The skyline of Dubai, one of the seven emirates that make up the United Arab Emirates. Photo courtesy of iStockphoto/DeeJpilot
You could call the United Arab Emirates (UAE) a boomtown, or “boom country.” Since starting oil exports in the 1960s, UAE has become the marketplace center for commerce and trade throughout the Gulf.
With a population of more than 8 million, compared to fewer than 100,000 just 50 years ago, the country has opted to pour its oil revenues into infrastructure, schools, hospitals and the like. And that growth has fueled the country’s car rental industry.
Interviews with franchise operators, independents and an industry consultant make one thing clear: With expatriates taking up a majority of the population, rental companies must accommodate longer-term rentals and they must be prepared for challenges that arise from the country’s demographics.
So how do these companies manage a rapidly growing market while keeping service and fleet management, well, manageable?
Long-Term Services Are A Must
Because of the transient nature of the mostly foreign workforce, long-term rentals are popular options. Take the city of Dubai, for example. Of the more than 2.1 million people living there, only 17% of the population is from the UAE. The rest are from elsewhere, primarily India.
“Many don’t want to buy a car and many don’t even want to lease a car,” says Bob Farrow, a Middle East car rental consultant, who first traveled to the region East 20 years ago to help Hertz UAE set up its network there. He went back in 2002 and continues to consult various companies in the UAE, as well as in Saudi Arabia and surrounding countries.
Farrow says that many people rent month to month, sometimes up to four or five months at a time, with the option of a hired driver.
Hertz UAE, with 12,000 vehicles across the country, has 17 locations with two more on the way. Nigel Johnson, Hertz UAE’s general manager, says that 45% of its business revenues are generated from residents renting on a monthly basis. Leasing is also a Hertz option.
“Many UAE customers find that fixed-cost driving can provide peace of mind with all maintenance, servicing, repairs, vehicle registration and administration managed on their behalf,” Johnson says. He adds that Hertz also provides fleet management to more than 600 corporate accounts.
Of the companies interviewed, Budget UAE follows Hertz in fleet size, with up to 6,000 vehicles during its peak season. Salim Damji, Budget UAE senior general manager, says there are currently 25 corporate-owned locations, as well as “hotline links” in various hotels. He says that UAE residents primarily book cars at monthly rates or lease, while tourists make up a majority of the company’s daily and weekly rentals.