The rush of returning business travel is shaking up your once-staid-and-stable car programs
By Ralf Walters
The Museum of Illusions – “Where Nothing Is Ever Quite as It Seems” – is the city of Charlotte, NC’s, newest attraction. According to one adventurous patron’s online review, “All exhibits are ‘hands on’ and experiential, and the revolving tunnel is seriously disorienting.” Corporate travel managers and TMC advisors may feel the same kind of disorienting queasiness when it comes to negotiating car rental contracts for business travel. Unlike other travel categories, controlling car rental costs in the current environment may be another experience where nothing is quite as it seems.
“There is no season for car rental negotiation like hotel,” says Neil Hammond of Goldspring Consulting. Hammond says the negotiation process is fluid and can be triggered by one of three events: “An approaching contract term date, a need for a car rental company to raise rates, and thirdly, mergers and acquisitions.” If any one of these events should occur, Hammond explains, a rental car sales representative would contact the corporate buyer to begin “contract extension discussions.”
Conversely, he notes, “A more proactive buyer would do the same sooner or launch a Request for Proposal process.” He notes that there are some “signing on bonuses” and “backend rebates” available to some of the larger programs. Regarding 2023 negotiations, Hammond says not much has changed in the overall process, “although the outcomes are currently resulting in 5 to 10 percent price increases in base rates across the board along with other stealth increases.”
The Art of the Rental Deal Recognizing that every customer’s needs are different, Rob Connors, vice president, business development at Enterprise Holdings says they recommend buyers schedule a meeting with an account manager “who can help manage the process of determining the best options to meet various transportation needs.” Echoing Hammond’s assessment, he says there is no one set time for contract negotiations, as each customer's needs are different. Being proactive, Enterprise’s account managers establish a “regular cadence of meetings and account check-ins to discuss any changes or enhancements needed for an existing account plan,” Connors says.
“We know our customers have several options to choose from today. What sets Enterprise apart is our ability to create customized agreements,” Connors adds. “Whether it is car rental, truck rental or vanpooling, the size of our fleet and variety of vehicles we offer gives business travelers the options they need to meet their transportation needs. And with a fleet of 1.5 million vehicles globally and hundreds of makes and models, along with our network of thousands of locations across more than 90 countries and territories, we have the coverage business travelers need.”
According to Dina Fischer, vice president of sales at SIXT USA, every negotiation process starts with a demand analysis by their corporate sales team. “It helps us to understand the needs and expectations in the potential, future car-rental partner. Especially for travel buyers new to the industry, we want to make sure that all the relevant aspects have been addressed and discussed.” Fischer explains that the SIXT team views it as their responsibility “to help our partners understand the complexity of car rental – and to consult them in a way that the company goals, travel program goals as well as the expectations from the corporate travelers will be met.”
Fischer also says corporate customers renting at a SIXT location for the first time and who have questions about corporate rates do not have to wait on site. “Our teams at the branch will gladly collect a customer’s contact details and within a maximum of five working days, a sales managers will reach out in order to schedule some time for a first demand analysis and program explanation.” Moreover, Fischer encourages customers to contact them through their website, adding SIXT’s rate negotiations take place throughout the year.
Quintessential car rental giant Hertz offers corporate rates, discount programs, and business travel benefits to their corporate partners, says SVP of corporate and strategic sales Casey Rodriguez. Hertz offers various discounts for short- and long-term rentals “depending on our partners’ travel profiles,” Rodriguez says. “Our consistent focus is on speed, service and the overall diversity and selection of vehicles available. Hertz’s newest features include mobile enhancements through our app, speed of service enhancements including mobile check-in, and the largest most diverse electric vehicle offering in the industry.”
Headwinds: Tight Supply Chains “Despite tight supply chains and a semiconductor crisis, we were able to increase our fleet last year and we’re proud to say we have the youngest fleet in the industry,” Fischer says. “We are currently observing that the OEMs’ ability to ship products is improving. SIXT is planning another substantial expansion of its fleet for 2023.” She explains the premium share of the SIXT fleet was 57 percent in 2022 which was in line with 2021, and 7 percentage points higher than in 2019. The company primarily relies on vehicles from European and American OEMs, a trend they expect to continue in the future. “With new partners, we take great care to ensure that our strict standards for risk diversification and quality are being met,” she adds.
Going into the spring and summer months, Connors says Enterprise is confident in its supply and ability to meet the needs of customers at their airport and neighborhood locations. “Ensuring a great customer experience is our number one priority. Like the rest of the industry, our brands continue to see strong demand for vehicles, and we anticipate this will continue for the rest of the year. A key challenge right now continues to be the global chip shortage and other supply chain constraints that are impacting all industries, including new car availability. Given the complexity of the supply chain situation, we expect some degree of supply chain disruption will continue for the near term.” He says with interest in spring and summer travel continuing to grow, it remains important to reserve a vehicle as early as possible for future travel. “Providing flexible dates and branch pick up locations in your search may help to increase your options,” Conner says.
