In the midst of the pandemic, rental car companies faced an unprecedented and devastating decline in demand from all sectors of travel. But with the world moving out from under COVID-19 mandates and restrictions, demand for car rentals by corporate travelers has ballooned. Now car rentals face a new set of challenges to keep up with a changing travel landscape.

Right now, the big problem of course is availability, as there are just so few cars on the lots.

“Clearly, it is well known in the marketplace that, due to supply chain issues, there is a shortage of cars for retail sale and fleet businesses, including the rental car business,” says Thomas C. Kennedy, president and CFO at Sixt USA. “At the same time, travel is recovering quickly, so the outlook for the peak summer travel season is that in some markets there may be a shortage of availability of cars. At Sixt, however, we anticipated this and have secured the cars to meet our business needs for the summer peak and throughout 2022.”

The company believes it has the youngest fleet in the industry in terms of mileage, and had a good plan in place anticipating the shortage.

“Further, given our recent growth in the US, including our openings at Charlotte and Baltimore which were announced [in April], we now have sufficient coverage to be a relevant competitor for corporate travel,” Kennedy says. “As such, we offer the mid-week availability business travelers need in most of the major business markets in the US, with the highest amount of premium vehicles that are consistent with corporate travel policies.”

Hertz CEO Stephen Scherr was quick to point to the availability problem on the company’s recent 2022 Q1 earnings call. “Like others in the industry, we are experiencing the impact of constraints on the supply of new vehicles as well as certain inflationary cost pressures,” he said. “It remains difficult to source fleet to meet demand, and this dynamic may well persist into 2023.”

After all, the recent industry dynamics of limited fleet supply combined with rapid post-COVID recovery of travel has led to demand for rental cars materially exceeding available supply, which is reflected in pricing.

“Given these challenges, our organization remains operationally flexible and careful on the cost side,” Scherr told analysts. “We are keeping cars longer, buying low-mileage pre-owned vehicles and in-fleeting new car supply, including electric vehicles, more quickly than before. We are also being careful to dispose of older vehicles from the fleet – so as to ensure quality of product.”

Don Moore, senior vice president, business rental sales and global corporate accounts for Enterprise Holdings, notes the entire industry is seeing increased demand for vehicles across the US and Canada, and the company is doing what it can with dwindling supply.

“We are continuing to work to meet this demand and support customers’ broader transportation needs,” Moore says. “Our teams are working closely with our manufacturing partners to secure and continuously add new vehicles into our fleet to ensure we meet the most critical transportation needs of our customers, insurance and business partners.”

In addition to its focus on fleet acquisition, Enterprise has implemented a robust fleet preservation strategy, extending the normal cycle of its fleet as one additional way to ensure it has as many vehicles as possible to meet customers’ transportation needs.

Other challenges for car rental companies include the rise in rates and turmoil in the cost of fuel. Thus the ability for a corporate travel program to predict – and plan – where this sector goes from here is murkier than ever.

Dealing with Corporate Travel
Business travel is shifting, but it’s not fully going away or even slowing down, Moore says. “As customers’ needs evolve, Enterprise has a wide range of mobility solutions to help people get back to the places they need to go, and to the people they need to see,” he explains. “We are encouraged to see more business travelers continue to choose car rental as one of the first modes of ground transportation to get them back on the road and driving for business.”

Still, as customers’ expectations shift, Moore says he knows it’s important for the company to evolve right along with them. “Recognizing the future of business travel will have a greater focus on flexibility and convenience, Enterprise is re-designing its rental processes to increase efficiency and give customers more choices to fit their unique needs,” Moore says.

At Hertz, the advice to corporate customers is to book as early as possible and consider booking at a neighborhood car rental location which may have more availability when airport volumes are high. Scherr recommends corporate travelers become Hertz Gold Plus Rewards loyalty members, which is free to join, and speeds the rental experience by allowing customers to skip the counter at many locations, and add products and preferences to their profile in advance of their trip, among other benefits.

Focus on Health and Safety
Since the pandemic first reared its ugly head in March 2020, health and safety issues have become more top of mind for those dealing with rental cars. “The travel and transportation industries – like every other industry – will forever be changed by the global pandemic,” Moore says. “However, Enterprise is focused on the positive elements of those changes, including the rapid adoption of technology and innovation.”

