With October rolling half way in, it is officially the pre-holiday season for car rental companies, as the joyous holidays are soon to follow. Most people are eager to plan a holiday trip, unwind from work, and stress in times like these.
Most travelers will research, whether it is the prices of flight tickets, vacation stays, or car rental options. After all, pricing is the top concern for many, and there is simply no shortage of options in the market.
The first part of their planning begins with price comparisons.
This activity by the globetrotters of finding the best price possible makes it challenging for car rental companies to look beyond traditional revenue management methods and explore new solutions that can help them leverage the surge in demand during the festive season.
This is where newer revenue management strategies, primarily the rate-intelligence tool, swoop in. It helps car rental businesses to strengthen their position in the ever-changing market.
In simple terms, rate shopping is the activity of considering and comparing different pricing options of businesses. Most travelers participate in this activity to configure the most beneficial pricing proposition. The rate-intelligence tool performs the rate-shopping exercise for car rental companies, by shopping the rates of their competitors across thousands of sources and sharing the most relevant data with them.
On the other side of the car rental businesses, rate-intelligence aids them in determining the customers’ requirements along with the dynamic nature of the market and competition. Based upon such understanding, they can optimally price their services to gain maximum traction.
The success of a car rental business is dependent on several factors like:
To gain this understanding, live dashboards and business intelligence reports are essential. The report’s quantitative parts contributing to pricing decisions are known as rate intelligence. And, to arrive at that point, rate-intelligence tools are generally needed.
These tools help to articulate meaningful information via reports, which mainly include:
So, rate-shopping is essential to conclude a pricing point at any given point that can challenge the rival’s position and attain a broader consumer base.
The bigger a car rental company – the more functions, and analysis it needs to perform, more inventory it has to sell, and the more locations it has to manage to achieve utilization that is profitable to the company.
Therefore, doing the manual job to get hands-on accurate rate data and adjust the prices on time accordingly is simply impossible. This is why a solid rate-intelligence tool that helps with revenue management is essential!
Usually, a car rental business relies on the previous years’ sales data, which gives an insight into the possible influx of demand during certain times, at particular places. They base their pricing according to this personal understanding.
Well, most businesses may still do it, but if you want to stand tall at the top, you need to invest in the proper intelligence data. With a good rate-shopping tool, there will be no more manual research.
Additionally, the tool will provide broader competitive data including region wise, segment wise, offers, special holiday prices and much more.
Now imagine if you plan to expand your car rental company to a new city. With the rate-shopping tool, you can catch hold of the essential information about your competitors pricing, and price your cars right to attract new customers through different marketing activities.
A good rate shopping tool will help you develop a more robust pricing strategy, knowing what to avoid and adopt.
To gain maximum revenue, you need to understand the market conditions clearly. Knowing which car must be priced at what rate per the changes in demand, overall business cost and competitor’s moves is essential.
The rate-shopping tool browses through different websites and OTA’s to provide intelligence on the rates being offered by the competition. Therefore, when the tide in the market changes either in favor or against you, you will know what to do and how quickly to act!
Rate shopping can allow you to offer the best experiences to your customer at the most affordable rates that work for both you and them. You not only get to gain a broader customer base but also ensure that you maximize your revenue.
Let us look at an example to get a better sense of the advantage that a rate-shopping tool offers:
Let us assume that your company offers a Sedan on a weekly basis for $400. With simple math, that would take your monthly rental to $1600. Therefore, a person who wants to rent a car for a month will end up paying $1600 for a sedan of his choice (considering no offers were running at the time of the booking)
You find a rate-shopping intelligence tool and realize that several car lenders offer a similar Sedan at 10% less.
The change in the percentage rate is small, but it matters for a customer renting the car for four weeks. They would have to pay only $1440 for a month instead of $1600 now, creating a disparity of $160. A $40 saving (per week) might influence customers to choose the other brand instead.
Now that you know the competitor pricing, you can lower your rates to either match or give extra discounts, giving the rivals a run for their money.
Rate shopping ensures that you offer the most competitive price or deal among all in the market.
Pricing is easily the most crucial decision any business must undertake. Revenue managers’ everyday tasks are to stay on top of the rival’s methods and pricing. This is why rate shopping is of such importance – it allows you to respond to market and drive prices while boosting your car rental services simultaneously.
If you are on the lookout for adopting a rate-shopping tool, make sure it offers these best features:
1. Freshness and quality of data
The whole point of having a rate-shopping tool is to get insights into the recent prices, but most tools only offer a periodic report.
A good rate-shopping tool can analyze new data and live pricing rates. It will allow you to get the first movers’ advantage over the rivals.
Besides the freshness of data, what also matters is the aggregation of wide channels for better price comparisons. Add to that, the tool must also focus on data purity, which includes features like anomaly detection and automatic integrity control. This would ensure that all the data assimilated is reliable and accurate.
2. Parity monitoring
Having hold over your distribution costs is significant and very hard. Your rate-shopping tool should help you monitor price parity between your car rental business and others. Keeping track of this will alert you when your competitor is undercutting prices, so you can quickly take appropriate action.
3. Shopping for the length of rental
Why put so much effort into drawing price comparisons of just one day’s booking? Your rate-shopping tool should gather requisite data for multiple days of booking.
This will allow you to monitor the pricing strategies of the competitor businesses, which is especially helpful in understanding the special offers during events and extended stays.
4. Source market accuracy
Make sure to invest in a rate-shopping tool with a point of sale functionality to process different domains (.uk, .co, .fr, etc.) and their rates from the same channel. It will help you ascertain the pricing around all the global source markets.
5. Shopping across distribution channels
Chances are that your car rental business is present on several distribution channels. It is tough to keep a manual check on each one of them.
This is precisely why you need a rate-shopping tool that can efficiently gather data from small and big OTAs and all the regional channels. It will also monitor your company’s website and global distribution systems.
6. Great customer support
Last but not the least, investing in a rate shopper that does not offer consistent customer support is of no use. Get one that can resolve your queries promptly and is available for assistance 24/7, regardless of your time zone.
Given the unpredictability of the current market scenario, the only way to thrive is by having an excellent insight into your competitors & your business’ pricing strategies and relevant analytical data. That can very well happen with a reasonable rate-shopping tool.
This intelligent shopping tool is an excellent aid for revenue managers, offering source market accuracy, quality data, parity monitoring and much more.
The combination of this tool with human intelligence will lead your business to new heights like never before!