“We are well fleeted from luxury sedans to zero-emissions EVs,” Rodriguez says. “We continue to work closely with our automotive partners to add new vehicles to our fleet and are strategically moving vehicles to Hertz locations with highest demand to support our customers.” He explains that Hertz’s fleet inventory remains dynamic and that they have great confidence in their ability to service all their corporate partners’ travel needs. “We’re also well positioned to support our corporate partners’ sustainability objectives with EV business rentals.”
Get With the Program Enforcing corporate travel policy is a challenging cat and mouse game for travel managers. Most business travelers are an independent lot and many like the convenience of booking their travel using their cellphone apps to choose their flights, accommodations and perks with the precision of a heart surgeon. Meanwhile travel managers are trying to keep these travelers compliant with corporate policies to fulfill contract negotiated discounted rates.
“Most policies state car rental bookings must be done through designated channels,” says Hammond. “However, car rental bookings have low compliance – lower than air, maybe higher than hotel – so a lot is slipping through the net without consequences for the travelers. Car rental booking channel compliance is higher when air is involved in the trip and lower when it is car only,” he cautions.
“Helping our customers drive compliance within their corporate travel policy is of utmost importance to us, as well as duty of care requirements,” Fischer says. With potential solutions such as Direct Connect, SIXT is able to offer direct booking solutions as long as this is in line with the corporate travel policy.
At Hertz, “contractual terms and conditions apply to a business rental regardless of the booking source. However, we always recommend that our partner employees and contractors comply with the company’s specific policy,” Rodriguez says.
“Enterprise has strong partnerships with most TMCs and we work together to implement robust programs for travelers that stay within corporate travel policies,” Connors says. “With our loyalty program, Emerald Club, we provide a customized link for enrollment with the unique customer identification number embedded to ensure that when a traveler makes their reservation they receive the negotiated rates, terms and conditions, as well as Emerald Club rewards.”
In the event a business traveler has an immediate need to rent a car without first having made a reservation using their corporate account, all may not be lost. Jordan Williams, Enterprise branch manager in Schiller Park near Chicago’s O’Hare Airport says they can still help the traveler be compliant with their corporate policy. But to do that, they first need two things from the customer. “We're not able to look up the account number. So, we've got to make sure they have that number on hand and proof they work with the company.” Williams says if the customer has those two things, they can “look it up, find the corporate code and the actual cost of the rental” and book the car.
Incentives and Rewards As with other travel categories like air, lodging and dining, car rental companies offer travelers rewards and points to encourage repeat patronage. “As a part of our implementation process for corporate customers, SIXT offers every business traveler the opportunity to join our SIXT loyalty program,” Fischer says. “With a SIXT profile, a traveler will not only be eligible to benefit from our skip-the line process in the US but also to collect valuable rewards.” Fischer adds that employees can also earn rewards when the booking goes though the company’s TMC, as long as the SIXT traveler’s ID is stored in the traveler profile that is reflected in the rental car booking.
Enterprise customers who book through their travel program’s TMC can use their Emerald Club membership when renting at either National or Enterprise locations. Moreover, an Emerald Club membership allows travelers to bypass the counter, pick out a vehicle, and head for their destination. “Travelers are offered free upgrades and earn credits toward free rental days,” Conners says. “This is backed up by our award-winning customer service and world class account management team who help customers get the most from their travel policy.”
Buyer Beware As corporate travel managers endeavor to get a handle on their companies’ car rental budgets, business travel consultant Hammond advises them to keep a close eye on “stealth” rate increases that are “pushed” on buyers. These under-the-radar rate hikes need to be “challenged,” he says. They can be hidden in weekly and monthly multipliers, one-way rates and/or excess mileage rates, city surcharges and peak rental day rates. “Traditionally buyers have used a primary and a secondary carrier to offer their travelers an option and cater to the airport and off-airport markets as well.
Further, some regional carriers, particularly in Europe, are also included. Recent consolidation of the marketplace may offer buyers the opportunity to consolidate further to a single preferred carrier and reintroduce some competitive tension into the RFP process.”
For travel managers using apps and online booking tools to shuttle business travelers from Point A to Point B, and back, the task has never been easy. However, in a post-pandemic environment with its rising rates, staffing shortages and tight vehicle inventory, enforcing compliance and managing rental car contracts in our fast-paced world can prove disorienting.