Matthew Darrah is a senior vice president at Enterprise, where he oversees North American operations for Enterprise Rent-A-Car, National Car Rental and Alamo Rent A Car. I asked him about the summer’s skyrocketing car rental prices and what travelers should do about some of the new fees they’ve seen on their rental bills.
Q: Everything seems to be on sale this summer – except for rental cars. Any idea what’s going on?
Darrah: Over the past year, the U.S. car rental industry weathered an unprecedented series of events: a plummeting used-car market, reduced travel, a major economic meltdown – including financial lenders and the credit market disappearing practically overnight – and, of course, Chrysler and GM went bankrupt.
Many in our industry were hit hard and suffered through bargain-basement pricing that, while popular in the short term, was simply not sustainable. As a result, car rental companies were forced to significantly reduce fleet and staffing, far beyond the normal peaks and valleys associated with seasonal travel. We were able to quickly resize our operations to meet customer demand, as opposed to hotel operators, for example, who have had to maintain the same number of rooms regardless of market conditions. This flexibility has enabled the car rental industry to be more nimble and responsive than most, which in turn keeps rates reasonable yet competitive.
Q: Where are rental cars still a bargain, at least when it comes to Enterprise and the companies it owns?
Darrah: Car rental bargains can still be found, but not necessarily at popular summer destinations or during big events like major tournaments or conventions. Peak travel times are a challenge as well, although special weekend discounts often are widely available.
Another important thing to remember is to book your reservation as early as possible. Generally speaking, last-minute bookings get more and more expensive as fleet capacity dwindles closer to the reservation date.
Q: Do you think your customers understand the economics of the car rental industry? What one thing to you wish they were aware of, that they aren’t?
Darrah: I’m not sure customers want to spend much time examining our industry’s economics. However, we certainly want them to understand the value of a daily car rental, which represents only a tiny fraction of a vehicle’s worth. That’s quite a value, especially when compared – for example – to the cost of a tuxedo rental.
We also want our customers to understand that way too many local elected officials have singled them out to fund unrelated projects and programs with car rental excise taxes. It is truly a national epidemic – with more than 100 such taxes on the books and more than $7 billion in revenues collected since 1990. As an industry, we are understandably outraged and continue to publicly object whenever these out-of-control taxes are proposed. Unfortunately, tough economic times and budget shortages have made our fight all that much more difficult.
Q: These taxes are not approved by travelers, they often don’t benefit your customers, and they drive the price of a car higher. They also appear to be on the rise. What can be done about these surcharges?
Darrah: Let’s face it, local politicians are more focused on closing budget gaps these days than on protecting the rights of car rental customers. Ironically, most car rental customers are local – local residents and local businesses – but elected officials still mistakenly assume they are targeting only out-of-towners with these excise taxes. That’s why we strongly encourage citizens to start speaking up and holding their government representatives publicly accountable for implementing such an unfair tax policy. We also urge travel agents, tour operators and other travel industry leaders to make their voices heard on these runaway car taxes.
Q: A lot of readers may not be aware that you are the largest car rental company in North America. How does being bigger make you better?
Darrah: Being bigger doesn’t automatically make us better. But it does make us the most financially stable and comprehensive service provider in the car rental industry. Just as importantly, we take our leadership role in the industry very seriously, and continually look for ways to make the car rental experience as consumer-friendly and transparent as possible.
Q: As a reader advocate, I can remember a time four or five years ago when I was getting a lot of complaints from readers about being charged for damage to their Enterprise rental cars that they say they weren’t responsible for. These issues have all but gone away. What happened?
Darrah: As the largest car rental provider in North America, we interact with approximately a million consumers a week. That’s a lot of customers, and our goal is to exceed each of their expectations – every time. Yet, even if only a small percentage is unhappy, that still translates to a significant number of less-than-satisfied customers. So we clearly are not perfect and we always work, day in and day out, to address problems and concerns.
For instance, our brand integrity assessment and customer service programs deliver immediate and honest feedback to our local managers, so that they can personally follow up on every concern. Exceeding customer expectations isn’t just about delivering perfect service, it’s also about fixing problems honestly, promptly and fairly.
Q: When a company says you’ve damaged a car, but you believe you haven’t, what’s the best way of resolving it?
Darrah: I can only comment about our own car rental brands. For Enterprise customers, the car-return process is more high touch and detailed. As a result, there’s more time and opportunity to carefully double-check for any visible or obscure damage. For our Alamo and National customers at the airport, the process is almost always much more hurried. Still, a quick once-over of the car is a good idea during the pick-up and drop-off process, if at all possible, even though travelers today rarely have any extra time.
Regardless, customers should always be upfront about any rental car damage done while the vehicle was in their possession. Likewise, we are obligated to conscientiously document all damage so there is no confusion about responsibility later on. That way, if a customer believes there has been a mix-up, we can properly research our records and address his or her concerns quickly.
Q: We’ve seen a lot of new fees being added to car rental bills in the recent past. Travelers believe car rental companies are inventing new fees in order to keep their earnings up in a recession. That’s a fair assumption. But is it right?
Darrah: Conventional wisdom is sometimes wrong — and the assumption that all fees and surcharges are the same can create a lot of hard feelings and misunderstandings.
What many people don’t realize is that many fees are government-imposed. For example, local airport authorities charge a concession fee for the privilege and convenience of doing business on airport property. Also, when a consolidated car rental facility is built, airport officials add a second fee to cover construction and maintenance costs. State vehicle license fees are yet another example. And, as already mentioned, municipal, county and state politicians frequently target car rental customers to fund special projects and programs that, while worthwhile, have absolutely nothing to do with renting a car. This is all in addition to standard local sales taxes.
Unfortunately, some car rental companies do take advantage of this line-item madness. So-called “Energy Recovery Fees” are a perfect example – they are arbitrary, impossible to calculate and potentially damage our industry’s reputation. Energy costs are a basic part of doing business and there is simply no excuse for charging such a fee on invoices.
Q: Can you please explain the benefit of quoting two prices – a lower rate, minus all the fees, followed by a higher rate that includes all fees. I notice that a lot of car rental companies and online agencies do this, including Enterprise. How does that help customers?
Darrah: Again, we always quote our basic rental rate as well as all government-imposed taxes and fees upfront. We believe transparency is important in every aspect of our business, which includes providing an accurate accounting of all non-negotiable charges. Additional options – like collision damage waiver, GPS units and car seats – are finalized and itemized when customers pick up their rental car.
Q: There’s an oft-repeated quote by your founder, Jack Taylor, that says, “Take care of your customers and employees first, and profits will follow.” Can you give me an example of how this philosophy has set you apart from your competitors?
Darrah: After more than 50 years, Jack’s words still resonate, not only within his family-owned-and-operated company, but also far beyond the reaches of the car rental industry. In fact, you can read more about it in a book written by business author Kirk Kazanjian. The book, titled “Exceeding Customer Expectations: What Enterprise, America’s #1 Car Rental Company, Can Teach You About Creating Lifetime Customers,” has sold more than 100,000 copies.
I think it’s fair to say that our unique corporate culture has stood the test of time. It also has evolved as our business has grown. For instance, our managers’ compensation levels and career advancement opportunities are directly tied to their overall customer service scores. This ensures that every manager – no matter how financially successful – never forgets that we want our customers to come back over and over again.
