Avis Budget Backs Off No-Show Fees

Corporate travel managers and buyers can breathe a little easier. Avis Budget said the company has cancelled plans to implement no-show fees for the U.S. market. That doesn’t mean no-show fees aren’t coming, just not in the near future.

“Our market needs no-show fees, and at some point, it will happen,” said Bill Knepper, lead ground transportation consultant for Advito, the research subsidiary of BCD Travel.

“Avis Budget provided the opening, but their major competitors didn’t respond. This is still a very competitive market,” Knepper said.

Another key player, Enterprise, which encompasses Alamo and National, went beyond simply not responding to the Avis Budget move. Enterprise tried to capitalize on the Avis Budget plan to introduce no-show fees by touting its aversion to the whole idea, Knepper said.

The problem of fees
Travel managers were largely unimpressed by both camps.
 
“Travel managers realize it’s coming,” Knepper said of no-show fees. “Travel managers won’t get energized to act until they see it stick.”

Knepper said that travel managers “fully expect no-show fees in time – they already deal with them in most other sectors. The question is really how they will manage the fees when they do come.”

The problem for travel managers is tracking no-show fees and budgeting for them, he said.

Most buyers likely will ignore the issue until at least one of the major rental car companies actually starts charging fees.

Pre-payment discounts
No-show fees are the norm in many markets outside North America.

Avis Budget chairman and CEO Ronald Nelson said the company has tested no-show fees in small non-corporate markets here. The company has back office systems in place to charge no-show fees, but is not moving forward because of industry resistance.

Instead, the rental company will focus on pre-payment discounts of 5% to 15%, depending on location and timing. Nelson also said that no-show fees will remain in place for rentals associated with major events, such as conventions and the Super Bowl.

No-show fees aren’t likely to affect special event business, Knepper said.

And while pre-payment discounts are likely to be an effective strategy with leisure travelers, pre-pay discounts aren’t likely to move corporate buyers or travelers to change their travel patterns – unless and until they have to change. Corporate travelers prefer the flexibility of paying full price.

Fleet management issues
Announcing that it will not bring no-show fees to the market right away, leaves Avis Budget with the fleet management problems that prompted it to try the tool in the first place.

Knepper said he expects to see increased use of email and telephone reconfirmations. Email and other electronic communications are low-cost options that can largely be automated.

Another possibility is a concerted effort to weed out duplicate and overlapping reservations. Travelers and travel managers can easily book multiple vehicles to cover any possible wrinkle in travel plans. These duplicate bookings currently carry no penalty, but repeat offenders can expect special attention in the future, Knepper said.

The next step, he added, is to extend the screening effort across multiple brands. Sweeping duplicates across brands may not help Avis Budget much, since the two companies have different markets. But it could give Alamo and Enterprise a lift since those brands appeal to overlapping markets.