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How to beat the majors at rate management
How to beat the majors at rate management
How to beat the majors at rate management
How to beat the majors at rate management
How to beat the majors at rate management
How to beat the majors at rate management
How to beat the majors at rate management
How to beat the majors at rate management
How to beat the majors at rate management
How to beat the majors at rate management
How to beat the majors at rate management
How to beat the majors at rate management
How to beat the majors at rate management
How to beat the majors at rate management
How to beat the majors at rate management
How to beat the majors at rate management
How to beat the majors at rate management
How to beat the majors at rate management
How to beat the majors at rate management
How to beat the majors at rate management
How to beat the majors at rate management
How to beat the majors at rate management
How to beat the majors at rate management
How to beat the majors at rate management
How to beat the majors at rate management
How to beat the majors at rate management
How to beat the majors at rate management
How to beat the majors at rate management
How to beat the majors at rate management
How to beat the majors at rate management
How to beat the majors at rate management
How to beat the majors at rate management
How to beat the majors at rate management
How to beat the majors at rate management
How to beat the majors at rate management
How to beat the majors at rate management
How to beat the majors at rate management
How to beat the majors at rate management
How to beat the majors at rate management
How to beat the majors at rate management
How to beat the majors at rate management
How to beat the majors at rate management
How to beat the majors at rate management
How to beat the majors at rate management
How to beat the majors at rate management
How to beat the majors at rate management
How to beat the majors at rate management
How to beat the majors at rate management
How to beat the majors at rate management
How to beat the majors at rate management
How to beat the majors at rate management
How to beat the majors at rate management
How to beat the majors at rate management
How to beat the majors at rate management
How to beat the majors at rate management
How to beat the majors at rate management
How to beat the majors at rate management
How to beat the majors at rate management
How to beat the majors at rate management
How to beat the majors at rate management
How to beat the majors at rate management
How to beat the majors at rate management
How to beat the majors at rate management
How to beat the majors at rate management
How to beat the majors at rate management
How to beat the majors at rate management
How to beat the majors at rate management
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How to beat the majors at rate management

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  • 1. The Tennant GroupJim TennantHow to Beat the Majors at RateManagement
  • 2. The Tennant Group• Roundtables – Car rental equivalent to aDealer 20 group. Owners and GMs onlyexchange financial information and meettwice a year. Talk to me if you areinterested.• Expert Witness Services.• General Consulting on all vehicle rentalrelated matters.• Jim@TennantGroup.com
  • 3. The Tennant Group
  • 4. Rate ManagementHow to Beat the Majors atRate Management
  • 5. Rate Management• In the 80s Bob Leech used to advertise hisone and only rate ($19.95) in cutout lettersglued to the outside of his building.• His Roundtable members convinced himto take his rate off his building and to havea winter and summer rate ($17.95/$21.95).• He finally adopted shoulder season ratesand so then he had 4 rates per year.
  • 6. Rate Management• Yield Management – Airlines realized itcosts little more to fly a plane full thanempty.• They could afford to sell an otherwiseempty seat for far below the cost of flyingthe plane because they were flying itanyway – full or empty!
  • 7. Rate Management• National Car Rental pioneered YieldManagement in car rental in 1993.• By the late 90s all the majors were usingsophisticated Yield Managementtechniques.• Today industry utilization is far higher than20 or 30 years ago.
  • 8. Rate Management• Objective: Adjust prices so that reservationflow each day provides just enoughreservations to keep the fleet on the road.• If you have to cut off reservations early,you could have had higher rates.• If you don’t have enough reservations,your cars will sit.• Either way, money is left on the table!
  • 9. Sitting vs. RollingSittingTime Depreciation YesInterest YesLicense & Taxes YesMileage Depreciation NoOil Changes NoTires NoRepairs & Maintenance NoRental Labor & Commissions No
  • 10. Sitting vs. RollingRollingTime Depreciation YesInterest YesLicense & Taxes YesAssuming 100 miles/rental dayMileage Depreciation $5.00Oil Changes $0.50Tires $1.00Repairs & Maintenance $0.50Labor & Commissions $1.00Total Extra Cost of Rolling - $8.00/Day
  • 11. Sitting vs. Rolling• If it costs $8.00 more to have a car rolling,then you make money renting it at $9.00,even though renting all your cars for $9.00would be suicidal!• If you are swamped with cars, you mighteven rent below your incremental or rollingcost of $8.00 because you have to payparking, hikers, etc.
