A car rental operation has limited resources -— in time and money -— to devote to bringing in business. Two of the most challenging "channels" are the Internet and the global distribution systems. It's important for all operators to understand what they are, how to implement them, and their pros and cons.
Today, any business that deals with the general public needs -— and must have -— a Web site. Just how big has the Internet become? Many hotels now offer free high-speed Internet access. Airlines charge a premium if you make your reservation over the phone instead of the Internet. Many travelers now print their boarding pass at their home or office before leaving for the airport.
Surprisingly, not all car rental companies have a Web site yet. Even if you're a local operator, you must have a Web site -— to stay competitive and to stay alive. Why? So people can find you.
What percentage of households have Internet access? A report by cyber-state.org indicated that in the state of Michigan, 89% of parents not only have a computer but also have Internet access. As of March 14, 2004, 204.3 million people in the U.S. had Internet access. That's 75% of the population. It's even greater for those ages 35-50. What percentage of businesses have Internet access? Almost all of them -— and an amazing 75% use it for purchasing.
Internet vs. Yellow Pages
How effective is Yellow Pages advertising? Do you measure or track where your business comes from? Some companies have cut back their Yellow Pages advertising by 75%.
One major advantage to using your Web site to advertise is that it's very easy to update. Compare this to the phone book, which is updated only once a year. Most companies have an employee who can easily update their Web site using one of the popular software packages. However, your Web site must be professional. Don't let your cousin or neighbor's kid take care of it for you.
You should also have it hosted by a reliable provider. AT&T Small Business Hosting, for example, charges only $35 a month. If you host it yourself, use a managed T-1. Update the site at least once a month. Put your Web site address on all marketing materials. You may also want to consider adding hyperlinks to local hotels, regional travel sites, and your local chamber of commerce. List your site on portals such as CheapRentACar.com. Look to reciprocate whenever possible: "I’ll put your link on my Web site if you do the same."
Make sure you monitor your "up time." Use a product such as Internetsee, which alerts you whenever your site is down. Likewise, it's useful to monitor your traffic. Products such as Web CEO can identify where your business comes from. You can run reports on the number of unique visitors, traffic by time zones, and the top 100 referring sites. Run these reports at least once a month, and make adjustments as necessary.
As a car rental operator, you should allow site visitors to get valid, accurate and complete quotes. Let them make reservations. And, when reservations are made, both you and the renter should receive an e-mail confirmation.
What are the pros of selling on the Internet?
• It's inexpensive. After you’ve paid the up-front costs, maintenance costs are minimal.
• It levels the playing field. Your rental business can be listed alongside companies that may be much larger (or smaller).
• A small independent appears like a major player, especially if its site looks professional.
• Many customers prefer a do-it-yourself approach. According to management guru Tom Peters, customers go to your Web site to look up their own information and to enter their own data -— with no intervention by any of your employees. When interviewed about making their own reservation online, many replied that it was "better" service. A study by American Express revealed that 40% use the Internet for speed of service, 35% for convenience, and only 15% for cost savings.
• Corporate travel managers prefer it. More and more corporations require employees to book travel on the Web sites of their contracted travel service providers. This is good news for small independent operators that pursue corporate accounts.
The only obvious cons to launching a Web site are up-front costs and monitoring costs. Expect to pay at least $2,000 to create a good site. Once up, the site needs to be constantly monitored.
What Are Global Distribution Systems?
So what is a global distribution system? It's an information system linking travel agents and aggregators to travel industry providers such as airlines, hotels and car rental companies.
GDSes started as the airlines' reservation systems. Look over the shoulder of an agent at the airport. They all use a GDS. Very cryptic and "command line driven." Over half a million travel agents are still in business. All use one of the four GDSes.
All of the GDSes are linked. Therefore, if a travel agent uses Sabre, he or she can still make a reservation with any airline. Nearly all of the travel Web sites are powered by a GDS.
By the way, 68% of all consumers will go to three or more travel sites before making a reservation.
Originally the reservation system for TWA, Worldspan was later sold to Delta and Northwest Airlines. Worldspan was selected as the booking engine for Microsoft's online travel Web site, Expedia. Now Worldspan is by far the leader in the online travel market. In 2003, Worldspan processed 65% of all online airline transactions made in the U.S. and processed by a GDS.
Based in Atlanta, the company has 2,500 employees. Worldspan hosts some of the most popular sites, including Expedia. (However, Expedia is moving half of its system to Sabre.) Other sites hosted by Worldspan include Hotels.com, Orbitz (which was just sold by a group of airlines to Cendant), Priceline and Travelnow.
