Starting with fewer than five used vehicles, Leisure Car Rental opened its doors in St. Maarten on March 1, 2007. Today, the independent rental company has grown to 50 vehicles at its main office located near Princess Juliana International Airport.
Serving tourists in St. Maarten, Leisure Car Rental hopes to expand its fleet to 75 cars by 2015.
General Manager Jimmy Fitzpatrick talks about how his company has grown the past seven years and how it competes against the franchises and other independent rental companies in the highly competitive rental market on the island of St. Maarten.
What’s your total fleet size?
At this time, we have 50 vehicles.
How many locations do you have and in what types of areas?
Our location is near the Princess Juliana International Airport, the larger of the two airports in St. Maarten. For now, we deliver cars island-wide (on both Dutch and French sides on the island). We deliver to the airports, cruise ports, hotels, resorts, villas, marinas, and even private residences.
How did the business start?
Leisure Car Rental started operating on March 1, 2007. The business was a one-man operation with fewer than five used cars. I only served the local market at that time, since most tourists preferred newer cars. There was very little chance of leisure competing in the tourist market when most car rental agencies had a newer fleet.
By 2009, our fleet doubled to 10 cars. We had about three employees and made a bold move to begin competing in the tourist market. I still remember our first tourist client. His name is Mr. Steve Marcello. He still rents from us to this day. He single-handedly convinced most of his friends to rent from us, too, and they return to us year-after-year for their car-rental needs.
What are your primary sources of rental customers?
Tourism is without a doubt the primary source of rental customers. Most of our customers come from the United States, followed by Europe and Canada.
Are you an affiliate of any kind?
Are you pursuing new sources of business/customers?
Yes, absolutely. We are always trying to find new sources of business and increase productivity of existing sources. We plan to expand our fleet to 75 cars by 2015, so we definitely need to attract more customers to maintain and/or increase our fleet utilization rate.
How has the car rental market in your area evolved in the past 10 years?
Ten years ago, many tourists would have been happy to have arrived on the island and rent any car. Dings and dents did not matter too much. The age of the car also didn’t matter too much, as long as the car had air conditioning and could get renters from point A to point B. And price wasn’t too important, since there were few car rental agencies operating at that time on our island.
Today, the number of car rental agencies operating in St. Maarten has more than quadrupled. Now, both locals and tourists are demanding more for their money. The car needs to be new and in excellent condition. Service must be on par with international companies. Today, renters want all of this and more for roughly half the price of a rental car 10 years ago.
Describe your specific marketing efforts and what the payback has been so far?
We partner with many travel agents and also invest in online advertising, but the payback has not been as expected. Marketing accounts for less than 40% of our clients. The rest is purely repeat customers and word of mouth referrals.
Over the years, we have come to the realization that most visitors to St. Maarten book an entire vacation package through booking sites such as Expedia, Travelocity, Priceline, etc. We have tried numerous times to have Leisure listed on at least one of these sites, but to no avail. It seems that they only list the international companies such as Hertz and Payless. I believe it would be a great boost for us, if we could be listed on one of these booking sites.
How do you buy cars?
Most of our cars are purchased new through local car dealerships. We are thinking of importing cars, but a door has not opened yet for this option. We estimate that we can cut purchasing costs by at least 30%, if we begin to import new cars from the U.S. instead of purchasing them locally.
One aspect to consider would be downtime: Purchasing a car here would cost more, but I get the car the same day that I pay for it. I could buy a car cheaper overseas, but then I have to wait at least three weeks for the car to arrive once I pay for it.
How do you sell your cars?
Car rental in St. Maarten is seasonal. So we usually purchase cars in October for the busy season and then sell some of the older cars after June. The locals know this routine very well and start calling around this time seeking to purchase used cars. If we plan to sell more than an average number of cars any given year, we usually place an ad in the local newspaper.
How long do you keep cars in fleet?
Maximum three years. Although most of our customers prefer a new car, some specifically request an older model or ‘gently used’ car.
