New Deal Europe Weekly Update on Tourism to the Balkan Region, Week 29
News from the market: Car Rental
We take a look at car rental, a segment of tourism we haven’t explored before, in this week’s interview. Our guest, Kevin Hall, is a high profile innovator and multi award winner in this area which forms a key component of the travel package for many tourists. Kevin established the first car rental booking portal, Carbookers, and is still delivering new technology solutions for the industry today. We get his views on the impact of Covid and Brexit on the car rental sector, how the industry is evolving, and we discuss why electric and green vehicles are still hard to rent.
NDE: Hi Kevin. Thanks for joining us today. Can you begin by telling our readers a little about yourself? What is your experience in the car rental sector and what are you currently working on?
KH: I call myself the luckiest person in the world as I have spent a lifetime working in the travel industry, travelling to all corners of the globe. I often say I have lived the life of a millionaire without being one! I entered the travel industry as a 16 year, originally in the Hotel Industry, took up a troubleshooting role and was sent to South Africa to open new hotels — such a wonderful country at a very interesting time. My life journey took a dramatic change when I was approached to join an all-female car rental company ‘Imperial Car Rental’. Over the next few years, the company went from a small business to market leader. Fascinating times. I returned to the UK and took up senior leadership roles with Dollar/Thrifty, Alamo, and National before joining the online giant ebookers.com in 2002 and I’m accredited with inventing the car rental booking portal Carbookers. Over the next 9 years we built up a company operating in 14 countries with a turnover in excess of $200 million. 30 awards are testament to its service and innovation. In 2005 I was instrumental in selling the company for $249m to Travelport. I remained with Travelport for 12 months before becoming VP of Sales for Orbitz Worldwide. I decided to set up my own company, ‘KDH Consultants ‘ in January 2009 and own the trading brands, Autocarbookers.co.uk, Fleetrez.com, and Toursrez.com and I work with a portfolio of clients across the globe.
NDE: That’s an impressive CV. How would you say the industry has developed throughout your career? What has changed in the last 5, 10, 15 years…?
KH: This is a great question as sadly car cental hasn’t witnessed a significant change since Holiday Autos created the pre-bookable fully inclusive package in 1999. However the pandemic has forced the industry to take a hard look at the rental process and today we are seeing the creation of soft-touch, keyless, and contactless rental. Carshare and Street Rental looks to be the future and it’s envisaged that in the near future rental desks will disappear and the customer will simply go straight to the car rental parking lot and drive away.
NDE: I don’t know what all of these terms mean, so I’m sure that some of our readers won’t understand them either. Could you give a little detail on these please?
KH: Sure. Soft-touch means minimal exposure to queuing at a rental office. The rental agreement is signed prior to arrival. Keyless and contactless, car rental is really ‘THE future’. You pick up a car and drive away and the billing is automated. Carshare and Street Rental is the process of mobile app car rental. You could call it Uber for car rental. This is already in place for corporate travel but it’s envisaged that airport pickup will follow for all segments with an easy to use contactless process.
NDE: This prompts the question, what percentage of car rental is business travel, and what percentage is leisure travel, and are there any other segments you identify in the industry?
KH: Car rental enjoys a 50/50 split between leisure and business but in the leisure services the distribution channels differ. Today car hire is sold via companies’ own websites, broker channels, OTA and Travel Agency affiliates and travel clubs. The GDS is still the main distribution for business travel although direct portals are starting to increase as technology take over.
The pandemic has forced the industry to take a hard look at the car rental process … today we are seeing the creation of soft-touch, keyless, and contactless rental.
NDE: Looking at the current situation, how has the Covid pandemic affected you in particular and the car rental industry in general? Has the fact that people are avoiding public transport been of any benefit to your industry?
KH: Covid-19 has meant that globally domestic car rental has witnessed a huge increase. All car rental companies have a promise and commitment to Covid clean and consumers are picking up vehicles at downtown or city locations, not just for domestic holidays, but also as a means of avoiding public transport. It has been very tough for airport locations though, and in the summer months the industry has been very slow with a small uptake in pickups. Some countries have closed operations and sadly we have seen some casualties.
NDE: And in terms of destinations are some more affected than others? How do you see it in the Balkans region?
KH: The biggest challenge in 2021 for the Balkans is the legacy of the pandemic, which will continue to affect the overall political, social and economic situation long after it is over. Uncertainty and enforced travel restrictions could weigh hard on the important tourism sector in 2021, one of the main sources of income for the region, although announcements about vaccines fuel optimism that the sector could recover in the second quarter of the year. There is also the economic aspect to the crisis. A good part of the Balkans’ economy is dependent on tourism, and we know that the sector will be in big trouble next year, which perhaps creates another problem, that of economic decline. The crisis in the travel and tourism sector caused by the Covid-19 pandemic will result in structural changes, affecting both the marketing of Balkan tourist destinations and the very nature of the tourist and tourist consumption. We are however very resilient in tourism. We will survive, and by using innovating skills we will adapt to the situation.
2021 is set to be one of tourism’s most significant years to date.
