Where do the opportunities lie?
TRENDS within the local
car rental space, which
reflect changes within
the travel industry at large,
indicate a need for agents to
pursue opportunities beyond
corporate travel.
The South African car rental
industry is made up of four
major segments – corporate/
government, foreign inbound,
domestic leisure and
insurance replacement.
According to the Southern
African Vehicle Rental and
Leasing Association (Savrala),
these segments account for
36%, 21%, 29% and 14% of
the total car rental industry
respectively.
In an industry which
generated R5bn in 2015
alone, the foreign inbound
and domestic leisure
segments showed promising
growth last year, increasing
in revenue by 11% and 4,5%
respectively.
However, the corporate/
government sector has shown
negative growth of -3%,
presenting both the car rental
industry and agents with a
significant challenge.
“Most TMCs in South Africa
focus on corporations and do
very little leisure business,”
says Lance Smith, executive
of sales at Avis Budget.
“But corporates are cutting
back on their overall travel
itineraries. This trend is not
exclusive to car rental.”
“It is now time for agents
to identify the opportunities
across the various segments
of travel and get involved
there,” he adds.
Consider other markets
For instance, conferencing
and events remain a
lucrative opportunity for
agents, says Lance. Similarly,
domestic leisure travel has
delivered the biggest growth
opportunity for the entire
travel industry, says Bidvest
Car Rental md, Paulette
McGhee.
Agents should also take
note of the emerging middle
class. Melissa Storey,
executive head of strategy,
development and marketing
at First Car Rental, told TNW
that approximately 8,5m
South Africans are considered
“middle class”. “This is the
primary growth market across
our country,” she says.
According to Melissa, the
middle class is bogged down
by issues of expanding their
assets beyond their means.
“Our industry requires creditworthiness
in the form of
a credit card with available
credit. So even though South
Africa’s middle class may be
expanding, the spiralling debt
is threatening further growth
in the car rental industry,”
she says.
“Even though we see our
own customer base falling
more into line with population
ratios, it is gradual and not
nearly as fast-paced as it
should be,” adds Melissa.
In order for the middle-class
market to grow at a faster
rate, Lance says, it should
be presented with enticing
value propositions. “A lot of
travel indicated in this market
is VFR related. Often these
customers would not rent
a car or stay in a hotel. As
such, it’s about building value
propositions that would make
sense for those people and
therefore attract them, rather
than offering a generic pitch.”
Travel agents will always add
value in a true consultancy
role, adds Melissa, whether in
business or leisure travel.
Tech will transform rental experience
THE car rental industry is
adapting in order to cater to
traveller demands and change
needs to come in the form of
relevant technologies, says
Avis Budget’s Lance Smith.
“Customers are demanding
to be able to interact with
car rental companies via
mobile and that is right from
point of reservation to point
of payment and (probably
even more importantly) while
renting. Even at the point
of picking up cars, a lot of
customers are asking: ‘why
do I have to stand in queues?
Why can’t I go straight to the
car?’” says Lance.
To address these demands,
the industry has identified
that the mobile phone is
unique to the user and can
therefore be used to pick the
vehicle up directly from the
car lot, without having to go
to kiosks.
According to Melissa Storey,
40% of First Car Rental’s
direct customers are using
smartphones to search,
book, contact the company,
read newsletters and use
mobile apps.
As such, First Car Rental
has already introduced the
First Car Rental Show&Go
Mobile Checkout Programme.
Designed for business
travellers, this mobile
technology allows customers
to go from airport arrivals
straight to their rental car,
bypassing the branch. Using
a mobile device, the agent
recognises the customer due
to photo identification from
their loyalty card 2D snap, and
checks the renter out in less
than a minute.
The First Car Rental
Show&Go facilities are
currently available at
OR Tambo, Cape Town,
Port Elizabeth, King Shaka,
George and East London
Airports.
The car rental industry is
also investigating ways to
enable customers involved in
an accident to complete claim
forms and record damage on
their mobile phones, without
having to go back to the
station to pick up forms,
says Lance.
Corporate travel agents
should welcome technological
advancements in the car
rental industry with regards
to mobile because it will help
them meet the needs of their
customers, he adds.
“For instance, a future
development in the industry
will see booking confirmation
go straight to the cellphone
of the customer. This will then
be used to open and close
the car itself,” he says.
Similarly, the toughest
interaction between car
rental companies and
their customers – the
vehicle check – will also be
transformed in the future.
|“I think the technology that
a lot of car rental companies
are looking at now is to the
development of 360-degree
photographic booths so that
when customers pick up
their vehicles, they can
drive through an electronic
booth which will record all
damage and condition of
the car, then when they
bring the car back, they drive
though a similar booth and
those two pictures should be
matched and the conditions
of the car noted.”
Services to skip the queue
Some car hire
companies, such
as Europcar, have
responded to requests
from travellers to
minimise time spent at
the rental desk through
means outside of
technology.
Europcar’s Ready2Go
service allows us to sign
our clients up so that by
the time they get to the
desk, they simply pick
up the keys for their car,
eliminating the need to
sign any documents,”
one agent told TNW.
This benefits corporate
travellers hugely
because they no longer
need to stand in long
queues with leisure and
international travellers,
while individual
travellers can sign up
for the service on the
Europcar website, the
agent said.
