US Intercity Bus Line Tests the Road in Mexico

After the deregulation of the coach market in 1993, new opportunities opened for US companies and José Luis Moreno, Regional Vice President of International Operations for Greyhound Lines Mexico, says cross-border transportation continues to offer a unique opportunity for new investors.

Hoping to take advantage of the more than 183 million border crossings reported by the US Bureau of Transportation Statistics between Mexico and the US in 2014 and the more than 14 million reported only in the Laredo-Nuevo Laredo crossing, Greyhound expanded its existing bus route network to the city of Monterrey. The company had already been present in Mexico since 1958 but only with ticket sales. In 2015, the company’s 100th anniversary, Greyhound finally decided to take passengers directly from Monterrey to the Texan cities of Laredo, Dallas, Houston, San Antonio and Austin.

“We analyzed demand at our seven ticket-sales locations in Mexico and we combined that information with the potential market that exists in the country,” says Moreno, who says Mexico is one of the largest passenger transport markets in the world. This is backed up by Miguel Elizalde, Executive President of ANPACT, who told Mexico Automotive Review in 2016 that almost 98 percent of all passengers in Mexico travel by bus. Across all its different market segments, Greyhound transports between 12,000 and 13,000 people per month.

“We were positive about the potential that large and highly populated cities such as Monterrey offered and we expected high demand from routes to Texas,” says Moreno. The company had two main target demographics: recurrent travelers who had to cross the border several times a week because of their work and people with relatives in the US.

Moreno might have expected a smooth entry to the country but what he did not foresee was the level of success Greyhound would have thanks to its unusual value proposition. The company bet on a digital marketing strategy to target its clients, selling tickets at preferential rates depending on how early the client was willing to buy them. This was revolutionary for the Mexican industry, in which only airlines used this business model. The strategy helped Greyhound reach a penetration rate in digital ticket sales of 62-63 percent. In comparison, the online share of its Mexican competitors is limited to between 4 and 5 percent, according to Moreno. “Depending on their flexibility in terms of dates and departure times, clients could find cheaper tickets if they used our digital services,” he says.

Greyhound’s digital approach also brought an unexpected surprise for Moreno. Along with its two main client pools, the company found a third niche to exploit. Concerts, sports events and other social gatherings attract a large number of people to the south of the US every year and, according to the Texas Tourism Marketing Plan for 2017, visits from Mexico only in 2015 generated spending of over US$4.7 billion. College students, for example, found in Greyhound a cost-effective alternative for short tourism and cultural trips.

At the moment, private cars are Greyhound’s main competitors. But Moreno highlights security as one of the main advantages the company can offer potential clients as a mobility alternative. The company is in contact with the state and federal governments on both sides of the border to prevent any possible incidents and clients can be sure they will travel to safe terminals in the US with enough last-mile connectivity to move to other destinations. Safety is assured using Prevost X3-45 buses built with a modular structure that ensures the unit’s integrity in case of an accident.

As an added bonus to promote Greyhound as a true mobility and tourism alternative, the company is also working with the US government and the US Department of Homeland Security to speed up bus crossings at the border through the Advance Passenger Information System (APIS). The idea is to collect information from passengers wanting to cross the border and upload it to a database connected with the US Immigration Office to pre-validate access. Monterrey is the first step for Greyhound in Mexico. According to Moreno, the company is still in its first stage in the country and its goal is to prove that its value proposition is attractive both for potential clients and investors. “We believe there is still an opportunity to grow in this market and once we deem it possible, we will analyze the possibility to branch out into new routes,” he says.