Whether for safety concerns to limit potential exposure to Covid-19, or because of sustainability desires, the demand for ground transportation options for business trips continues to grow. But the environment has changed since March 2020.
It’s been well-publicized that car rental companies, after decimating their fleets with significant sell-offs during the beginning months of the pandemic, found themselves with supply shortages once demand started to return. Though primary rental agencies have begun to bolster their fleets, they still are behind 2019 numbers, and some have redistributed their inventory to destinations with strong leisure demand.
It doesn’t look like this will change markedly anytime soon, given the ongoing semiconductor chip shortage and nascent-but-growing return to business travel. Still, some travelers who used to fly shorter distances are opting for car rentals for social distancing—or because airlines have cut certain secondary and tertiary routes.
As a result, many business travelers find they may need to book further in advance to ensure availability. Prices have spiked to take advantage of this strong demand. In 2019, the mean daily price for car rentals was $77, according to J.D. Power. It increased to $85 in 2020 and stayed steady in 2021, at $84. But year to date in 2022, it’s $91.
In addition, Hertz exited or renegotiated corporate contracts during bankruptcy restructuring, so some companies aren’t getting the same deals as before. Rising gas prices add to the costs.
Business travelers may find they need to book rental cars farther in advance to ensure availability. Also, expect higher pricing.
A Sustainable Shift
Another pandemic-era shift has been the increased focus on sustainability. Many car rental companies are expanding the availability of electric vehicles, including Hertz and Sixt. According to Hertz, at least some customers are willing to pay more for the option.
Some companies also are taking a new look at rail, particularly as they continue to expand their sustainability efforts, especially in Europe. Instead of short-haul flights, some companies are changing their travel policies to encourage alternative options if a trip is within a certain distance and rail is available.
Advito launched a rail practice in 2021, and Egencia the same year added new rail booking capabilities. The latter includes integrated rail bookings from Germany’s Deutsche Bahn and the leading rail provider in Norway, and an alert about rail availability on the same route when a traveler is booking a flight. The alert service currently is offered in seven European countries and in the United States.
Ride-hailing companies have not been immune to changes these past two years. Both Uber and Lyft reported increasing business demand in the second half of 2021. The surge in gas prices, however, resulted in both companies adding temporary fuel surcharges on most rides. In addition, some drivers have cut their available hours because of the high gas costs—as gig workers, the companies do not reimburse them for gas—leading to lower supply and possibly longer wait times.