RM Tips and Strategy

Time has come to change the Yield management approach for car rental

Emmanuel Scuto
March 8, 2021
The rebirth will be stronger than expected: after months of lockdowns and curfews, 2021 and the upcoming years will see a wave of “revenge traveling”.

Booking.com (mother company of Booking, Agoda, Rentalcars, etc) has announced its results for 2020 with a -63% drop in sales. Like any other company in the travel sector, Booking has been hit by Covid-19 and the unprecedented restrictions to travel from one place to another.

Car rental operators: be ready for the Revenge Travel

The rebirth will be stronger than expected: after months of lockdowns and curfews, 2021 and the upcoming years will see a wave of “revenge traveling”.

Figures of the domestic activity in Summer 2020 were promising despite the containment measures and the limited possibility to travel outside our homeland. There is no doubt that when borders will reopen this year, we will see a huge demand for new sceneries and places to visit.

 Christmas vacations in the French Caribbean islands were a good illustration of what revenge traveling might look like. In the second half of November, the French government announced that traveling to Guadeloupe and Martinique was possible: no curfew, no local lockdown, and, even bars and restaurants were open! A couple of weeks prior to the first school term break, a large number of people, with money saved from a lack of activity elsewhere booked their stay to these beautiful islands.

The Western Indies attracted the type of clientèle who used to go skiing resorts during winter (ski lifts are still all closed in France), these passengers benefitted from a higher level of ability to spend due to their level of savings, which had increased a lot during lockdowns: in summary, people were wealthier and took this opportunity to travel to new destinations, and escape the city for fresh air and exercise.

Car rentals operators: time to stop relying on brokers?

As travel operator professionals, we all should turn this into a chance to react: it’s time to change the way we sell and distribute our services.

You know how “I love” the brokers who keep the major part of the contribution on their side. My job as a car rental yield management expert makes me talk to hundreds of car rental operators around the world. And it is amazing to hear how addicted they are to brokers.

Sometimes they do not even see any other options than dealing with brokers to run their business: it is an addictive drug like cocaine for them.

We have clients in the Mediterranean area who are happy to make more than 75% of their business with deals sent by Rentalcars, Cartrawler, or other giants. Do these top leisure destinations need a third party to sell in July or August?

How car rental operators can react and prepare?

But clearly, 2021 is THE year to break this unvirtuous cycle. I do not mean to stop them from making business with the brokers. I state that this should be under better control. It is easy to allocate/restrict the brokers’ access to the capacity, to monitor their booking pace and their price contribution with a revenue management system.

Use them for what they are good at, which is to direct the business you can not attract yourself, thanks to your own website or call center. Stop giving them access to your inventory when the demand can be converted directly especially in peak season.

The Covid-19 situation was and is still an economical disaster for the travel industry. But it can be turned into a fantastic opportunity to change. Collectively, we should not leave this one and the only occasion to think differently, to wake up from this “dreamland” created by the brokers over the last 20 years.

Car rental operators, now it is time to react.  This is the right moment to set your direct strategy for Summer.

Do you agree it is the right time? What are your challenges taking the control back?

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Emmanuel Scuto
March 8, 2021

I am CEO and founder of WeYield with 25 years of passion about revenue performance acceleration in the revenue management field (hotels, theme park, car rental), I created WeYield in 2012.I am here to help car rental operators who want to change in piloting their business with more agility and freedom while improving their performance. I like being able to participate in the transformation of the organizations. Working with WeYield's revenue managers and engineers gives me a lot of energy to create new features and approaches.

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