  • 12. Questions?
  • 13. What do the majors do?The major brands have a clear and consistent rate hierarchy.
  • 14. What do the majors do?– Hertz, National and Avis are the top tier.
  • 15. What do the majors do?– Budget and Alamo duke it out next.
  • 16. What do the majors do?– Thrifty and Enterprise are very close.
  • 17. What do the majors do?– Dollar has become the loss leader.
  • 18. What do the majors do?– They watch each other like hawks. These tiersare consistent across all major airport markets.I Year Average Hi LoHertz 57.34 79.33 43.49National 56.14 (1.20) 73.72 42.18Avis 55.91 (0.23) 79.14 41.59Budget 47.09 (8.82) 72.08 33.27Alamo 46.98 (0.11) 67.50 34.00Thrifty 39.67 (7.31) 61.76 30.04Enterprise 39.01 (0.66) 59.39 30.52Dollar 35.67 (3.34) 48.46 27.59
  • 19. What do the majors do?– Here is a chart of the same rate quotes weekby week over the last year:
  • 20. What do the majors do?– The rates are very volatile – but the relativeposition of each brand is remarkably stable.
  • 21. What do the majors do?– They watch each other like hawks.– They watch and change rates continuously.Thursday, April 11, 20138:00 AM 9:00 AM 10:00 AM 11:00 AM 12:00 PM 1:00 PM 2:00 PM 3:00 PM 4:01 PM 5:00 PM 6:01 PMAD $16.00 $25.00 $25.00 $25.00 $25.00 $25.00 $25.00 $25.00 $25.00 $25.00 $25.00AL $26.77 $26.77 $26.77 $26.77 $26.77 $26.77 $26.77 $26.77 $26.77 $26.77 $26.77ET $26.86 $26.86 $26.86 $26.86 $26.86 $26.86 $26.86 $26.86 $26.86 $26.86 $26.86FX $16.89 $16.89 $16.89 $16.89 $16.89 $19.16 $19.16 $18.37 $18.37 $18.37 $18.37ZA $20.86 $20.86 $20.86 $20.86 $20.86 $23.67 $23.67 $22.69 $22.69 $22.69 $22.69ZD $26.92 $26.92 $26.92 $26.92 $26.92 $26.92 $26.92 $26.92 $26.92 $26.92 $26.92ZE $29.49 $29.49 $29.49 $29.49 $30.49 $30.49 $30.49 $30.49 $30.49 $30.49 $30.49ZI $37.99 $37.99 $37.99 $37.99 $37.99 $37.99 $37.99 $37.99 $37.99 $37.99 $37.99ZL $29.33 $29.33 $29.33 $29.33 $29.33 $29.33 $29.33 $29.33 $30.32 $30.32 $29.33ZR $22.92 $22.92 $22.92 $22.92 $22.92 $22.92 $22.75 $22.75 $22.75 $22.75 $22.75ZT $26.34 $26.34 $26.34 $26.34 $26.34 $26.34 $22.75 $22.75 $22.75 $22.75 $22.75
  • 22. What do the majors do?– They watch each other like hawks.– They watch and change rates continuously.Friday, April 12, 20138:01 AM 9:00 AM 10:00 AM 11:00 AM 12:00 PM 1:00 PM 2:00 PM 3:00 PM 4:01 PM 5:01 PM 6:00 PMAD $25.00 $25.00 $25.00 $25.00 $25.00 $25.00 $25.00 $25.00 $25.00 $25.00 $25.00AL $26.77 $26.77 $26.77 $26.77 $26.77 $26.77 $26.77 $26.77 $26.77 $26.77 $26.77ET $26.86 $26.86 $26.86 $26.86 $26.86 $26.86 $26.86 $26.86 $26.86 $26.86 $26.86FX $22.54 $22.54 $22.54 $22.54 $22.54 $22.54 $22.54 $21.61 $21.61 $21.61 $21.61ZA $23.67 $23.67 $23.67 $23.67 $23.67 $23.67 $23.67 $22.69 $22.69 $22.69 $22.69ZD $26.92 $26.92 $26.92 $26.92 $26.92 $26.92 $26.92 $26.92 $26.92 $26.92 $26.92ZE $30.49 $30.49 $30.49 $30.49 $30.49 $30.49 $30.49 $30.49 $30.49 $30.49 $30.49ZI $29.99 $29.99 $29.99 $29.99 $29.99 $29.99 $29.99 $29.99 $29.99 $29.99 $29.99ZL $30.32 $30.32 $30.32 $30.32 $29.82 $29.82 $29.82 $29.82 $29.82 $29.82 $29.82ZR $22.92 $22.92 $22.92 $22.92 $22.92 $22.92 $22.75 $22.75 $22.75 $22.75 $22.75ZT $26.34 $26.34 $26.34 $26.34 $26.34 $26.34 $22.75 $22.75 $22.75 $22.75 $22.75
