From the beginning of time car rentals were only available on a per day, per week, per mile basis. 8 Seater Vehicles For Rent in Morningside you rented a car and paid for the time used and the miles driven. However it was only a question of time and circumstances before car rentals would be offered with free mileage.
In 1967 my partner and I took over a bankrupt car rental company and had three rental stations, Miami, 5th Street on South Beach and the third in Ft. Lauderdale. Cheap Seven Seater Car Hire at the time Yellow Rent A Car, owned by Yellow Cab of Miami, with rental stations in Miami and Ft. Lauderdale was offering a sub-compact car with unlimited free mileage at $45 a week. They were the first and only car rental company with free mileage but with a one week minimum rental requirement.
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I can not tell you what year they first offered free mileage but I can guess why. They were only in South Florida, Car Rental For Six Passengers they were only dealing with the leisure market and Disney World 200 miles north was not open. Renters did not use a lot of miles. The competitive rate for a sub-compact car back in the 1960s was $5 per day, $25 per week [5 times the daily rental] and 5 cents per mile. With a one week minimum rental at $25 and with their weekly rate of $45 they would have the difference, or $20, to cover the cost of the miles. At 5 cents a mile the client could use up to 400 miles for the week and the rental would be a wash. I found out later that this was a winner for Yellow Rent A Car.
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To my knowledge Yellow Rent A Car was the granddaddy of free mileage. Their caveat was a one week minimum. My partner and I, owners of Capital Rent A Car took it one step further. We were the first to offer unlimited free mileage one day or more. One week minimum rental did not apply. It couldn’t get any better than that and I will tell you how it evolved.
We first published in CATM in 1970 and I mention this because I previously stated that we, Capital Rent A Car, was the first to offer unlimited free mileage one day or more. To substantiate this claim I must mention that in 1942 I was in my seventh grade Shop class and the teacher claimed that he invented the airplane before the Wright brothers. I am not kidding you and maybe he did. But if he did he didn’t tell anyone so Wilbur and Orville got the credit.
Maybe we weren’t the first with unlimited free miles and maybe someone in Okemos. MI or Rockford, IL did. But if they did they didn’t tell anyone. We did by being in a national publication, CATM. So we are going to take the credit for being the first. The next time you rent a car and don’t pay for mileage you can thank us.
For those out there who wish to contest our claim please contact me at my email address below, You can also read another one of my Ezine Articles, “Start A Major Car Rental Company”, dealing with the car rental business at the resource below.
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The car rental industry is a multi-billion dollar sector of the US economy. The US segment of the industry averages about $18.5 billion in revenue a year. Today, there are approximately 1.9 million rental vehicles that service the US segment of the market. In addition, there are many rental agencies besides the industry leaders that subdivide the total revenue, namely Dollar Thrifty, Budget and Vanguard. Unlike other mature service industries, the rental car industry is highly consolidated which naturally puts potential new comers at a cost-disadvantage since they face high input costs with reduced possibility of economies of scale. Moreover, most of the profit is generated by a few firms including Enterprise, Hertz and Avis. For the fiscal year of 2004, Enterprise generated $7.4 billion in total revenue. Hertz came in second position with about $5.2 billion and Avis with $2.97 in revenue.
Level of Integration
The rental car industry faces a completely different environment than it did five years ago. According to Business Travel News, vehicles are being rented until they have accumulated 20,000 to 30,000 miles until they are relegated to the used car industry whereas the turn-around mileage was 12,000 to 15,000 miles five years ago. Because of slow industry growth and narrow profit margin, there is no imminent threat to backward integration within the industry. In fact, among the industry players only Hertz is vertically integrated through Ford.
Scope of Competition
There are many factors that shape the competitive landscape of the car rental industry. Competition comes from two main sources throughout the chain. On the vacation consumers end of the spectrum, competition is fierce not only because the market is saturated and well guarded by industry leader Enterprise, but competitors operate at a cost disadvantage along with smaller market shares since Enterprise has established a network of dealers over 90 percent the leisure segment. On the corporate segment, on the other hand, competition is very strong at the airports since that segment is under tight supervision by Hertz. Because the industry underwent a massive economic downfall in recent years, it has upgraded the scale of competition within most of the companies that survived. Competitively speaking, the rental car industry is a war-zone as most rental agencies including Enterprise, Hertz and Avis among the major players engage in a battle of the fittest.
