It’s true that rental-car rates have recently gone as high on the high end as Las Vegas room rates are low on the low end.
It’s easy to see that in the case of room rates, there’s not only a glut of supply and reduced demand, but it’s no easy task to cut down on supply or increase demand. Some Las Vegas hotel-casinos have closed floors, and even towers, in order to minimize the ongoing maintenance, utilities, and cleaning costs involved in keeping rooms open. But they can’t, obviously, sell off hotel rooms to reflect changing demand, as rental-car companies can cars.
Which is exactly what rental-car companies have done: cut supply by drastically trimming their fleets, something that not even airlines have been able to do. Estimates we’ve seen peg the rental-car inventory at 15%-25% less that what it was during the boom of a few years ago, while prices seem to have gone up 50% or more.
Not only have rental-car companies sold off a substantial number of cars, but they’ve also been holding off on buying new ones. It’s not unusual to see rental cars with 25,000-30,000 miles on them. And the average age of a rental car is now 12 months or more, compared to nine or so months in 2008.
Why? We don’t know for sure, but we suspect that, like most other businesses these days, rental-car companies were highly leveraged, i.e., carrying large loans on their fleets from banks and auto manufacturers. Due to the downturn, they’ve had to liquidate inventory to lower debt, which reduces supply, which, even with a somewhat lower number of travelers, creates consumer competition for cars. We also suspect that as the economic situation in the rental-car industry starts to settle -- or shake -- out, we might start to see more competitive rates from less-leveraged companies, those that have more working capital or better access to credit. But that hasn’t happened yet.
As for Vegas visitors spending what they save on lower room rates for higher-priced rental cars, it might stand to reason that with one costing less and the other costing more would equal out in the end. However, we wouldn’t automatically assume so.
For one, there are still ways to reduce the cost of renting a car: starting your search early and jumping on a good deal, then watching for an even better deal; renting at an off-airport location; checking mom-and-pop agencies at websites like CarRentals.com and CarRentalExpress.com, which often offer rates 15%-25% less than national brands; navigating sites like Priceline.com and Hotwire.com, which offer deep discounts if you’re willing to lock yourself into a preset price before finding out which rental-car company you’re using; checking sites such as FatWallet.com and CouponWinner.com for car-rental discount codes; and even looking at airline websites for mileage-partner deals.
For that matter, if prices are still high for your budget or taste, you can forego a rental car altogether. Via a combination of an airport-shuttle service, walking, the Deuce buses, the Strip monorail, the various free Strip trams and casino shuttle buses, and even an occasional taxi ride, you can spend substantially less that you would on a car and still have a full Las Vegas vacation.
And if fewer and fewer people are willing to pay the higher rental-car tabs, it’s Economics 101: Demand falls, supply rises, and prices drop.
Of course, if price is less of an object than having fun, why not take a spin in one of Las Vegas Exotic Car Rental's babies, like a Lamborghini Gallardo Spyder? The regular daily rate is $1,295.00, plus tax, but you can get 20% off that with the coupon in the 2010 LVA MRB, or get an additional 15% off the 3-day special ($3,250.00 + tax). Daily mileage of 100 miles in included in both rates. At the less extravagant, but still fun end of the spectrum, check out their 1970 Cadillac De Ville Convertible, or H2 Hummer.
