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Avis to introduce No-Show Fees
Thursday, 06 June 2013

The car-rental company, which has seen a significant increase in no shows, believes this will curb the behaviour. Lance Smith, executive: sales, says between 10% and 12% of bookings are no-shows. “If you take into consideration that the industry is doing somewhere in the region of 250 000 transactions per month, that means 25 000 people aren’t showing up. But, you’ve parked the car there; you’ve filled it up and have prepared all the documentation.”

Eventually, Lance says, Avis wants to move towards a pre-paid model. He points out that in Europe almost 80% of car-rental business is done on a pre-paid system. In South Africa, 90% of clients still pay when they return their vehicle. The Avis Budget US branch introduced a pre-paid car-rental model last year in several markets. With this option, renters pay rental costs upfront and receive a rate discount of between 5% and 15%. Ronald Nelson, Avis Budget chairman and ceo, was quoted in US papers as saying: “Since it’s less likely travellers will cancel a paid rental-car booking, the system accomplishes the same result as no-show fees.”

Dawn Nathan-Jones, ceo of Europcar, says although Europcar has not seen a significant rise in no-shows, the company would also consider a pre-paid rental model. She says it would assist with fleet planning and allocation as well as decrease the number of no-shows. The downside, however, is that it would also increase transactional complexity in terms of refunds should there be a no-show. It could potentially also have an impact on complexity of billing for waivers in the event of an upgrade, says Dawn.

First Car Rental has already started introducing both no-show fees and a pre-paid model but only during high-demand periods. Melissa Storey, executive head of strategy, development and marketing for First Car Rental, says: “When you isolate prepayment and no-show fees to demand periods, it serves both the customer and the rental company in the sense that it allows for accurate planning when it really matters. In the discretionary segment, where there is a high risk of no shows, renters or their brokers are less likely to forget to cancel within a reasonable timeframe if there is a no show fee, and in the event of non-refundable prepayment it is even less likely. We have been operating on this basis for peak-periods since early 2010, and it has served us and our customers well.”

By : etnw
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