Even before the pandemic, Moore says customers were looking for a more personalized and frictionless process that put them firmly in control. So Enterprise’s customer service team was already working on these efforts and pulled together a team fully dedicated to this initiative. “Our offerings now include curbside rental for an efficient experience that maximizes customer control,” Moore says. “We’ve also implemented changes to our operations and processes to continue providing the same exceptional service to our customers while keeping them and our employees safe.”

Enterprise’s Complete Clean Pledge is a good example of that. It’s a long-term commitment to industry-leading health and safety practices throughout its operations, including all vehicles, branch locations and shuttles. “Building on our Complete Clean Pledge – and as an additional way to bring extra peace of mind – we added an industry-first collaboration with Clorox to provide a one-count disinfecting wipe in every vehicle rental through our brands,” Moore points out. “By renting a car, customers have complete control of their surroundings and extra peace of mind knowing their car has been fully cleaned and sanitized,” he says.

Sixt has implemented new hygiene measures across all touchpoints of the rental process including but not limited to the construction of Plexiglas protective kiosks in all its branches, installing signage to guide customers to keep a safe distance, and ensuring all vehicles meet the Sixt Premium cleaning standard, a program under which every single vehicle is professionally cleaned using a multi-stage process before clients receive their rental.

At Hertz, Scherr notes the company remains vigilant in maintaining safety and cleanliness standards, so all vehicles continue to undergo an enhanced 15-point cleaning process.

Going That Next Mile
Rental car companies know that it’s important to do even more for customers, particularly business travelers, and continue to come up with innovative ways to stand out.

“We’re looking forward to welcoming more business travelers back to our locations around the world,” Scherr says. “We’re committed to delivering on our strategic priorities to lead in vehicle electrification, shared mobility and a digital-first customer experience and will continue to remain extremely focused on providing excellent account management and service to all our corporate customers.”

Over the past two months, Hertz has established near-term work plans to address its core technology stack, systems architecture, changes to the app, and various other components of the customer journey, with hopes of incremental progress.

“As we enter the summer peak season, we have already initiated enhancements to the customer experience,” Scherr says. “Our objective is to provide customers with a seamless digital experience every step of the way. This begins with the app, which must be reimagined. Early progress in technology won’t always be visible to our customers, but the experience will get better over a manageable time period.”

Hertz has multiple pilot programs underway to field-test certain touchless exit gate and rental processes.
It’s also expanded its Tesla rental offering to more than 20 markets and intend to be in 40 markets by year-end. 
Meanwhile, Sixt recently began the roll out of its digital check-out process, which helps the company better service business travelers and enable a less time-consuming interaction.

With the road warrior in mind, Enterprise has continued to adapt and extend its loyalty programs so members don’t lose out on benefits because they’ve been unable to travel. This includes members of National’s Emerald Club Executive and Executive Elite, and Enterprise Plus Silver, Gold and Platinum elite tiers.

“As travel restrictions start to ease, there’s a lot of pent-up demand for travel,” Moore explains. “Enterprise’s main advantage is that we can meet customers at their current comfort level.” In addition, the sheer size of Enterprise’s global network is a key benefit, he says, as it can move vehicles from throughout the fleet to different regions when demand fluctuates.

Key to Recovery
With the number of serious COVID cases thankfully dwindling, and even Dr. Anthony Fauci, the president’s chief medical advisor, recently declaring with some caution that the “US is out of the pandemic phase,” those in the industry are optimistic that business travel will return to pre-pandemic levels sooner rather than later – and rental cars will be needed perhaps more than ever.

“An overwhelming majority of people continue to find value in meeting with others,” Moore says. “And we’re ready to help people get back to the places they need to go, and to the people they need to see. We’ve been delivering transportation alternatives right where people live and work for more than six decades – and we’re collaborating with a wide range of stakeholders to continue to ensure we can meet the diverse needs of travelers in the future.”

Enterprise’s current business model includes a range of services including extensive vehicle rental, carsharing, truck rental, fleet management and retail car sales, as well as travel management and other transportation services to make travel easier and more convenient for customers.

“Customer expectations are evolving rapidly in every industry, travel and mobility included,” Moore says. “We’re on a journey to transform the customer experience, and the pandemic only helped to accelerate some of those efforts. By listening to our customers and employees, as well as leveraging new digital capabilities to enable the experience they want, we’re confident we’ll be able to keep pace and drive transformation.”