Renting for Special Events

If your just going on a standard vacation, or a normal business trip, typically you can get a car with little difficulty. The only question is "what will it cost?"

But when it comes down to special events, its a much more difficult process. Some events (Olympics, Super Bowl, Pro Bowl, Major College Football Bowl Games, Basketball Tournaments, Famous Festivals and parties) simply are so big that even while booking almost a full year in advance the prices are still sky high, let alone trying to get a car closer to the event. It doesn't matter if you are in town for that particular event, or not, your stuck in the same unwieldy, expensive mess.

So what's a guy to do? I need a car, but how can I get one? The honest truth is there is always cars available. But i'll get to that later. Right now I want to focus on how to get the best price in those situations. In order to do this, we need to discuss how the car rental agencies set their prices.

Every agency, in fact every travel related company is familiar with a term. This term is called "yield management." In a nutshell, this is how they RAISE prices. And lower them, but the purest version of this is all about raising prices. Here is an exxagerated example for demonstration purposes.

A particular car company has 1000 cars on its lot available for rent on a particular day. The company sets a base rate of, lets say for easy math, 25 dollars per day for that particular car class. Based on historical records, they can predict what the final rental demand will be on a specific day as much as 4-6 months in advance. After receiving the estimate, they begin to "yield" up or "down" the price according to match the expected number of available cars for any given day.

in our example, lets choose Forth of July. Independence day is typically a busy travel period. As a national holiday, many people take little weekenders, or escape trips around the Fourth. With the forecast data, the trendline is showing that we will rent around 850 cars at a particular car class for that day. That means we have around 150 car rental days to grow for that period. So a local manager may opt to reduce the base rate of $25 to $22 per day for the same period. Also, he/she may opt to put in sales for weeklong rentals starting several days before the 4th. Each decision would have an effect to hasten the pace of renting cars in that particular locale. Once the Forecast is on target for 1000, then they raise the rates to $25.00 or more to slow it down again.

This also works in the other direction. The Forecast model shows 1400 car demand for the 4th and strong demand for the days before and after. Although they do not HAVE 1400 booked reservations, (actually they may have 650 booked), the projection says that if they don't increase their prices or close down reservations soon, they will be overbooked.

In comes Yield Management at its best. The absolute goal is to NEVER be sold out. If you have one car left on the lot, that car must rent out at 1 million dollars per day. The busier you get, you keep moving the price up and up and up until the the market says "no". The sad part is that there is always someone willing to pay 30-40-50-60 dollars a day more than the last person to guarantee they get a car. So often Yield Management is not enough.

So now that you have a basic understanding of how they set their prices, click the links to the right of my screen (the google ads) for some of the rental car companies that pop up over there. Take a peek and look at what you see. you will see a various list of prices. The Base price as discussed mythically at $25 per day. Here is the basic rule of thumb when it comes to rental cars.


take the MSRP of that car, divide by 1,000. That will equal the "approximate" starting point for every car rental price for that class of car. But as the cars get bigger, the premmium rate increases more and more. Examples...

Subcompact- retail 14-15k Starting price 15.00 per day
compact- retail 14-17k Starting price 17.00 per day
Midsize- retail 18-20k Starting price 20.oo per day
Full size- retail 22-25k Starting price 25.00 per day
SUV- retail 30-35k Starting price 35.00 per day + size market upg ($25.00 per day)

*note- these numbers are for comparison only. When looking at the one week price, these prices reflect the average price per day.

you can use the retail prices formula to "start" your priceline bidding strategy (a blog for another day).



So now that you have a basic understaning of how they price the cars, several theories on how to pick the best price come forward.

1> Mass booking, dollar cost averaging strategy. if you KNOW your going to the "super bowl" and you know that you will need a car, booking a car per week until the prices go sky high is one strategy. Most rental car companies do not penalize you for cancelling car reservations (unlike hotel reservations) but some do. Check the terms of the company your dealing with before you book.

2> Book early. Yes, booking early does work, but too early means you get the "set" price of what they "think" the demand is going to be. Typically about six months out is a good time to start price shopping for specific events, but some places (Hawaii) seem to always book out in tremendous fashion really early around the holidays. When it comes to those locations, its best to book a "safety" reservation first and then go shopping, knowing that if you cannot find a better price, at least you have the backup plan.

