Travel sellers generally viewed Avis Budget Group's recent floating of its no-show/non-cancellation fee trial balloon as a logical business decision. (See related story.) Most also agreed that a no-show fee would help everyone, but insisted that both agent and supplier should be compensated. Plus, the move raised concerns over how the fees would be processed, just how travel sellers would be compensated, and, most important, whether this would become just one more way for the car-rental companies to avoid paying commission on bookings.
For U. Gary Charlwood, Uniglobe Travel International Chairman/Chief Executive Officer, the fear is that these charges could arguably be likened to those levied by the lodging industry. “Most hotel no-show fees are considered penalties, so commission is not typically paid on those. I would expect the same in the car-rental industry.”
Several agents noted this could become a way for car-rental companies to avoid paying commission to agents.
Martin's Travel and Tours President Susan Tanzman explained, “Car-rental companies are notorious when it comes to ways to avoid paying the source that delivers the client.” For example, she noted, “They have a habit of upgrading or changing the type of rental, and then doing a new booking to cut the agent out of their commission.”
Citing similar experiences, Superior Travel's Lois Howes, past president of ASTA's Long Island chapter, said, “We lose sometimes because [car-rental personnel] up-sell, or further discount, etc., and then claim a no-show so they don't have to pay. It happens way too often with some car-rental companies, which is why I stick with a few companies that are reliable (have the car available, pay commission and provide good service).”
However Mike Weingart, president and managing director for Travel Leaders, said those moves were a thing of the past. “There was a time when rental agents were known to change the reservation [when the customer was delayed or needed a different class of vehicle] and treat it as a new booking. But I don't believe this continues to be a problem.”
Nevertheless, Weingart suggested, “What's needed is an automatic system, probably through the GDS or other automation that would notify the car company
when a flight is delayed or changed.”
Ultimately, the car-rental firms will make the call on both no-show/non-cancellation fees themselves and whether such fees will include any compensation to agents. An Avis Budget spokesman noted it was still early in the testing process of these fees to provide specific answers regarding agency commission paid on them.
As for some other major players in the industry:
* Bob Barton, president of the American Car Rental Association (ACRA) and president/COO of U-Save Auto Rental insisted, “Travel agents should definitely get a piece of any no-show/non-cancellation fees put into place; after all, they are still providing a service.”
* Hertz indicated it does levy no-show/cancellation fees on pre-paid rentals, with agents compensated on them.
* Enterprise similarly reported such fees are in place, but only on pre-paid Alamo rentals, and official word about agency compensation in such instances was unavailable.
In addition to commission issues, agents had questions about how these fees will impact the car-rental process for them and their clients.
Communicating to Clients
Charlwood noted, “This will have an impact on agency procedures, though in many cases it is tightening up on things that should have been done before, [like] encouraging participation in preferred renter programs, ensuring that arriving flight details are in the reservation, etc.”
In addition, Neil Abrams, president of the Abrams Consulting Group, said agents will also need to be sure their clients are clear about whatever new rules are imposed. “An agent's duty as the sales intermediary is to provide full disclosure [vis-à-vis the rental contract] to the client.” Abrams said the no-show fee is primarily a credit-card issue, in the sense car-renters need to provide their credit-card numbers to make and secure their reservations, as is the case with airline and hotel reservations. Historically a harsh critic of what he has termed “a free pass to car-rental customers,” Abrams justified this fee-implementation by noting, “What with fleet numbers so tight, every rental is important to the car-rental firms, as they need to maximize vehicle utilization with limited inventory.”
Barton agreed. “All we need is for customers to provide their credit card and demonstrate courtesy by canceling rather than failing to show up [with no notification].”
Benefit to the Traveler
What's more, the ACRA chief maintained there's actually a plus to the customer: “Pre-paying with a credit card establishes a contractual obligation [for the supplier] to deliver on its promise.”
But the bottom line seems to be “the bottom line.”
Austin Travel Chairman/CEO Larry Austin put it best, “Car-rental firms are doing what the airlines and other vendors are doing, and that is trying to make a profit by charging for whatever they can. I was on a Delta flight recently when the flight attendant announced there would be a $100 charge to stow your coat in the overhead rack. Of course, she was trying to be funny… but for one moment I thought she was serious.”
Austin said he is convinced Avis and the other car-rental companies “will charge for anything they can, and most business travelers will pay it, as they are usually more focused on their trip than its cost and fees.”
Of course, the purpose of the fees is not to raise money but to prevent renters from treating their reservations nonchalantly. Underscoring that, Barton cited remarks by his ACRA associate Craig Parmerlee, of Ace Rent A Car, who avowed, “If I never collect 'dollar one' in no-show fees, but every renter showed or had the courtesy to call ahead to cancel, I could run my business better and provide better customer service than ever before.”