The big ballroom at the Hilton kept filling up with people just before Larry De Shon's keynote speech. Chairs were added. People lined the walls. The crowd-more than 600-hadn't turned out like this in many years. "It reminds me of the old days," remarked one of the old guards, referencing the early years of the show's 16-year history.
This year, there was evidence that the Car Rental Show (CRS) is once again growing beyond an independent and licensee-only affair. Along with the usual crowd of entrepreneurs, large independents, franchisees, affiliates and mom-and-pop shops, CRS 2011 drew attendees from all corners of the globe, including Canada, Ireland, Korea, India, Venezuela, Australia and the Middle East. Representatives from the automakers were there, as were the Wall Street guys, along with many new faces who showed up looking to make business or at least see what all the fuss was about.
More pictures from CRS 2011 can be viewed here.
Before De Shon took the stage, Sharon Faulkner, executive director of the American Car Rental Association, announced that Dollar Thrifty Automotive Group and Avis Budget Group had both joined ACRA the week before the conference.
The announcement brings ACRA two steps closer to gaining buy-in from all the majors. And it comes at an opportune time, with the industry healthy yet facing mounting threats that need a swift response in a cohesive, decisive voice representing the entire industry.
"Judging by the crowd here this morning at the show, I can without hesitation state that this is a new era of solidarity for the car rental industry," said Faulkner. "It has always been my dream to see this industry take on a credible and meaningful role as legislation, consumer advocacy, travel issues, tax initiatives and other public policy matters are debated by the media and elected officials at all levels. We can make a difference by being a part of a recognized, strategic industry organization that speaks with a unified voice and a consistent message."
Faulkner's opening remarks set the tone for two days of keynote speeches, panels, seminars and expo hall activities in which the industry gathered to educate, gain consensus and set direction.
Larry De Shon: Technology Will Automate Car Rental
In his opening keynote address, Larry De Shon, executive vice president of operations at Avis Budget Group, provided a look into the future of car rental through technology.
De Shon showed how technology can shorten repair times, locate stranded renters, improve customer service response and leverage ancillary sales. De Shon's main point, however, centered on how technology is actually changing the way cars are rented.
Car sharing–while still a minute piece of the overall fleet and revenue pie–has inherent technological advancements that can be used in traditional car rental to automate and decentralize the process, regardless of whether the rental is by the hour or for a week. Such systems can be used to expand a rental company's local market presence without expanding brick-and-mortar operations.
De Shon gave the example of a group of cars parked at a corporate campus in designated parking areas. Company employees can reserve a car using a smart phone, which can also unlock the vehicle. Mileage is tracked and gas consumption is measured to the 1/10th gallon. When finished, the computer locks the doors for you. Billing is seamless. This allows disparately located micro-fleets, situated conveniently for different rental situations, to be controlled by one mother store. "Now the local market store is anywhere you can park five cars," said De Shon.
However, "Don't think that technology will do everything for the customer, like The Jetsons," De Shon said in closing. "Technology should be used to save time, provide consistency and allow the renter to take more control of the process. Don't overlook the unlimited potential of your personnel."[PAGEBREAK]
Lee Broughton: Take the Lead – or Get Legislated
In his Wednesday morning address, Lee Broughton, who heads up Enterprise Holdings' sustainability efforts, cautioned that the car rental industry must lead the way in implementing solutions that address environmental, social and economic concerns. However, "If we take an attitude of 'wait-and-see-what-happens,' then we may lose the opportunity to determine our future-and the marketplace will dictate it for us," he said.
Broughton cited how for years European Union governments were looking at ways to deal with CO2 emissions from commercial airlines, while the airlines themselves did little to proactively address the issue. Britain has since executed a carbon emissions tax on airlines, which may force airlines to buy emissions permits-and prove to be a heavy burden for both the airline and the consumer. "You can bet that [here in the United States] the car rental industry is already in somebody's sights," he said.
The U.S. car rental industry can make its greatest impact through the 1.6 million vehicles it puts on the road, said Broughton, in the form of fuel-efficient rental options, carbon offset programs and helping to bring alternative-fueled vehicles to the mass market.
"We have a great tool called the American Car Rental Association to use, so let's use it," he concluded. "Let's make ACRA the hub of our industry's sustainability efforts."
Jack Fitzgerald: Political Action Starts Local
Jack Fitzgerald is an entrepreneur's entrepreneur. Fitzgerald came to Las Vegas in his jet-that he flew himself. Fitzgerald owns Rent-A-Wreck, Priceless and Nextcar, though these companies represent just a small percentage of his automotive empire, which took in $570 million in revenue last year. In his closing keynote address, Fitzgerald spoke off the cuff about dealership rentals, recalls and political action.
Fitzgerald sees opportunities for experienced car rental operators to operate dealership rentals. "You ought to be helping car dealers manage their loaner cars and rental cars, because they really don't know anything about that business, and you all know everything about managing fleets," he said. "You might want to go find a good car dealer and marry him."
Regarding recalls, Fitzgerald took the National Highway Traffic Safety Administration (NHTSA) to task for not requiring that auto manufacturers keep the contact information of the individual consumers who buy their cars, as is standard procedure in the tire business, for instance.