3> Walk up. some people are GREAT at yield management, others are not. Booking one really solid but not earth shattering reservation at a company you are comfortable with is where we start with this strategy. Then, on the day of your arrival, put your best negotiating face on and pound the turf. Some companies have misjudged the need on those days by wide margins. If so, they have "Cars Available" signs everywhere with special rates to try and capture on the last second foot traffic. Keep your "safety" reservation (make sure your aware of its cancellation policy) and play one location off the other...." National just offered me 30 a day, can you beat it?"
Whomever gives you the best deal, wins.

Its VERY important to know that agents get comissions on the walk up traffic they bring in. So they are more likely than managers to "drop the rates." Agents have tremendous ability to play with prices. As an agent I sold a subcompact car for 80 dollars a day, and the very next customer "because she was very cute" got the 20 dollar rate and they both got the same car.


May the force be with you. Ask questions and I will answer them. Or visit my website at carrentalinsider.com

How Priceline works

When it comes to renting cars, websites like Priceline and Hotwire can be your best friend, or your worst enemy. Often I heard of customers coming in with stories and confirming printouts of SUV's and Convertibles for as low as $20 per day before taxes. Such rates are extremely tempting and is often part of the viral nature of those sites business. Someone heard from a friend of a friend that they got a car for such a price and you can get it too!

The truth is, they are right! These sites are incredible factories for low cost car rentals, low cost airfare, low cost hotel rooms, and even low cost cruises. The most recent trend on these sites is to package multiple items together into one, incredibly cheap, super package that people cannot ignore.You must be wondering how these companies can do it. I did, but since I worked for a rental car company, I learned through experience and (by asking the right people) how it works. And now you will know.

When a Rental car company buys cars, they do so in tremendous numbers under special "programs". Often deals in the neighborhood of 25,000 of one particular type of car are not uncommon and in all likelihood those numbers may only represent the actual needs of one state. Thats a lot of cars.

These rental cars (using the 25,000 number) cost in the neighborhood of $500 million dollars (based on $20,000 per car). There are very few companies that are able to outlay that kind of cash for immediate purchase, so they end up financing the cars with mega loans at institutional interest rates. So they got a loan just like the rest of us.

So now the car is on the lot. Its ready to rent, but its a "slow" week for rentals. Because these rental car companies (were talking all of them) have some sort of reservation system, a trained eye would be able to look at the reservations build up and know approximately how many cars will be available around what time frame. It doesn't take a rocket scientist to see that 3 weeks for a particular weekend, they have reservations for only 18,000 of 25,000 cars and the computer is predicting that 3,000 cars will go un-rented on a given "slow weekend." When you do the math, that works out to around a $15.00 per car, per day expense to leave that car sitting on the lot un-rented.

In comes Priceline, Hotwire, or the myriad of discounters out there. For a fee (which works out to about $5 per car rental day from my experience) Priceline will sell the rental days to bargain hunters and tour package operators. While Priceline uses its "name your price" gimmick to attempt to match up a customer with a great deal, the truth is they have very specific numbers they must meet. Hotwire doesn't mess around with "price guessing", they just give you their price and move on from there. In both cases, if you agree to the price, and they agree to your price, you must pay for the rental immediately via credit card.





Does it seem too good to be true? Don't worry, it isn't. These sites are perfectly legitimate and actually are great options for seasoned travelers as well as the occasional weekend warrior. But these deals are far from perfect. In exchange for price, you give up some of your flexibility in travel.

Once you buy these deals, your committed. There are no refunds, there are no "changing your itinerary", and its becoming even more and more difficult to even use the vehicle for less than the days you committed to buy em for, even if you prepaid for it. You may think "that doesn't bother me" until your flight is diverted from one city to another because of a freak thunderstorm. If you had a normal reservation, you could make adjustments, probably pay a bit more, but you wouldn't be stuck with a prepaid reservation you cannot use.

Another thing to consider is the underage or undesirable driver factor. Many rental agencies do driving record checks on drivers before renting the car out to the driver. If your driving record exceeds the minimum standards for renting a car for that company, prepaid or not, your not leaving with that car unless you have another driver. And since you needed to name the driver at the time of prepaying for the rental, depending on the company you may just have to eat the cost and rent from a company that will let you rent with your record. Although underage drivers are allowed on these sites (underage meaning 21-24 years of age), if you fail to declare this at the time of bidding on your rental price, you may not be able to use your prepaid rental.

When deciding what the best way to make your accommodations, make sure you have considered all the ramifications of the company.

www.carrentalinsider.com for more information