  • 23. What do the majors do?– They watch each other like hawks.– They watch and change rates continuously.Saturday, April 13, 20138:01 AM 9:00 AM 10:00 AM 11:00 AM 12:00 PM 1:00 PM 2:00 PM 3:00 PM 4:01 PM 5:00 PM 6:00 PMAD $25.00 $25.00 $13.00 $13.00 $13.00 $13.00 $13.00 $13.00 $13.00 $16.00 $16.00AL $26.77 $26.77 $26.77 $26.77 $26.77 $26.77 $26.77 $26.77 $26.77 $26.77 $26.77ET $26.86 $26.86 $26.86 $26.86 $26.86 $26.86 $26.86 $26.86 $26.86 $26.86 $26.86FX $13.52 $13.52 $13.52 $13.52 $11.67 $11.67 $11.67 $11.67 $11.67 $11.67 $11.67ZA $20.29 $20.29 $20.29 $20.29 $20.29 $17.50 $17.50 $17.50 $17.50 $17.50 $17.50ZD $26.92 $26.92 $26.92 $26.92 $26.92 $26.92 $26.92 $26.92 $26.92 $26.92 $26.92ZE $30.49 $30.49 $30.49 $30.49 $30.49 $30.49 $30.49 $30.49 $30.49 $30.49 $30.49ZI $29.99 $29.99 $29.99 $29.99 $29.99 $29.99 $29.99 $29.99 $29.99 $29.99 $29.99ZL $29.82 $29.82 $29.82 $29.82 $29.82 $29.82 $29.82 $29.82 $29.82 $29.82 $29.82ZR $22.92 $22.92 $22.92 $22.92 $22.92 $22.92 $22.75 $22.75 $22.75 $22.75 $22.75ZT $26.34 $26.34 $26.34 $26.34 $26.34 $26.34 $22.75 $22.75 $22.75 $22.75 $22.75
  • 24. What do the majors do?– They watch each other like hawks.– They watch and change rates continuously.First Last8:00 AM 6:00 PMAD $16.00 $16.00AL $26.77 $26.77ET $26.86 $26.86FX $16.89 $11.67ZA $20.86 $17.50ZD $26.92 $26.92ZE $29.49 $30.49ZI $37.99 $29.99ZL $29.33 $29.82ZR $22.92 $22.75ZT $26.34 $22.75
  • 25. Questions?
  • 26. What can you do?1. Make sure you have the right size fleet.The most sophisticated rate managementwill not be enough if you are over-fleeted.2. Rate Management can improve utilizationby moving cars on slow days.3. Rate Management can improve RPD orDDA by getting higher rates on busydays.
  • 27. What can you do?• Reservation Flow is more predictable thanyou think.– If your reservation build starts at least 2weeks out, you can build a forecastingspreadsheet that will give you a good earlywarning of upcoming good and bad days.
  • 28. What can you do?• Reservation Flow is more predictable thanyou think.21 Days 14 Days 7 Days19 24 26 27 28 28 28 34 36 41 48 54 54 57 64 75 85 97 97 97 105 Mon 04/0264 78 78 77 75 72 74 82 82 87 96 101 98 103 105 112 115 121 111 106 105 Mon 04/0215 15 20 20 20 20 23 27 29 33 34 34 36 46 54 62 68 75 78 81 100 Tue 04/0350 47 60 58 55 55 60 64 65 72 69 68 71 84 89 93 96 98 97 97 100 Tue 04/0335 38 41 42 42 45 48 54 63 66 67 68 74 81 84 91 97 101 101 124 139 Wed 04/04104 108 111 111 110 111 112 118 132 131 129 131 133 136 129 133 133 133 130 144 139 Wed 04/0422 26 26 27 28 29 36 40 42 42 45 49 51 57 63 71 72 71 81 89 109 Thu 04/0563 71 69 71 70 69 81 85 85 83 90 91 89 94 97 104 104 98 101 101 109 Thu 04/0532 35 35 35 38 40 46 48 48 48 52 54 64 69 69 73 75 82 100 108 127 Fri 04/06104 116 106 99 102 102 112 108 106 107 112 106 118 121 115 114 115 113 123 122 127 Fri 04/0640 41 43 46 46 49 53 57 56 63 67 69 75 86 88 90 95 99 101 106 Sat 04/07120 122 118 123 118 118 119 128 124 132 133 131 135 144 140 139 139 133 127 122 Sat 04/0722 23 22 23 24 25 24 24 27 34 36 37 42 43 45 50 57 58 68 Sun 04/0866 68 60 62 61 60 54 54 60 71 72 70 75 72 72 77 84 78 86 Sun 04/08
  • 29. What can you do?• Reservation Flow is more predictable thanyou think.– You can keep good records so that you knowwhat to expect based on previous years.– You can monitor reservation enquiries by dayof pickup.– You can ask location managers to predictdemand a week or two ahead.
