Operations

BTN Offers Travel Managers Tips on Managing Transportation Rates

LCT Staff
Posted on September 3, 2008

NEW YORK CITY – Competition in the rental car industry could work in buyers' favor, but some consultants still anticipate costs to increase moderately.

"They'll be looking at mid-single-digit increases," said Neil Abrams, president of Purchase, N.Y.-based Abrams Consulting Group.

"There will be continuing pressure for a rise in prices, but there is a lot of competition in the market today and we're seeing an increase in demand, which is related to the economics around renting a car versus using your own car for travel," said Frank Schnur, vice president of Advisory Services for American Express Business Travel, adding that with reimbursement rates for personal car use increasing, it could be more economical to rent a car at a shorter distance.

However, Dave Kilduff, managing director of ground transportation for Carlson Wagonlit Travel's CWT Solutions Group, anticipated rates would remain relatively flat in 2009.

Bill Knepper, senior director of business development at Advito, BCD Travel's consulting arm, said: "I don't see rates going down, but there may be a modest increase. I don't see a tremendous amount of rate increases at this point."

Knepper added that while "clients will see their overall cost increase," a lot of that would be due to taxes or fees added on to the price.

However, buyers still can better leverage negotiations.

"It's going to be key for the companies to get into their rental car spend particularly because many companies haven't looked at it before," Knepper said. "It will be important for buyers to consolidate their program, so that they have no more than two suppliers so that they can retain their negotiating leverage."

Added Kilduff: "You'll see people with more primary exclusive deals in car rental and limo and you'll see more people start to do the process — setting the platform, getting an online booking tool that measures usage — so that when you go to the negotiating table you have the power to show that you can move business, which means you can get better deals from the limo companies, but you've got to be able to eliminate the use of so many different companies."

Source: Business Travel News

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