aside that “grandiose plan” and since has focused the company instead on marketing rental services to entrepreneurs and corporate executives and celebrities who regularly travel eight or 10 hours a day on business trips. Coaches also get rented for corporate entertainment trips to football games and other sporting events both in the region and nationally.

“There are a lot of ways to travel,” Middaugh said.

“You can hitchhike or you can charter a helicopter,” he said. “We’re in the middle somewhere.” Star-studded business

Motor coaches provide about 750 million passenger trips per year in the United States, according to the United Motorcoach Association trade group.

The highly fractured industry has about 3,200 operators, mostly private companies owning 10 coaches each and having annual revenue of about $1.5 million to $2 million.

“It’s a small business-driven industry, said Victor Parra, the trade association’s CEO. “We’re a big player even though much of that business involves small companies.”

Middaugh said he first delved into the charter business when he invested in the ownership of a motor coach in Custom Coach’s charter fleet.

He started Coach Quarters with one motor coach but now has a fleet of six coaches, with four of those based out of its facility off Industrial Parkway immediately west of Dublin and two others in Cincinnati.

“I always had owned a coach or two,” Middaugh said, “so we started here and in Cincinnati.”

Middaugh said Ohio has a geographic advantage with its proximity to East Coast cities as well as St. Louis, Chicago and other cities in the Midwest. Most of the Big Ten collegiate athletics conference also falls within that 10-hour drive, the most any one charter driver can drive in a 15-hour work day under federal regulations.

“The good thing about Columbus,” he said, “is you’re within a 10-hour drive of two-thirds of the (U.S.) population.”

The type of customer varies, he said.

A job can be as simple as parking a coach with 18 to 23 seats at a recreational vehicle parking lot as the venue for a corporate tailgate party before and after an Ohio State University football game or as complicated as a multicity tour of a company’s facilities across the Midwest.

“Our bread and butter are the multiple-day business trips to a few cities,” Middaugh said. “It’s a way to take the show on the road.”

That’s not his favorite, however.

“I like the ones that take three days but I only have to work one,” said Middaugh, something that occurs when the coach serves as the mode of transportation for a weekend corporate retreat.

Coach Quarters supplied a motor coach to the presidential campaign of U.S. Sen. John McCain for his travels along the East Coast, in the Midwest and the Southeast in 2008. The company supplied the same coach earlier this year for use in the filming of the HBO cable television adaptation of the Game Change book on the McCain campaign.

Middaugh has plenty of other stories about selling a coach to a famous musician or driving another one around. Those stories include selling a motor coach to actor Tom Cruise.

“That was a big sale,” he said. “Very profitable.”

But rubbing elbows with the rich and famous no longer has the same thrill it once held for him.

“I don’t get too star-struck anymore,” Middaugh said. “It’s business as usual.”

Efficient travel, entertainment

Leasing the coach costs about $200 to $250 an hour depending on various factors, with a minimum of four hours. Daily rates are about $1,750 four 10 hours.

Swivel chairs and seating around tables make the setting convenient for business meetings on the way to visit a production facility or several stores in a few different markets.

“Driving time can be business time,” said Brad Spence, Coach Quarters’ regional sales manager in Columbus. “The drive home is fun time.”

Count Columbus real estate broker Ray Boll of the RJ Boll Realty Ltd. commercial brokerage among those who have enjoyed fun time with Coach Quarters.

Boll said he has taken employees as well as customers to Ohio State football games, most recently Purdue during the 2010 season.

“We could watch other college games on the television on the way to see Purdue play Ohio State,” he said. “When we go to Purdue, we had lunch right outside the bus.”

Middaugh said the company has driven a group of Japanese businessmen for a few years now from Atlanta to Augusta, Ga., during the Masters golf tournament in April and also has taken groups to the Kentucky Derby in Louisville, Ky.

The company also runs the Big Ten Network’s visit in August to the training camps of all of the collegiate athletic conference’s football teams as part of the cable network’s coverage. That assignment includes wrapping the coach in a vinyl covering with the network’s logo and other images.

It also has driven the Cincinnati Reds media caravan in January, where it takes a few players and front-office managers around the region to drum up fan interest for the upcoming season.

While Coach Quarters has done weddings, Middaugh said those short assignments can conflict with its other multi-day contracts.

“Everybody gets to ride together,” he said. “It’s more expensive than a limo, but it’s more comfortable.”

He could expand that business if the company buys another bus.

“You’d need to have a smaller vehicle,” he said, “dedicated to just that market.”

Referrals, Middaugh said, often come through other independent operators in the region and across the U.S. Those operators also may supply coaches for Coach Quarters when it has leased out its fleet on a given day or week.

“A lot of (the assignments) are by word of mouth,” he said.

That inter-company network supplying business sort of makes up for Coach Quarters not having the fractional charter initiative functioning since that concept involves co-owners sharing a larger, in-house fleet.

For the near term, Middaugh said he has not given up the fractional idea, hoping the market develops when the economy improves.

He said a company or superstar musician would have to travel 40,000 miles per year to make owning a motor coach work out financially.

“It’s more of a given in the corporate aircraft industry,” Middaugh said of the fractional sales market. “But I think it will work out for motor coaches someday.”