  • 30. What can you do?• Reservation Flow is more predictable thanyou think.– One way or another, you must know whichdays to slow down and which days to speedup reservations.
  • 31. What can you do?• You need to place yourself in the ratehierarchy.– For a normal flow, I need to be just belowCompetitor A.– If I need more reservations, I need to bebelow Competitor B or far below A.– If I need fewer reservations, I can be above A.
  • 32. What can you do?• You need to monitor your competition.– You know this already – internet, telephone,etc. probably every day.
  • 33. What can you do?• You need to communicate your constantlychanging rates to your staff.– Red, Yellow Green?– Level 1, 2, 3, etc.– Do NOT use HI/MED/LOW! (Someone is sure tosay to a customer “We are on HI rates today.)– Use the sign-in screen on your countersystem.
  • 34. What can you do?And last, you need to figureoutHOW YOU ARE GOING TOSPEND ALL THESE EXTRAPROFITS!
  • 35. Questions?
  • 36. Rate-Highway, Inc.Michael MeyerRate Management – part II
  • 37. Who am I?• President of Rate-Highway• We are global, helping build revenue forcar rental companies in the US, Canada,Mexico, South America, Europe, Australiaand New Zealand• We are one of a select few providers ofmarket data• We are the only providers of completeRate Management & Automation
  • 38. The Answer• Are you ready?– I am going to make this really easy, the twoways to beat the majors are:(Jim performs drumroll)
  • 39. The Answer• Set all your rates to $1,000 a day– You just beat the majors for highest price,congratulations!• Or, set all your rates to $1.00 a day– Either way beat the majors, but did you reachyour goal?
  • 40. Your Goal?• Isn’t your goal to beat the majors?– In a word: NO. I believe it shouldn’t be (moreon this later)• Before we talk about your goal pleaseallow me to share some of my thoughts…
  • 41. Reflecting…• Thought about this presentation a lot,came up with the questions:– “What does beating a major look like?”– “Is it even possible?”• Taking a step back, what is YOUR goal?– Beating others to the lowest price?– Beating others to the highest utilization first?– Beating others to be sold out first on holidays andhigh seasons?
  • 42. Reflecting… (pt 2)• Or could your goals possibly have less todo with “them” and more to do with you?– Building reservations smarter vs. faster? (i.e.better revenue)– Increasing your daily dollar average? (i.e.better revenue)• If you do better than you have ever done,does it matter what company X did*?* Yes, I know, there are exceptions for airport %, etc. Talking big picture here. Please stepout of the weeds.
  • 43. Pick Your Battles• Can you out spend a Major Brand?• Do you have more available resourcesthan they do?• Then why would you fight for theirposition?– If a major wants to be lowest in a market, isthat a battle you can win?– Be careful who and why you follow
  • 44. Competing or…?*Logos are the property of their respective owners. Location and size of logo isreflective of nothing but your imagination.
  • 45. Wait a minute…• Whose side am I on?– Full disclosure, Rate-Highway does work with:• Major brands (both corporate & licensees)• Independents– In this race for revenue• We might make the fastest cars• But we never supply the drivers– YOU are the driver– YOU make the rules
  • 46. Back to Goals• I believe your goal should be:Grow Revenue(simple right?)
  • 47. Easier Said Than Done• Easy to say, but how?– Price your products as competitively as possible• Factor in utilization / market position / product mixture– Maintain relevant pricing for as much of the timeas possible• This means when others change their price, you shouldupdate your pricing too, if needed
  • 48. My Market is…• Funny, I couldn’t keep up with the ratechanges in my market if I had 24 hours a dayto do so– With all the car types– All the dates to check– All the lor’s to research• I don’t have time for all that, I just shoot fromthe hip!
