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Working with car rental suppliers.

Article Excerpt
Travel managers putting together a car rental program might have a tougher time this year keeping costs down at the negotiating table. Car rental companies are feeling increasing pressure from rising fleet costs, and many are pushing for corporate rate increases--to the tune of 8 percent--so that they can keep a healthy profit margin. At the same time, car rental companies also are tightening up terms and conditions in their rental policies. Customers are getting less leeway in such areas as grace periods for late returns and liability for damage to rented vehicles through acts of nature. Corporate agreements can override these terms and conditions, but buyers should be aware of recent and upcoming policy changes.

A growing portion of car rental cost is not subject to negotiations as car rentals increasingly are the target of local and state taxes to fund such projects as sports stadiums.

Some corporate travel managers have found ways around these taxes by turning to off-airport locations, finding the difference in cost more than enough to cover the cost of a cab or a shuttle to get to the location. In fact, off-airport rentals have recently supplanted on-airport rentals as the top segment in the industry overall.

The unstable price of gas is another factor for corporate travel managers to watch. Unless a flat refueling fee is negotiated, refueling costs for travelers who do not fill up the gas tank before returning their vehicle are a moving target, sometimes as high as nearly $6 a gallon. Outside of a negotiated refueling fee, companies should hold employees responsible for refueling their vehicles.

Travel managers also should keep in mind that several of the major rental companies have undergone changes in ownership and structure, which could affect supplier negotiating positions and the competitive landscape in general. Ford Motor Co. has sold Hertz Corp. to a private investment consortium, for example, and Cendant Corp. is spinning off its Cendant Car Rental Group, parent of the Avis and Budget brands, into a separate entity this summer. Other brands, such as Dollar Rent A Car and Enterprise Rent-A-Car, also are going after corporate business more aggressively than before, so buyers should not overlook them.

Despite the pressures in pricing and terms, surveys have shown that customer satisfaction in the car rental industry is on the rise, however. The following is a step-by-step guide of what to consider when putting together a program to ensure that the corporate car renting experience is a part of that increasing satisfaction:

I. GATHERING DATA

Show potential vendors as much detailed information as you can gather on past car rental usage by your travelers.

A. Sources of data: Various types of usage statistics can be obtained from car rental firms with which you have done business as well as your travel management company and expense management systems. While corporate charge card data will show how much your company has spent with car vendors, it...

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