3. The Tennant Group
• Roundtables – Car rental equivalent to a
Dealer 20 group. Owners and GMs only
exchange financial information and meet
twice a year. Talk to me if you are
interested.
• Expert Witness Services.
• General Consulting on all vehicle rental
related matters.
• Jim@TennantGroup.com
6. Rate Management
• In the 80s Bob Leech used to advertise his
one and only rate ($19.95) in cutout letters
glued to the outside of his building.
• His Roundtable members convinced him
to take his rate off his building and to have
a winter and summer rate ($17.95/$21.95).
• He finally adopted shoulder season rates
and so then he had 4 rates per year.
7. Rate Management
• Yield Management – Airlines realized it
costs little more to fly a plane full than
empty.
• They could afford to sell an otherwise
empty seat for far below the cost of flying
the plane because they were flying it
anyway – full or empty!
8. Rate Management
• National Car Rental pioneered Yield
Management in car rental in 1993.
• By the late 90s all the majors were using
sophisticated Yield Management
techniques.
• Today industry utilization is far higher than
20 or 30 years ago.
9. Rate Management
• Objective: Adjust prices so that reservation
flow each day provides just enough
reservations to keep the fleet on the road.
• If you have to cut off reservations early,
you could have had higher rates.
• If you don’t have enough reservations,
your cars will sit.
• Either way, money is left on the table!
10. Sitting vs. Rolling
Sitting
Time Depreciation Yes
Interest Yes
License & Taxes Yes
Mileage Depreciation No
Oil Changes No
Tires No
Repairs & Maintenance No
Rental Labor & Commissions No
11. Sitting vs. Rolling
Rolling
Time Depreciation Yes
Interest Yes
License & Taxes Yes
Assuming 100 miles/rental day
Mileage Depreciation $5.00
Oil Changes $0.50
Tires $1.00
Repairs & Maintenance $0.50
Labor & Commissions $1.00
Total Extra Cost of Rolling - $8.00/Day
12. Sitting vs. Rolling
• If it costs $8.00 more to have a car rolling,
then you make money renting it at $9.00,
even though renting all your cars for $9.00
would be suicidal!
• If you are swamped with cars, you might
even rent below your incremental or rolling
cost of $8.00 because you have to pay
parking, hikers, etc.
14. What do the majors do?
The major brands have a clear and consistent rate hierarchy.
15. What do the majors do?
– Hertz, National and Avis are the top tier.
16. What do the majors do?
– Budget and Alamo duke it out next.
17. What do the majors do?
– Thrifty and Enterprise are very close.
18. What do the majors do?
– Dollar has become the loss leader.
19. What do the majors do?
– They watch each other like hawks. These tiers
are consistent across all major airport markets.
I Year Average Hi Lo
Hertz 57.34 79.33 43.49
National 56.14 (1.20) 73.72 42.18
Avis 55.91 (0.23) 79.14 41.59
Budget 47.09 (8.82) 72.08 33.27
Alamo 46.98 (0.11) 67.50 34.00
Thrifty 39.67 (7.31) 61.76 30.04
Enterprise 39.01 (0.66) 59.39 30.52
Dollar 35.67 (3.34) 48.46 27.59
20. What do the majors do?
– Here is a chart of the same rate quotes week
by week over the last year:
21. What do the majors do?
– The rates are very volatile – but the relative
position of each brand is remarkably stable.
22. What do the majors do?
– They watch each other like hawks.
– They watch and change rates continuously.
