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Like most travel industry vendors, car rental companies struggled in the early days of the pandemic. To stay afloat, they sold large parts of their fleets, canceled new car orders and reduced staff at their rental stations. At the same time, the suppliers have introduced deep cleaning of their vehicle fleets and disinfection processes in their operations to ensure safety and cleanliness standards.
Meanwhile, travelers worried about virus transmission in crowded rooms rented cars to replace flights for longer trips and detained vehicles for long periods of time. According to the providers, employees sometimes use rental vehicles to get to work as an alternative to public transport and trains.
As business travel becomes more serious and the associated demand for rental cars increases, it may become more difficult for businesses to get the vehicles they need. In February, automakers warned of a delay in vehicle shipments due to a global shortage of semiconductors, which are critical components in auto manufacturing.
To avoid bottlenecks and maintain profitability as demand increases, industry players have implemented revenue management strategies similar to airlines and hotels. According to buyers, vendors prioritize customers based on the length of the rental and the time of the reservation. In practice, this means that providers can switch off the rental to travelers or offer different price points based on individual rental parameters.
Buyers want to implement service level agreements in their preferred partner contracts to ensure vehicle availability for their business travelers. Companies with larger volumes can have more leverage on this point. Service level agreements may not be a panacea, however, as vehicle prioritization is often decided at the local level. And when volume thresholds are part of the contract, buyers want to track the number of times cars have not been available and bring this up at contract review meetings. Travelers on the ground should be urged by travel managers to book as early as possible and be flexible about their travel dates and store pick-up locations.
