Travel Buyers See Moderate Price Hikes for Rental Cars and Limo Service

Prices for rental cars and limo service are expected to see a moderate increase next year, but as airport fees, energy surcharges, insurance and taxes add even more to the cost of ground transportation, buyers are negotiating these fees with suppliers, according to purchasing.com.

As demand for business travel has dropped off over the past year, demand for rental cars has also dropped. In addition, the crisis in the financial services industry caused a drop in demand for black car limo service.

Travel management companies say buyers can successfully negotiate agreements with car rental companies and black car limo services by knowing their companies’ spending on these categories. The suppliers themselves and corporate card companies are good sources for mining the data.

Travel buyers can also negotiate costs for insurance and energy surcharges. Other costs to consider include no-show fees and new charges for extended rentals. Large penalties may be assessed for smoking in a non-smoking car. To keep some costs down, travel buyers can pick up rental cars at off-airport locations, especially for long-term use, eliminating on-airport charges.

Demand for black-car limo service has started to pick up a bit, says Gregg Tuccillo, CEO and founder of Hackensack, N.J.-based Global Ground Automation, which processes transactions for black car limo service. Tuccillo says he sees an increase of 45 percent from this past August to September. A seasonal drop in demand for black car service often occurs in the summer months, but increases around 20 percent in the autumn.

Tuccillo says businesses around the country are starting to gain confidence and are working to find new business, but appears to have little impact on 2010 pricing. Travel buyers will benefit from excess capacity in the industry and can negotiate prices, causing pressure on those prices for the next 6 to 18 months.

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