Corporate Rental Rates Stabilizing … Or Even Increasing
Average corporate car rental rate for a full-size car is up more than $4.
Car rental companies have tightened fleet controls and operating costs, which has stabilized or increased rates for corporate buyers, according to Business Travel News.
The publication has come out with its annual tabulation of daily costs for hotels, car rental and three daily meals in 100 U.S. business travel destinations. The study is encouraging for the car rental industry, which for years has struggled for profitability.
This year’s index shows the average corporate car rental rate for a full-size car, before taxes and fees, was $85.55, up from $81.44 last year. Rate totals are based on compact, intermediate and full-size rates pulled on six midweek days.
The publication quoted Neil Abrams, president of car rental research firm Abrams Consulting Group, who said car rental companies are no longer cutting corporate rates to unprofitable levels to retain an account. Abrams pointed out that Dollar Thrifty Automotive Group, which just a few years ago was trading at less than a dollar a share, in March was trading for more than $30 a share.
Much of this has come through fleet control. Major car rental companies in the past four years cut fleets from a total of about 2 million cars to about 1.3 million, Abrams said.
Advito vice president Bob Brindley said that with better inventory control, car rental companies in the past 18 months have increased usage of two-day rental minimum policies, so business travelers who only need cars for one day actually will have to pay two days' worth of rental charges. While these policies always have popped up in large cities like New York, tighter fleets made them more widespread and pushed reported rates upward in many cities, he said.
Car rental taxes continue to grow as well, Abrams said, with the industry being a constant target for municipalities and states needing funding for a host of projects such as sports stadiums. In the past decade, Abrams estimated, targeted car rental taxes and fees, excluding sales taxes, totaled about $7.5 billion.
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