An On-Demand Case Study
This traditional car rental operator is successfully running self-service vehicles out of two apartment complexes in the Miami area.
Shmuel Hazan has been involved in traditional car rental since 2005, but about two years ago, he went after a new business opportunity: Could he put rental vehicles into large residential complexes in the Miami area and let the residents rent the vehicles without interacting with a rental counter or staff?
Hazan, who also owns New Age Car Rentals, set about contacting real estate management companies with the idea. “These buildings are often managed by multinational corporations, so you have to get to the right decision maker,” he says, adding that they didn’t necessarily understand the concept of carsharing. “But once we got started, they’re happy, because they see that the residents are happy.”
Hazan’s “pet project,” Cars by Hour, was born. Today the service has seven vehicles in two apartment complexes, the Flamingo in Miami Beach and the Intracoastal Yacht Club in Sunny Isles Beach.
Hazan expects to leverage his success with other developers who will look to offer this amenity to their residents. However, the first step is to find the right buildings, usually large residential complexes in larger cities where parking is expensive and a greater percentage of residents don’t own cars.
The technology in the cars — powered by JustShareIt — consists of hardware to track and lock and unlock the vehicles. JustShareIt’s software manages the back office and the consumer-facing website, while customers download an app to rent vehicles instantaneously. The hardware isn’t much more expensive than the GPS tracking devices used by independent car rental operators already, Hazan says.
The cars occupy specific parking spots in the buildings’ garages, though they have no branding.
In terms of use scenarios, renters use the service instead of taxis, oftentimes to run errands. The Miami Beach building has a few “crash pads” for flight attendants, and the service allows them some mobility. He has gotten calls from people from out of state. “They want to make sure we’re still here and how it works,” he says. “People use it as a consideration when moving to the building.”
Natural Advantages
Offering cars only to building residents has built-in advantages, Hazan says. First, potential security issues surrounding unattended cars are mitigated by the fact that the cars are in gated parking. The JustShareIt program has the ability to run motor vehicle record checks on potential customers, but security is less of a worry because the vehicles aren’t available to the general public.
As the service is targeted only to building residents, the marketing budget is negligible. Hazan says new residents get a flyer that advertises the service when they move in.
While there have been a few issues with renters leaving dirty cars, especially for one day or longer rentals, the majority of renters keep them clean for their neighbors. “It’s much better than regular car rental,” he says.
Hazan sends someone to check and wash the cars once or twice a week. Using existing staff to service the cars keeps the overhead low.
Average rental time is two to three hours, but renters will take a full day for about $70. While Hazan would prefer the more profitable hourly rentals, daily rentals work just fine, too. Hazan rents fuel-efficient cars to mitigate fuel expense, but generally renters don’t put hard miles on the cars.
These benefits trickle to the bottom line. “Compared to regular car rental, [on-demand rentals] give higher revenue per month,” he says. “It took a while, but it’s definitely profitable at this point.”
Hazan realizes the delicate balance between high utilization and good customer service. If he sees a sustained increase in utilization, he’ll add another car.
“Right now I’m concentrating more on getting the business model right, which might mean not as much utilization,” he says. “But everyone will be happier. I might make a little less money, but it’s early in the business. I’m more interested in making it successful right now than making money.”
