“Procurement strategy is changing. The advice is to partner with multiple car rental companies to mitigate the risk of shortages,” says Sabah Kahoul, Paris-based general manager of travel management consultancy Business Travel Purchase.. This may involve securing more than a single secondary partner. Any resulting discounts, even relatively small ones, could prove highly welcome: ITM reports members having to pay rates up to four times higher with non-preferred suppliers. Sixt’s Stuart Donnelly agrees: “Always have a minimum of two car rental and ride suppliers regionally and/or globally to mitigate the risk of supply shortages and to maintain a competitive balance of service delivery and user experience.”
NAIL DOWN AVAILABILITY
For many buyers an even higher priority in negotiations than price will be gaining cast-iron commitments from suppliers regarding provision of vehicles. Esther van der Aa, global travel manager at Vanderlande, says service level agreements will need closer attention than ever for this reason.
CHECK THE FLEET
Suppliers are running cars for longer so ask them to detail the average age and mileage of their fleets by country and vehicle mix, advises Sixt’s Donnelly, so you know what to expect.
IT MAY SEEM OBVIOUS BUT…
Booking as far in advance as you can is paramount right now given the sector’s current challenges – a minimum of two to three weeks ahead of trips, says Donnelly.
Van der Aa secured a three-year contract after anticipating rates would rise steeply. It may even make sense to negotiate agreements for
up to five years, says Sabah Kahoul.
“There’s an awful lot of information we can pull out of management reports, such as average mileage and time of day,” says David McNeill of Enterprise Holdings. “People often say they need a car at 6am on a Monday. Do they really, or is this just a habit they’ve got into?” A reassessment may show a shorter rental will be fine.
LOOK BEYOND THE BASIC RATE
It’s often add-ons that catch out the unwary, such as refuelling costs, delivery and collection charges, mileage fee and airport and city charges. “You really need to pay attention because ancillaries can be very expensive,” says van der Aa. Consider variable rates versus conventional fixed rates based on supply and demand and seasonal variances, and ask for a last car guarantee.
LOOK AT OTHER OPTIONS
Car rental providers have morphed into mobility experts and can offer a range of solutions, but buyers might also consider ride hailing or car sharing in city locations. Some alternatives can improve both traveller experience and reduce cost, says Sixt’s Donnelly. Enterprise’s McNeill agrees there are more options than in the past. Examples include keeping a pool of rental cars on the company premises or subscribing to car clubs.
Processes are being increasingly digitised to streamline the experience. Ask suppliers where they are on this particular journey, says Donnelly. Car selection? Licence verification? Counter bypass?
Donnelly suggests buyers should enquire as to whether travellers can book direct with the supplier and link their user account to their expense management system for data integration and duty of care reporting. Doing it this way can save the GDS fee on each transaction and possibly the OBT booking fee too.
THE DEVIL IS IN THE DETAIL
Data on past car rental use, pre-pandemic, is aging fast but will at least provider suppliers with a starting point around which to negotiate. List number of rental transactions, rental days and spend broken down by country as a minimum.
GET YOUR USERS INVOLVED
Survey your frequent car rental users about preferences and past grievances. Involve a select number in the sourcing strategy.
Review your company’s policy on the use of personal vehicles. It can be a significant hidden expense that’s better shifted to bolster your bargaining power.
Pay particular attention to suppliers’ electric fleet claims and guarantees if your organisation has identified EVs as an opportunity to reduce carbon footprint.