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Car rental strategy
Getting a handle on your rental-car expenses is easier than it is for air tickets and hotel accommodations: The buying processes are simpler, and the impact on your total travel bill is usually fairly low.
But, of all the travel buying processes, renting a car is the least consistent. I've concluded that the only way to find the lowest rate is to check among all the suppliers for each rental. Unfortunately, an exhaustive search is often not practical or even a sensible use of your time. Still, you need to know what you want and what the decision points are.
The rules - Learn the differences between the major car rental companies.
The strategy - Decisions to make before you rent.
Making the deal - A game plan for finding the lowest rates.
The rules
The car-rental business in the U.S. has not segmented itself by price/quality strata as hotels have. Although Alamo, Dollar, Thrifty, and some of the smaller operators sometimes position themselves as price leaders, they don't always undercut their larger rivals; even when they do, the differences aren't great.
Four big companies do the bulk of the rental car business in the U.S.: Cendant (Avis and Budget), Enterprise, Hertz, and Vanguard (Alamo and National). All have offices throughout the U.S.; all are also active outside the U.S., as well. Although no one company stands out above the others (as Midwest, JetBlue, and Southwest do among airlines), you do see some significant differences.
Differences between the major car rental companies
Convenience programs
- Alamo, Avis, Budget, and Hertz all offer a "fast track" rental system at big airports.
The main focus of frequent drive programs is on convenience rather than "rewards," and that's not a bad idea. Alamo, Avis, Budget, Hertz, and National offer some sort of "fast track" system that greatly speeds the rental process, at least at their large airport stations.
You join the company's "club" or other sort of program, and the company maintains an online file of your personal information (driver license data, charge-card number, car preferences, and insurance preferences). When you reserve, the rental company uses that information to pre-issue your contract, which is waiting for you in a pre-assigned car. When you arrive at an airport, you bypass the rental counter, walk directly to your car (or the company shuttle drops you off right by your car), load your baggage, get in, and drive off the lot. The only time you have to negotiate anything is to show your ID to a guard when you leave the lot. I'm a great fan of that system: no lines, no hassles. Avis, Budget, and Hertz charge an annual fee for their programs, but membership is often available "free" through your charge card or a promotion.
Choice within class
- National's fast-track system appeals to drivers who are picky about the specific car models they prefer to drive. When you get to National's airport rental area, you go directly to a bay where National has a selection of cars within the price range you reserved. You can choose which of the available models you'd prefer to drive, and quickly head off the lot with it.
Brand presence
- If you travel to a lot of different places, Enterprise has the most locations throughout the U.S., although many of them are more convenient to its primary replacement-car market rather than to airports. Hertz has the most airport locations worldwide, but the others are also well represented.
In-car GPS systems
- Hertz has gone more heavily into GPS guidance than the other companies. "Neverlost" is available on a wide variety of cars, for an extra $6 a day (sometimes less during promotions). Although Neverlost occasionally misses the optimum routing, and may even give you a bizarre detour of a block or two, you truly are never lost and you always get to your destination. I often ask for Neverlost in a city I don't know well.
- In 2003, Avis also moved into GPS guidance in a big way, with portable units as opposed to the hard-wired Hertz system. When I checked, the Avis system seemed to have a few convenience points over Hertz, but Hertz cost less.
Second tier and independent car rental companies
Jointly owned Dollar and Thrifty are the leaders of the second tier of rental companies, with nationwide and international locations. Other, smaller companies with reasonably broad coverage include Ace, Advantage, and Payless. You also find niche players: Specialty, which rents performance and luxury cars in California; Fox, which operates only in California and Phoenix; and InterAmerican, which concentrates in Florida, are only a few of the many examples. Most of those companies operate at or near major airports.
Pricing patterns
Most car-rental companies follow the same general pricing patterns:
Mileage
- Unlimited "free" mileage is the current norm for rentals in the U.S. and Europe. However, smaller companies sometimes slap on a mileage cap, above which they assess some fairly stiff mileage charges. You also run into mileage caps in some parts of Canada. And you often find mileage caps on specialty rentals, vans, trucks, and such. Always be sure to verify whether any rental quote you see includes unlimited mileage.
Discounts
- All the big rental companies set relatively high daily list prices, and then give discounts to almost anyone. I remember a rental company executive's advice many years ago: "Spread out all your charge cards and membership cards on the counter and let the rental agent pick the one that gives the best deal." If nothing else, AAA membership rates a modest discount with Hertz and Thrifty, and AARP membership qualifies for a discount at Avis, Hertz, and National. Also, your charge card may also provide a discount with one or two rental companies.
Daily vs. weekly/weekend rates
- The per day costs of weekly and weekend rentals are usually far lower than the daily cost on weekdays. You'll pay a lot less, per day, for a rental if you can plan your driving for five or more consecutive days or over a weekend. If you return a weekly-rate car in less than five days, your rental will revert to the daily rate, usually much higher.
