New Metrics Alter Effects of Event-Based Pricing On Car Rentals
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A new study has revealed that car rental companies will have to contend with more than just the emergence of car-sharing and vehicle automation. Now, they may need to address new ways in how to price their auto rentals when it comes to major events.
Research compiled by travel-based data company RateGain reveal that large events ranging from league finals to rock concerts aren’t the only draws on the calendar companies need to consider. Smaller, niche-oriented affairs may play as much of a role in determining the rates they may want to put in place.
“The travel and events landscape is much different today with many new micro-events like music festivals, shopping festivals etc. appealing to millennials travelers,” says Apurva Chamaria, RateGain’s chief revenue officer.
Traditionally, car rental rates tend to rise during a major event. An influx of visitors, especially those who don’t book well in advance, puts a strain on the vehicle inventory of a rental agency. In response most businesses will raise their rates on dates surrounding the event or hold back on vehicles that may be reserved for customers trying to take advantage of corporate discounts. These tactics are put into play in what rental companies refer to as the “blackout period,” which also includes holidays like Thanksgiving and Christmas.
But methodology and access to what RateGain calls digital composition data determined that even micro-events can have a huge impact on rental rates. The study looked at several cities, but were particularly interested in the events taking place in Philadelphia throughout 2018.
The largest spike in car rental activity took place on Feb. 19 when there were three events: a rap concert featuring Tyler the Creator and Vince Staples, an NCAA basketball game, and a parade in Chinatown featuring the Philadelphia Suns Lion Dance troupe.
Car rentals on Feb. 19 were considerably higher than the second-highest peak at the end of January, when league games involving the NBA, NHL and the NCAA took place. In fact, that date posted results similar to a later date that featured an NBA and NCAA game as well as a Harlem Globetrotters match, a youth film festival and an event held by the Drexel Academy of Natural Science.
RateGain concluded that smaller events that attracted specific target markets, changes in tastes in emerging demographics and clusters of micro-events might have a greater effect on how car renters should price their vehicles than a standard big event does these days.
“Pricing analysts that want to optimize car rental rates should develop a nuanced approach to event-based pricing,” added Chamaria.
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