What are your biggest challenges with fleet?
Maintenance. As hard as we try, a car is still a machine. We can check everything before renting the car and still have an unexpected issue. Thankfully, many customers understand this concept.
What are your popular rental vehicles?
Our most popular car is the compact Hyundai i10, a small four-door hatchback. It packs a lot of power for its size and can go practically anywhere on the island. It’s fuel efficient and easily fits into tight parking spots. Tourists love it! For some, it’s the first time they’ve seen such a “cute” car. I don’t think the i10 is available in the U.S. or Canada.
What types of counter products are popular?
To date, we are the only car rental agency on both the Dutch and French sides of St. Maarten offering fully comprehensive zero deductible insurance coverage.
We introduced ZD Insurance packages in late 2009, and it literally flew off the shelves. One customer said to us: “I know I have insurance coverage through my credit card … but who wants the hassle?” Another stated: “It’s good to know that there will be no additional expenses if something happens to the rental car”
ZD Insurance covers all loss and damage to the rental car with a $0 deductible. This coverage starts at $30 per day. To date, 50% of our customers opt for the ZD Insurance. This is our most popular counter option.
Are there a lot of independent car rental companies where you are?
Yes, the local/independent companies actually outnumber the franchise companies at this time. These franchises usually have a larger fleet and are able to offer lower rates. This makes it a bit of a challenge for smaller car rental companies to be successful.
I have seen many independent companies close their doors after a few years of battle. The seasonal nature of the car rental business here is a major contributor to this. It is very easy to open a car rental Company and make a profit between December and April, but it’s a challenge to stay in business and continue paying bills on time between April and November. One must have solid strategies and potent plans to counter the negative effect of the slow season.
How are you surviving the current economic climate? And what is that economic climate like currently for you in your country?
Like many other countries, St. Maarten was hit really hard by the recent recession. But I must say we are recovering quite well. The number of tourists visiting St. Maarten has been steadily increasing over the past few years. However, most of them appear to be very cautious about their spending.
What are your biggest challenges right now in the business?
Our biggest challenge right now would be competing with the larger franchises. They have a larger fleet with cheaper rates and it’s easier for them to be listed on international booking sites like Expedia. They have filled up most of the car rental booths at the airport. And most of the franchises already have a solid client base.
What does the car rental market over the next five years in your country look like?
It looks very promising. With an increasing number of tourists visiting our island each year, once a car rental agency is able to provide good service and fair prices, survival is possible.
Do you have any legal threats that are challenging how you do business?
Well, actually, our current business license only allows us to register 50 rental cars. If we are to meet our plan to increase to 75 cars next year, we would have to apply for an amendment to our license. Not a big deal, really.
Any new laws or rules you must abide by?
The usual: Cars must be insured, number plates must be changed and rental cars must be inspected every year. French companies cannot operate on the Dutch side and vice versa.
Where do you think the biggest growth potential is in your business?
Right now, I would have to say being listed on a few of the major booking sites like Travelocity or Priceline. This would certainly increase bookings for Leisure Car Rental.
Another option is getting an investor. I considered this option a few times, but I decided not to proceed because at the end of the day, my wife and I worked way too hard to build Leisure Car Rental. At that time, it would be comforting to know that we still own 100% of the business.
To operate in your country, do you have to pay any special car rental taxes or fees?
Yes, in addition to the usual taxes and government fees, we pay a specific car rental operating tax each year.
What would you like to see change in the industry in your country? Worldwide?
Starting with St. Maarten, I would like to see a standard minimum car rental rate. This should be the lowest cost of a rental car per day, week or month and should be set by the car rental association. No company would be allowed to publish a rate lower than the established minimum rate. And if a company does, it should pay a penalty.
This would give all rental companies a fairly equal chance for survival, especially in the slow season. Based on the market and other factors, all car rentals companies could meet periodically and decide to increase/reduce this standard rate.
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