CRS 2009: Funding, Funding, Funding

More than 400 industry professionals from the independent, licensee and corporate sides of the auto rental industry convened March 30-31 at the Las Vegas Hilton for the 2009 Car Rental Show (CRS).

Presented in conjunction with the American Car Rental Association (ACRA), CRS featured two full days of education, entertainment and networking.

Challenges and Optimism
Matthew Darrah, senior vice president of North American operations for Enterprise Rent-A-Car, National Car Rental and Alamo Rent A Car, presented the keynote address on Monday. Darrah underlined many of the challenges facing the auto rental industry: managing the decrease in new car sales, the decline in consumer demand, the lack of credit to fund vehicle purchases and a used car market that has become “virtually toxic.”

However, Darrah struck an optimistic note. “We have all proven that we can react very quickly to resize our businesses to reflect current realities. Those of us who continue to make the correct decisions now will stand ready when conditions do improve – and they will,” Darrah said.

Darrah noted the recent positive trends such as the rise in average daily rates as a result of the industry right-sizing fleets, a strong international inbound tour business, a loosening of the credit market and the beginnings of a rejuvenation used car market.

Darrah warned that misleading add-on fees such as “energy recovery” fees are simply an opportunity to disguise a legitimate business expense. “From our perspective, fees like this have no place in our world,” Darrah said.

Funding, Funding, Funding
This year, the funding crisis and credit crunch were prevailing themes in the seminars, panels and roundtable discussions.

Concerns were raised that car rental operations are highly levered, which makes it difficult for banks to lend money. The car rental industry is still not fully understood, speakers said, which leads to funder’s skittishness.

Seminar presenters stressed the importance of establishing multiple credit lines to protect against a primary bank pulling funding. They called for the need to be more detailed and transparent than ever before regarding financial statements to satisfy a bank’s requirements.

Though funding choices are more limited than a year ago, panelists from First Source Bank, Union Leasing and Automotive Finance Corp. stated that there are credit lines available now to qualified candidates.

The Inside Scoop
The funding information seemed to pay off for attendees.

“As a 12-year veteran in the industry I might think that I know a lot – and I do – but now after opening up my own brand, I am dealing with much more issues on my own,” said Matthew Holowinsky, general manager of Greenberg Rent A Car. “To understand how banks are looking at you as a potential customer and how they qualify new clients in those really tough financial times is the ‘inside scoop’ you can't get anywhere else.”

In a separate meeting, a group of operators gathered to strategize on how the industry can access TALF (Term Asset-Backed Securities Loan Facility).

The ACRA panel discussion touched on other industry concerns, such as the continued fight against predatory excise taxation of the car rental industry, legislation that would require verification of driver’s license information and the challenges to the Graves amendment, which overturned vicariously liability.

The rallying cry of guaranteed reservations was raised once again in several seminars.

Barton Receives Russell Bruno Award
Robert M. Barton, executive vice president and COO of Franchise Services of North America Inc. (FSNA), owners of the U-Save brand, was presented the Russell Bruno Award for outstanding service to the car industry by Sanford Miller, FSNA’s co-chief executive officer.

“Attendees showed a very high level of enthusiasm this year in regards to the networking opportunities, quality presentations and roundtables,” said Barton, who also currently serves as president of ACRA. “Operators and vendors were enabled to seek out and exchange new ideas, strategies, products and services to better manage their business in a challenging economy.”

Attendance Up
Attendance figures for the 2009 Car Rental Show, the only industry-wide trade show for the auto rental industry, show a 10 percent increase over last year’s show. “This is an amazing achievement given the state of the economy,” remarked Chris Brown, editor of Auto Rental News. “It shows that car rental operators and industry personnel are hungry for answers on how to run their businesses more effectively during these uncertain times, and I believe we provided that content.”

Make plans to attend the 15th annual Car Rental Show on March 29-30, 2010 at the Las Vegas Hilton.

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