Ground transportation considerations

Insight

Ground transportation considerations

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As corporate travel rebounds, travellers will need to start thinking differently about ground transportation. Principal Consultant at FCM Consulting, Mike Cox, shares his insights below.

Car rental has rebounded much more quickly than airline travel for many companies, reaching nearly 75% of pre-COVID usage in the US.

However, rental companies have significantly fewer cars than pre-pandemic times and will for some time. And it seems corporate travellers who rent those cars are keeping them longer — from an average of about 3 days in pre-COVID, to almost 6 days now. Combined, this means higher costs and lower availability for companies.

Even if a company has contracted rates with a car rental supplier, if that supplier is sold out at a location, travellers who need a car will need to pay market rate. On average this is almost doubled from $55 USD in April 2020 to $105 USD in April 2021 (for benchmarking sake, it was $82 USD in April 2019). 

With week-long rentals costing almost $1000 at market rates in some areas, travellers who require car rental as part of an upcoming trip are encouraged to check the rental prices and availability prior to booking flights, and to book as far in advance as possible. A recent Marketplace podcast does a nice job of summarizing the impact (See May 27 edition, car rental segment starts 10:15 in).

And those who think ridesharing is a good alternative to beat high car rental prices may be surprised to learn that rideshare companies these days are having trouble attracting drivers, forcing them to increase their payment rates and/or include incentives. This leads to an almost permanent state of “surge pricing” in many markets, increasing the costs and wait times significantly. This New York Times piece covers this problem in-depth. Rideshare costs can be defrayed somewhat by requesting “pool” rides, but travellers are still hesitant to share a car with multiple people.

Meanwhile, public transportation in some major markets, like New York City, Chicago, and Boston, have been slow in returning to full pre-pandemic scheduling, limiting other options for getting around at a destination. Plus, there may be a not-insignificant subset of travellers who will feel uncomfortable, from a health and safety perspective, using public transportation.

All this to say that with the return of corporate travel, the ground transportation segment of travel has taken a larger role than it traditionally occupied, and corporate travel managers are spending much more time addressing these new challenges. 

Pre-pandemic, the approach of replacing air-for-car rental would have typically brought the total average cost of trip down significantly. This may no longer be the case. High rental prices and additional hotel nights quickly add to the total cost. Therefore, it’s certainly worth taking time to evaluate ground transport expectations and strategy and communicating what has changed to travellers.

 

For more on developing accommodation and airline trends, check out FCM Consulting’s recent Global Trends Report here.

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Mike Cox, Principal Consultant at FCM Consulting

With more than 25 years in the travel industry, Mike has been a Travel Manager, a travel supplier, and a consultant between the two. Mike works with multinational clients seeking to optimize their travel programs through strategic program design and management. With a background in building effective loyalty programs and designing innovative success metrics, Mike is a frequent subject matter expert panelist and presenter at industry events.

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