Avis No-Show Fee Test ‘Promising’
by Michael BilligAvis Budget Group Inc.’s recent “beta testing” of no-show and/or non-cancellation fees has captured the attention of the travel industry. Most agree that better fleet utilization would benefit travel sellers and their customers as well as the car-rental firms. However, travel sellers’ reactions have been mixed, partly because questions about compensation and implementation remain unanswered. (See related story: Agents Unsure of Compensation Under Avis No Show Fees.)
Many pointed out that this roll-out of a penalty charge is nothing new; it’s been played out several times over the years and seems likely to be repeated until the car-rental industry gets it right and the practice becomes commonplace.
| Neil Abrams |
To many industry executives, the real eye-opener is that the car-rental sector hasn’t followed the lead of the airline and lodging companies sooner in the imposition of such fees. As Neil Abrams, president of Abrams Consulting Group and industry guru, put it: “What took ’em so long?”
Echoing that thought was Bob Barton, president of the American Car Rental Association (ACRA) as well as president and COO of U-Save Auto Rental. “It’s
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about time! This is something that’s long overdue.”
These fees are being imposed overseas by Avis Budget and others, but car-rental firms have generally not implemented them in the U.S. An Avis spokesperson pointed out that the company has been working with the GDSs for at least six months to build in the ability to accept credit-card information at the time of booking. This capability would enable implementation of no-show/non-cancellation fees as well as allow customers to access lower pre-paid rental rates.
“So far, initial testing via our website [done before and during President’s Day weekend] has proven positive,” he said. “I can say without hesitation we are pleased with the results.”
While no timetable has been set for implementation, he said that it would ultimately be applicable for business as well as leisure travel.
Asked if travel agents would have a share of the revenue from no-shows and cancellation fees, the Avis spokesperson said that the company is “still in the early testing phases, and the results of each test will inform the final plans for deployment. At this time, we do not have specifics to provide.”
However, he said “cancellations, or to be more precise no-shows, have long been a problem and have gotten in the way of doing business. That’s why everyone (in the car-rental business) has been looking at the situation and addressing it… selectively.”
The intent is not to create a revenue stream, stressed President and CEO Ronald Nelson in the company’s Q1 Earnings Conference Call. “While that may be the short-term impact, we believe that longer term, this is about improving efficiency and changing customer behavior,” he said, calling the results of the test “promising.”
Enterprise and Hertz have also taken some action on this front.
A Hertz spokesperson said, “At this time, our customers do not incur cancellation fees on a ‘regular’ rental. However, on pre-paid rentals, there is a $25 fee if the reservation is cancelled at least 24 hours in advance, and a $50 charge if the cancellation is made closer to the time of pick-up… or if the client doesn’t show at all.” She added that Hertz is currently “monitoring” the Avis Budget situation.
Asked whether the fees are ever waived, she replied, “We usually try to work with our customers to reach an amicable solution… particularly when the cause or concern is genuine.”
When asked if agents were compensated for a canceled booking, she said, “If an agent books their customer on pre-paid rates via Hertz.com, they are entitled to be paid a commission [for their efforts].”
Enterprise Holdings, which has Alamo and National under its banner, only imposes no-show and/or cancellation fees on pre-paid, credit-card rental transactions for Alamo rentals, said their spokesperson. She said that a cancellation made more than 24 hours out incurs a $5 fee, while a cancellation made within 24 hours of pick-up — or a no-show — results in a $10 charge. She was not able to confirm whether any commissions were paid to agents in these cases.
Like many industry watchers, Abrams called the move by Avis “inevitable… a game-changer! This has been tried many times in the past, particularly when peak periods or specialty vehicles are involved. So the traveling public should be used to this by now, and accept it.”
Barton added, “We in the car-rental sector have to manage our business more effectively, not only to turn a profit but also to pay for the expense of that record locator on the GDS.”
For travel sellers’ reaction, see related story.
