Behind the Driver’s Seat
The rental car crisis in the United States is challenging travel loyalty programs to deliver expanded access to rental car booking options in response to a macroeconomic snowball triggered by the COVID-19 pandemic. Rocket Travel by Agoda is working real-time to identify the issues of this crisis, spot the future trends and help our partners navigate these unforeseen times.
While the rental car crisis is slowly steadying, it is far from over.
Shifting travel trends
Early in the pandemic, health concerns and travel restrictions drove an increase in the demand for cars for personal use. But since many factories were closed, new cars were not being produced, pushing the demand to pre-owned vehicles.
Meanwhile, rental car companies saw an opportunity to respond to decreased revenues by selling off their supply to cash in on the higher demand for pre-owned cars. When travel slowly came back, the new cars that would typically backfill older cars at rental agencies were no longer available, creating shortages of more than 50% in some areas.
As travel restrictions eased and travel returned, demand for rental cars hit an all-time high. Rental car agencies had trouble navigating no-show rates and increasing booking trends with the limited supply. This often led to more reservations than there were cars available, causing a lot of mistrust from the viewpoint of the traveler.
How loyalty programs are responding
The Business Operations team at Rocket Travel by Agoda is constantly analyzing these types of travel trends, identifying behavior patterns and developing solutions that brands can use to respond to customer needs through their travel loyalty programs. Working with our technology and partner teams, we respond quickly to deliver the best experience for our partner’s customer base. By highlighting the risk and reward of each offering, we look ahead to source and serve inventory that responds to customers’ rapidly-shifting needs.
In the current travel climate, brands have a huge opportunity to build consumer confidence by leveraging “pay now” car rental inventory. Historically, consumers have preferred ”pay later” bookings, which allow travelers to make a reservation and pay at vehicle pickup. This inventory does not have any fees in the event the consumer cancels, making this a desirable option for travelers with flexible plans. However, car rental companies often overbook pay later inventory in order to compensate for potential cancellations and no-shows. With a shortage of cars available in the US, many consumers who choose a pay later option may find there is no car available when they arrive at their destination. This has become exacerbated as more people are traveling again.
Building customer loyalty
The Rocket Travel by Agoda team sees a clear opportunity for our partners to build loyalty with their customers by addressing this challenge and leaning into “pay now” inventory, which offers peace of mind, better rates, and also some level of refundability. Our technology teams worked early during the crisis to quickly adapt our platform to deliver a clear distinction between “pay later” and “pay now” rental car options, often with added rewards for booking ahead.
By leveraging our business intelligence, we’re able to empower our partners to quickly respond to challenges in the travel space, offering a booking experience where the traveler can see the benefit of a variety of options delivering value and building customer loyalty.
In the current landscape, our teams at Rocket Travel by Agoda are continuing to analyze the evolution of the travel industry and customer behaviors. While booking trends are constantly changing, we actively monitor and interpret that behavior data as well as economic models to provide product enhancements across our rental car, hotel, flight and activity booking platforms.