Hotwire car-jacked: Where did all the rental cars go?

cars2Hotwire, the Expedia company specializing in opaque and retail sales of air, car, hotel and also media, ran across something in September and October that the company had never seen before: Car rental companies had so downsized their fleets that they were totally sold out in some U.S. markets.

Speaking during an investor conference call Dec. 10, Hotwire Group President Clem Bason said the company found that at times in September and October consumers couldn’t find rental cars on an opaque basis — where you don’t know the identity of the car rental company up-front — or on a retail basis on Hotwire.com in some markets. Bason said the company had never before seen something like this so staff phoned car rental call centers to confirm that the fleets indeed were sold out.

The airlines have cut capacity to increase yields, but the car companies have apparently taken the downsizing to new heights — or depths.

But Bason expects things to be changing next year. The Hotwire Group president says major car rental companies have announced new financing agreements and he expects them to begin expanding their fleets incrementally in 2010.

That’s good news for consumers, although the car rental companies likely will try to maintain price points which have hit renters hard in their wallets this year.

Expedia acquired CarRentals.com in 2008 and merged it into the Hotwire Group. Bason says the car segment is Hotwire’s fastest-growing line of business. He thinks the car segment will rebound faster than air because airlines won’t add capacity as fast as he expects the car companies to do.

Bason believes that Hotwire’s largest opaque segment, hotels, will be a healthy one for the company for at least the next 3-5 years, even as the economy improves.

Generally, opaque sellers like Hotwire and Priceline do better when the economy is raw because suppliers are trying to unload unsold hotel rooms, flights and cars.

But, Bason says about one-third of hotel rooms in the U.S. are empty every evening, so with that kind of inventory available, the business should remain a healthy one for Hotwire.

There is also so much room to grow for the opaque hotel business in the U.S., Bason believes, adding that he thinks today opaque-hotel sales account for merely “a point or two” of U.S. hotel marketshare.

The “wildcard” in 2010 will be whether consumers adhere to what is often referred to as “the new normal” as it relates to leisure-market hotel pricing, Bason says.

Bason wonders whether “consumers will be stuck on the notion of value and low price…” as hotels raise room rates next year.

In other words, will all of the deals, discounts, specials and promotions that have permeated the travel market have a lasting impact on consumer behavior?

Will consumers opt out of traveling when the prices rebound?

That’s the question.

One thing is certain: Consumers won’t rent cars if none are available.

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Side note: In its presentation to investors, Hotwire revealed how it comes up with its star ratings for hotels. Here’s the formula: The company takes the average rating of three top hotel websites and then tweaks that with feedback from some of the “over half a million reviews” it receives annually.

And, methinks that formula sure saves a lot of shoe leather.

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Dennis Schaal

About the Writer :: Dennis Schaal

Dennis Schaal was North American editor for Tnooz.

 

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  1. Toyota recalls put brakes on Hotwire car rentals | Tnooz

    […] Tnooz has reported that in September and October, fleet levels had declined to such an extent that Hotwire for the first time found itself sold out in some markets. […]

     
  2. Israel Car Rental

    This is my first time to hear something like that!
    I have rent a car via Eldan (a car rental company In Israel) at least 5 times and never have I heard there are no cars to rent.

    [Edit note: URL removed]

     
  3. Tweets that mention Hotwire car-jacked: Where did all the rental cars go? | Tnooz -- Topsy.com

    […] This post was mentioned on Twitter by Dennis Schaal, Paul Brady. Paul Brady said: Interesting story from @denshaal about rental car companies selling out their entire inventories in Q3: http://bit.ly/6JcE0t […]

     
 
 

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