Anyone who has read this magazine over the last four years has heard me talk about credit card deposits and prepaid rentals so many times it would make your head spin. You have read reports from financial analysts on the economic benefits to public companies implementing such policies, and you have read consumer advocates’ views about tighter fleets and that people should book multiple reservations to protect themselves.
Some of us do not think we should have cancellation policies — I accept that. Some of us have created prepaid options on our own branded website or sell prepaid reservations through opaque websites. We all have to make our own decisions in the best interest of our own individual businesses, but when technology changes the rules of engagement sometimes the way we do things needs to be re-evaluated.
The week of Feb. 6, you could book a car for $1 per day in Miami. No, that is not a typo; the rate was $1 a day. To that you had to add a state tax at $1.79, an airport tax of $0.27, an energy recovery fee of $1.90, a license recovery fee of $3.50, an airport privilege fee of $8, an area privilege fee of $8 and a surcharge of $4.10. These taxes and fees total $27.56. Only one word comes to mind: stupid. I truly wonder what the consumer expects when the car is $1 per day, but then they end up paying $27.56 after all the taxes and fees — or the cost to check one bag onto their flight.
Fortunately, there is legislation gaining steam in Washington that may finally put a cap on municipalities’ ability to unfairly punish our customers with these stadium fees and taxes. Proudly, we can now say that the American Car Rental Association (ACRA) membership represents almost the entire car rental industry.
We also have legislators in Washington that understand some of the concerns and challenges we face as an industry and are working with us to create and promote balanced and fair legislation. Congressman Sam Graves is one of those individuals and we are extremely fortunate to have him at the Car Rental Show with us this year.
These are interesting times indeed, and the enhancement of technology and accessibility requires us to evaluate if our modes of operation are in tune with how the world changes. Foxnews.com ran a story on Feb. 2, “Is It Worth It to Prepay For Car Rentals?” The crux of the article suggested that because we do not charge for cancellations and no-shows, the consumer should not prepay for a rental, and besides, rates change too often and if you book through a certain website, they will re-book your rental with someone else — or even the same company — if the rates drop.
Can you do this with an airline ticket? No. Can you do this with a discounted prepaid hotel rate? No. Can you do it with a standard car rental reservation? Yes. Oh, and by the way, our commission stream pays for these services in the end.
Some in the industry have started to modify their policies. These are decisions each company must make on their own, but if you look at the hotel industry, not only have prepaid rates been developed over the past few years, I have also watched the “cancel by 6 p.m.” policy start to move to 24 hours or even 48 hours in some cases; each hotel chain is different. In other words, the companies took a hard look at how they ran their businesses and how technology advancements required the need for them to consider change. I would suggest the same holds true for car rental.
Book a flight. You pay for it in full. You want to make a change? There is a fee, plus the difference in rate (up or down, oh, and by the way, if it’s lower, we will give you a credit for future travel, not cash). Twenty years ago, you didn’t pay for the flight until you got to the ticket counter and checked in. (To be fair, 20 years ago my bags were free and I was fed a meal from Florida to New York and watched a movie for free.)
The world is changing and we need to change with it. Ten years ago, everyone used a Blackberry. Look at today. Review your policies of how you operate. Is it time to consider some change?
Bob Barton is a keynote speaker at the 2012 Car Rental Show, president and COO of Franchise Services of North America (FSNA), and president of ACRA. This guest editorial is the sole view of Barton, and in no way reflects the opinions of FSNA or ACRA.
