Business Travelers Continue Mass Migration to Uber; Lenders Under Pressure

Business travelers are continuing to increasingly use their phones to hail a ride rather than their arms, according to the latest data.

The migration trend of business travelers to ride-hailing apps for ground transportation continued in the second quarter of 2016 according to expense-management software company Certify. Uber and Lyft accounted for 49% of ground transportation market share in the quarter ended June 2016, up from 46% in three months.

In a testament to the bumpiness and noise in any given quarter, all of the Uber/Lyft market share gains came at the expense of car rentals, after the latter registered a share gain in the first quarter. Taxis maintained a paltry 14% share of business traveler wallets among Certify customers, down from 36% two years ago. Taxis suffered a 6% sequential share decline in the first quarter, the worst quarterly drop since ride-hailing apps entered markets in 2011, so a flattening of declines in the second quarter was not surprising. Ride hailing has gone from 8% to 49% (see Chart below) in the last 27 months -- an historic example of rapid, prodigious market disruption by innovation.

Share of Business Ground Transportation by Mode (Certify Client Base)

Source: Certify.

Uber's U.S. share has now increased from 14% in the first quarter of 2014 to nearly 75% in 2016, during which time Lyft has gone from 0% to 5%, all at the expense of taxis (see chart below).

Share of US Business Traveler Trips in Certify Client Base

Source: Certify.

Lyft again charged the cheapest average fares at less than $21 per ride (down nearly 8% year-over-year). Uber's $25.50 was down 15% after fare cuts in most of its markets in late January (fares were recently raised to offset some of that reduction) and taxis, at almost $40, were up over 15%. In addition to a significant price advantage, users again rated the ride-hailing experience higher than taxis. Uber's rating was unchanged from the prior quarter at 4.7, but Lyft jumped to the top spot going from an average rating of 4.5 to 4.8 sequentially. Taxis fell modestly to 3.75 on the five-point scale.

Share gains in the last twelve months were observed for Uber alone versus taxis in all major cities (see chart below). Miami has become a notoriously volatile market, perhaps owing to a limited Certify sample size in that city or other statistical noise. Double-digit year-over-year share gains were again observed in New York, Chicago and Atlanta (Dallas showed a 9% share gain for Uber in the first quarter). It is worth noting that sequential business traveler share was flat in New York, after a significant 16% sequential gain in share for Uber in the first quarter.

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