Hertz Eliminates Base Commissions
Blaming continued weak travel demand and a pressure to reduce costs, Hertz Corp. late yesterday announced it would end base commissions paid to travel agents on U.S. and Canadian corporate and government accounts with negotiated rate rentals only.
The company noted that travel agency override and bonus commissions will not be affected, nor will leisure and non-negotiated business rentals. Hertz will see a high seven-figure savings within a total estimated industrywide savings of about $60 million, according to Hertz's estimate--should every commission dollar that would be paid within this segment be withheld.
Mike Going, senior vice president of worldwide sales for ANC Rental Corp., parent company of biz-heavy National Car Rental, said National currently is analyzing the commission changes.
"I wouldn't be surprised if National were to do it," said Neil Abrams, president of Purchase, N.Y.-based Abrams Consulting Group Inc. "But as the corporate travel supplier trendsetter, Hertz was the natural one to set the precedent. It would be difficult for National to be the first one to do this because of its financial position." Avis Rent A Car did not return calls by press time, but last month did launch a new version of its Club Red incentive program for travel agents, in which members earn $5 for each qualifying rental in the United States and Canada--including corporate and government booking--that consists of any weekly or weekend rental with a Saturday.
"The industry had to do something," Abrams said. "They've steadfastly stood by the travel agent community while airlines were chopping away at that industry, and the car rental industry has been under more profit pressure than its sister travel suppliers. The softening began more than a year ago."
The travel management community is not pleased with Hertz's latest move. Terry McCabe, president of Oakland, N.J.-based Stratton Travel Management, said, "A lot of travel agency executives are going to be annoyed by this because we walked Hertz into corporate deals over other suppliers."