Travel Buyers See Moderate Price Hikes for Rental Cars and Limo Service
November 25, 2009
Prices for rental cars and limo service are expected to see a moderate increase
next year, but as airport fees, energy surcharges, insurance and taxes add even
more to the cost of ground transportation, buyers are negotiating these fees
with suppliers, according to purchasing.com.
As demand for business travel has dropped off over the past year, demand for
rental cars has also dropped. In addition, the crisis in the financial services
industry caused a drop in demand for black car limo service.
Travel management companies say buyers can successfully negotiate agreements
with car rental companies and black car limo services by knowing their
companies spending on these categories. The suppliers themselves and corporate
card companies are good sources for mining the data.
Travel buyers can also negotiate costs for insurance and energy surcharges.
Other costs to consider include no-show fees and new charges for extended
rentals. Large penalties may be assessed for smoking in a non-smoking car. To
keep some costs down, travel buyers can pick up rental cars at off-airport
locations, especially for long-term use, eliminating on-airport charges.
Demand for black-car limo service has started to pick up a bit, says Gregg
Tuccillo, CEO and founder of Hackensack, N.J.-based Global Ground Automation,
which processes transactions for black car limo service. Tuccillo says he sees
an increase of 45 percent from this past August to September. A seasonal drop
in demand for black car service often occurs in the summer months, but
increases around 20 percent in the autumn.
Tuccillo says businesses around the country are starting to gain confidence and
are working to find new business, but appears to have little impact on 2010
pricing. Travel buyers will benefit from excess capacity in the industry and
can negotiate prices, causing pressure on those prices for the next 6 to 18
months.
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