Where the Rubber Meets the Road in Rental Car Programs

May 24, 2021 00:16:34
Where the Rubber Meets the Road in Rental Car Programs
Your Window Seat
Where the Rubber Meets the Road in Rental Car Programs
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Show Notes

This episode highlights what has been referred to as the “Rental Car Apocalypse” with dramatically increased car rental rates, reduced vehicle availability and the uncertainty of what to expect as more companies return to business travel.

Join host, Tracie Carillo and Guest Speaker, Jay Pope, Global Strategic Sales Director for Enterprise Holdings, as they buckle in…to Your Window Seat.

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Episode Transcript

Speaker 0 00:00:03 Hello, and welcome to this episode of your window seat, where we at travel, Inc. Discuss the topics that you care about most in this ever-changing business travel industry. I'm Tracy Carrillo, your host for today's topic, how the rubber meets the road with rental car programs. For those of you who have not yet jumped in the seat of your favorite rental car vendor, get ready for a bit of a shocker. As the cost of renting a car for a leisure vacation has increased over 165% since the same time in 2019, we are here today with the one and only Jay Pope of enterprise holdings to discuss what all led up to this and what our business and procurement travel managers, along with your travelers need to know about protections with your corporate agreements and the impact on car availability. So for the next 15 minutes, we're going to buckle in and Jay, welcome to your window seat. Speaker 1 00:01:03 Thank you so much pricing on buck them up. I'm ready. And just want to say thank you to travel, Inc for having us I'm looking forward to the discussion. Speaker 0 00:01:10 Perfect. So I'm sure I'd just term rental car apocalypse and a recent industry publication certainly sounds a little exaggerated to me, but what can you tell me about the reality as it pertains to rental car industry's current situation today? Speaker 1 00:01:26 Sure. Yeah, there's a couple of things going on that had taught quite a bit of steam. We started seeing it in the industry and mark and it's kind of really picked up over the last few months, but there's really two sides to this it's supply and demand. It's a common theme across many industries and, you know, as business has started to return and we're getting back to that normal pace. So first on the demand side, so I, as some states and municipalities, they begin to open up restrictions are loosened and that seen disposition becomes more widely available. We're all starting to feel a bit more comfortable, right? People were starting to travel again, specifically leisure, which has been kind of going on is really ramped up the business. Travel is also starting to pick up speed. This is reflecting that some, the demand that we see specifically many areas who are experiencing uptakes and booking as we head into spring and summer, we anticipate this kind of continued throughout the coming months as people venture farther and farther away from our home for both leisure. Speaker 1 00:02:17 And this, that demand is really started to increase. The additional side of that is the supply. And so during the lowest points of last year, there was a 20 to 25% reduction in the north American rental fleet. Many in the industry actually canceled the car orders altogether, but that reduction in the fleet is where we started. And then at the same time as businesses starting to ramp back up, fleets are starting to come back in. There's now a global car shortage that a few things that kind of factor into this one is certainly demand is outstripping production due to a few combinations, but manufacturers set downstairs in the crisis following that as they reopened and started production back again, they were hampered by the global semiconductor sorted. And now we have semiconductor plants plaintiffs up. So quite honestly, the manufacturer just haven't been able to produce the cars that the market demands we've been getting tars since June of last year, regularly. We did not cancel any of our feed doors. They had enterprise all these enterprise and national didn't came so in the hallway. So we've been getting them in, just not at the levels that we expected and wanted. And so they're starting to come in by the tens of thousands, but just not nearly as enough that we need. Speaker 0 00:03:25 So speaking for myself, I just took a recent trip up to New York, actually to go see my twin grand babies. And I'm used to having a whole bunch of cards to choose from and did not have that experience. Now, it might've been just the time of day that I was there or just a fluke. Is this a new expectation that us business probably should start expecting in the near term? Speaker 1 00:03:47 Yeah. You know, it's hard for, I see there could be some unique circumstances around yours, but I think as a whole travel does look a little bit different, especially right at the moment. So wait times may be a little bit longer than expected. There's a few reasons that play into this. I think primarily at that early on increased cleaning protocols, we were new trying to figure all that out. Certainly takes a lot longer to sanitize and get a car ready. But in addition to that, we have things such as unpredictable Modesto rates, people keeping their cars longer than they used to. So that increased length of rental. There's other factors that play into there. All of a sudden the industry are working diligently to try to address those limit. The white towns, reduce them, make our customer's experiences as best possible. One thing I would add as a business traveler, I think there's some things that you can do to make a difference in there. Speaker 1 00:04:32 Certainly enrolling in loyalty member fits, making sure that your profile is updated, be proactive in your bookings book as early as possible cancel reservations, if and when you're planning to paint, all of that has certainly some best practices. And I was telling a friend that I was reminded of this one of my first international trips. I took many, many years ago. And the person leading the trip said the best ability is flexibility. So having that mindset going into these, being ready, being adaptable, understanding that things are a little bit different. Everybody's getting back on the road at the same time. And so all of those I think would be some good practices. Speaker 0 00:05:07 Uh, I love that. That was a great phrase. I'm going to borrow that