The next phase for rental car operations will be competitive, but a good pricing strategy will be key in charting the new waters.  -  Photo from,  licensed  with CC BY-ND 2.0.

The next phase for rental car operations will be competitive, but a good pricing strategy will be key in charting the new waters.

Photo from, licensed with CC BY-ND 2.0.

There has never been a time in recent memory where rental car pricing has created more chatter. As we all have heard, the pandemic forced fleet reductions, which was stymied by re-fleeting efforts due to chip shortages. Mixed with just the right amount of post-pandemic pent-up travel demand, these compounding factors have had an extreme impact on prices. It's a hot topic.

While the emergence from quarantine has had some very positive effects on the revenue of operators recently, notwithstanding the significant operational issue of lack of fleet, and has allowed survival in many cases, the one thing we can count on is that this rocket ride won't last forever. With the retooling of computer chip manufacturers resulting in more support for vehicle manufacturing, a larger number of new cars will enter the supply chain, creating availability for operators, which supports the growth of fleets and ultimately leads to more supply than demand and lower rental rates. Depending on the market, this will likely happen in the next six months. This means there is precious little time to sharpen our pricing pencils. 

While many operators are frantic with staffing and operational issues, coming off the back of the worst demand period in recent history, the truth is that operators need to be ready for the next phase, and this next phase will be hyper-competitive.

At the International Car Rental Show this month, rate technology experts Michael Meyer from Rate-Highway and Andrew Pascoe from MarginFuel take the stage to help rental operators with the latest pricing strategies, in a forum hosted by Nick DiPrima of Wheels Car Rental System.

"More than ever, rental companies need to be mindful of what is happening in the market," says Rate-Highway's Meyer, "because you can’t factor in 2020 data, and odds are, you are working with a smaller fleet that you are used to, so your strategy and how you are competing becomes more important than ever."

They explain how having a pricing strategy that’s based on the target market, available fleet, and current demand can help provide a chart for these rough waters. 

“Knowing your rental clients and what they are doing relating to travel can help you to make rate decisions with confidence, and that’s what technology can now help rate managers to do,” says DiPrima. “Just because the airport is renting cars for $150 per day, it doesn’t necessarily mean you should move your fleet to the airport or mimic their rates.” 

The team says that defining a strategy that both accommodates when 100 cars are available and when you are down to having one car available is a good start, because it forces the fleet owner to think about how his customers want to be treated in this competitive market and how he wants to treat them.

They also indicated that demand forecasting, while challenging, continues to play a critical role in revenue management for dates into the future. 

“Focusing on the momentum of the marketplace instead of historical patterns will pay off. And looking at the competition and making sure that you have the right product mix, defining your core strategy and how you’ll deal with change is paramount now,” says Andrew Pascoe.  “We don’t need to return to the way things were. We can make them better with good technology and discipline.” 

A new normal is emerging, and this is our chance as an industry to help make it stick. This new normal is where:

  • Operators of all sizes are switching to using tools to help them do their pricing instead of pricing by hand, there just isn’t time enough to do an effective job in this high stakes new world.
  • Pricing and revenue management is planned vs an afterthought, allowing operators to drive tactical and strategic directions.
  • Pricing is a mixture of market position and demand, close in and further out.
  • Operators measure the impact of pricing strategies and make adjustments while in complete control.
  • Channel pricing is managed and optimized by the operator.
  • Rate changes are updated instantly and automatically directly into the reservation system.

This is where the industry is moving to at a faster rate than ever before. Jump aboard as we discuss approaches and solutions that are proven, measurable, and cost effective regardless of the size of the operation. The team talks about the importance of integrating rate management platforms with rental software.  

“You wouldn’t trust your doctor for long if they made decisions solely based on telephone calls. To make the best decisions, they need to see you in the office to perform a physical, do blood work, and so forth. In the same way, any rate management offering needs to access the operator’s rental management software to understand the complete picture in order to make healthy decisions,” says Meyer. 

“That’s right,” adds DiPrima, “it’s a holistic approach. Rate distribution systems like Wheels can help operators to see how many times people are shopping for rental cars and for which days, and report on how successful those rates are in the operators' booking channels, like their websites, OTA, or GDS partners. This data, and the ability to receive rate updates from rate-management and AI systems, is more important today than ever.” 

Please join Nick DiPrima (Wheels), Michael Meyer (Rate-Highway) and Andrew Pascoe (MarginFuel) at the "Pricing and Revenue Management for a Post-Pandemic World" session at ICRS for an interactive discussion on what this new normal looks like and how best to benefit from it.

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