Welcome to another episode of our podcast, The Revenue Machine. Today, in the latest Revenue Machine Episode, Emmanuel Scuto is talking with Andy England. With over 30 years of experience in Revenue Management (RM) at Dollar-Thrifty and Hertz, primarily serving franchisees, Andy has witnessed the evolution of the industry. He began his journey when Travelocity emerged as the first online travel agency, predating Expedia. This period marked a significant shift as pricing became a critical factor in customer decision-making with the advent of the internet in the early 2000s. At Dollar, the IT manager developed a separate tool to manage prices independently from the regular reservation system, which was groundbreaking at the time.

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Car rental licensees reacted differently to the RM shift. Some were progressive and open to new strategies to enhance competitiveness, while others were primarily concerned with costs. A portion of the licensees initially struggled to grasp the importance of these changes. Over time, customers have been conditioned to search for the best rates, necessitating a disciplined approach to fleet management to influence better booking behaviors. During peak seasons, despite high prices, people continue to travel, indicating that car rental costs are not a major factor in destination choices.

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Fleet management decisions, such as opting for purchase options that lead to over-fleeting, can impact revenue. Initially, Dollar acted as an outsourced revenue manager with limited information about the fleet. A framework was established between licensees and the RM team at headquarters to create a pricing corridor, allowing flexibility without requiring rental operator approval for each price change. Trust built over months and years led internal clients to consult the RM team on broader issues beyond pure RM topics.

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High-level performance in car rental necessitates a solid foundation and daily discipline. It begins with accurately calculating the usable fleet available each day, monitoring no-show rates by day of the week, tracking reservation trends, and analyzing competitor behavior. Manual rate monitoring is inefficient; daily RM practices are vital. When uncertain, revenue managers should test their hypotheses, as the results can sometimes be surprising and significantly impact yield.

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The presence of players making illogical pricing decisions can disrupt the entire market. Conversely, systematic yield management by key players benefits the market as a whole. To enhance processes, trying new methods or features that promise better results is encouraged. However, mastering the fundamentals and practicing them consistently is crucial for success. Simply pressing buttons or expecting a system to work magic will not suffice.

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Maximizing revenue opportunities requires a strategic approach distinct from operational decisions. A revenue manager equipped with the right tools and strong fundamentals can make optimized decisions regarding "when, where, and what" actions to take, even in unexpected situations. This ability to adapt and optimize in real-time is both challenging and rewarding.

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In summary, effective revenue management in car rental is an investment that pays off through consistent, disciplined practices and a willingness to embrace innovation while maintaining a strong grasp of the basics. This approach ensures that revenue opportunities are maximized and the business remains competitive and profitable.

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📌 Here's a glimpse into the enriching discussion:‍

00:00:00 Introduction of Andy, how did the RM start at Dollar

00:13:10 Beginning of the pricing by duration and check-out

00:23:30 Reaction of licensees confronted to the revenue management project

00:30:30 Summer pricing, car dealers: influence factors

00:38:40 Process to onboard a licensee in the Central RM

01:00:00 Advices on best practices

01:16:20 Market benefits of all car rental implementing yield management properly

01:20:10 Andy’s vision about the future mobility like peer-to-peer 

01:28:20 RM fundamentals of the job