Car Rental Rates Expected to Increase This Year

Car rental rates will continue to increase while hotel rates decline and North American airfares remain steady this year, according to Advito, a travel-management advisory group, which issued a first quarter update on its 2010 industry forecast on the airline, hotel and car rental industries.

Advito’s original industry forecast, which was released in October 2009, first called for car rental corporations to prepare for a potential increase in ancillary revenues and penalty charges. The company said recent developments in the industry have made that scenario more likely.

Advito cited how in November 2009 Avis Budget Group began working with global distribution system operators to implement the addition of credit card information to rental car bookings. This move allowed Avis and Budget “to assess a no-show fee for travelers who fail to cancel their rental car reservation without sufficient notice,” according to Advito.

The company said Avis and Budget have not set a timeline for implementing a no-show fee and haven’t said whether the fee would be a flat rate or average daily rate including applicable taxes and surcharges. “However, we anticipate that they will begin assessing no-show fees in the U.S. market during 2010,” Advito said.

The company also said the recall of more than 8 million Toyota vehicles contributed to temporary fleet shortages among rental companies. About 8 percent of the North American car rental fleet – or about 104,000 vehicles – were pulled off lots belonging to Hertz, Enterprise, Avis, Budget, National and Alamo. Enterprise Holdings, which operates the Alamo, Enterprise and National brands, said about 4.1 percent of its fleet was affected.

Advito said, “The recall may have had a particular impact on clients seeking to integrate a ‘green’ element in their rental car program, as Toyota’s popular hybrid model, the Prius, disappeared temporarily from car rental lots.”

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