New payment methods for emerging markets
CLIENTS are seeking
alternative ways to pay car
rental companies.
“In developing countries
particularly, the vast
majority of the population
do not have credit cards,
so they are requiring us to
provide means for people
with debit cards to rent
cars. And that is something
that the industry is working
towards,” says Avis Budget’s
Lance Smith.
The big issue at present
is risk, he says. “We would
need to take large deposits
and should nothing happen
to the car, we would need to
refund the money back to
the customer.”
This would need to be
done using dual-channel
cards. While some
individuals already own
dual-channel cards, the
majority still use singlechannel
cards to complete
payments, making it difficult
for the car rental industry to
introduce any major changes
at present, says Lance.
He adds, however, South
African banks are moving
toward introducing dualchannel
payment cards. “As
soon as the banks enable
dual-channel cards, we will
be able to refund money
back onto debit cards. I see
this happening in the next
three years.
Remind your travellers
Paulette McGhee,
md of Bidvest Car Rental
rounds up her four top
car rental tips for agents
to advise their travellers:
1. Travellers have the
option of hiring a
GPS from the Bidvest
Car Rental counters if
they are unsure of their
directions.
2. The longer the car is
rented for, the less the
traveller will pay.
3. When possible, consider
weekend rates which are
extremely competitive.
4. Always be on the
lookout for the latest
specials on the Bidvest
Car Rental website for
casual renters.”
First Car Rental enhances its app
Travellers are able to
search for a vehicle, get
a quote and book a car
in three easy steps using
First Car Rental’s rent-onthe-go
mobile apps, which
are available for Android
smartphones and tablets.
The car rental company
launched an iOS app for
iPhones and iPads in
September last year. The
First Car Rental apps for
iPhones and Smartphones
allow customers across
South Africa to modify and
cancel reservations straight
from their device. The apps
also allow renters to view
the fleet, send a message
to customer services, call
central reservations, find
First Car Rental branches
and, for account holders,
log in to their corporate
weblink account. The app
also shows branch opening
times and contact details.
Expect increases in car rental rates
DUE TO tough trading
conditions as well as vehicle
pricing inflation, customers
can expect to see greater
than CPI rate increases going
forward. “Vehicle pricing
inflation of 20% needs to
be recovered via pricing
to the customer as the
current environment is not
sustainable,” Bidvest Car
Rental md, Paulette McGhee
told TNW.
To make matters worse,
consumers are trying to curb
spending. “The rand/dollar
exchange rate, the price
increase of most vehicle
brands (and the increase in
the interest rate as a result),
together with the economic
downturn in South Africa hit
every business and consumer
hard and the first avenue
where spending is curbed is
often travel,” says First Car
Rental’s Melissa Storey.
To alleviate the situation,
car rental companies will
likely introduce products
which allow customers to rent
a car for a few hours, rather
than an entire day, says Avis
Budget’s Lance Smith.
“Traditionally, car rental
companies bill per day,
but customers have asked
for more convenience around
renting cars; i.e. renting a car
for an hour or two and not for
a day and this initiative will
be introduced to the South
African market in the not-toodistant
future,” he says.
Did you know?
Budget Car Rental offers special weekend rates for the Western
Cape. Travellers can save up to 5% on all pre-paid rentals. These
rates are valid from Thursday at 12h00 to Monday at 23h59. The
5% discount does not apply to the R73 Rental Contract Fee which
is included in the quotation.
Top tips for agents
Pamela Eggleton, manager
and senior consultant at
Harvey World Travel Port
Shepstone, offers the
following tips for agents
when booking car rental:
1. Book the type of car
that best suits the
travellers’ needs in terms
of the length of stay.
2. Compare unlimited and
limited kilometre options;
i.e. if the traveller will
only use 100km per day,
some rental companies
offer good rates while
unlimited is preferable
for international travel.
3. Strongly advise your
clients that insurance
cover is of the utmost
importance, especially
when travelling overseas.
"They may think they are
saving a few pennies
by taking out limited
insurance, but if they are
hit with an unforeseen
excess cost, the those
few penny savings may
amount to thousands of
rands," she says.
4. “Agents should consider
using a car hire broker
for international
bookings,” Pamela says.
“It is important to have
that 24-hour support
system, and it’s all done
via a reservation portal.”
5. Clients should not take
out more insurance than
they need. “Sometimes
after long flights, clients
are bombarded with
extra insurance without
them really wanting it
and - before they know
it - their credit cards are
debited for a horrendous
amount.”
Win with First Car Rental!
First Car Rental is offering
agents and travellers the
chance to win a holiday in
the Drakensberg or Cape
Town. Visit the First Car
Rental website, click on the
‘competitions’ tab and answer
one simple question to stand
a chance of winning a prize
valued at approximately
R16 000. The prize includes
Group C car hire from First
Car Rental for three days as
well as two accommodation
options courtesy of Anytime
Holidays: either three nights’,
mid-week, out-of-season
accommodation for two people
sharing in a self-catering unit
at Cayley Lodge near Central
Drakensberg, or three nights’,
mid-week, out-of-season
accommodation for two people
sharing in a self-catering
unit at Royal Atlantic in Sea
Point, Cape Town. The prize
also includes return FlySafair
flights (excluding taxes) for
two people to Cape Town
or King Shaka International
Airport, depending on the
accommodation option the
winner selects.
