What the New Hertz Strategy Means for Corporate Buyers

BK-0815By Bill Knepper, Senior Consultant

As recently reported in The Company Dime, Hertz has refocused its strategy and returned to the basics, cutting costs, reorganizing its sales force and moving away from their pursuit of aggressive growth. As part of the new strategy, Hertz has declined some recent corporate business if it can’t get an adequate rate increase. So, what does all this mean for travel managers?

Rates of Yesteryear May Be Scarce
Travel managers could see price increases across the board if other rental companies follow Hertz’s firm corporate sales stance in pursuit of better margins. While growth has been the name of the game for Hertz in the past, under new management the company is focused on improving profitability and customer service. Faced with potentially higher prices, how can travel managers respond?

  1. Know your Business
    In a time when rates may be on the cusp of increasing, know your business. To be able to negotiate the strongest terms, consolidate your spend and be able to demonstrate to your car rental supplier(s) why they should hold/decrease your rates.
  2. Determine the “True Cost Per Day”
    Determining the true cost per day can be invaluable in the negotiations process. Analyzing base daily rates, weekly/monthly discounts, city surcharges, one day surcharges, energy recovery fees, and rebates/incentives are helpful in reaching a creative solution that works for both parties. Seek concessions from your suppliers that give you the most bang for the buck.
  3. Negotiate
    Car rental companies utilize evergreen agreements. Don’t automatically accept a 3-5% increase. While Hertz is pushing for increased rates, the rest of the industry has yet to follow. Now may be a great time for you to put out an RFP before it is too late. There are many things in a car rental agreement besides base daily rates that can be negotiated. Also, while most companies don’t want to move suppliers, with today’s technology, it is easier than in the past and shouldn’t be avoided at the expense of increased rates.

Need more guidance or assistance? GoldSpring Consulting can help. SpringBoard Ground Transportâ„¢ is our industry-leading program designed specifically to support every component of your ground transportation program.

Our services include a full program strategy review followed by complete management of the RFP process, detailed analysis of the proposals, and negotiation assistance. For more information, please visit our ground transportation page.

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