The cost of renting cars for corporate travelers is on the rise again, potentially altering the inputs on the rent-versus-ride calculation. Taxis and limos were always there, of course, but the equation changed significantly with the advent of Uber and Lyft.
Speaking on the June edition of the Business Travel Executive Town Hall conducted via LinkedIn Live, Steven Mandelbaum, senior vice president for business solutions at education consulting company EAB, and Kelly Christner, travel and expense procurement leader at access control and commercial security company Allegion, covered a wide range of issues in ground transportation.
After years as a relatively stable, even staid, segment of business travel, ground transportation – everyone from rental cars to limos to taxis – got a wakeup call with the introduction of ride share. The convenience, and the fact that it can be a more restful and productive experience, moved more use cases away from car rental. But the choice is not only about ease of use.
“Ground transportation was the Wild West until Uber came around,” said Mandelbaum. “There were local providers in different areas and different taxi companies, and the expensing and the reconciliation was a nightmare. Uber cleaned that up.”
Business programs from Lyft and Uber bring the spending into sharper focus for corporate members and can make expense reimbursement easier for travelers. According to Uber, 200,000 companies across 70 countries are enrolled in Uber for Business. EAB is one of them.
The “tipping point” in major markets is often the cost of parking, which is “just insane, particularly at hotels,” according to Mandelbaum. “The locale determines whether you should take a rideshare or rent a car. If you’re going to New York City, I can’t imagine it making sense to rent a car. I think that’s the case for most major cities. In places that are more suburban or rural, it probably makes a lot of sense because it’s going to be hard to get around and you might not get an Uber so quickly.”
Christner said her firm also had a deal in place with a ride-hailing service. She’s assessing the value and taking note of added fees for things like requesting quick service or keeping the driver waiting. She also mentioned complications that arise when travelers have the wrong form of payment in their ride-share profiles.
The car rental industry further compounds things with add-ons, according to sources. The sector is infamous for fees and surcharges, and a recent increase in scrutiny of scratches, dings and the general condition of cars upon return means more damage claims being submitted by rental companies.
The pandemic shock is behind them and major car rental companies have returned to more normal growth levels. At the same time, though, Avis, Enterprise and Hertz are enduring higher vehicle acquisition, maintenance and labor costs while overall rental rates drop. At Avis Budget Group and Hertz, overall revenue per day dropped 3 percent during 2024. At Avis, it was down that much again in the first quarter of 2025. At Hertz, the first quarter drop was 5 percent.
But for many corporate travelers and their employers, pricing is going the other way. According to Prime Numbers Technology, which tracks aggregated business travel activity across roughly 3,500 companies, base rates were higher year over year in each quarter since the third quarter of 2023. Corporate rate growth has been at most a few percentage points, but then in this year’s first quarter, it jumped by 7.5 percent to above $46. Cornerstone Information Systems reported average spending on car rental in April was up 5 percent year over year after declines during the first quarter.
Despite industry challenges, car rental is one of the “most straightforward” components of the corporate travel program at EAB, Mandelbaum said. Travelers report “very high satisfaction” with preferred rental companies.
Strength In Numbers
Both Allegion and EAB use a group purchasing organization for car rental contracts. It’s an option that many small and medium-sized companies have turned to, and feedback from involved buyers is usually positive. “Our travel program is not enormous, and that GPO contract allows us to carry the heft of a much larger company,” Christner said.
GPO car rental contacts, like most corporate rates, use fixed pricing. Car rental companies have explored the concept of dynamic pricing – negotiated discounts off floating market rates, akin to what’s used for airline contracts and some hotel agreements. Neither Christner nor Mandelbaum favors that approach.
“It makes the management that much harder,” Mandelbaum explained. “We pick preferred suppliers, and we want to give them a high level of market share. This enables us to do it. If they’re going to have dynamic pricing, they may not always be the least expensive. The contract might not work, and they’ll be frustrated that they’re not getting the volume that they were hoping to get. There are lots of good things about dynamic pricing – largely for suppliers, not necessarily for buyers – but there’s also a lot of downside that comes with it too, and you’ve got to be ready to deal with that complexity.”
It’s “nearly never” the case that company travelers find lower, comparable rental rates outside GPO contract pricing, he said. “We pick one to two providers per region, and our pricing is competitive enough that we generally don’t shop elsewhere.”
For Allegion, a GPO contract with Enterprise Mobility also includes trucks when needed by the company’s field workers. “We can charge individual cost centers,” Christner said. “It’s a nice addition to a contract that’s fairly easy to manage.”
What GPO deals don’t do is protect member companies from various car rental surcharges, such as consolidated rental facility charges levied by many airports.
Another issue, according to Christner, is damage claims submitted by rental companies. She said she’s pushed back in some cases where the driver insisted they caused no damage. “One of the things that’s been a little concerning is that our accident rate is approaching the threshold where it threatens our contract,” she said. “So we’ve had to lean into managing that. Are these accidents really ours? Are they really our fault?”
Mandelbaum said he was not surprised that rental companies were focusing more on this area, given the need to maintain the value of vehicles as much as possible before selling them in the used car market. “We are probably eventually going to be in a situation where we’re going to have to do some documentation, similar to the way you’ll see valets when they run around the car and take a video of it,” he said. “We’ve got to be prepared for some evolution in this particular product in the next couple of years.”
Some companies advise travelers to take photos of both the car’s interior and exterior at pickup and drop-off to help defend against illegitimate claims, or at least ensure the rental company is aware. Maybe the car smells like smoke.
“It’s important that if you do see something, you document it,” Christner said. “I advise our travelers to take a good walk around, note anything that they see and make sure that the check-out folks note it, as well. I don’t want to have to go through all the somersaults to get that taken off. So when we push back, we are successful at times in getting them to say, ‘Okay, we can’t attribute that to you.’ “
EAB doesn’t ask travelers to photograph rentals. If the car rental companies “get more aggressive, we might have to rethink it,” Mandelbaum said. As it stands, the existing insurance coverage provides good protection. “Most corporate programs carry insurance, so it tends to figure itself out,” he said. “But I can see a scenario in the future where they’re going to get more strict on it, or your insurance rate is going to go up.”
For now, EAB has no significant issues with its rental suppliers. “I have been doing this for a long time,” Mandelbaum said. “People complain. We hear it. We hear it with drama as well. We don’t hear it with car rental.”
Visit businesstravelexecutive.com to listen to this complete LinkedIn Audio session and find details about the next BTE Town Hall.
