Part of what is – pardon the pun – driving this is an artificial push for more revenue. For example, the Wall Street Journal reported in May of last year that the new CEO of Hertz Global Holdings (which also owns Dollar and Thrifty), John Tague, was going to "implement this summer what could be the biggest price increase in recent history." It extends to all three brands.
Airport car rentals (the bulk of business in Las Vegas) would go up $5 a day or $20 a week. The excuse was "strong seasonal demand" – the Global Business Travel Association predicts business-travel spending will be up five percent in 2016 – which would seem to put paid to theories that car-rental companies were reacting to the growth of Uber and Lyft (whose true competitors are the taxi companies). "It's a different customer base," says an industry consultant.
Not only did Hertz stock jump at the news, Avis shares rose even higher – even though the company had not announced whether or not it would follow Hertz's lead. Hertz also ensured that demand would be higher by closing 200 non-airport locations, thereby reducing the number of rental cars on the market.
That wasn't the end of it. BankRate.com recently reported "car rentals are up and in some cases way up from a year ago, according to Abrams Consulting Group … In early July, the average rate for a one-day rental of a midsized car booked a week in advance from an airport location was $99.81, up from $75.96 a year ago." Some of the blame for the sticker shock was placed on fleet reductions by the majors.
This is not a sudden phenomenon, though: Between 2012 and 2014, rental prices rose 15 percent. "The rental companies are operating with tighter fleets than in the past," Abrams tells LVA. Add a softening used-car market and this "creates an upward draft on pricing. [Travel] business has been strong and that's what drives the rental environment. They have to make their margins somewhere" and tourism to Las Vegas is at all-time-record levels.
Since the U.S. market is effectively controlled by three conglomerates, there is a certain de facto collusion at work. PBS consumer advocate Rudy Maxa researched the price of a 22-day rental in Los Angeles (in 2014) and found that Hertz, Avis, and Enterprise all charged $1,800. (He found a bargain by renting through his insurance company, although he could only rent for nine days at a stretch.)
Consumer advocates recommend a variety of methods of pushing back on price. Top of the list: Don't rent at the airport. Rates at airport car-rental facilities are estimated to be 20 percent higher than the norm. A popular positive recommendation is to shop for a rental through Priceline.com, where you can set your rock-bottom fee and chum the waters for car companies looking to reel in bargain-conscious customers. Renting from smaller, non-name-brand outfits like Fox Rent A Car is also recommended. "Demand is strong and supplies are tight," concludes Abrams, "and that's where you find yourselves" – between a rock and a hard place, from the looks of it.
