The question whether car rental is worth travel professionals’ time has come around when discussing the future of ground transportation in the travel industry. With the behavioral changes in travelers, the rise of new game changers like Uber and Lyft, followed by latest tech innovations, it is only natural to question what are the growth opportunities with car rentals in 2018. In this article we will guide you to the answer through analyses of relevant facts and figures in the travel industry.
To begin with, the global travel industry had an outstanding performance in 2017, outpacing even the global economy with a growth rate of 6 % in outbound travel (source). With global gross bookings reaching $1.6 trillion and with an estimated stable growth of 5% in outbound travel for 2018 (source), the travel industry is paving a promising way towards success.
However, one question is: what will bring the success to travel professionals in 2018? From the buzz of tech trends in the travel industry, it is only logical to focus on their implementation as a first step. Automated processes, digital currencies, chat bots, virtual and augmented reality are only some of the opportunities the tech revolution offers. Yet, there is still the human factor in the equation for success that travel businesses must not forget. At the end, everything evolves around the travelers and their experiences.
‘ Travel providers need to remember that at the heart of the guest experience is the experience part ’ – Jon Fauver, Co-founder at TrekkSoft
Car Rental – the answer to the complete travel experience
The behavioral shift of travelers from ‘ownership’ to ‘access to’ may not be a new concept. According to a research by shopping centre owner Westfield, 46% of milennials in the UK were interested in renting goods, car rentals taking the second place with 19% (source). Moreover, their sensitivity to flawless and unique experiences over time is becoming less and less elastic. Consequently, new generations are expecting completeness and authenticity from travel professionals on every level of the customer journey.
In this transition ‘car rental’ comes in as the missing piece on the complete experience puzzle.
While airlines bring travelers to their chosen destination, and the sharing economy provides them with the possibility to get from point A to point B, car rentals give them the freedom to explore places and cultures that will satisfy their needs for unique adventure.
Furthermore, the decline in tour holidays by 2% in 2017 (source), only shows the strong impact of the individual travels trend. This is especially notable among millennials and Generation Z, being all about individuality, authenticity and freedom. Similarly, the stable growth of global car rental market at CAGR of 13.55% between 2017 and 2022 (source), represents a strong indicator that the car rental industry holds promising growth opportunities in 2018.
Let’s talk Revenues
It is not a revelation for travel professionals that the continuous decline in product based margins in the travel industry lead to the popularity and rise of ancillary revenues.
The airline industry, queen of ancillary revenue, is an excellent example why adding car rental services is a smart move for travel agencies and OTAs.
Most of the airlines offer car rentals as a cross sell service (source), which represents one of the revenue streams of total ancillary revenue. With ancillary services reaching sales of $82 billion in 2017, an increase of 22% on 2016 (source), it is clear that there is high revenue potential for travel professionals that will add car rental services to their platforms.
The conclusion is simple:
The Car Rental industry is walking the same path towards success as the global travel industry. Don’t miss your chance to be part of it!