Airbnb Business Model and the Car Rental Agency Business

7 years ago | Posted in: Articles, Business, Technology | 1126 Views

Companies are starting to apply the Airbnb Business Model to the rental of cars and other types of transportation. Companies such as Uber are putting pressure on the rental car industry and companies that use the Airbnb model are not helping the industry, either.

How It Works

A typical rental car agency has age restrictions on renting their cars. The car rental locations are limited to those areas where they can rent enough cars to make the business pay. Thus, most car rental locations are by transportation centers or by locations that sell used rental agency cars. Most car rental agencies are experiencing a decline in sales and are overstocked with cars they can’t rent. Worse, the used car market is stocked with leased cars that are returning to the car market. More and more people are buying cars due to the low financing available at this time. It makes it hard for the typical rental agencies to unload their unused vehicles.

Companies such as RelayRides don’t rent cars as the rental car agencies do. RelayRides offers a larger variety of car models than the standard rental agency. Most car rental companies rent by the day, prefer by the week, and they encourage you to keep the car longer.

RelayRides doesn’t spend money on buying cars for its fleet. It takes requests from car owners who are willing to rent their car out for varying periods of time. They are able to choose where to meet the renter and where they want to pick the car up. They also have the ability to approve or disprove a rental user. It is quite possible to rent the car on weekdays and then have the car available on the weekends or evenings for personal use.

Drivers are screened by their driving history and their financial background. Any driver with a record of frequent accidents or tickets is refused acceptance by the service. RelayRide states that their cars are safer than cab companies or driving unknown car in an unknown city on their own. Plus, the person seeking the ride does not have to worry about finding a place to park. Parking in some cities, such as San Francisco, is just about impossible due to space or the many parking regulations.

What it Costs

Rentals for the Airbnb agencies start at $5 in some cases. They offer a larger variety of cars, and encourage its used to set up reservations for cars. If you choose a Porsche 911, you might by $200 per day. Exotic cars are available at the typical Airbnb. The driver meets the rider in person, identifies him or her, and then drops the person off. The pick up can be arranged with the same driver, or a different driver can be scheduled later on.

Drivers are insured by the rental company, but the rider should carry some kind of liability insurance for any injuries that might occur. Whether the rider is covered and how much depends on the driver. It makes sense to pay a few dollars more to protect yourself. Cheap car insurance online is easily available to anyone with internet access. Some car insurers do cover their insured persons in any car they are riding in, so start by checking with your insurer.

Hertz-like car rental agencies used to account for about 50% of car rentals. Sharing a car accounted for a very small part of the car rental market. Many car dealers would also provide a loaner to their customers. Today, they are likely to simply provide a ride to these customers to home or to their work location. Today, these rental agencies account for about 35% of the rental business. Sharing has risen to about 36% of the business. It doesn’t look like sharing cars is going away anytime soon.

 

by: Vincent StokesĀ 

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