KEEPING CAR-RENTAL COSTS DOWN
By Joe Brancatelli
October 20, 2010 -- The big car-rental news is no news at all: No. 2 Hertz Global Holdings won't be buying the fourth-largest firm, Dollar Thrifty Automotive Group, after all. And despite a swirl of rumors and published offers, there is no deal yet for No. 3 Avis Budget Group to buy Dollar Thrifty.
Somnambulant as it seems, however, the car-rental industry is changing. Demand is picking up as business travel ticks slightly upward. And since the industry's combined fleet of vehicles for hire was smaller last year than a decade ago, prices at the rental counter are headed higher. That's driving travelers to search for strategies to keep rates under control.
Superficially at least, car rentals are still a bargain. The industry's approximately 1.6 million vehicles generated less than $20.5 billion in revenue in 2009. That's only about $35 a day. But statistics are cold comfort on the road, and $35-a-day rentals are a rarity for business travelers.
One recent survey pegged the average weekly price of a compact car picked up at an airport at $335, up about 50 percent from 2008. During a busy period in Detroit this summer, small cars were renting for $140 a day. And in cities such as New York and Boston, where many locals don't own their own vehicles, $200-a-day weekend rentals aren't unknown.
So how do you rein in the price of a car rental? It starts at the beginning of the process with where you make your reservation and literally continues until the moment you return your car. Here are some tips worth considering.
Want to Save? Shop Around.
Want the one place that offers all of the prices from all of the car-rental firms? So does everyone else. Sadly, no such place exists.
For starters, even companies that own multiple car-rental firms don't offer centralized reservations services. If, for example, you want to rent from the nation's largest firm, Enterprise Holdings, you'll have to visit one of its individual sites: Enterprise, National, or Alamo. Avis Budget maintains separate sites for both of its brands, as does Dollar Thrifty.
Expecting a full spread of rates from Orbitz, Expedia, or Travelocity, the Big Three online booking sites? Uh-uh. None of them offers rates from more than a half-dozen or so of the top 15 rental firms. Secondary sites such as CarRentalExpress.com focus on smaller agencies, but ignore the big chains. Another variable: blind booking sites such as Priceline and Hotwire. They often have cheaper rates, but you won't know which rental firm is supplying the lower quote, and you'll have to prepay before you find out.
That kind of pay-it-forward uncertainly isn't for all travelers, of course, and the basic fact remains: The only way to make sure you're getting complete information is to visit multiple sites.
Discounts Are Out There—Somewhere
Car-rental firms produce a blizzard of promotional codes, special rates, and group discounts. AAA members get special prices. So do shoppers at Costco. As do members of organizations such as the AARP. But just as no one booking engine has all of the rental rates, there's no single repository for the discount opportunities. And car-rental firms like it that way.
When a startup called AutoSlash launched this spring, it promised to book renters at the lowest prevailing rate, then lower the price as it found applicable discount codes. Several major rental firms immediately objected, then jawboned Autoslash until it stopped booking their cars. The site still offers a page listing publicly available discounts and promotional rates, however. You can also find discount codes by searching sites like FatWallet, doing a Google search—or simply by checking with your clubs, organizations, and other affinity groups.
All of those discounts need to be weighed against the corporate rate offered through your company or the special small-business rate you have negotiated with your agency of choice. No one discount channel or promotion consistently yields the lowest price.
When and Where Makes a Difference
No matter the discount or booking site, car-rental prices are extraordinarily volatile, especially when it comes to the basic components: time, day, and place. To find the best rate, try adjusting the hour or day or your pickup. You'll be surprised how different the prices may be.
Then there is the on-airport, off-airport, in-town rental conundrum. Generally speaking, rental agencies located just off the airport grounds offer cheaper rates than car firms located on higher-priced airport real estate. But the cheapest alternative may be booking from an in-cty location. That's usually because the imposition of government-mandated taxes and fees and surcharges imposed by the rental firms jack up the price of the airport rental.
Look Beyond the Bottom Line
Speaking of taxes and fees, you can never be vigilant enough about factoring them into your price calculation. And you never see a rental quote these days, even the ones that purport to be the bottom-line price, that doesn't add a caveat along the lines of "other taxes and fees may be imposed at the time of rental."
Un-American as it sounds, taxation without representation is standard operating practice in the rental game. States and municipalities love to pile extra charges on renters because we probably don't vote in the community where we pick up a car. So beware all sorts of bizarre levies: taxes to fund a new sports stadium or the airport expansion; user fees to support the local tourism-development agency or a public-transit initiative; surcharges to balance the local budget; and, lately, charges imposed to build new consolidated rental facilities. These are all in addition to standard sales and excise taxes, of course.