Thursday, April 11, 2013
8:00 AM 9:00 AM 10:00 AM 11:00 AM 12:00 PM 1:00 PM 2:00 PM 3:00 PM 4:01 PM 5:00 PM 6:01 PM
AD $16.00 $25.00 $25.00 $25.00 $25.00 $25.00 $25.00 $25.00 $25.00 $25.00 $25.00
AL $26.77 $26.77 $26.77 $26.77 $26.77 $26.77 $26.77 $26.77 $26.77 $26.77 $26.77
ET $26.86 $26.86 $26.86 $26.86 $26.86 $26.86 $26.86 $26.86 $26.86 $26.86 $26.86
FX $16.89 $16.89 $16.89 $16.89 $16.89 $19.16 $19.16 $18.37 $18.37 $18.37 $18.37
ZA $20.86 $20.86 $20.86 $20.86 $20.86 $23.67 $23.67 $22.69 $22.69 $22.69 $22.69
ZD $26.92 $26.92 $26.92 $26.92 $26.92 $26.92 $26.92 $26.92 $26.92 $26.92 $26.92
ZE $29.49 $29.49 $29.49 $29.49 $30.49 $30.49 $30.49 $30.49 $30.49 $30.49 $30.49
ZI $37.99 $37.99 $37.99 $37.99 $37.99 $37.99 $37.99 $37.99 $37.99 $37.99 $37.99
ZL $29.33 $29.33 $29.33 $29.33 $29.33 $29.33 $29.33 $29.33 $30.32 $30.32 $29.33
ZR $22.92 $22.92 $22.92 $22.92 $22.92 $22.92 $22.75 $22.75 $22.75 $22.75 $22.75
ZT $26.34 $26.34 $26.34 $26.34 $26.34 $26.34 $22.75 $22.75 $22.75 $22.75 $22.75
23. What do the majors do?
– They watch each other like hawks.
– They watch and change rates continuously.
Friday, April 12, 2013
8:01 AM 9:00 AM 10:00 AM 11:00 AM 12:00 PM 1:00 PM 2:00 PM 3:00 PM 4:01 PM 5:01 PM 6:00 PM
AD $25.00 $25.00 $25.00 $25.00 $25.00 $25.00 $25.00 $25.00 $25.00 $25.00 $25.00
AL $26.77 $26.77 $26.77 $26.77 $26.77 $26.77 $26.77 $26.77 $26.77 $26.77 $26.77
ET $26.86 $26.86 $26.86 $26.86 $26.86 $26.86 $26.86 $26.86 $26.86 $26.86 $26.86
FX $22.54 $22.54 $22.54 $22.54 $22.54 $22.54 $22.54 $21.61 $21.61 $21.61 $21.61
ZA $23.67 $23.67 $23.67 $23.67 $23.67 $23.67 $23.67 $22.69 $22.69 $22.69 $22.69
ZD $26.92 $26.92 $26.92 $26.92 $26.92 $26.92 $26.92 $26.92 $26.92 $26.92 $26.92
ZE $30.49 $30.49 $30.49 $30.49 $30.49 $30.49 $30.49 $30.49 $30.49 $30.49 $30.49
ZI $29.99 $29.99 $29.99 $29.99 $29.99 $29.99 $29.99 $29.99 $29.99 $29.99 $29.99
ZL $30.32 $30.32 $30.32 $30.32 $29.82 $29.82 $29.82 $29.82 $29.82 $29.82 $29.82
ZR $22.92 $22.92 $22.92 $22.92 $22.92 $22.92 $22.75 $22.75 $22.75 $22.75 $22.75
ZT $26.34 $26.34 $26.34 $26.34 $26.34 $26.34 $22.75 $22.75 $22.75 $22.75 $22.75
24. What do the majors do?
– They watch each other like hawks.
– They watch and change rates continuously.
Saturday, April 13, 2013
8:01 AM 9:00 AM 10:00 AM 11:00 AM 12:00 PM 1:00 PM 2:00 PM 3:00 PM 4:01 PM 5:00 PM 6:00 PM
AD $25.00 $25.00 $13.00 $13.00 $13.00 $13.00 $13.00 $13.00 $13.00 $16.00 $16.00
AL $26.77 $26.77 $26.77 $26.77 $26.77 $26.77 $26.77 $26.77 $26.77 $26.77 $26.77
ET $26.86 $26.86 $26.86 $26.86 $26.86 $26.86 $26.86 $26.86 $26.86 $26.86 $26.86
FX $13.52 $13.52 $13.52 $13.52 $11.67 $11.67 $11.67 $11.67 $11.67 $11.67 $11.67
ZA $20.29 $20.29 $20.29 $20.29 $20.29 $17.50 $17.50 $17.50 $17.50 $17.50 $17.50
ZD $26.92 $26.92 $26.92 $26.92 $26.92 $26.92 $26.92 $26.92 $26.92 $26.92 $26.92
ZE $30.49 $30.49 $30.49 $30.49 $30.49 $30.49 $30.49 $30.49 $30.49 $30.49 $30.49
ZI $29.99 $29.99 $29.99 $29.99 $29.99 $29.99 $29.99 $29.99 $29.99 $29.99 $29.99
ZL $29.82 $29.82 $29.82 $29.82 $29.82 $29.82 $29.82 $29.82 $29.82 $29.82 $29.82
ZR $22.92 $22.92 $22.92 $22.92 $22.92 $22.92 $22.75 $22.75 $22.75 $22.75 $22.75
ZT $26.34 $26.34 $26.34 $26.34 $26.34 $26.34 $22.75 $22.75 $22.75 $22.75 $22.75
25. What do the majors do?
– They watch each other like hawks.
