Cos. Seek More Car Rental Value Via Second-Tier Firms

Just as they increasingly are using low-cost airlines, corporate travel managers are considering contracting with value-oriented car rental providers to further control their costs on the road. The interest in such second-tier car rental firms as Budget Rent A Car and Thrifty Car Rental as possible secondary suppliers extends even to the unconventional choice of Enterprise Rent-A-Car, which traditionally has served the local market.

Rather than trying to mimic the full-service firms that cater to the road warrior, executives at these second-tier firms said they see themselves as the Southwests of the car rental industry.

"There's a tremendous number of business travelers who travel once a month and stay longer than one day," according to Rob Hibbard, Enterprise vice president of rental development. "They don't have as great a need for express service. People who have a few extra minutes and want to save money are a great fit for us."

Added Jay Foley, executive vice president of operations at Dollar Rent A Car: "We are a low-cost provider. We will not increase our costs by building systems to give account data, but, over time, we know cost-conscious business travelers will book with us."

One company that is trying out Enterprise for its travel needs is Learning Tree International, a worldwide vendor of training for IT professionals. The Los Angeles-based company is offering its employees, who typically travel to a site for five or six nights to conduct training sessions, an alternative this year: Instead of staying at a Hilton or Hyatt located near the training site, they have the option of staying at an extended stay property farther away and renting an Enterprise car. The cost of the limited service hotel and car roughly equals the rate they would pay at the full service property and the arrangement "offers more flexibility and freedom," said venue manager Sharon Burns.

"Enterprise offered a competitive price," Burns said, adding that the supplier's flexibility was another draw: In the event the Enterprise location at the airport is closed—a possibility at a firm not traditionally oriented to the corporate market, should the traveler arrive on a late-night flight—the trainer either can use an alternative downtown location or have the car delivered to the hotel the next day, she said.

Burns so far has contracted for five rooms at an extended stay property in Reston, Va., along with the Enterprise cars. By year-end, she expects to have the program rolled out at nine other cities in which Learning Tree conducts training sessions, including Atlanta, Boston, Chicago, Parsippany, N.J., and Philadelphia.

Learning Tree's program is not mandated—trainers still can stay at the full service hotel, minus the car, if they prefer—but was devised as a way to get more bang out of the company's travel buck, according to Burns. "I have to stay within budget," she added.

Hibbard said the average rate for an Enterprise car is 30 percent lower—including the 10 percent discount available through its national account program—than the cost of a car from a major airport provider. The privately owned company, which has almost 5,000 locations in North America and has long been the pre-eminent player in the local market, has been developing more of a presence at the airport during the past few years and currently is onsite at 63 of the top 300 U.S. airports, according to Enterprise's Hibbard.

Airport rentals only account for 5 percent of Enterprise's overall business, but it is growing at a 10 percent clip a month, Hibbard added.

Typically, a company contracting with Enterprise for its travel needs is already a customer of its fleet leasing management service. For example, CH2M Hill, an engineering firm based in Denver with 11,000 employees worldwide, had been using Enterprise to replace its fleet vehicles when they required repair.

Danielle Murphy, who handles CH2M Hill's fleet program, said her company recently negotiated a national agreement with Enterprise as a secondary supplier for its travel needs as well. The contract includes 25 airports, at which "Enterprise's rates are significantly lower than Hertz's or Avis'," Murphy said. However, she added that one drawback at many airports is Enterprise's remote location.

While Enterprise does not offer express rental service for preferred customers, it saves basic data—including name and address—from a customer's first rental and can incorporate that information into subsequent rental agreements. The average age of vehicles is less than one year, and the company's fleet of 525,000 cars—the largest in the United States—allows it to quickly mobilize more cars to a particular location if demand surges, Hibbard said.



Accessing Enterprise's Rates

Enterprise also participates in all of the global distribution systems and is at the highest level of connectivity in Sabre and Worldspan. Through Sabre, travel arrangers can view the total price of a rental, including taxes and other charges. In Worldspan, availability, rate and rate comparisons are listed on a real-time basis.

The car rental firm also recently upgraded its Web site for easier navigation and a speedier booking process.

A handful of other large companies are contracting with second-tier car rental firms as their primary suppliers. Thrifty Car Rental, for example, which is mainly a franchised system and provides express service through its Blue Chip program, just signed an agreement with a large midwestern corporation that replaced a previous long-term contract with Hertz, according to Bob Thunnel, Thrifty vice president of corporate and travel industry sales.

Travel managers "are looking at every dollar they're spending to maximize the savings," Thunnel said. At Thrifty, "they'll save in the double digits versus what they'd spend at Hertz in a year."

In addition to the lower rates, Thunnel said companies also benefit from fewer city surcharges; Thrifty only has one, in New York City, versus dozens at the leading airport firms. "We've been able to contract with many companies that wouldn't let us in the door before," Thunnel said.

While Dollar does not have a distribution network to service corporate accounts—its only large account is DaimlerChrysler, which supplies 60,000 to 70,000 vehicles for Dollar's fleet—business travelers are booking its low-price vehicles anyway, and they're doing it through the Web.

The number of short, midweek rentals booked with Dollar through the Internet has risen significantly over the past two years, indicating the firm's low prices increasingly are attractive to business travelers, said Charlie Coniglio, Dollar staff vice president of e-commerce.

So, are maverick corporate travelers breaking their company's travel policy to snare that low-cost Dollar rental car they spotted on Expedia or Orbitz? "I guarantee you they are," Dollar's Foley said. "That's how we'll grow."