Car rental yield management learning after ATM fair 2018 in Dubai

First impression or usual impression let say. Dubai is the city of the max! I had meetings with various car rental franchises, from small with 500 car fleet, to pretty big from 12,000 to 15,000 units to rent. Here are my notes and tips for the revenue management car rental optimization.

Operating systems: always work with the last version

All car rental companies met are upgrading their current version of operating system (sometimes old by more than 10 years). This gives them the ability to get access to last pricing features as well as operational rental agreement features to be handled with mobile devices. As a matter of fact, all hiring companies have now integrated the data management process within their operating system. This gives them the ability to interface any optimization tools.

RM tips: in a yield prospective, make always sure the operating software is updated with last version. It is never efficient to work with a system that is not up to date. Data is key.

 

Brokers: the continuous growing importance of the intermediaries

Rentalcars has a strong and permanent presence on site in Dubai, explaining why they get more than 50% of market share in UAE. Cartrawler remains the number 2 but far behind the Manchester’ based platform.
However, I have noted a large proportion of leisure business (20 to 50% of the arrival sometimes) that is not pre-booked. In practice, many drivers in general from GCC countries (mostly from Saudi Arabia) like to shop upon arrival without any reservation guarantee, negotiate with three or four operators before making the deal. They have time and they like to play that game. Cultural habit.

RM focus: as a rental franchisee, it is crucial that all marketing efforts are put in developing the direct source to protect profitability and avoid being in the hand of third parties. Even though the spot business is highly contributive, it remains very risky with a potential low utilization ratio on the d-day.

 

Hotel industry: automation, automation, automation

With a long background in hotel optimization, I always pay attention to this industry. Dubai has reached 140,000 hotel rooms (above London) with an average occupancy ratio of 75 to 80% all year round, which is pretty high. And hoteliers continue to build more and more hotels. By Expo 2020, an additional +40,000 rooms will be added on top of current inventory. Believe it or not: 60% of building cranes in the world are located in Dubai area!

RM focus: yield trend is to move to more automation than ever like in the airline revenue management. Experienced analysts are employed to calibrate revenue management system and challenge its demand forecast. Thus, large hotel chains tend not to have any human intervention in the optimization anymore. And business analysts have to justify themselves if they override the optimization system more than 3 days per month!

Conclusion

No doubt that technology environment is changing quickly, sometimes disrupting existing positions. But it is not a lost battle as long as the car rental companies organize their pivot to enter into this new world with confidence and expertise back-up.

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