– They watch and change rates continuously.First Last
8:00 AM 6:00 PM
AD $16.00 $16.00
AL $26.77 $26.77
ET $26.86 $26.86
FX $16.89 $11.67
ZA $20.86 $17.50
ZD $26.92 $26.92
ZE $29.49 $30.49
ZI $37.99 $29.99
ZL $29.33 $29.82
ZR $22.92 $22.75
ZT $26.34 $22.75
27. What can you do?
1. Make sure you have the right size fleet.
The most sophisticated rate management
will not be enough if you are over-fleeted.
2. Rate Management can improve utilization
by moving cars on slow days.
3. Rate Management can improve RPD or
DDA by getting higher rates on busy
days.
28. What can you do?
• Reservation Flow is more predictable than
you think.
– If your reservation build starts at least 2
weeks out, you can build a forecasting
spreadsheet that will give you a good early
warning of upcoming good and bad days.
30. What can you do?
• Reservation Flow is more predictable than
you think.
– You can keep good records so that you know
what to expect based on previous years.
– You can monitor reservation enquiries by day
of pickup.
– You can ask location managers to predict
demand a week or two ahead.
31. What can you do?
• Reservation Flow is more predictable than
you think.
– One way or another, you must know which
days to slow down and which days to speed
up reservations.
32. What can you do?
• You need to place yourself in the rate
hierarchy.
– For a normal flow, I need to be just below
Competitor A.
– If I need more reservations, I need to be
below Competitor B or far below A.
– If I need fewer reservations, I can be above A.
33. What can you do?
• You need to monitor your competition.
– You know this already – internet, telephone,
etc. probably every day.
34. What can you do?
• You need to communicate your constantly
changing rates to your staff.
– Red, Yellow Green?
– Level 1, 2, 3, etc.
– Do NOT use HI/MED/LOW! (Someone is sure to
say to a customer “We are on HI rates today.)
– Use the sign-in screen on your counter
system.
35. What can you do?
And last, you need to figure
out
HOW YOU ARE GOING TO
SPEND ALL THESE EXTRA
PROFITS!
39. Who am I?
• President of Rate-Highway
• We are global, helping build revenue for
car rental companies in the US, Canada,
Mexico, South America, Europe, Australia
and New Zealand
• We are one of a select few providers of
market data
• We are the only providers of complete
Rate Management & Automation
40. The Answer
• Are you ready?
– I am going to make this really easy, the two
ways to beat the majors are:
(Jim performs drumroll)
41. The Answer
• Set all your rates to $1,000 a day
– You just beat the majors for highest price,
congratulations!
• Or, set all your rates to $1.00 a day
– Either way beat the majors, but did you reach
your goal?
42. Your Goal?
• Isn’t your goal to beat the majors?
– In a word: NO. I believe it shouldn’t be (more
on this later)
• Before we talk about your goal please
allow me to share some of my thoughts…
43. Reflecting…
• Thought about this presentation a lot,
came up with the questions:
– “What does beating a major look like?”
– “Is it even possible?”
• Taking a step back, what is YOUR goal?
– Beating others to the lowest price?
– Beating others to the highest utilization first?
– Beating others to be sold out first on holidays and
high seasons?
44. Reflecting… (pt 2)
• Or could your goals possibly have less to
do with “them” and more to do with you?
– Building reservations smarter vs. faster? (i.e.
better revenue)
– Increasing your daily dollar average? (i.e.
better revenue)
• If you do better than you have ever done,
does it matter what company X did*?
* Yes, I know, there are exceptions for airport %, etc. Talking big picture here. Please step
out of the weeds.
45. Pick Your Battles
• Can you out spend a Major Brand?
• Do you have more available resources
than they do?
• Then why would you fight for their
position?
– If a major wants to be lowest in a market, is
that a battle you can win?
– Be careful who and why you follow
46. Competing or…?
*Logos are the property of their respective owners. Location and size of logo is
reflective of nothing but your imagination.
47. Wait a minute…
• Whose side am I on?
