When evaluating car rental spend, it can be tempting only to compare the daily rental rates of a contract, but this rarely, if ever, provides a true picture of the total cost. While base rates are certainly the foundation of car rental spend, they are only one component of the total cost of a car rental program. Items such as city surcharges, energy recovery fees, fuel charges, insurance premiums, and GPS fees greatly impact car rental spend. These charges can be further amplified by organizational travel habits.
Savings Beyond Base Rates
Consider, for example, an organization that is examining two car rental programs:
- Base Rate – Car Rental Company A: $43/day
- Base Rate – Car Rental Company B: $45/day
The city surcharges for the car rental companies are as follows:
Last year, a hypothetical organization examining the two car rental programs had a total of 2,000 car rental days. They expect that the coming years will see the same rental frequency to the same cities. The days rented in each city are illustrated below:
If you compare rates over 2,000 days of car rental, the results are interesting. When only comparing these two programs on base rates, the results are as follows:
- Car Rental Company A provides a $4,000 savings over Car Rental Company B.
But the total cost of the car rental program tells a different story. If all other surcharges are equal and the organization’s specific travel habits are applied to the analysis the results are much different:
- Company B provides a $2,400 savings over Company A.
The example is obviously simple, but this $6,400 swing is a perfect illustration of why base rate comparisons alone can be deceiving. Don’t fall into the trap of asking for base rates and using them alone as a basis for evaluation. Know the full, total cost of ownership of a car rental program and apply it to organizational travel habits to make a truly informed decision.
The Corporate United Advantage
Our contract with National-Enterprise includes low base rates as well as many other beneficial features that help avoid situations like the one above. Members that participate in the contract can choose their most traveled cities and get reduced rates in those cities. The offer also includes the ability to transfer over loyalty rewards built up from other rental car companies and National-Enterprise will match any level of loyalty you may have accrued with your previous provider.
To learn more about our car rental contract or any of our offerings, contact us today or visit our website at http://www.corporateunited.com.
Matt Narens: Manager, Category Development at Corporate United
In his role at Corporate United Matt works with both CU members and supplier partners to ensure that the programs he manages are delivering maximum value. This includes everything from commercializing new offerings to conducting category lifecycle and supplier relationship management. His efforts are focused on minimizing the administrative burden and reducing the total cost of ownership related to indirect spend for Corporate United members. They also include aligning strategies with Corporate United’s supplier partners in order to best meet the needs of the market.