Car Rental Extras Cutting Into Bigger Piece Of Corp. Pie
<B> Car Rental Extras Cutting Into Bigger Piece Of Corp. Pie</B>
By Lynn Woods
Few transactions boost the amount of fine print accompanying a car rental booking. There are taxes--state, city and municipal in some cases--airport concession fees and perhaps a shuttle charge; vehicle licensing fees; and charges for extra drivers, late or early returns, insurance, and in some instances, mileage. While most corporate travel managers are able to negotiate out the insurance, extra driver and mileage fees in their contracts, the company probably is anteing up the rest--in addition to city and midweek surcharges. But few travel managers know it.
Extra charges have become an effective way for the car rental companies to implement indirect rate increases. However, a few travel managers are waking up as extra car rental charges eat up an increasingly larger proportion of the total rental cost--in some cases, as much as 25 percent. And that's not just in New York City, long the scourge of economy-minded travelers: Secondary cities, such as Cleveland and San Antonio, are beginning to reach the tax heights of the giant metropolises.
It's not hard to understand why these charges are slipping through the cracks at most companies: Car rental is the low man on the totem pole compared with the amount of money spent on air and hotel. Extra car rental charges therefore comprise a proportionately miniscule portion of the travel budget. Many travel managers assume all the extra fees are taxes and therefore non-negotiable anyway. But in some cases, the charges are airport-related levies that go into the pockets of the car rental companies.
The main problem, however, is that "travel managers don't even see it," said Rolfe Shellenberger, senior consultant at Runzheimer International. "They see the price based on booking information, not the expense account." Travel agents also have little idea of the magnitude of the charges. "They rarely see anything in the way of true cost data," he said.
Shellenberger didn't pin all the blame on the car rental companies. The real culprits, he said, are greedy airport authorities that have taken advantage of the car rental companies over the years. Car rental firms "don't have the flexibility to go off airport. When they do, they have to pay a fee."
Municipalities that slap taxes on visitors to pay for convention halls and other local projects also are guilty of exploitation, said Cyndi Perper, director of corporate travel at Colgate-Palmolive in New York and president of the National Business Travel Association. "Charges like Arizona's cactus tax are taxation without representation. It concerns us," she said.
To try to get a handle on these extra costs, Harold Seligman, CEO at Management Alternatives, suggested travel managers obtain data reports from their car rental vendor and take a close look at the expenditures. Shellenberger said travel managers should consider negotiating their biggest-volume cities separately from the standard national contract and have travelers rent downtown.
In many cities, "airport rentals are so much higher for business travelers," he said. "I have a client who a couple of years ago negotiated a local deal with Hertz. They are paying $7 a day and 25 cents a mile." Even if the traveler has to take a cab from the airport to the rental location downtown, he or she is still paying far less than the amount of an airport rental, he added.
Perper predicted that travel managers will become savvier. "You'll see more and more people looking at every piece of this business," she said. It won't be a simple task: "As the pie gets cut into pieces, it becomes more difficult to manage.