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Working with car rental firms.

Article Excerpt
Expected to jump between 5 percent and 7 percent this year over last, base rates for car rentals are growing to meet a recovering business travel market. Yet, some of the biggest increases in the cost of renting a car are coming not from suppliers, but rather from local and state governments, which increasingly have been boosting taxes and fees for car renters.

Taxes and fees vary widely from city to city, but often are the result of various local and state initiatives that favor taxing out-of-towners for local projects such as sports stadiums, roadways and convention centers. At airport locations in the top 100 markets across the United States, the average percentage of local and state taxes and fees nearly matches the 26 percent of taxes and fees levied on airline tickets, which travel industry advocates long have noted surpass the "sin taxes" imposed on alcohol and tobacco. In some airport markets, taxes and fees actually can surpass base rates, comprising up to 69 percent of the total cost to rent a car, according to a recent study conducted by Travelocity.

As such, the biggest add-on expense for car rentals is nonnegotiable. Yet, off-airport locations continue to be significantly less costly, giving buyers the chance to explore alternative locations when directing travelers who rent cars. Some companies have found they can save significant travel dollars by advising their travelers to rent at downtown, suburban or other off-airport locations--even when figuring in the cost and inconvenience of taking a cab or shuttle. In fact, neighborhood rental locations are the fastest-growing segment in the car rental industry, as vendors that traditionally have focused on airport rental locations continue to branch out. This leaves corporate travelers and their managers with more options. However, despite the potential savings that can be achieved by renting cars from such locations, most travel buyers have found it difficult to encourage busy business travelers to pick up car rentals from outside the airport.

In addition to higher rates and more pervasive taxes, gasoline prices this year have hit national highs and are expected to continue climbing through the fall. The U.S. Energy Information Administration in a recent forecast said it expected gas prices to average $2.10 per gallon between April and September, marking a 20-cent jump from the same period last year and surpassing last May's record high of $2.06 per gallon. As such, refueling rental cars is a concern to travelers and their companies since suppliers may charge even more should the renter return the car with an empty tank at the airport--an extra cost that could exceed $50. Buyers need to hold employees responsible for the refueling of vehicles or try to negotiate a discount as part of the contract.

One cost to buyers that became standard in the car rental industry in the past year is a surcharge on frequent flyer miles earned on the rental. Buyers should bring this to the negotiating table, or consider stipulating in their policy that travelers are not to take the miles from those suppliers.

Meanwhile, corporate travel buyers should be on the lookout for other fees passed on by car rental companies as a cost of doing business. While The Hertz Corp. earlier this year attempted to push through--but ultimately repealed before its enactment--a $2.50 reservation fee for U.S. reservations, the possibility has not been taken off the table.

On the positive side, the car rental industry as a...

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