if it's okay with you, tell me about loyalty status. I mean, why does a loyalty status plan? What does that do for a business traveler as far as an assurance of having car availability? Speaker 1 00:05:20 Yeah, so the loyalty programs are helpful even during normal times, but more so during these peak times of high demand, as a SPE specific things, I'll use Nashville, they are more valid and great examples specifically for the corporate traveler. The beauty there is that that allows for the guarantee of midsize compliance, contracted pricing. This is huge for companies travel managers alike, and when they're trying to manage their programs and their costs, it also gives the crab access to the freshest fleet in the industry. So the aisle where you would reserve a midsize and then fields from any car on the lot, it certainly looks a little different today than it was in the past. It's not as full to be candid, but it certainly, we still believe that the best way to run a vehicle. So having that information, preloaded, having a routine that you're ready, being able to guarantee the size car and the cost of that car are really key factors with them. Allow you reserve a midsize, always pay for the mid-size pay for that car class that you lose and they get to choose from any car that's available. Historically, the owl was filled quite honestly with larger vehicles SEBS and whatnot with this trend towards leisure that we've seen, we've seen an increased demand for those SUV. And so not as many of those are on the owl as they used to be, but certainly it still has a good mix of vehicles that are out there Speaker 0 00:06:34 As a business traveler and the importance of having a car. When you show up at the airport, are there particular days of the week that are better and worse than others as far as that assurance? Speaker 1 00:06:44 Yeah, that's a great question. You know, historically the demand for that was driven at peak did like midweek, you know, so that Tuesday, Wednesday was really the peak of it. Weekends. We had plenty of availability now with the increase in leads to where it's pacing and a shift to demand being Friday through Monday, Tuesday, Wednesday, all of that driven by retail. These peak times travel maids are wildly unpredictable and can honestly be regionalized early on Texas, Florida were really high demand and had some difficulty with the bell building more recently. In fact, in the last couple of weeks, it's been Hawaii and Alaska. So if you think leisure areas have really had some needs there. So I would say historically, it'd be during the mid week, but now, and I'll call it, drop the table. It's a little bit of everything. It just kind of depends on what's going on in that region at that time. I think the best that there is a book early as possible, we recommend when you're making those airline reservations to go ahead and attach that car at the same time. Speaker 0 00:07:39 So then when going go back to the rates a little bit where we're looking at budgets, it's almost like, you know, a travel budget is almost impossible to put together in this year. Not really sure of the average rate of airline what's going on with a hotel availability. We're looking for some kind of constants, right? Where's the constant with a negotiated program for rental cars. Speaker 1 00:08:03 Yeah. So this is a great question and it leads to what I was speaking to earlier. I think the need for corporate agreements has never been stronger than it is right now. So you want to make sure that you've got a contract that's in place and those can look a bunch of different ways. Some have district percentage off whatever the retail rate is. Some have set rates, some have set rates in there with a discount for that set, right? It's kind of a ceiling. So now's the time to engage with your partner to make sure that you've got to unpack the current environment, the demands of the day. And that's where if I'm being honest, I think that's where we separate ourselves, the national product of the MLL, that ability to book and guarantee a mid-sized right on the aisle is really key because that gives some stability for the pricing and the travel manager, less ability for the traveler. It's really the best of both worlds in any time. It's certainly never been more highlighted than it is today. Speaker 0 00:08:51 I tend to agree with you. Every car vendor is in the same boat, so to speak, dealing with the lack of availability, dealing with demand and supply issues. So how is the rental car industry kind of now responding also to the ride, share Uber and Lyft. And so they've always kind of been in the game. It's ground transportation after all, but what's happening today. Are you seeing a rise in Lyft and Uber reservations because of the lack of availability or is it not a threat to you? Speaker 1 00:09:25 I'll take the first part of that. Whether we're seeing arise, it's kind of hard to determine quite honestly, because the levels of volume now are anemic compared to what they were. Right. And so it's hard to see where does this rise and where does it drop? And as business starts to down, we may get a little better insight, but speaking to like the competition, we'll call it that there's always a focus opportunity, right? We always look at wins and losses and what are we doing? But in general, I think that fulfills a need has plenty of room in this space. So if you look at a, say a one day a sport, there might be going on, there's certainly a need variety. There are car hailing and extended business trips. So we think there's a real need and approves to be a real need for personal transportation, right? Speaker 1 00:10:07 Someone wants their own space. They've got multiple stops because he didn't need the flexibility to have in your own. The transportation. Some of the current demand that we're seeing today, we believe can actually be attributed the customer's desire to control their environment. Right? So rental cars are unique and that they allow for travel, but while also giving the travel with that ability to limit their interaction. And so that's a big thing. So there's always been that play and a little bit of competition in there. There's plenty of room in this space, but we think that ability for someone to kind of control their space is big. And, and you saw a lot of this, right? We're coming out of it last year. Real cars went through the roof. It's been a key priority for enterprise holdings throughout this to ensure the health and safety of not our employees, but certainly our customers is complete clean pled