Car-rental rates to remain flat
By Susan Avery -- Purchasing, 11/19/2008 4:18:00 PM
Travel buyers can expect corporate car rental rates to remain flat or increase by up to 1% in 2009, according to the National Business Travel Association 2009 Business Travel Overview and Cost Forecast. The average corporate car rental rate rose 4% in 2008 to $44.
Executives at travel management companies say that now is a good time to negotiate new agreements with suppliers—especially true if buyers have not looked at the ground transportation spend in a while.
In fact, leveraging spending on rental cars, for example, with one or two preferred suppliers and encouraging travelers to comply with company travel policy will provide new cost savings and efficiency benefits. (Recent consolidation in the industry resulting in expanded service coverage of car rental companies makes this possible.) Furthermore, asking travelers to purchase ground transportation services through a travel management company using an online booking tool can deliver even more results. Reporting data on spending can be used in negotiations with suppliers.
“To offset higher operating costs, we expect car companies to push through rate increases with new contracts,” says Mathias Eichelberger, director of air and ground transportation for Egencia North America in Bellevue, Wash. “But if an organization can bring volume to the table, it will be in a very good position to negotiate for discounts.”
Dave Kilduff, managing director, ground transportation, CWT Solutions Group—Americas in Minneapolis, Minn., says, “Simply managing the category and negotiating with suppliers will save regardless of what is going on in the marketplace. To compare prices offered by car rental companies, Kilduff suggests travel buyers take a total cost of ownership approach to the buy and remember to include all of a company’s charges and add-on fees.
Here are some other ways travel buyers can help reduce ground transportation costs:
• Have travelers refuel the vehicle. For instances when it’s not safe or convenient for travelers to do so, negotiate a fuel surcharge that adjusts quarterly based on a national rate such as the one provided by the American Automobile Association (AAA).
• Be flexible on car types in the travel policy. Although they use more fuel, mini vans now are less expensive than economy cars. They may make sense for short trips.
• Consider using limo service in some big cities like New York. Demand for black cars is down due to the financial crisis and the flat fee may be less than what it costs to rent a car and pay for tolls and parking in the city. Travelers can book online.
• Look at the traveler’s length of stay. It’s a good idea for a company with a lot of six-day rentals to think about negotiating a weekly rate.
• Renting a vehicle off-airport can be less costly than renting one on airport.
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