The amount of money spent on car rentals is usually a fraction of what companies spend on airfare and hotel. Yet according to Business Travel News 2015 Corporate Travel Index, rental car spending makes up 15 percent of on-the-ground costs for a business trip. Overspending on car rentals can add up quickly, but depending on the needs of your travelers, car rentals are an essential piece of your overall travel budget. How can you provide this option for your travelers, without sacrificing your travel budget?
The good news? Car rental agencies are one of the places where large volume is not absolutely necessary when negotiating a discount. Agencies work well with travel management companies and businesses to provide price discounts, special services or other options that save time and add convenience to business travelers’ time on the road. As leaders in the travel management business, we’ve developed the following tips to help keep car rental costs down for our clients.
Tip #1: Know your data
It’s important to show potential car rental suppliers as much detailed information as you can about your car rental habits. One of the first questions that a car rental agency may ask when you start the negotiation conversation will be about volume. How often do you use a car rental agency? For how many days? How much do you typically spend on car rentals?
In addition, talk with them about the average number of miles driven per day and when those trips reach certain thresholds, such as 75, 100 or 150 miles. What types of vehicles are most rented by your travelers? Small or mid-sized vehicles? Two or four doors?
The 2015 Business Travel Buyer’s Handbook also recommends gathering information on the number of rentals by day of the week, week of the month and month of the year; as well as locations where most corporate car rentals have taken place and in what cities. Providing as much data as possible will help to communicate volume, usage trends and can show suppliers where they can have the most impact on your business.
Tip #2: Be clear in your travel policy
Once you’ve had success in procuring a car rental supplier, your next step is to communicate this information to your travelers. The best way to do this is through your travel policy. Be sure your travel policy is up-to-date with the latest information on preferred suppliers and the dos and don'ts when booking a rental car. Questions to consider when updating your policy should cover:
- Insurance – should this be purchased from the rental agency, or is your company-wide policy sufficient? Who’s responsible for securing insurance?
- Options – what options are available? Can travelers rent the Mustang convertible on their business trip, or do they need to stick with the Toyota Corolla? Is an upgrade permitted if available?
- Preferred suppliers – what suppliers should be used and why? This is critical, as your negotiated discounts may be partially based on the expected volume that your travelers will provide. Clearly communicate preferred suppliers and the benefits of working with them to prevent your travelers from booking outside the system.
Tip #3: Plan ahead
One of the greatest balancing acts in managing travel is keeping both management and travelers happy. Through pre-trip planning, all areas of a person’s travel can be organized and secured before they leave their office for the airport. By working with car rental agencies to secure the best options for travelers ahead of time, the work for your road warrior is done. That way, when John gets to the car rental counter after a 6-hour flight across the country, he’s simply handed the keys and sent on his way. This not only benefits weary travelers, but also saves time when reconciling expenses.
Tip #4: Follow-up and work with suppliers
Staying in contact with your preferred car rental agencies is essential for managing this part of your travel budget. Continually assess the program and the updated needs of your travelers and the supplier. Is the volume where it should be? Have traveler needs changed? What additional benefits might be available? Options such as free insurance, VIP membership for travelers and upgrades can be negotiated. As your volume increases and you create a track record, you can negotiate for increasingly significant discounts. Some car rental agencies combine their deals with airline points – your travelers earn points with one company while enjoying rewards from the other.
Tip #5: Know when to say no
Sometimes renting a car just doesn’t make sense. Things like hotel parking fees and conference center locations make renting a car the least preferred option. What situations warrant the use of a taxi or Uber? Is the business located in an area where parking your own vehicle is not an option? Through traveler feedback and thoughtful consideration by your travel squad, questions like these can be addressed in advance through your travel policy. That way your business travelers know exactly when to say no to car rentals and why.
Small and medium-sized businesses may not always have the volume, but by working directly with car companies, or through your TMC, negotiated discounts or special value-added benefits can be an option for your business. A good supply of traveler data, a clear travel policy, effective planning and open lines of communication will give you the information you need to keep car rental costs down.