Consultant Shares Ways To Save On Car Rental Costs

New York - Corporate travel buyers can save about 30 percent on car rental costs by using a little creativity in negotiating and allowing flexibility regarding service needs, said the car rental industry's foremost consultant here at the recent Corporate Travel World conference.

Neil Abrams, president of Abrams Consulting Group, said travel buyers must know exactly what level of service they need in which markets, then arm themselves with rates from the Internet when negotiating new contracts. By simple comparison of published rates, Abrams said, buyers likely will realize they are paying for services that just aren't necessary. By having a sense of what the market prices are, travel buyers will be in a much better position to negotiate a more favorable deal—whether it's with their current provider, or by switching to an independent or regional rental car company.

Abrams said rental car pricing is very elastic, and some corporations are able to negotiate reduced rates with the major rental car companies, but there can be significant savings to be had with regional or independent providers. "Certainly, a company could save if they're focused," he said. "In a particular market, you could save upward of 25 percent and, in some cases, up to 50 percent. It depends on where you're going, when you're going and how far ahead you can book. There are a lot of variables.

"If you've got a $5 million travel spend on car rental, and you are willing to forego the data and reporting capabilities and don't mind if your employees spend another 15 minutes getting their cars and you don't require direct billing, you can save potentially $1 million a year," Abrams continued. "But there is more effort required, and you've got to compare apples to apples. The only way you can do that is if you're willing to put in the due diligence in every market where there are value service providers. Is that worth a million bucks? Maybe."

In a climate where more travelers are becoming Internet savvy, Abrams said more car rental is being booked on the Web, making rate comparisons easier than ever. Simultaneously, growth in the off-airport rental car market is strong, while more business travelers are driving instead of taking short-haul flights. With U.S. businesses expected to spend $11 billion to $12 billion in corporate car rentals, there is plenty of opportunity to change providers and save some money when negotiating contracts.

"The duty of corporate travel managers is to challenge their travelers and senior management to assess what they really need," Abrams said. "This is good business, this is smart business, this is doing the due diligence on an expense item that is significant."



Same Service FOR A LOWER Price

Abrams pointed to Los Angeles' airport as an example of the wide range of rental car price points and services. "If you're renting at LAX, there are 10 companies that are permitted to service the airport, and seven are household names," he said. "But those three others are providing essentially the same basic service, offering relatively the same car, but it can be at a significantly reduced rate."

Of the 10 with contracts that allow them to serve the airport itself, there is a myriad of other companies at LAX that operate off airport with shuttle service from a centralized area. "These are once again quality companies that have similar, well-maintained vehicles. What may be a difference of 10 to 15 minutes and a minor inconvenience could mean a savings of $25 a day, and if you're going to have the car for a week, that might be important to you," Abrams said. "You have options. Corporate travelers have tendencies to look at the major brands, but what do you really need? Are you paying for what you really need?"

With a simple search on Orbitz, a midsize car off-airport in Los Angeles through Midway is just $30. On airport, similar cars run from $69 with Avis to $28 with Fox. For a compact car with Hertz, the rate was $53 and $26 for Alamo, with both companies on airport. But Sakura, another off-airport company, the day rate was just $21 for a compact. "This doesn't mean [the off-airport providers] are inferior companies, it just means they could not make the cut compared to the 10 companies that are allowed to service the airport. You're still getting good quality service and the same car."

On-airport rental car companies are subject to surcharges that can be as high as $10 per rental, as is the case in Boston. By using off-airport rental car companies, corporate travelers can avoid these surcharges and contribute to significant savings in rental car spend.

Abrams said larger corporations that have hundreds or thousands of travelers may need the seamless booking, complicated reporting and billing information systems provided by large rental car companies in order to track and ensure contract compliance. Regional and independent rental car providers may not have substantial coverage nationally or internationally to justify making a switch or have multiple rental car providers. The smaller companies also are less likely to have the bells and whistles of the industry leaders, such as navigational systems and express rental services.

"These are very important services and technology offerings, and there is a premium you pay for that," Abrams said. However, as technology becomes easier to implement, cheaper to run and more advanced, the smaller companies inevitably will offer comparable services.

Abrams said corporate travel buyers need to constantly reassess rental car agreements to improve their positions. "You've got to be prepared," he said. "You don't have to stick with your current company, I don't care how long you've been with them."