Car rental companies were one of the first travel suppliers
to begin to see a recovery from the
pandemic, with leisure demand for road trips—along with business travelers
opting to drive rather than fly—taking off in the summer of 2020 and continuing
through 2021. The global shortage of new vehicles due to a microchip shortage
among other supply-chain issues, however, meant these suppliers could not
rebuild their fleets so easily after selling them off when Covid-19 first
struck, thereby causing car rental prices to skyrocket.
The major players have begun to expand their fleets with new
cars when they can find them, with used cars and by keeping vehicles in
rotation for more miles—up to 50,000 miles, for example, as opposed to an
average of up to 30,000. But this could mean less satisfied corporate travelers
who may be used to more top-of-the-line options. In the 2021 J.D. Power North
American Car Rental Satisfaction Study, customer satisfaction was down 11
points from the previous year, while average prices increased 58 percent in the
prior nine months.
During a May podcast, J.D. Power managing director of
travel, hospitality and retail Michael Taylor said the company does not see
these trends changing at least through 2023. Cars still will be in high demand
at higher prices, along with continuing staff shortages, longer wait times for
vehicles and occasional lack of availability, depending on the market.
Non-leisure destinations are starting to see prices level off. This situation
lends itself for travel buyers to implement service-level agreements.
As with other segments, like hotels and
airlines, car rental suppliers aren’t as willing to roll over corporate
contracts as they were in recent years, so travel buyers should prepare for
negotiations with destination and volume data. Hertz, which emerged from
bankruptcy less than a year ago, noted during a February earnings call that its
bankruptcy allowed the company to cut unprofitable corporate contracts and
renegotiate the rest, to their benefit.