Large Market Buyers See Little Negotiating Room with Rental Companies

Car rental companies have had trouble in the past negotiating with too-high volume customers that ultimately hurt them, according to Business Travel News.

In addition, car rental companies operate on such small margins that they have less room for negotiating rates than hotels and airlines, said Neil Abrams, president of car rental research firm Abrams Consulting Group. Another reason car rental rates are tough to negotiate is that governments continually target the industry with local and state taxes to fund projects such as sports stadiums. In some cities, these taxes and fees actually come close to equaling the actual rates.

Because of those factors, large market buyers would be better off looking at add-ons and favorable contract terms rather than focus on negotiating rates, Abrams said. Areas to consider in negotiations include last-vehicle availability, insurance coverage, GPS equipment, fuel pricing or midweek pricing versus weekend pricing, Abrams noted.

Large market buyers could also consider a policy requiring travelers to refuel their own cars before returning them in most cases, rather than making them pay refueling fees.

But despite the challenging business environment for car rental, the industry has remained stable, making it unlikely that buyers will be able to reduce significant amounts from their car rental rates this year, Abrams said. A Business Travel News survey of large market buyers showed them spending an average of $40 on daily rentals for midsize cars in 2008, not counting taxes or fees. Corporate Travel 100 buyers in 2008 paid a rate of $37.80 on average for midsize car rental, and that number has changed little in the last decade.

 

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