In dealing with the recall issue legislatively, Fitzgerald said efforts should begin at the grassroots level and through ACRA. "All politics are local. It comes from the precinct up, not from Washington down," he said.
"Get to know your elected officials," said Fitzgerald, who spearheaded the Committee to Restore Dealer Rights. "If you don't, you can be legislated out of business."
OEMs Will Continue to Control Rental Sales
For the first time in a long time, the auto manufacturers convened at CRS to talk rental. Representatives from Ford, Chrysler, Toyota and Hyundai made it clear that the rental business is an integral part of their overall sales pie. However, they were quick to point out that they are now taking a more managed approach to rental fleet sales to protect residuals.
Their message: Don't expect much growth in rental sales or any super deals on new cars, though this new discipline should continue to benefit RACs on the used car side. Fleet sales will stay a percentage of retail sales-and retail sales aren't expected to increase dramatically.[PAGEBREAK]
ACRA Panel Tackles Recalls and Prepaid Reservations
The American Car Rental Association convened a panel on Wednesday afternoon to break down the issues facing the industry collectively.
Sharon Faulkner said ACRA is tracking 125 bills in 35 states that could impact the car rental industry-most of them negatively. "If you're asleep and not letting us at ACRA help you with these things, we're all going to get hurt," she said.
The major hot button issue was safety recalls, in the wake of U.S. Sen. Charles Schumer's introduction of federal legislation to ground all recalled rental vehicles. During the session, Bob Barton, ACRA's president, introduced ACRA's position paper on recalls, which was circulated to the audience. The ACRA position paper proposes that the current rules be modified to a two-tiered system that can properly categorize each recall by the nature of the defect and the potential for harm.
Barton asked why other industries that use vehicles for business, such as limos and taxis, are not part of the legislation. He pointed out that recalls are certainly a manufacturer problem as well. "If the manufacturer determines that we should ground the [recalled] vehicle, we will. But we need OEM guidance to make that determination," he said.
Avis Budget Group has discontinued its no-show transaction experiment; however, the hue and cry is still strong on no-show fees-especially with utilization higher than ever. The discussion is turning toward adopting a prepay model, which will give the rental customer a "guaranteed reservation," viewed as a more consumer-friendly initiative.
Barton said that ACRA has met with credit card companies to discuss how to implement a guaranteed reservations strategy that mitigates chargebacks and deals with loss of use and diminution of value. Barton told operators to expect correspondence from credit card processors regarding writing specific language into an RAC's customer communication that characterizes the situation properly, positively and uniformly.
Barton suggested a three-pronged method to address the no-show problem: Give a discount to customers that put down a credit card at the time of the reservation to guarantee the reservation, with a one-day charge for a no-show; give a larger discount for prepaying the reservation with no changes allowed; or, with no credit card at the time of reservation, guarantee the customer a car, but make it subject to an upgrade or downgrade depending on fleet availability with no rate adjustment.
ACRA board member Frank Colonna of Triangle Rent A Car, who has successfully lobbied for the industry in his district, offered one of the most compelling reasons for a strong association. A politician once told him, "When you all get your act in one bag, come see me."
"Politicians want to hear from an industry, not fragments within the industry," Colonna said.[PAGEBREAK]
LaPlaca Receives Russell Bruno Award
Michael LaPlaca was awarded the 2011 Russell Bruno trophy for outstanding service to the car rental industry. LaPlaca started his career in the mid-1960s with Hertz and turned to the full-time practice of law in the mid-1970s. LaPlaca has worked with ACRA, the Car Rental Coalition and is a regular speaker at the Car Rental Show and contributor to Auto Rental News.
Leslie Pujo of LaPlaca Law presented the award. "Michael became a tireless advocate for the industry as a whole, as well as for his individual clients," she said. "On a personal note, I would like to say that Michael has been the best attorney and best mentor with whom I've worked."
LaPlaca shared some remembrances of Russell Bruno, a business associate and friend.
CarTrawler Award Announced
Patty Hagar of CarTrawler announced the launch of the CarTrawler Car Rental Vendor of the Year Awards, the first global awards to focus exclusively on the car rental sector. In association with Auto Rental News, the award will recognize CarTrawler's car rental partners worldwide who achieve superior levels of service, performance and partnership based on tangible operating data.
The overall winner will be presented with the award at a gala awards ceremony in Ireland, held in October 2011.
Carsharing: Extending, Your Reach, Improving Your Margins
- Neil Abrams and Julian Espiritu, Abrams Carsharing Advisors
|(actual car sharing company) reservation|
Tennant Group Roundtable
- Jim Tennant
Which Financial Metric is the Best Predictor of Profitability?
From a study conducted by Jim Tennant of 40 car rental companies over three years, the metric with the highest correlation to profitability was fleet expense as a percentage of revenue. Personnel expense as a percentage of revenue had the lowest correlation out of 17 metrics analyzed. "Interestingly, personnel expense expressed as dollar amount per vehicle had a negative correlation. In other words those companies with higher personnel costs per vehicle were on average more profitable," said Tennant.
Rental Car Satisfaction Recovers - Now What?
- Stuart Greif, J.D. Power and Associates
Primary reason you selcted the rental car company
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From J.D. Power and Associates' 2011 Notch America Rental Car Satisfaction Study