department filled with flora. So those are some relevant examples of what that looks like Speaker 0 00:10:54 I've even seen increases in rideshare prices, adding transaction fees, adding numerous different fees. That really they're there a couple of years ago, or at least either they were rolled in, or we hadn't noticed them. But having that transparency of all the different line items that these on the ride share, I think that opens another set of eyes. But to your point on the control of cleanliness and interactions, there's a lot to say about that. And certainly having that option for ride share or ride hail as well is up to each individual company and where they are within the industry and their business decisions and policy. So the last thing we want to touch on is primary secondary card vendor relationship. What are the pros and cons to having just one or both? Speaker 1 00:11:39 Yeah. You know, I'm missing that really the importance of the agreement now is truly the time to evaluate this part. And if some company philosophies are really good at implementing and mandating a primary and only source for suppliers, some had needs and have a culture that supports having multiple. And so it kind of depends on the needs of the company, but we really think it's key to evaluate the partnerships. You know, a buyer needs to have confidence that their supplier and their partners and they're looking, they need to have confidence in that supplier. And look for someone that's focused on long-term partnership, not in just the fleet, which is today's concern, right? So you need to have confidence net fleet, but in all aspects of that relationship. So I think the things as the financially stable, someone that's present and accessible and respond to needs, you look at this past year, have you had contact with the suppliers? Speaker 1 00:12:25 Are they there to meet your needs? Are they helping keep you abreast? Are they all the faint is if it's going on something that I think stands out as a focus on total mobility, not just car rental, we just mentioned ride hailing and car sharing. There's there's other aspects of that. So a full mobility solution provider, are they looking to bring your company value company as a whole, but I think that you need to be open to seeking secondary suppliers. If you have any concerns that they need those above that I mentioned, it certainly is an opportunity now the time. Speaker 0 00:12:54 So what are your top three recommendations for business procurement travel managers in today's environment, as we continue out 2021 and head into 2022 program plan Speaker 1 00:13:07 Top three, evaluate your current supplier, and really see if they're meeting the goals of the company as a whole, not just in the, whatever that one single source in, but as a whole company, bringing value, total mobility, those things, but they say evaluate your current supplier. Certainly look into that, check out the education and the support and instruction given to your travelers. And I think the third is that if anything, this past year has taught me and many others, I think that while price is important, there's so many more things that go into a well-maintained well-managed probable program. And certainly that needs to be competitive on the price, but you need to make sure that someone's there to meet all of your needs. Speaker 0 00:13:44 So Jay is supply starts coming back, business travel starts coming back. What does your crystal ball have to say about either, you know, a balancing of rates or more car availability by the end of the year? Speaker 1 00:13:58 Yeah, Tracy you're right. That crystal ball though is a little bit cloudy compared to what it used to be, but I give you some information on this. So typically we have a summer serve that kind of is a retail that overlays the corporate business. And then that's followed by a fall influx of vehicles and a slowdown of the leaker. That's a normal environment. And that's when you would see rates and availability kind of respond accordingly. So much of this is up to the manufacturers, their supply chain, how that works, the vehicles, when they come in we're hopeful and into 2022, it's going to be there that the supply is going to come. So we're going to increase into the fall heading into 2022. I think it's worth noting that a lot of demand is really high, where the industry is still significantly below pre COVID levels. This recovery is still early and it's certainly a long road ahead of us. And it's a little bit unpredictable at times. You know, the last thing I'd say is that our data Dusko, that pricing has been suppressed for many, many years. So there is some need for compression and we'll see how it all out. Speaker 0 00:14:53 All right, Jay, wrapping it up now. Thank you for your time. Thank you for your expertise, but I gotta ask you why enterprise holdings. Speaker 1 00:15:02 Yes. Thank you, Tracy. It's in a great time being here. Thank you to travel, Inc, to, for putting us on what a great opportunity, you know, why enterprise always, I think the future is uncertain, but we're confident we're going to be here to handle whatever it may bring. You know, in many ways, this has been a great journey for us. It's been allowing us to transform our business and our missing that continue to be the best mobility company in the world. Our customer service focus, those efforts lead our thinking and everything that we do and combine that with our financial stability that comes with being a conservative, privately held company. And we believe that sets us apart. You know, enterprise hallways, we're not just a rental car company where it through mobility providers would deliver on solutions and various offerings such as truck rental, car standing, vanpool fleet management services. You know, we're excited to see what comes next and we would love to partner with you. Speaker 0 00:15:49 Okay. So maybe not an apocalypse, but maybe some new expectations for a new way of traveling over the next few months, Jay. Thank you. Thank you to enterprise holdings. We're excited to be getting back to travel. We're excited to learn. What's the right approach and we're excited to have you as a partner. Thank you so much. And thanks for joining your window seat. Thank you for joining us today on this episode of your window seat, to learn more about travel, Inc. You can find us on our [email protected] Inc com or follow us on any of our social channels. We look forward to the next episode and as always at travel Inc, travel safe.

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