One of the hot topics of 2010 in the car rental industry was no-show fees. A no-show fee is simply a charge made to a consumer's credit card when he or she does not show up for a reservation. This is standard practice in the hotel industry, where you typically forfeit a charge of at least one night (and sometimes as much as your whole stay) if you don't show and don't cancel a certain amount of time beforehand. The airlines can be even more draconian in their cancellation policies.
The rental industry has lagged behind the rest of the travel industry in instituting these policies. According to the American Car Rental Association (ACRA), the no-show rate on car rentals can run as high as 30 percent. We all know that when you make a car rental reservation, there's a chance that by the time you arrive at the rental counter the agency might not have the type of car you reserved. It might not have any car available at all, for that matter. Agencies have always partly blamed this unfortunate scenario on the high no-show rate.
Intestingly Avis Budget, previously the biggest supporter of no-show fees, recently said that they do not plan to aggressively push the fees for U.S. car rentals in the near future. Avis Budget tested these fees in certain smaller markets last year, and they have the systems in place to handle them, but as Ron Nelson, Avis Budget's CEO said last week, "We've slowed it down, because there hasn't been industry acceptance of it yet."
The basic issue is that consumers have gotten used to not having any "skin in the game" when it comes to car rentals. They like the flexibility of being able to book, re-book, cancel, and yes--even no-show if they so desire on their car rental. If one of the major industry players were to institute no-show fees across the board, they might find that their competitors have not chosen to follow their lead. This could put them in a serious "pants around the ankles" situation, and lead to a very serious competitive disadvantage.
It looks like at least for now, no-show fees will be a no-show for 2011. Rental companies will instead focus on the pre-pay option many of them have, in which renters pay rental costs upfront and receive a rate discount of between 5 percent and 15 percent. While we're big proponents of discounts here at AutoSlash, we're not fans of these pre-pay options since many of them charge a penalty for any cancellations. In most cases, using a service like AutoSlash can save you far more money, without the downside of being stuck with a penalty if your plans should change or a better deal comes along.