Michael Graham, a qualified Chartered Accountant, took on the role as Budget Rent-a-Car's Managing Director for Europe, Middle East and Africa at a time when the company was in serious financial difficulty and is credited with implementing the changes instrumental in its turnaround and re-positioning. Prior to his appointment in 2004, Michael spent three years as Finance Director for Avis UK. This year, Budget celebrates its 50th anniversary and will see the company return to profitability.
As we gear up to celebrate Budget”s 50th birthday, it seems like an opportune moment to reflect on how the car rental industry has changed in recent years. From vehicle fleets and booking methods to environmental issues and new government legislation, there have been a number of contributing factors that have had a significant impact on our operations.
Marketplace consolidation has been one of the major industry developments. It has seen some of the biggest car rental players joining forces. Despite this, the market has remained intensely competitive with only the fittest prospering.
The industry is also experiencing tougher supply conditions, particularly in terms of rising fleet costs. This is having, and will continue to have, an upward pressure on rental prices and a downward pressure on profit margins. At Budget, we are committed to our value proposition, so continue to closely manage our fleet and improve our operational efficiency to ensure we remain both profitable and very competitive.
The continued pressure on pricing has been made more transparent due to new online channels, such as car rental brokers. With an increasing number of people now booking travel online, it has been imperative for us to heavily invest in our own web presence, as well as embrace these new online operators. Whilst we still have a contact centre for offline reservations, we now take more bookings through our website than we do over the telephone.
At Budget, the customer is central to everything we do, so consumer trends and demands have also had a major impact on the way we operate. This has been particularly apparent with the increasing focus on the green travel agenda. With climate change and issues surrounding carbon emissions now taking centre stage, car rental companies have quickly had to embrace ”going green”.
Particularly in the corporate sector, greener vehicle options are essential. This ”journey” has only just commenced for the car rental industry, vehicle manufacturers and fuel companies. Over the coming years we will see economically viable cars and fuels available in sufficient quantities, with recognised standards, improved reliability and, critically, proven green credentials.
We continue to partner with our suppliers to research and test in this important area - we are already trialling hybrid vehicles at our Edinburgh and Heathrow airport branches to gauge customer acceptance before rolling out to further UK network locations; and in Sweden, bio-fuel cars make up 30% of our fleet ” our aim is to increase this to 50% in 2008.
Corporate responsibility in the workplace is also becoming increasingly important, primarily as a result of the new Corporate Manslaughter Bill that comes into force on 6 April.
This will have a major effect on how corporate car fleets are managed. Companies have a duty of care over staff to ensure that they drive roadworthy and properly insured cars. Penalties for company directors failing to do so are severe under the new legislation.
It is likely we will see an increasing number of companies using short-term car rentals in place of long-term company car leases; and limiting the number of employees that use their own private vehicles for business purposes.
All in all, car rental is, and will continue to be, an important part of any travel itinerary. The customer is central to this ongoing demand ” they are more informed with a stronger voice than ever before, so we must remain focused on their needs to stay ahead of the game. At Budget, we are committed to doing this.