Over the past five years, most firms have been working towards enhancing their fleet sizes and increasing the level of profitability. Enterprise currently the company with the largest fleet in the US has added 75,000 vehicles to its fleet since 2002 which help increase its number of facilities to 170 at the airports. Hertz, on the other hand, has added 25,000 vehicles and broadened its international presence in 150 counties as opposed to 140 in 2002. In addition, Avis has increased its fleet from 210,000 in 2002 to 220,000 despite recent economic adversities. Over the years following the economic downturn, although most companies throughout the industry were struggling, Enterprise among the industry leaders had been growing steadily. For example, annual sales reached $6.3 in 2001, $6.5 in 2002, $6.9 in 2003 and $7.4 billion in 2004 which translated into a growth rate of 7.2 percent a year for the past four years. Since 2002, the industry has started to regain its footing in the sector as overall sales grew from $17.9 billion to $18.2 billion in 2003. According to industry analysts, the better days of the rental car industry have yet to come. Over the course of the next several years, the industry is expected to experience accelerated growth valued at $20.89 billion each year following 2008 "which equates to a CAGR of 2.7 % [increase] in the 2003-2008 period.
Over the past few years the rental car industry has made a great deal of progress to facilitate it distribution processes. Today, there are approximately 19,000 rental locations yielding about 1.9 million rental cars in the US. Because of the increasingly abundant number of car rental locations in the US, strategic and tactical approaches are taken into account in order to insure proper distribution throughout the industry. Distribution takes place within two interrelated segments. On the corporate market, the cars are distributed to airports and hotel surroundings. On the leisure segment, on the other hand, cars are distributed to agency owned facilities that are conveniently located within most major roads and metropolitan areas.
In the past, managers of rental car companies used to rely on gut-feelings or intuitive guesses to make decisions about how many cars to have in a particular fleet or the utilization level and performance standards of keeping certain cars in one fleet. With that methodology, it was very difficult to maintain a level of balance that would satisfy consumer demand and the desired level of profitability. The distribution process is fairly simple throughout the industry. To begin with, managers must determine the number of cars that must be on inventory on a daily basis. Because a very noticeable problem arises when too many or not enough cars are available, most car rental companies including Hertz, Enterprise and Avis, use a "pool which is a group of independent rental facilities that share a fleet of vehicles. Basically, with the pools in place, rental locations operate more efficiently since they reduce the risk of low inventory if not eliminate rental car shortages.
Most companies throughout the chain make a profit based of the type of cars that are rented. The rental cars are categorized into economy, compact, intermediate, premium and luxury. Among the five categories, the economy sector yields the most profit. For instance, the economy segment by itself is responsible for 37.7 percent of the total market revenue in 2004. In addition, the compact segment accounted for 32.3 percent of overall revenue. The rest of the other categories covers the remaining 30 percent for the US segment.
The rental car industry is in a state of recovery. Although it may seem like the industry is performing well financially, it is nonetheless gradually regaining its footing relative to its actual economic position within the last five years. As a way of insuring profitability, besides seeking market shares and stability, most companies throughout the chain have a common goal that deals with lowering the level of dependency on the airline industry and moving toward the leisure segment. This state of motion has engendered some fierce competition among industry competitors as they attempt to defend their market shares. From a futuristic perspective, the better days of the car rental industry have yet to come. As the level of profitability increases, I believe that most of the industry leaders including Enterprise, Hertz and Avis will be bounded by the economic and competitive barriers of mobility of their strategic groups and new comers will have a better chance of infiltrating and realizing success in the car rental industry.
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Rental car foes war on each other's turf. The Associate Press. Fall 2004. The Enquirer. 08 March 2005. http://www.enquirer.com/editions/2004/10/11/biz_rentalcars111.html.
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That statement in one form or another has been part of car rentals since the beginning. In the early days, it was a straight out principle issue. You used it, you replace it. At some point between then, and now, someone realized that "there's a lot of money to be made with the gas tank on rentals.
For those who don't know, lets explain your refuelling options in car rentals. When you rent a car, the car usually comes with a full tank of gas. In some circumstances, it comes with a partially full tank. In either case, the rental company will give you three options. Bring it back at the same level you got it at, (full) prepay for a full tank of gas (GSO) and bring it back empty, or bring it back empty and pay a refuelling charge (FSO) of a more expensive per gallon rate.
Fuel Service Option (FSO) is almost always the costliest option. Up and down the California Coast, most cities have FSO charges around $5.99 a gallon (and with recent prices, even higher). Around the country, its not much better. While your mileage may vary on the actual price per gallon, the FSO charges are almost always a good Dollar per gallon more expensive than the prevailing GSO (prepaid) rate or the rate of the local gas stations. It may seem that there is no really good reason to use the FSO, but there is. While most FSO users are people with more money than time or people who forgot to fill up the gas tank, there is one segment where it is cheaper to use this service than any other.
If you have a GPS unit, lock in the location of the car rental area and the closest gas station to save you time on return. Some of the best made plans are ruined by getting lost trying to get back to the airport. If traveling in a group, assign one person to look for the car rental return signs, the exit off ramp, nearest restaurant among other things that you may need on your way back to the airport.
Under no circumstances are you to buy the most expensive grade of gasoline! Let me repeat that in clearer terms. by the cheap gas. The car rental agencies all buy the cheapest gas the law will allow. Do not feel guilty topping of that car with a more expensive grade of gas. The car will break down and be sold from abuse long before the gas causes issues for the car.