In 1953, the president of American Airlines sat next to a senior sales rep from IBM on an airplane. Six years later, Sabre was installed in its first travel agency -— on an IBM terminal.
Based in Texas, Sabre has 6,000 employees. In 2003, the company had $2 billion in revenue. Sabre is publicly traded on the NYSE. Until Sabre won part of Expedia, its most popular site was Travelocity.
Formerly known as Apollo, Galileo was the reservation system for United Airlines. Now owned by Cendant, Galileo hosts sites such as CheapTickets.com, Lodging.com, Trip.com, and Southwest Airlines.
Based in Madrid, Amadeus was founded by Iberia Airlines. It hosts sites such as TravelForLess.com, ReservationsToGo.com, OneTravel.com and HowardJohnson.net.
[PAGEBREAK] Chain Codes
A chain code is a unique two-letter identifier across the GDSes for a travel industry provider. The chain code provider defines the parameters for using the chain code, and also provides the central reservation system (CRS).
For example, one typical parameter is that there can be only one provider per airport code. So, if you are on a Web site searching for a car rental near an airport, you will see only one car rental company per chain code.
Chain code providers must pay thousands of dollars each year to each aggregator. That's why mainly just the largest corporations and franchisors participate. However, independent operators do have options. In particular, they can join an affiliate system such as Ace Rent-A-Car or Fox Rent A Car, or sign up with a system such as Vantis (formerly VIP). Vantis actually offers more than one chain code (so that they can have more than one customer per airport). Vantis owns chain codes for such brands as New Frontier and Rent Rite.
The large travel Web sites, such as Expedia, Priceline, Travelocity and Orbitz, are also known as aggregators.
Several years ago, Expedia was burned by a large independent in Florida that suddenly closed its doors. Over 400 of the company's customers were stranded. As a result, Expedia is very leery about hosting small franchises or independents. If you go to the Orbitz Web site, hold your mouse over each logo, right click, choose properties, and you'll see the chain code.
Wizcom spun off of Avis as a separate business unit to provide connectivity to GDSes for entities other than Avis. Customers of Wizcom still have to provide their own chain code.
Wizcom's "switch" provides connectivity to all four GDSes via leased lines/frame/IP so that the CRS doesn't need a unique connection to each GDS in auto rental. It is still used today by Fox and Advantage. However, Fox uses Hospitality Data Systems (HDS) for its CRS, and Advantage has a home-grown CRS.
The GDSes have defined several different "connectivity levels" to communicate with them.
So do you implement a marketing strategy using the GDSes? If you're an independent operator, you need to align yourself with the chain code provider that meets your needs -— and your standards. Once you're on the GDSes, advertise your lowest rate but train agents to upsell.
(If you look at the Orbitz matrix, you'll see how you can scroll way over to the right to see all of the companies. The auto rental agencies that show up first on the left are those with the lowest rates.)
As with any business, you need to build a great reputation. Abide by the rules and guidelines of your chain code provider. Make sure you stay in good standing. Maintain signage, keep your lobby clean (one of my pet peeves), and pay fees and commissions on time. If you don't, your contract will not be renewed.
What Are GDS Pros and Cons?
What are the pros of being on the GDSes? Visibility and a high volume of traffic —- although not under your company's brand name unless you purchase your own chain code.
And what are the cons?
• Price wars
• Paying commissions (usually 10%) to the aggregator or travel agent
• Annual aggregator fees, which are going to increase substantially
• Reservation fees to the aggregator, GDS and chain code provider. After everyone gets a share, the car rental operator will pay about $11 per reservation.
Did you know that 78% of consumers claim that brand loyalty has no impact on their travel planning? When they go to that matrix, they stay to the left.
So, in the final analysis of Internet vs. GDS, you need to carefully assess your market and your budget. If you are near an airport, you need to be on a GDS -— if the price is right. You don't need to have your own chain code. If you primarily serve the local market, you just need a good Web site. But you must market it heavily. Include your Web site address on everything possible -— ads, promotional items, business cards, radio or TV commercials, etc.
Evaluate your target market and then decide how to best attract new business from the Internet. Be sure to carefully consider the cost/reward factor in planning your strategy.
The preceding article is based on a presentation made at the Car Rental Show last October by Angela Margolit, president of Bluebird Auto Rental Systems. She can be reached at [email protected]