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Customers who book a “last-minute” rental car this coming summer may face a price increase of 60% or more. As such, Director of holidaycars.com Robbert Jan Meerpoel urged the car rental branch to adjust its internal strategy, rather than to simply point out the shortage of rental cars due to the economic crisis. “Holidaymakers will not take this huge rate increase into account when allocating their holiday budget. Chances are that they may then forgo their rental car, which is of benefit to no one.”
In a recent article in the British newspaper “The Daily Telegraph” a comparison was made with car rental rates for the Easter holiday in Spain with those from the previous year. Popular destinations, such as Malaga, Alicante and Palma de Mallorca, showed a price increase from 85 pounds to nearly 140 pounds for the cheapest rental car with a rental period of eight days. Meerpoel says: “This Easter was a good indication of what is about to happen this coming summer. Due to the large shortage of rental cars, in Spain alone the total rental fleet has shrunk by 35% prices for last-minute bookings during high season will go ‘sky high’. The business sector, travel agents, as well as consumers who book directly themselves, are aiming for the same rental cars. Car rental companies have too few cars available to maintain their profit line; consequently, they push up their prices in a state of panic.”
Structural solutions
Modification to a car rental company’s internal management would lead to better control of their turnover. By this statement, Meerpoel refers to the same method used by low-cost airlines. “In an airplane, every seat has its own price and own target group. This thinking can also be applied to rental cars. Book early and be rewarded! Divide your fleet into segments; one part is for self-booking consumers, one for the travel industry and one for the business market. If you tune the prices of each segment towards the target group, you as a car rental company will have much more control of your own pricing. It is not necessary, Therefore, to increase drastically the prices during peak periods, as is being done right now.”
A model rental car
In addition, Meerpoel sees opportunities for car rental companies if they offer only one car model in their fleets. “The fleet is then divided again into segments for your various different customers. Thus a generic model, identical in appearance and performance, can be rented at different rates. A car rental company can manage its own costs very well and keep the prices during shortage under control.”
Impact economic crisis
Before the economic crisis, car rental companies normally kept the cars for six to twelve months. They were then bought back by dealers or car manufacturers for the second-hand market. Now this is not possible, as the stocks remain high in the dealer market. Car rental companies are knocking at the banks’ doors to fill the financial gap by means of loans, yet usually their request is denied. The car rental industry now has much less money with which to purchase new cars. Companies that succeeded in doing so also notice that they failed to meet the required profit numbers. Car manufacturers have greatly reduced their production; this phenomenon has already incurred the large shortage of rental cars in countries around the Mediterranean Sea. Meerpoel advises consumers to make their booking before May 1. “By doing so, you avoid the risk of the enormous price hikes or getting no car at all in a worse scenario because they are all rented out.”
TravelDailyNews Asia-Pacific editorial team has an experience of over 35 years in B2B travel journalism as well as in tourism & hospitality marketing and communications.
