This is the time of year when we like to look back and reflect on the past and create resolutions and goals for the following year. This is no different for the car rental industry except that, frankly, we could all accept a little dose of reality.
Residual values are at record levels and we are all reaping the benefit of this, but we didn't cause that to happen.
Fleet levels, across the industry, have come down to more rational levels. While some want to take credit for that, I would suggest that 35 percent credit enhancements (if credit was available at all), and discipline on the part of the manufacturers in righting their own ships had more to do with this than we did.
Taxes continue to challenge our industry. But to its credit, at least Southwest Airlines told Charleston, S.C., "We don't want your car rental taxes." We won, thanks to Southwest, but we didn't cause that to happen either.
New York wants to stop the industry from allegedly discriminating by having different rates based upon where people reside. This interesting concept is one being practiced by every municipality that charges airline customers a tax on car rental to fund stadiums, pet projects and budgetary shortfalls that their voting constituents will not have to pay.
Sen. Bill Nelson (D-FL) openly asserted that foreign tourists come to America, rent cars, get in accidents and then leave the Florida resident with no insurance holding the bag. That alone justifies the repeal of the Graves Amendment.
As a former insurance commissioner, Sen. Nelson should know that every rental in the state of Florida, regardless of the residence of the driver, comes with the state-required financial responsibility limits as set by the state. Ironically, most inbound Europeans tend to purchase a voucher rental that includes SLI, giving that Florida resident access to a $1 million policy if the accident was caused by the foreign tourists - substantially more coverage than the average citizen of Florida currently maintains.
2010 was definitely a transition year for the industry, and we have made great strides in efficiency and profitability, although some are not getting the message with pricing as low as $9 per day for a car in Phoenix during the first week of December.
So, moving forward what should our resolutions be for 2011?
- Do not over fleet to service the peak. That never, ever works in the long run.
- Price your product to earn a fair return. Garnishing market share in the long run never works.
- Let's implement a no-show program with a credit card deposit similar to the hotel system. Stop the "I can't, because they won't" argument. It's long overdue! All hotels follow this, and all airlines collect the ticket fare at the time of reservation. It has to start somewhere. Wall Street has talked about the financial impact on the public companies. Every operator can run their business better without a 35 percent no-show factor.
- Let's implement an industry-approved car classification system similar to Europe's. A Cobalt cannot be a compact and an intermediate; a Versa cannot be an economy and a compact. What is even more ridiculous is when one company classifies the same vehicle in different categories in different cities.
- We are our own worst enemies when we choose not to work together on legislative and taxation issues. The "What is bad for _____, is worse for everyone else" attitude is so passé.
- Attend the Car Rental Show and find a way to address issues facing the industry collectively. Frankly, we get targeted because everybody knows how dysfunctional we are as an industry.
We all run our businesses differently. That is a good thing. We can collectively support standards and challenge taxation, legislation and regulation collectively like every other industry does. In the long run it will be better for our companies, our employees and, most importantly, our customers. The airlines have infuriated the customers with bag fees, seat fees, snack and drink fees and boarding fees. No wonder they are fed up by the time they come to get our cars. Let's put the "customer" back in customer service. These are the things I want for the holidays, and will make as my New Year's resolutions.
Bob Barton is the president of the American Car Rental Association.