Rental firms are no less creative with surcharges: "concession recovery fees" that supposedly offset the higher rent at airport or other locations; "shuttle bus" fees to cover the cost of getting you to and from the rental lot; energy surcharges; and even location-specific rip-offs like "tire fees." Some business travelers have even been hit with something called a "privilege fee." What's the privilege? Having made a reservation within 48 or 72 hours before your arrival.
These charges are not trivial. On a daily rental, they may double the price you eventually pay. On a weekly rental, they could comprise 50 percent of the cost. When comparing quotes, make sure to check the final price, not the top-line rental fee, to get the best view of your options.
Beware Hidden Price Traps
Since rental rates have been so low for so long--Enterprise, for example, still promotes a $9.99-a-day weekend rate on its homepage--rental firms have become masters of the hidden price traps. Some are legendary: upcharges for second drivers, rates that include only a limited amount of miles, geographic surcharges, and "minimum keep" rules that guarantee you'll pay more if you return a weekly rental too soon.
Others, like the "refueling charge," industry jargon for filling your car with gas when you return it, are easily avoided. Bluntly put, never buy gasoline on any terms from a rental firm. Even overpriced gas stations just outside the airport grounds are literally dollars per gallon cheaper than the "refueling charge." Fill up just before you return your car and make sure you have a receipt to prove it.
And some hidden fees are new. Now that states are moving to electronic toll-collection systems, rental firms have gone into the business of selling you the option through operations such as PlatePass. As usual, markups and practices are obscene. Worst offenders? Firms like Hertz, which may charge you a $2.50 daily fee even when you don't use the system to pay tolls.
Just Say No to All Insurance
Too many articles about rental cars go into excruciating detail describing the cornucopia of insurance products, damage waivers, and liability coverage that the rental industry tries to guilt or scare you into buying. There's no need for the specificity: Just say no, emphatically and repeatedly, to any insurance-like product any rental agent tries to sell you. There's a reason these products are considered "junk insurance" by the industry. The prices are inflated and, since the rental agencies usually write the policies themselves, they are full of loopholes.
The intelligent approach to car-rental coverage is to discuss the options with your own insurance agent or broker. Comprehensive car-rental insurance is available for an extremely reasonable premium as part of your existing auto coverage. And don't buy into the "if you have an accident in a rental car and use your own coverage your rates will go up" sales tactic. At $20 a day for the basic "loss damage waiver" (LDW) sold by car-rental firms, your annualized premium would be a whopping $7,300. Even if your own insurance agency raises your rates after a car-rental accident, it wouldn't be anything near the annualized cost of an LDW.
Don't own your own car? Ongoing liability coverage may be available as part of your homeowners or renters coverage. Another option is to check if an insurance company offers a "non-owners" policy. Geico, for example, sells such protection, and a friend recently got such a plan for about $160 for six months of coverage. Collision coverage is the other main type of insurance necessary, so check with your credit-card issuer. Many premium versions of Visa, MasterCard, or American Express offer collision coverage if you charge the rental to the card. When talking with a credit-card company, be sure to be specific with what it covers. The key word to look for is "primary." If your credit card offers primary coverage, you may have all of the car-rental insurance you need.
The Fine Print…
Treatises can be written about how car-rental firms now rigorously inspect cars for damage when you return the vehicle. Hertz is even testing a system to photograph cars before you leave the rental lot and when you return. Don't ignore these new realities, especially since the average age of a rental car is older than ever, and vehicles are likely to have picked up a few dings and dents before you arrived. Use the technology in your pocket—your camera-equipped mobile phone—to protect yourself. Snap a few shots of the car before you leave the lot and take a few more when you return the vehicle. That'll give you visual evidence to fight any bogus claims of damage.
ABOUT JOE BRANCATELLI Joe Brancatelli is a publication consultant, which means that he helps media companies start, fix and reposition newspapers, magazines and Web sites. He's also the former executive editor of Frequent Flyer and has been a consultant to or columnist for more business-travel and leisure-travel publishing operations than he can remember. He started his career as a business journalist and created JoeSentMe in the dark days after 9/11 while he was stranded in a hotel room in San Francisco. He lives on the Hudson River in the tourist town of Cold Spring.
THE FINE PRINT This column is Copyright © 2010 American City Business Journals. All rights reserved. Reprinted with permission. JoeSentMe.com is Copyright © 2010 by Joe Brancatelli. All rights reserved.