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Car Rental Tips

Save on your business travel budget by renting smart.
July 29, 2002
URL: http://www.entrepreneur.com/article/53908

Introduction

Car rentals typically represent 15% of a firm's travel budget. In coming years, this percentage threatens to go significantly higher as rental rates continue to rise. But the industry remains highly competitive, which will allow you to at least slow the rate of increase.

There are seven firms that target the business rental market. Hertz and Avis are the largest, typically offering the largest numbers of cars and the most airport rental locations. Other competitors include Budget, National, Alamo, Dollar, and Thrifty.

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In many areas, a second rental option consists of regional firms that target the leisure market. Although most leisure-oriented rental firms have fewer locations, they can often be found by airports. In addition, some offer a level of service comparable to the national firms. Some of the largest regional agencies are Value and Payless.

There are also a number of firms that concentrate on rentals to repair shops. Although most of these firms are located outside the airport and do not actively seek business travelers, they can be considered in a pinch. The largest firm in this market is Enterprise, which offers the largest number of rental locations of any firm nationwide.

This buying guide is designed to give you the facts you need to select a rental firm for business travelers at your company. You can choose to read this guide from beginning to end, or jump directly to a section of interest by clicking on the links above.

Differences

The biggest difference among rental firms concerns how rapidly you can rent and return a car. In most cases, the rest of your rental will be fairly similar no matter which firm you use, since all the major rental agencies use new cars and remove them from service after about 20,000 miles.

Agencies speed the rental process in three ways. First, rental lots can be located close to airline terminals, resulting in a shorter bus ride. Major firms such as Hertz and Avis often feature on-airport lots, while other agencies such as Thrifty typically use off-airport rental centers.

Some car rental agencies also offer express pickup services to shorten rental time. This allows you to avoid the line at the rental counter, which can be very busy when many planes have recently arrived. Hertz, Avis, National, and Budget even have programs that allow customers to proceed directly to a car and drive away without waiting in any line.

A third feature that can save time is a quick return service. These allow you to return a car without waiting in line. Some firms offer automated terminals, while others staff the return lots with parking lot attendants that can record return information on a wireless computer.

Altogether, services such as these will help you save about ten minutes on each end of a trip. However, this time savings does come at a premium. Renters typically pay an additional $10-$20 per day when choosing a firm that offers these services. As a result, you may want to limit your use of the fastest vendors to times when you require the extra level of service.

Corporate Accounts

Corporate accounts tend to be a very good deal even for infrequent renters. There are no sign-up fees, and you can save an average of 20% on every car you rent.

In addition to lower rates, corporate accounts can provide other benefits. Many programs offer free upgrade coupons or free rental days to members. Rental firms will also guarantee cars in times of high demand for account holders, meaning a corporate renter will rarely face a situation in which no cars are available.

Rental Strategies

If your firm spends more than $15,000 to $20,000 yearly on rentals, you should try to concentrate all your rentals with one firm. This will allow you to negotiate larger discounts or obtain added insurance benefits.

However, if your company's usage falls below this level, it can make more sense to join the corporate programs of several agencies, so you can select the best one depending on local rates and special offers.

Rental Insurance

Purchasing rental insurance from a rental agency (typically a collision damage waiver, or CDW) tends to be a relatively poor bargain. Rental firms typically will charge you several times the actual value of the insurance.

For more cost-effective coverage, you should obtain insurance through a corporate or personal credit card. Many gold cards offer auto insurance coverage to rentals made with the card. Larger firms may want to add collision and liability insurance as part of their standard insurance package, or negotiate insurance coverage as part of a rental agreement.

Pricing

Rental rates vary depending on the size of the car, availability, and the rental agency.

Most rental firms offer several sizes of automobiles, ranging from compact through intermediate and full-sized. Moving up a size is generally not very expensive, but specialty cars and vans/trucks often cost much more.

Local supply and demand also has an enormous effect on rental rates. Leisure areas such as Florida are usually very inexpensive, since the major rental agencies compete with dozens of smaller firms. Cities such as New York and Chicago tend to be very expensive, since space is limited and demand is high.

There is also tremendous variation depending on the reservations made for that day. Rental firms are increasingly using yield management systems to predict demand and raise prices in popular areas. This means that rates are likely to go up if there is a major convention or new tourist attraction.

Depending on the rental agency you choose, rates may be as little as one-half of the most expensive choice. For one-time rentals, Hertz and Avis are generally at the top of the price scale, with Thrifty, Dollar, and Alamo nearer to the bottom. However, corporate discounts can result in 20%-25% savings off daily rental rates.

Buying Tips

Lowering rates
You may be able to negotiate lower corporate rates if you can guarantee reservations. Unlike hotels, most car rental agencies do not penalize customers who do not cancel reservations. This has resulted in an average 15% to 40% overbooking of reservations, and made fleet management quite difficult for the car rental agencies. By guaranteeing reservations, you can potentially knock off a couple of dollars per rental.

Drivers under 25
If you have many employees under the age of 25, negotiate ways to eliminate underage surcharges or waive an underage exclusion policy.

Mileage caps
If most of your firm's rentals cover a fairly limited area, you may be able to obtain a 100 miles/day cap in exchange for lower daily rates. In this case, you can get $4 to $5 per day off the standard corporate rate.

Corporate allowances
Make sure to negotiate what will happen if a retail rate is available for less than your corporate rate. Some agencies will allow you to default to the lower rate (or even less) under the corporate plan, while others will only let you switch if you agree to give up your corporate benefits.

Hourly rentals
Value is unique in offering hourly rentals in all its locations. A traveler in town for a brief business meeting can now pay as little as $1.59 per hour to rent a car, instead of having to pay a full day rate.