A lot of travel managers lately have been surprised by the price of rental cars. While deals are to be found in almost every other aspect of travel — on hotel rooms, plane tickets, and restaurant meals — the cost of renting a car has gone up. Way up.
The Abrams Consulting Group, which follows rental car rates, reported in May that the average weekly rate on a compact auto booked a week in advance at an airport outlet was $345.99, an increase of 73 percent from May 2008, when the average rate was just $199.65. Abrams says the reason is simple: Though the demand for rental cars was down 15 percent, the number of cars at rental company lots was down even more. The companies are cutting supply to create a shortage and raise prices.
Fortunately, business owners and travel managers can respond with a few strategies of their own.
Avoid airport rentals. Sure it’s easier to walk out of the terminal and into a waiting rental car, but the convenience costs money. Airport locations tack on local and state surcharges, raising the cost of a car by as much as 45 percent. If employees in your organization don’t mind spending a little extra time, they can save by picking up their rental at a downtown office. The hotel may have a shuttle from the terminal, or it may be possible to pick up the car at the hotel.
Top off before dropping off. Most rental companies offer the option of returning a car with a full or less-than-full tank. Make sure travelers should opt for full. If they don’t, the agency will fill the car at the rental office and charge up to $8 a gallon. Or go with Enterprise Rent-a-Car, Alamo, or National. Last summer the three affiliates introduced a new policy, promising to charge the local market’s self-serve price plus a markup not to exceed 50 percent of the fuel cost.
Go online. A lot of people hesitate to use sites like Priceline and Hotwire because they’re “opaque.” You must agree to a preset price before the sites reveal what rental company the car is coming from. But here’s the upside: your organization can save a significant amount of money this way. Or you can try an aggregator like Kayak, Orbitz, or Travelocity. They display rates from a number of different companies alongside each other for easy comparison shopping. For even lower rates, check out Car Rental Express, which aggregates cars from independent companies. The site promises savings of 15 percent to 30 percent on a rental.
Book early. Remind your employees to book in advance whenever possible. Rental companies also offer a discount if you book early — usually a week in advance. But be sure to read the company’s cancellation policy and learn how far in advance you must cancel to avoid a penalty.
Rent weekly. Companies tend to charge higher rates for daily rentals; so instruct your employees to always ask about a weekly rate. You could save by booking a car for a week, even if it’s needed for fewer days.
Avoid the crowds. If travel dates are flexible, encourage your employees to do a little research online to see if a planned trip coincides with any special events or conventions. If it does, consider a change. Travelers who arrive in Miami at the same time as Super Bowl XLIV and will pay an XXXL price for a rental car.
Consider coverage carefully. A survey of consumers by the National Association of Insurance Commissioners found that almost half were utterly confused or had only a hazy idea about car rental insurance. A third said they usually pay for insurance at the rental counter just to be on the safe side. A little knowledge here can save you money. Drivers’ own car insurance policies might provide coverage in a rental as well. Give the insurance company a call and find out. Some charge cards, like American Express, provide supplemental rental car insurance to personal coverage if an American Express card is used to reserve and pay for the car.
Skip the GPS. Employees like to splurge when they’re on the road. But it’s your job to draw the line. Travelers who are familiar with their destinations should consider getting a car without GPS. Rental agencies charge up to $15 a day for the devices in many cities.
Join the club. Many rental companies have business membership programs similar to airline frequent-flier programs. In addition to perks like priority service and roadside assistance, most also offer special rates and discounts for frequent renters. Lots of rental companies also have links with airline, charge card, and hotel reward programs. If your organization is already a member of such a program, check to see if it has a partnership with a rental company.
Ride in style. Encourage employees to do the math. Why? Because some rental companies charge a premium for economy cars. You’ll save on gas with a fuel-sipper, but you may pay a lower rate to rent a larger car.
Tom Stein has contributed to leading business and general interest publications including Wired Magazine, Business 2.0, Venture Capital Journal, and Tennis Magazine. Previously, he held staff-writer positions at the San Francisco Chronicle, Red Herring, and InformationWeek. He also was a senior editor at Success Magazine, where he covered some of the most unusual and utterly unique entrepreneurial companies in the world.