Rate hikes of up to 5% for rental cars in Canada and the U.S.: Amex GBT report

Rate hikes of up to 5% for rental cars in Canada and the U.S.: Amex GBT report

TORONTO — Airplanes, hotels, trains, cruise ships – all evoke the excitement of travel.

Rental cars? Not so much.

But as many travellers found out these past few years, ‘you don’t know what you’ve got ‘til it’s gone’, and that’s as true for booking rental cars as it is for anything else.

Rental cars are indispensable for many travellers, both corporate and leisure. And unlike airfares on a long list of competing airlines, or a room in a hotel down the block, alternatives are few when it comes to car rentals in an already highly consolidated sector.

Coming into the pandemic, the rental car sector was already working hard to keep up with demand amid tightening supply lines. The semiconductor shortage was impacting the production of new cars and that has a knock-on effect for rental car inventory.

Couple that with the pandemic’s supply shortages worldwide, and by 2021 there were reports of desperate travellers unable to book rental cars who were securing moving vans instead, just to get a vehicle.

Now it’s 2023 and travel bookings are soaring, with no end in sight to the pent-up demand. The industry is well aware of rising prices for airfares and more. What about rental cars?

On the heels of American Express Global Business Travel’s just-released Ground Monitor 2023-2024 report – which looks at, among other things, the rental car sector – Travelweek connected with Sesilia Kalss and Mark Biscardi, both Senior Consulting Managers with Amex GBT Global Business Consulting, for their feedback and insights on what the industry can expect this year and next.

Travelweek: Amex GBT’s Ground Monitor 2023-2024 indicates a potential 5% rate climb for rental cars in Canada and the U.S. As much as travellers don’t want to pay higher prices, they may just be happy to secure a rental after the past couple of years of shortages! How did Amex GBT navigate the vehicle supply shortage over the past few years?

Kalss: “Amex GBT supported clients by providing greater choices. To those most impacted, we recommended they open up the online booking tool (OBT) to more suppliers to widen availability. We have competitive rates with key rental car partners to ensure clients can secure good rates, even in times of limited supply.

“The vehicle shortage was mainly impacting small to midsize cars, unfortunately the classes with the highest demand. Bigger and premium cars were less impacted, but naturally higher in costs. Our recommendation was to: consolidate demand where possible; bundle trips when possible as having more than one employee in a car could justify the higher costs; review rideshare policies; and look to rail or public transit where viable.”


Travelweek: Looking ahead, how does car rental availability look for the rest of 2023 and into 2024? The report indicates that North America commands 52% of the global rental car market.

Biscardi: “In North America the supply is getting much better these days, however leisure travel, being as strong as it is this summer, will put a strain on the market. But overall, we’ve seen improvements with car suppliers adding to their fleet and getting back up to pre-pandemic levels.”


Travelweek: As Amex GBT’s report notes, the two key sectors of the travel industry, leisure and corporate, are vying for the same limited supply of vehicles. And that the limited supply is particularly acute in destinations that cater to both leisure and corporate travellers. Where is the situation most challenging?

Kalss: “Typical leisure destinations such as south of France, Italy, German northern coast, and any international airport could face limited supply, especially when cars are not returned in time. Other circumstances, such as public transport strikes or flight cancellations, further increase the pressure.”

Biscardi: “In the U.S., the most frequent destinations for corporate and leisure travel are Los Angeles, San Francisco, Florida, Phoenix, New York, Detroit, Seattle, Philadelphia, and Chicago.”


Travelweek: In the highest-demand destinations, what sort of price increase could travellers see?

Kalss: “The answer depends on what you compare the data with – i.e. last year, or two to three years back. It could go up more than 20% if a business didn’t have to change contract terms and rates over the past several years. The same is true for countries with high inflation rates, such as Turkey. The UK is also showing higher car prices than ever, resulting in increased daily rental rates.

“We also observed significantly higher costs for services – mainly delivery and collection services, as well as costs for drivers and gasoline. This impacts service fees, as you need two drivers to deliver or collect a vehicle outside the rental station. As well, WLTP Fees (Worldwide Harmonized Light Vehicle Test Procedure) went up as suppliers consider the higher costs for mandatory measures of fuel consumption and CO2 emissions from passenger cars in their fleet.”

Biscardi: “In the U.S., travellers can expect to see car rental price increases between 5% to 7%. In Canada, the top destinations, Montreal and Toronto, are expected to see rates rise by 6%. This is in line with the country average of 6% to 7% increases.”

Amex GBT’s Ground Monitor 2023-2024 report also looks at client interest in electric vehicle rentals (‘EVs go mainstream, but drivers remain wary’), generational differences in rental car demand, and much more. The complete report can be found at www.amexglobalbusinesstravel.com/content/uploads/2023/06/Ground-Monitor-2023-2024.pdf.

This article originally ran in the July 20, 2023 issue of Travelweek. To read the issue, click here.

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