– Full disclosure, Rate-Highway does work with:
• Major brands (both corporate & licensees)
• Independents
– In this race for revenue
• We might make the fastest cars
• But we never supply the drivers
– YOU are the driver
– YOU make the rules
48. Back to Goals
• I believe your goal should be:
Grow Revenue
(simple right?)
49. Easier Said Than Done
• Easy to say, but how?
– Price your products as competitively as possible
• Factor in utilization / market position / product mixture
– Maintain relevant pricing for as much of the time
as possible
• This means when others change their price, you should
update your pricing too, if needed
50. My Market is…
• Funny, I couldn’t keep up with the rate
changes in my market if I had 24 hours a day
to do so
– With all the car types
– All the dates to check
– All the lor’s to research
• I don’t have time for all that, I just shoot from
the hip!
51. Markets Differ
• Simple (seasonal or non-airport)
– Daily and weekly rates
– Differ by day
• Complex (airport)
– Daily rates
• Might have 1, 2, 3, and 4 day rates
• Weekly rate
• Might have 8 or 9 day rates also
52. Markets Differ (pt 2)
• Highly Complex (airport)
– Daily rates
• Might have 1, 2, 3, and 4 day rates
– Weekly rates
– Week plus rates
• Might have 8 or 9 day rates also
– Time of arrival rates
• Daily and weekly rates differ based on pick-up
times
53. Rate Movement
$0.00
$5.00
$10.00
$15.00
$20.00
$25.00
$30.00
$35.00
4/11/13 8:00 4/11/13 12:00 4/11/13 16:00 4/12/13 8:00 4/12/13 12:00 4/12/13 16:00 4/13/13 8:00 4/13/13 12:00 4/13/13 16:01 4/14/13 8:00
ECAR at LAX 1 day rental for 4/14 at 10 am
Advantage Alamo Enterprise Fox Payless Budget
Hertz Avis National Dollar Thrifty
55. Where is the help?
• Rate Management Services arrived at car
rental after Airlines and Hotels
• There are two types of help available:
– Data Collection
• What are the rates in my market?
• More of a DIY solution
– Full Rate Automation
• Keep my cars correctly priced
• Collect Compare Correct
• Collaboration between CRS, Counter System and Rate
Management company
56. Automation Benefits?
• Automation top 5 problems solved:
1. My market changes rates too fast/often
2. I don’t have the time to research & update
3. I’m missing booking opportunities (too high)
4. My daily dollar average is suffering (too low)
5. I make mistakes sometimes when entering rates
57. So What To Do?
• Decide on a goal
– Airport locations
• Decide on a daily dollar average target
• Identify where in the order you want to fall
– Be realistic – remember some of the positions are
expensive to obtain and may not be worth it
• Decide how aggressive you want to build your
reservations
• Identify your peak periods and plan for them
• Systematize it (either manual or via automation)
58. So What To Do?
Continued…
– Neighborhood locations
• Decide on a daily dollar average target
• Identify where in the order you want to fall
– Be realistic – remember some of the positions are
expensive to obtain and may not be worth it
• Decide how aggressive you want to build your
reservations
• Identify your peak periods and plan for them
• Systematize it (either manual or via automation)
59. Systematize
• A clear, written rate strategy
– If someone else can’t make sense of it and
use it, then it does not count
• Utilization inflection points
– How are you getting utilization information?
• Market Data
– Find a data provider that gets you the data
you need when you need it
60. Systematize
• Better yet automate it and free up time to
work ON your strategy instead doing the busy
work
• Select a rate automation provider that meets
your needs:
– Collect (raw market data)
– Compare (automatic integrated market analysis
and rate suggestions)
– Correct (integration with your CRS to update your
rates)
61. Collect
• With data collection services you are
provided with market data that can be
collected using specific criteria:
– Local or one-way rates
– Length of rent
– Pick up date(s) and time
– Car types
– Competitors
– Regular, government or discount rates
63. Compare
• The comparison ability allows the rate
automation company to compare a
selected market to your rate strategy
– If you rates are in alignment with the rate
strategy then no suggestion is needed
– If you rates are NOT in alignment with the rate
strategy then a suggestion is provided
65. Correct
• The correction ability allows the rate
automation company update your
reservation system with updated rates
– Your rates are now updated on your electronic
channels
– Your rates can also be updated automatically
in your counter system
66. Complete!
• Now you can take a vacation!
• Let the rate automation system check the
rates and correct them for you
• Rate automation does not replace the rate
manager it just makes them much more
effective
• Remember to revisit and refine your
strategy as needed
