RateGain, a provider of revenue management for the travel and hospitality industries, including all major car rental companies, has released “State of Car Rental Pricing During Covid-19 and Next Steps,” a report designed to give car rental operators an understanding of the present crisis from a pricing perspective as well as help them with coping strategies.

The study analyzed 400 million car rental data points from all major car rental companies from over 700 online sites in over 28 markets. The data was taken from two periods: pre-coronavirus pandemic (Jan 1 to Feb. 28) and after onset of the pandemic (March 1 to April 30). 

“Our intent is to help the industry get a frequent update on the condition of the market” said Apurva Chamaria, chief revenue officer for RateGain. “We’ll continue to bring more insights and publish these reports to track the recovery of the market so as to help car rentals everywhere be ready for a better tomorrow. Our teams are planning to share insights on an upcoming webinar series as well.”  

Findings

Not surprisingly, the report found that in most markets rates are down, some substantially more than others. Some, surprisingly, are up — though the report notes that this will likely change in the next 15 to 20 days. 

The Atlanta market shows a price increase of 3% for Atlanta for the March 1 to April 30 period. However, the study notes that prices will decrease as the effects of Atlanta’s stay-at-home order take effect.  

Dallas has seen an upswing of demand in the same period, the report states. This could be due to the city’s relatively late restrictions imposed on personal and business travel. 

In Austin, the cancellation of the SXSW festival did cause rates to crash. However, Austin is experiencing very few cases of coronavirus, and prices had been improving for the month of April. Dallas may be benefiting from Austin’s lower virus case load, as commuters travel between the two cities, the report surmises. 

El Paso, Texas has seen 9% gain in the pandemic period studied. At the time of the repot, a lockdown had not been ordered. 

Louisville has seen a surprisingly 22% gain for the pandemic period. The city’s executive order to shelter in place came relatively late, March 23. This gain should erode as well, as the Kentucky Derby, normally scheduled for early May, is rescheduled for September. 

From a segment standpoint, full-size passenger van demand crashed in January and February. The report surmises that at this time, China was in the midst of the worst part of the pandemic, and those travel restrictions prohibited large groups from visiting the U.S. during the Chinese New Year break. 

Demand for compact and economy cars remained relatively stable. The report notes that with the drop off in family vacations, preference may have shifted to smaller cars to get around in markets where public movement is not completely restricted. 

“As most people are not taking vacations, this might be the right time for car rental managers to increase prices on the CCAR and ECAR categories to compensate for losses,” the report states. 

Coping Strategies

The report concludes with potential actions car rental operators can take to adjust to the extraordinary circumstances. These “coping strategies” include:

• Pivoting away from leisure and corporate business to rentals for delivery and logistics services; 

• Ensure easy cancellations and rebookings to future dates;

• Enact “contactless” home delivery of a rental car for free;

• Market long-term rentals for those postponing buying a car;

• Keep track of booking trends in 90- to 180-day windows in relation to fleet size; 

• Target local travelers as international travel curtails;

• Change the mindset from “cheap” to “safe” by marketing sanitization policies 

The full report can be accessed here.