The J.D. Power & Associates 2009 Rental Car Satisfaction Study had somewhat encouraging news in it-the industry average for overall satisfaction has stabilized after two years of declines. Okay, it's still the lowest score in more than five years, but after these crazy past two years, stabilization is good.
However, the qualitative analysis J.D. Power offers up is stirring up some controversy:
"The stabilization of overall satisfaction is largely a result of the rental car industry effectively responding to economic pressures. In particular, many rental car companies have focused on containing operating costs by 'right-sizing' their fleets to meet changing consumer demand and extending the service life of their vehicles, allowing them to delay orders for replacements. This has enabled many rental car companies to decrease their rental fees."
Hmm. Right-sizing fleet and keeping cars in service longer has lead to lower rental fees, and thus higher customer satisfaction? I posed this "hmm" to J.D. Power. Michael Drago, director of the global hospitality and travel practice, responded.
First off, Drago supplied me with some hard data: the occurrence of customer problems was 11 percent of the total respondent pool in 2009 compared to 10 percent in 2008. (The study was fielded between October 2008 and October 2009.)
Wow, in light of cars with 50,000 miles on them, and fewer of them to satisfy demand, that slight increase in problems looks pretty good. Until we remember (or try to forget) last summer, with RACs frantically trying to satisfy small car demand to match $4 gas prices.
How can tighter fleets lead to higher satisfaction levels? Drago offered this up: Tighter fleets mean fewer cars, and hence fewer model choices, at the rental location. This situation is easier to manage, which leads to fewer problems. "The ability to set accurate expectations and to manage this smaller pool of vehicles becomes easier," he said, although he admitted it is speculation.
This doesn't seem right to me, but I'm not in the trenches. What do you think?
Certainly, right-sizing fleet and extending hold times are cost cutting measures, but the driver of these actions was not to allow RACs to lower rates, as the analysis suggests-they were a survival reaction to soft travel demand and the collapse of the securitization market, which led to the cost of money almost tripling overnight.
The result of these measures was healthier revenue per unit, which is offsetting a drop in transactions. Lower rates are not a direct consequence. For that matter, rates weren't lower at all.
I asked where J.D. Power got its interpretation that car rental rates had actually gone down. Drago pointed to a AAA prediction that 2009 Memorial Day rates were expected to be $2 lower than last year.
Taking one snapshot in time does not make for a comprehensive look at rates. Consider that by Independence Day, AAA predicted rates would be $2 higher than 2008 and by Labor Day, rates were expected to be $3 higher than the year previous.
Drago also referenced the NBTA 2009 travel tax study that shows a year-over-year decline in the average combined taxes a traveler pays on lodging, rental cars and meals, "attributable to decreases in the average rates for those travel services across the country."
Again, this is a snapshot in time: NBTA told me that rates collected for the study were January to March 2009-hardly a proper rate sample.
Volume has been down, but rates have been the highest in years, as evidenced by the public companies' statements during earnings calls and Abrams Travel Data Rate Index.
(Neil Abrams pulled some numbers: one-day airport rental of a midsize car, one week advance booking for Oct. 19 was $90.30. Same time last year was $63.18. Abrams says numbers have been tracking similarly since the first quarter of this year.)
"Volume is down." Therein lays part of the secret to quality score stabilization. Fewer transactions equal fewer problems. Certainly staff has been cut as a reaction, but perhaps not enough to affect the score. Hence staff can spend more time dealing with the 12,976 customers in the respondent pool than last year.
All in all, it's important to note that no one is assailing the methodology of the J.D. Power study, one of the most important snapshots of the car rental industry. For that reason, the industry should have been approached to provide an understanding of what's going on. As a consumer-facing study, getting the analysis of customer satisfaction right is now more important than ever.