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Newport Beach

Volume 6, Issue 38  | May 11, 2021


The toughest part of booking a vacation is not the plane ticket or the hotel room, it’s making certain you’ll get that rental car

By GARY SHERWIN

Experts have called it “The Perfect Storm.”

As the economic recovery takes greater hold, it seems things are starting to get surprisingly crazy in the tourism industry. Just look at the car rental industry.

Prices for rentals are now skyrocketing in many markets and depending on where you are, availability is severely limited. And people wanting a nice ride, or even a modest one, are feeling frustrated, stranded, or gouged.

With a recent surge in people planning a vacation getaway this summer, especially those recently vaccinated, a shortage of rental cars is expected for the next several months. According to Destination Analysts, more than 75 percent of Americans are planning on a trip in the next three months alone.

While many people will stay relatively close to home and will be driving their own vehicle, places like Hawaii are expected to have high rental rates and limited availability.

Gary Sherwin

Click on photo for a larger image

Courtesy of Visit Newport Beach

Gary Sherwin

So, what happened? Like everything else, the pandemic scrambled the car rental industry’s business model which is why travel experts make the storm reference. When travel nearly evaporated last year, several companies liquidated many of their cars. The Avis Budget Group, home to both Avis and Budget car rentals, saw revenue drop 40 percent in 2020 and it sold off 250,000 of its vehicles. 

Another company that owns Hertz, Dollar and Thrifty brands filed for bankruptcy last May and as a result reduced its fleet by 40 percent as well. The good news is that they reorganized and have secured $4 billion in financing to rebuild its inventory of cars.

Hertz may have to wait awhile for those cars, however. On top of the smaller inventory, companies are having difficulty ordering new vehicles because of a global semiconductor and microchip shortage that has shut down many auto factories around the country. They simply can’t get the cars.

And if that wasn’t bad enough, there was a fire at a rental storage lot in Florida last year that destroyed 4,000 cars.

The quick turnaround in tourism apparently surprised many of these companies as they try to pivot and keep up. But now with fewer cars than they had in 2019, it is also now a matter of market demand.

“It’s not very pleasant for the renter looking forward to vacation and cooped up for a year to find out they have to pay $300 a day for a Kia,” said Mike Taylor, the senior travel analyst at J.D. Power.

A recent check at John Wayne Airport showed that while there is availability, prices vary tremendously. While a Ford Fiesta or Toyota Corolla could fetch $211 a day, a Chevy Spark, another economy car, could cost $82.37. Much of it of course depends on surge demand particularly around weekends or holidays.

Even large popular destinations like Florida have a severe shortage. But the biggest challenges will be for people going to places with limited options for rentals such as Hawaii. Advisors are saying that it is a wise idea to book your car rental at the time of your air travel at least a month out so you can be assured of getting some wheels.

“If the car rental search engine says all the cars are gone, get crafty,” said Leigh Rowan, the founder of Savanti Travel, who recommends using Google Maps to search for car rental locations near your hotel or vacation home rental and not just the airport. “In major tourist spots like Wailea in Maui, there are four different car rental locations walkable from hotels.”

Other travel experts are suggesting you make a couple of reservations at different car rental agencies that are easily refundable since some people are arriving at rental desks with confirmed reservations and learning that there are no cars.

Some people are calling the rental branch the day before they arrive to make sure their car will be there and making a point of asking for the name of the person working the desk when they get to the destination.

Could the rental agencies also be gouging the consumer? Absolutely. The Hawaii Department of Commerce and Consumer Affairs said recently that it is looking into the high cost of rentals in the state that have spiked to as much as $600 a day.

Because of the shortage, many visitors are looking at transportation alternatives. Some have even resorted to booking RVs since their rates have been cheaper in some markets. The strangest story I heard recently was about people renting U-Haul trucks as vacation transportation which is a decidedly uncomfortable way to travel. The upside is that U-Haul advertises rentals starting at $19.95 a day, a bargain.

Of course, visitors can avoid rentals altogether and get an Uber or use public transportation too unless they must travel long distances.

Regardless of this mess, it is strangely positive and remarkable that this surging demand has grown so quickly after months of nearly non-existent travel. Yet it is another sign that tourism’s yearlong slumber is finally coming to a merciful end.

Gary Sherwin is President & CEO of Visit Newport Beach and Newport Beach & Company.

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