Car Rental Recovery Remains Elusive

A market analysis released Tuesday suggests that a combination of forces affecting business travelers will suppress a quick recovery within the car rental market.


Jon LeSage, vice president and director of research at Long Beach, Calif.-based Abrams Travel Data Services, a car rental market consultancy, said the midsize rental car category that corporate travelers favor is showing increased usage in January, and car rental companies say the sector is on the rise this month. But consolidated car rental facilities at airports--which LeSage said makes renting more time-consuming--along with less business travel in general conspire to keep more business travelers out of rental cars. Moreover, the cost-cutting measure of fleet reductions, put in place last year by car rental companies, will mean business travelers can expect to drive more used cars this year as demand rises, according to the report.


Early January rentals and reservations among their corporate renters make Hertz optimistic, said Hertz spokesman Richard Broome, though he remains cautious. "The state of our current advanced reservations is the first sign that we're going to see an improvement in business travel, though what we're seeing doesn't bring us all the way back," Broome said. Demand in the first two weeks of January, however, beats demand from November and December, though corporate travel continues to lag behind the leisure drivers. Travelers are turning to rental cars as an alternative to some shuttle flights, noted LeSage, but targeted rate hikes in these markets may not be too far behind.


Hertz initiated a round of rate hikes in December that were completed this weekend when the company upped its weekend rates by 10 percent. The move is part of a targeted round of hikes that began in December, when daily rates were pushed up by 10 percent and weekly rates by 26 percent. Last year's depressed travel numbers hit business travel-friendly Hertz, Avis and National the hardest, according to data released on Tuesday from Abrams Travel Data Services. These companies responded quickly by reducing their fleets in line with sluggish demand. Should demand rebound by spring or summer, Le Sage said, companies quickly will bring used cars into the fleet to match rental traffic.