It is “Destination Fear” for Car Rental Companies as They Negotiate the COVID-19 Nightmare
The increasingly tougher business environment in the travel and tourism sector is sending ripples of disruption, fear and anxiety across the entire value chain including car rentals.
Global Industry Analysts, Inc. (GIA) launches comprehensive analysis of industry segments, market trends, growth drivers, market share, size and demand forecasts on the global Car Rental Business market. Report segmentation include Location (Airport, and Non-Airport); and Sector (Leisure, Business, and Other Sectors).
10 June 5:58 A.M., California/Marketwire/ - According to the new market research report, the increasingly tougher business environment in the travel and tourism sector is sending ripples of disruption, fear and anxiety across the entire value chain including car rentals. Rapid spread of COVID-19 across the globe is having an enormous impact on the travel and tourism industry. From cruise ship quarantines to complete grounding of airlines as countries seal their borders to prevent spread of the disease, the travel industry is feeling the heat of the chaos unleashed by the pandemic. With all of the world's favorite tourism destinations being off-limits to visitors and guests, the worst affected are countries with the highest contribution of travel and tourism to national GDP such as the Caribbean; Maldives; Philippines; Thailand, Italy, Malaysia, Turkey, Sri Lanka, Chile, Peru, Indonesia; China, Egypt; Mexico, among others. The indirect and induced impact of travel bans is felt by sectors such as hotels and hospitality; car rentals, travel agents and tourist guides, among others. Tourism losses are growing bigger in parallel to the rapid spread of the disease. The shelter-in-place orders will cost the global airline industry over US$350 billion for the year 2020. The massive drop in revenues will result in significant job losses. Without fiscal support from governments, several airlines are already staring at bankruptcy. With the world now in recession, the impact on travel will deepen delaying the recovery further. Airlines which have already collapsed due to the pandemic include Virgin Australia (Australia); Compass Airlines (US); Trans States Airlines (US); and Flybe (UK), among others.
The easing of travel restrictions and bans is largely dependent on achieving widespread nationwide testing by countries worldwide. Given the challenges involved in achieving desirable testing rates in both developed and developing countries, a return to normalcy remains fraught with delays and challenges. The delay in recovery will further reduce the oxygen levels for companies to survive. Until a vaccine is developed, it's a long and painful road to recovery for non-essential travel and the decline in average revenue per user (ARPU) will test the survival of car rental companies. Car rental businesses are heavily dependent on air travel since business travelers and vacationers often combine their car rental and flight reservations to save money and make the travel process more efficient, convenient, streamlined and stress-free. With international and domestic vacations on a complete freeze, its tough times for car rentals. The U. S. car rental giant Hertz, for instance, is already dangerously on the brink of bankruptcy as it desperately seeks last-minute extension on debt payments. Against this backdrop, the global car rental business is projected to reach a revised US$89.6 billion after declining by -31.7% in the year 2020.
Like all other markets and industries there will be a before and after corona virus scenario and in the post COVID-19 era, resurgence in travel and tourism encouraged by the return of economic stability will help the market recover. In existence long before "Mobility Service Providers" became the buzzword, rental companies will feel the need now more than ever to reinvent their business model by adopting connectivity technologies, adding dynamic fleet planning capabilities, enabling remote vehicle diagnosis and driver behavior monitoring and implementing location detection technologies to increase customer engagement. App based booking and online booking; competitive service pricing on a subscription basis; increased adoption of car rental software and self-service technologies to boost competitiveness and quality of service (QOS); development of online social platforms to support peer-to-peer (P2P) car sharing; and cloud-based car rental software services and car rental ecommerce platforms will all grow in prominence during the post corona virus period.
Key Competitors Covered in the Report
Avis Budget Group Inc.
Avis Rent-A-Car System LLC
Budget Rent-A-Car System Inc.
National Car Rental
Payless Car Rental
The Hertz Corporation
Geographies Analyzed in the Report
Europe (France, Germany, Italy, United Kingdom, Spain, Russia, and Rest of Europe)
Asia-Pacific (Australia, India, South Korea, and Rest of Asia-Pacific)
Latin America (Argentina, Brazil, Mexico, and Rest of Latin America)
Middle East (Iran, Israel, Saudi Arabia, United Arab Emirates, and Rest of Middle East)
This latest edition of the research study is conducted and published by Global Industry Analysts, Inc., in close collaboration with senior executives in the industry driving strategy, business development, marketing, sales, product management, technology and operations. All analysis and findings published in the report are based on validated engagements from a total executive pool size of 4434. Among this pool, 798 direct interactions with domain experts were carried out via our proprietary market research platform, MarketGlass. Among the 133 unique participations, a total of 61 validated responses were received as part of this report's primary research outreach program. We are unique in the industry to provide our clients with the validated list executive engagements and the complete project data stack.
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