Rental car companies benefit from resurgence in business travel
Business travel is coming back, and the airline and hotel industries are reaping the benefits.
But a less obvious beneficiary is the rental car industry.
During the recession, demand for rentals dropped, particularly among business travelers. In addition, many rental companies had an oversupply of cars bought under special deals offered by manufacturers, pushing rates further down.
As a result, many rental car companies held on to automobiles longer, providing their customers with cars that already had 30,000 miles or more.
But starting late this year, the nation’s largest rental car companies began to see business — and revenue — grow again.
The nation’s largest rental car companies, including Hertz and Avis, reported year-over-year profit growth for the July-to-September period, thanks mostly to growing demand.
That growth is expected to continue for a while. By the end of 2010, the industry is expected to report more than $20.5 billion in combined revenue, a nearly 3% increase over 2009, according to a survey released this month by Auto Rental News, a trade magazine.
“We have seen that business travel is definitely leading the way,” said Christy Conrad, a spokeswoman for Enterprise Holdings Inc., the company that operates the Enterprise, Alamo and National car rental brands. “We, as a company, are signing lots of corporate accounts.”
The good news for car renters is that rates have remained relatively flat, and satisfaction levels are improving as rental companies invest in new cars.
According to a J.D. Power & Associates study, the satisfaction level with car rental car companies hit a three-year high in 2010 of 750 on a 1,000-point scale, compared with 733 in 2009.
Said J.D. Power Vice President Stuart Greif: “Satisfaction has snapped back to levels not seen since before the downturn two years ago.”
• Singapore Airlines to offer suites
Singapore Airlines is so certain that Americans are ready to spend on business travel again, it has introduced the ultimate in in-flight luxury: suites.
In March the airline will begin offering flights from Los Angeles International Airport to Singapore on a new Airbus A380 with 12 semi-private cabins, each with a 23-inch video screen, meals served on Givenchy china, 35-inch-wide seats and a bed with a down duvet and pillows.
C.W. Foo, the vice president for the airline’s Americas region, said he is confident such luxury will sell.
“It’s no doubt a challenge, given the economy,” he said. “But based on evaluations of the market, we feel it will be a success.”
The per-passenger price to fly round trip from LAX to Singapore in a suite? About $13,600, plus taxes.
• Union criticizes conditions at Sky Chefs
LGS Sky Chefs, the German company that makes the in-flight meals for many of the nation’s largest airlines, is in a contract dispute that could turn the stomachs of airline passengers.
Union workers for Sky Chefs contend the company has been cutting back on staffing and equipment at the facility in Los Angeles that prepares food for Air Canada, Alaska Airlines, US Airways and Virgin America, among others.
As a result, union officials say, health and safety standards have been compromised. For example, workers say they have been ordered to clean pots and pans with bleach instead of soap and water, said Leigh Shelton, a spokeswoman for Unite Here Local 11, the union that represents Sky Chefs workers.
“This raises some questions about if these conditions are sufficient to meet food safety standards,” she said.
Sky Chefs disputed the allegations and said the company, which has served 3 billion meals since 2002, has never had a report of a food illness from any of its facilities.
“This is a union tactic,” said Beth Van Duyne, a spokeswoman for Sky Chefs. “We are disappointed that the union chooses to tarnish the reputation of our hard workers by accusing them of not doing their jobs properly.”
A year ago, Sky Chefs received a warning from the U.S. Food and Drug Administration about roaches and listeria bacteria reported at the company’s Denver facility. Sky Chefs confirmed the letter but said it passed a re-inspection in January.