Like most travel industry suppliers, car rental companies struggled in the early days of the pandemic. To stay afloat, they sold large portions of their fleets, canceled new vehicle orders and reduced staff at their rental locations. At the same time, to ensure safety and cleanliness standards, suppliers implemented deep cleaning of their vehicle fleets and sanitization procedures into their operations.
Meanwhile, travelers concerned about virus transmission in crowded spaces rented cars as a substitute for flights for longer trips and have been holding onto vehicles for longer periods over longer distances. In some cases, employees are using rental vehicles for commutes, according to suppliers, as an alternative to public transport and trains.
As business travel comes back in earnest and the associated demand for car rentals increases, corporates may find it more difficult to get the vehicles they need. In February, car manufactures warned there could be a delay in the delivery of their vehicles due to a global shortage of semiconductors, which are vital components for auto manufacturing.
To stave off shortages and maintain profitability amid rising demand, industry players have implemented revenue management strategies similar to those employed by airlines and hotels. According to buyers, suppliers have been prioritizing customers based on rental period length and time of reservation. In practice, this means suppliers may turn off rentals to travelers or offer different price points based on individual rental parameters.
Buyers are looking to implement service level agreements in their preferred partner contracts to ensure vehicle availability for their business travelers. Companies with larger volumes may have more leverage on this point. Service level agreements, however, may not be a silver bullet since vehicle prioritization often is decided on the local level. And if volume thresholds are part of the contract, buyers will want to track the number of instances cars were not available and bring that up during contract review meetings. For travelers on ground, travel managers should urge them to book as early as possible and be flexible with regard to their travel dates and branch pick up locations.