  • 49. Markets Differ• Simple (seasonal or non-airport)– Daily and weekly rates– Differ by day• Complex (airport)– Daily rates• Might have 1, 2, 3, and 4 day rates• Weekly rate• Might have 8 or 9 day rates also
  • 50. Markets Differ (pt 2)• Highly Complex (airport)– Daily rates• Might have 1, 2, 3, and 4 day rates– Weekly rates– Week plus rates• Might have 8 or 9 day rates also– Time of arrival rates• Daily and weekly rates differ based on pick-uptimes
  • 51. Rate Movement$0.00$5.00$10.00$15.00$20.00$25.00$30.00$35.004/11/13 8:00 4/11/13 12:00 4/11/13 16:00 4/12/13 8:00 4/12/13 12:00 4/12/13 16:00 4/13/13 8:00 4/13/13 12:00 4/13/13 16:01 4/14/13 8:00ECAR at LAX 1 day rental for 4/14 at 10 amAdvantage Alamo Enterprise Fox Payless BudgetHertz Avis National Dollar Thrifty
  • 52. Rate Movement$0.00$5.00$10.00$15.00$20.00$25.00$30.00$35.00$40.004/11/13 8:00 4/11/13 12:00 4/11/13 16:00 4/12/13 8:00 4/12/13 12:00 4/12/13 16:00 4/13/13 8:00 4/13/13 12:00 4/13/13 16:00 4/14/13 8:00ICAR at LAX 1 day rental for 4/14 at 10 amAdvantage Alamo Enterprise Fox Payless BudgetHertz Avis National Dollar Thrifty
  • 53. Where is the help?• Rate Management Services arrived at carrental after Airlines and Hotels• There are two types of help available:– Data Collection• What are the rates in my market?• More of a DIY solution– Full Rate Automation• Keep my cars correctly priced• Collect Compare Correct• Collaboration between CRS, Counter System and RateManagement company
  • 54. Automation Benefits?• Automation top 5 problems solved:1. My market changes rates too fast/often2. I don’t have the time to research & update3. I’m missing booking opportunities (too high)4. My daily dollar average is suffering (too low)5. I make mistakes sometimes when entering rates
  • 55. So What To Do?• Decide on a goal– Airport locations• Decide on a daily dollar average target• Identify where in the order you want to fall– Be realistic – remember some of the positions areexpensive to obtain and may not be worth it• Decide how aggressive you want to build yourreservations• Identify your peak periods and plan for them• Systematize it (either manual or via automation)
  • 56. So What To Do?Continued…– Neighborhood locations• Decide on a daily dollar average target• Identify where in the order you want to fall– Be realistic – remember some of the positions areexpensive to obtain and may not be worth it• Decide how aggressive you want to build yourreservations• Identify your peak periods and plan for them• Systematize it (either manual or via automation)
  • 57. Systematize• A clear, written rate strategy– If someone else can’t make sense of it anduse it, then it does not count• Utilization inflection points– How are you getting utilization information?• Market Data– Find a data provider that gets you the datayou need when you need it
  • 58. Systematize• Better yet automate it and free up time towork ON your strategy instead doing the busywork• Select a rate automation provider that meetsyour needs:– Collect (raw market data)– Compare (automatic integrated market analysisand rate suggestions)– Correct (integration with your CRS to update yourrates)
  • 59. Collect• With data collection services you areprovided with market data that can becollected using specific criteria:– Local or one-way rates– Length of rent– Pick up date(s) and time– Car types– Competitors– Regular, government or discount rates
  • 60. Rate Reports
  • 61. Compare• The comparison ability allows the rateautomation company to compare aselected market to your rate strategy– If you rates are in alignment with the ratestrategy then no suggestion is needed– If you rates are NOT in alignment with the ratestrategy then a suggestion is provided
  • 62. Rate Suggestions
  • 63. Correct• The correction ability allows the rateautomation company update yourreservation system with updated rates– Your rates are now updated on your electronicchannels– Your rates can also be updated automaticallyin your counter system
  • 64. Complete!• Now you can take a vacation!• Let the rate automation system check therates and correct them for you• Rate automation does not replace the ratemanager it just makes them much moreeffective• Remember to revisit and refine yourstrategy as needed
  • 65. Questions?Michael MeyerRate-Highway, Inc.michaelm@rate-highway.com(888) 551-0029 x705

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