NDE: For sure, we always have adapted in this industry, and now at the beginning of 2021, what is your view on how the year will progress?
KH: Every year travel trends come and go. However, 2021 is set to be one of tourism’s most significant years to date. As the world slowly recovers from Covid-19 and borders gradually start to open, we all expect travel to look a little different from how it did pre-pandemic.
Although nobody knows exactly what will happen, one thing is clear; we won’t be able to travel as freely as we used to, without consideration for our health…at least for the foreseeable future. As the tourism industry embarks on this next chapter, the tour operator will have an important position in this rapidly changing environment. Governmental regulations, health awareness and the long-lasting attitude effects of a global pandemic will mean changes for the way our industry operates. However, with this comes an exciting opportunity to adapt and innovate, and the possibility that travellers may be willing to pay more to reduce their Covid-19 exposure. Before Covid, exploring a crowded city would have been exciting and invigorating. Wandering through bustling markets, enjoying dinner at a bistro brimming with locals and visiting tourist hotspots were often the hallmarks of a fulfilling holiday. Sadly, what were once sources of endless travel memories are now situations that incite fear and anxiety for many. In a post-Covid world, travellers will be much more cognisant of the need to travel to destinations that make it easy to maintain social distancing practices. Tour operators will need to get creative by designing itineraries that avoid public forms of transportation and crowded tourist areas, as their customers will expect this more considered approach to travel design. This may take the form of itineraries focusing on more remote locations or even the increased popularity of niches such as birdwatching holidays and biking tours, where travellers are less likely to come into contact with others. Life will return to some form of normality but be prepared to adapt.
NDE: And talking of adapting, here in the UK, we have just begun a new relationship with the EU. In the Balkans we have a similar situation crossing the borders, from non-EU to EU, and vice versa. Do border crossings pose any problem for you?
KH: Car rental is allowed across borders with very few issues. You would have additional fees, and you might have to purchase an additional motoring policy in the event of a breakdown, but that’s pretty much it. Brexit came on the 31 December with a whimper. It’s been an ongoing subject since 2016 so it no longer commands the column inches. Britons have travelled the world for centuries and will continue to travel. Any obstacles they will overcome.
NDE: I am conscious that we haven’t had any mention yet of sustainability. How is the car rental industry embracing the movement towards sustainable tourism? Are people asking for ‘green’ cars, electric cars, no diesel and so on?
KH: A very sad reflection on the industry is multinationals and fleet managers have not had sufficient requirements to add electric vehicles (EV), or green vehicles to their fleet, or demand has come in very small numbers. Sadly it is a buzz word and whilst all companies are reviewing the situation it is possibly too early to see who may make the leap first. Someone has to be bold and move their fleet to EV but currently it’s not a priority and it’s not high on the consumer’s choice.
NDE: Is this because at the moment the consumers are not given a choice, so can’t request these? How is the industry monitoring this latent demand, or are they not able to do this because it is not an option when people book car rentals?
KH: Every day another EV company launches an app to entice the car rental sector to move to electric or battery-powered cars. However, for both the business and the leisure traveller the landscape when renting an electric car still has many obstacles. Battery-powered electric vehicles (BEVs) are expected to reach a milestone in shipments in 2021, but the technology faces several significant hurdles to gain wider market adoption. Limited driving range, high costs, battery issues, and a spotty charging infrastructure are the main challenges for BEVs. Besides, there are issues with various power semiconductors and other devices.
This helps explain why hybrid vehicles, which run on both battery and gasoline, are more popular than battery-only electric cars. But carmakers and several China-based vendors are accelerating their BEV market efforts amid rapid growth in China and elsewhere. According to IHS Markit, worldwide production of battery-electric cars is expected to reach the 2 million mark in 2021, compared to 1.39 million vehicles produced in 2019. By 2030, some 30% of all cars are expected to be electric, according to the International Energy Agency. The general public and governments seriously need to support and adopt this transportation in the future, but right now, most people are not ready to take the plunge as the reality is still unknown.
We are however very resilient in tourism. We will survive, and by using innovating skills we will adapt to the situation.
NDE: Kevin, you and your company are at the forefront of technical developments to make bookings easier, for both the consumer and the rental companies. To round off, can you tell us what innovations are in the pipeline and how do you see the long term development of the industry?
KH: Earlier you asked about changes in the industry, and sadly car rental hasn’t undergone huge changes. The pandemic though has made all companies review processes and systems and the way business is conducted. This has shown companies that the IT infrastructure is legacy, antiquated, out date and not conducive for future business growth. We have recently launched two products Fleetrez and Toursrez. Both products make use of AI technology and will allow company business owners and management the freedom to actually manage the business, whilst technology does the hard, time-consuming jobs. We believe that our work will revolutionise the car rental business bringing it into the 21st century, and putting it into line with other elements of the travel package and we would like to hear from anyone who wants to grow their business using these platforms.
Questions by Robert Dee and Tine Murn, founders of New Deal Europe, the only travel market platform dedicated to generating business to the Greater Balkan region of Europe. Apply to New Deal Europe Marketplace and Forum taking place on 12 April 2021 at www.newdealeurope.com.