The fuel gouge
To minimize fuel costs, rent the car with a full tank and return it full. If, instead, you accept the option to buy a tankful at the beginning of the rental, you wind up donating whatever gas is left in the tank to the rental company-and I don't know anyone whose favorite charity is a car-rental company. If you're pressed for time when you return the car, you can let the rental company refuel it: You'll pay at least double the going price per gallon, but that beats missing your plane.
One-way rates
The most efficient itinerary for some business trips calls for a one-way rental, often in conjunction with an "open-jaw" air trip. Rates for one-way rentals within a single state are often the same as if you returned the car to the location at which you rented it. Ditto for rentals within individual European countries. That works well for large states or countries. But if your one-way trip is from Boston to Washington, say, or Amsterdam to Milan, you'll probably have to pay a special one-way rate.
The strategy
The main policy issue with rental cars is the size and type of car you want to rent-and you want your employees to rent. Unlike the airline case, the cost increments from one price/quality level to the next in rental cars are usually small. After that, your cost depends mainly on duration of rental and price variables among different suppliers. Only rarely does mileage figure into the rate any more.
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A note on European rentals
If you rent a car in Europe, you may want to bend your usual U.S. strategy a bit. Automatic transmissions still add a lot to European rental rates until you get up to the luxury end of the market where automatics are often standard. If you plan to rent extensively in Europe, brushing up on your stick-shift skills will cut your rental bills substantially.
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1. Determine value
In my experience, most business travelers have a pretty good idea of the general model of car they prefer to rent and drive-subcompact to luxury to van to SUV. The decision is more like the hotel case than the airline: Business travelers seldom want the "cheapest" rental car, which usually means a small, underpowered subcompact. Instead, they zero in on a class somewhat up the line, depending on personal preferences. I don't have much to add to whatever you've already concluded about the car models you like to rent, except to remind you (1) that bigger cars generally protect you better than smaller in case of accident and (2) you have to go up to the "Intermediate" or even "Standard" size before you find rear seats with enough room for adults.
2. Assess your insurance options
Whether you're an independent traveler or have employees, adequate insurance for driving rental cars is essential: You can't afford to drive, yourself, or have an employee drive without full coverage for (1) damage that may be done to your rental car in a collision or loss/theft of that car during your rental period and (2) liability for damage you or your employee may do to someone else's person or property, in a collision or any other type of accident. You may also want to be insured against the loss/theft of business and personal equipment from a rental car: The replacement cost of a laptop computer or presentation projector could be several thousand dollars.
The prime rule of rental-car insurance is inviolate: Buying from the rental company is always, always the worst way to buy insurance. The reason is simple: The price is grossly inflated. Collision damage waiver or loss damage waiver (CDW/LDW) you buy through a rental company costs as much as $25 a day-the equivalent of a whopping $9000 a year! The gouge on other insurance is similar.
The best way to cover the risk of collision damage is through a charge card. Several cards automatically provide full collision coverage, at no extra cost, on any rental on which you use the card for deposit and payment. See Chapter 7 of my book for more details.
Making the deal
1. First, decide what sort of car you need-whether you want your usual model or something different for a particular trip.
2. Then, check with the company you've selected as your preferred renter. These days, you're apt to find an Internet special price that's a bit better than you'd get through the company's reservation office. Your benchmark rate is that company's quote for the time, place, and model to meet your needs. Since you can cancel without charge, you might as well complete the reservation process at that time.
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Don't forget
If you find a good Hotwire or Priceline deal, make sure to cancel any tentative reservations you have made elsewhere.
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3. For a possible lower rate, check through one of the several full-spectrum websites to see if any other major rental company can beat your benchmark price by enough margin to justify switching from your preferred company. If so, you can book that deal, as well-but be sure to find out the deadline for no-fee cancellation. And be very careful not to rely on base-rate price comparisons: Hidden and partially concealed extras can easily alter the final values.
4. If you're interested, look for special deals on luxury or sports cars through those websites.
5. If (or when) you're absolutely sure you won't change your plans, booking through one of the opaque sites may cut a bit off your bill. Give them a try. Currently, Hotwire covers a few major cities in Canada, but the U.S. Priceline site does not, and neither covers rentals in other countries. Priceline's U.K. affiliate, however, provides rentals throughout much of Europe and a few other countries. Either underbid the best regular deal you can find by $10 a day or more, or bid the best rate you can find on a more expensive car model.
6. If your rental will extend more than 14 days, check the coverage of your regular auto insurance or the coverage limits of the credit card you plan to use. If neither source covers your rental, consider supplementary CDW through a travel insurance policy.
Related information:
Column: Rental cars- beyond the price
Portable ombudsman: Overbooked car rentals
Portable ombudsman: Avoiding extra car rental fees
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