While the 2025 global travel industry appears poised for disruptions and setbacks, rental car operators can deploy various tech tools and business approaches to attract more customers.

A session, Global Rental Car Outlook and Analysis, shared some practical insights and advice with rental car operators on April 15 during the International Car Rental Show in Las Vegas. Sid Kothari, CEO of Rev-Al by RateGain, presented the results and analysis from a survey -- State of Car Rental -- conducted with input from Auto Rental News and parent company Bobit Business Media. 

It was based on feedback from over 150 car rental executives worldwide, offering detailed insights into pricing behaviors, digital adoption, customer experience, fleet planning, and the role of emerging technologies such as AI and EVs. 

RateGain Travel Technologies Limited provides AI-powered SaaS solutions for travel and hospitality. It works with 3,200 customers and 700 partners in more than 100 countries, helping them generate more revenue.

Setting or Following Pricing Strategies?

A key takeaway from the survey is the widespread use of follower pricing strategies. A sizable 64% of respondents admitted their companies determine prices mostly by tracking competitors. 

Kothari pointed out the pitfalls of this reactive mindset. “If the competitor is incorrect in their pricing decision, so are we,” he noted. Instead, he advocated leveraging technology and demand forecasting to drive pricing independently.

Kothari suggested rental car operators consider applying demand signals and booking paces to set prices, instead of blindly matching competitors. Leading on prices boosts profits and can shift market perceptions, with the pricing leaders spurring other companies to question their pricing decisions. 

That could potentially raise the pricing standard industry-wide.

Tariffs Starting to Spook Travel Behavior

Kothari also addressed how external economic factors, like tariffs, influence car rental dynamics. Recent tariff announcements in the U.S. sparked a temporary surge in booking pace and daily rates for certain car classes. This suggests consumers are sensitive to macroeconomic shifts, affecting rental fleet inventory and pricing strategies.

Kothari recalled how consumer booking patterns shifted during and after the global pandemic. "Once again, consumer behavior is changing with the tariffs. We see peaks based on the new tariff pattern when we look at the booking pace curve or the demand forecast curve. There is the risk of over-fleeting, so we must be cautious not to fall into that trap. If [rental] cars get more expensive, it could be a golden opportunity because we have limited fleets, which we need to use more intelligently. That could have an incremental impact on revenue per day (RPD)."

Tourism trends are also shifting, with airlines like British Airways slashing prices to fill empty seats. Kothari emphasized the importance of closely monitoring international booking patterns, especially for operators who rely on inbound travel from Europe or Asia.

Investing in More Digital Training

The survey found that too many rental car operators are not fully adapting to digital tools and platforms. While many companies are investing in technologies across revenue management, HR, finance, and operations, insufficient training undermines their effectiveness.

Respondents cited a lack of training as a key reason for inefficient tool usage. “If the technology is not used properly, then the results are always delayed,” Kothari warned. He recommended that car rental operations budget for software, onboarding, and on-the-job training, ensuring frontline staff and managers can gain the most value from these tools.

Not There Yet On AI 

Artificial intelligence awaits wider acceptance in the rental car industry. While 12% of respondents already use AI and 25% are evaluating its potential, 65% remain undecided. Kothari called such ambivalence a missed opportunity, especially given AI’s proven ability to automate repetitive tasks and enhance department decision-making.

He cited a recent Y Combinator cohort where 90% of startups reached $10 million in revenue with fewer than five employees — made possible by AI. Kothari urged rental operators to identify applicable AI tools for functions like revenue management, customer support, and fleet tracking.

Delaying Customer Responses Can Incur Costs

Customer satisfaction stands central to the car rental experience. The survey found sluggish customer support to be a common pain point. About 43% of respondents indicated that delays in responding to customers and resolving their issues led to more complaints. 

Kothari said speed in resolving complaints directly correlates with better online reviews and improved brand perception. He encouraged operators to audit their internal processes, to resolve concerns faster and empower staff to handle issues promptly.

Human vs. Digital Interaction

Despite digital advances and wider usage, 56% of survey respondents reported that customers still highly value human contact, especially at check-in counters and during greetings. A hybrid model that combines tech-driven efficiency with personalized service may best satisfy different customer preferences and demographics.

Rideshare Presents New Opportunities

Ridesharing services such as Uber and Lyft are not eroding rental car market share as previously thought. About half of the respondents indicated that Uber and Lyft have minimally detracted from their businesses. Kothari highlighted a surprising evolution: Uber now functions as a distribution platform for car rentals, listing brands such as Budget and Dollar Thrifty directly within its app.

This shift represents Uber’s strategic pivot. Rather than displacing rental companies, Uber is monetizing its inventory through aggregation — similar to how airlines have long sold car rentals as part of travel packages. Kothari views this development as an opportunity for rental firms to reach broader audiences, provided they negotiate competitive terms with such aggregators.

Planning for Rental Fleet Cycles

Given shifting customer demand, rental car operators face challenges in planning rental fleet purchases. Inaccurate demand forecasts can cause operators to adjust fleet levels at the last minute and misjudge the best times to buy new vehicles.

Kothari advocated for better predictive tools to inform fleet size and vehicle mix decisions—insights that could significantly impact revenue and customer satisfaction.

A related issue is the selection of vehicle types. The survey found operators struggling to identify which vehicles deliver the best balance of cost and revenue. Kothari urged the use of data analytics to monitor customer preferences and adapt fleet composition accordingly.

Rental Customers Still Resist EVs

Electric vehicle (EV) adoption remains sluggish in many regions, primarily due to car renters' concerns about the lack of charging infrastructure. While nations like Norway have embraced EVs — with nearly 90% of new car sales being electric — other markets lag due to a lack of chargers and conflicts over public policy governing EVs. As a result, rental car companies generally avoid EV purchases for their fleets. A targeted regional strategy is more likely to match electric rental cars with customers who want them.

Technology Can Help Smaller Operators

In response to an audience question, Kothari underscored that even modestly sized fleets, such as those with 300 vehicles, stand to benefit from pricing and revenue management technologies. The ROI can be realized within weeks through better rate adjustments and time savings. "Your team stops hunting for data and starts making strategic decisions," he said.

Autonomous Vehicles: A Five-Year Horizon

When asked about the timeline for self-driving cars, Kothari predicted meaningful rollout within five years, noting that China is leading the way with over 100 autonomous taxis already running in some cities. But he cautioned that global adoption will vary, influenced by local policies, public acceptance, and employment concerns.

In markets like India, for instance, government resistance to displacing workers may delay wider adoption. Kothari advised that car rental companies monitor regional developments and prepare to coexist with autonomous fleets, much like hotels did with Airbnb.

2025 and Beyond

Kothari forecasted a slightly softer year compared to 2024 in terms of overall revenues but noted plenty of pricing opportunities. He stressed that operational efficiency, accurate demand forecasting, and technology adoption will be the key differentiators moving forward. 

“If we avoid pricing errors and use technology smartly, this year can still be a strong one,” he said.