Charlie Graham

Car Rentals for Summer and Memorial Day

$300 a day rental cars.  A Uhaul as a replacement for a compact car (in Hawaii).  No cars available to rent in the most popular destinations like Orlando and Las Vegas.  It was a crazy time to be a rental car customer during the 2021 United States Spring Break and Easter holiday.  An unexpected increase in demand coupled with limited inventory due to multiple reasons led to historically high rates. With the bulk of Spring Break travel now in the rearview, the most frequent question presented to AutoRentals.com is: What will Memorial Day and the Summer look like for rental cars?

Our prediction?

Demand will grow.  Inventory will improve.  Renters will be more savvy.  Higher than average rates will be around through at least the peak summer season and availability will remain tight, especially in Florida and Hawaii.

Demand Will Grow

As the number of Americans who are vaccinated continues to increase and availability to these vaccines is now opened up to all adults, the thought of traveling is a more welcome prospect than was previously. Loosened COVID restrictions, both in terms of testing and quarantines, and capacity limits at businesses and venues also increase the willingness of the public to travel.  Finally, after a year or more of only dreaming of travel, the pent-up demand is resulting in “revenge travel” with many booking multiple or lavish trips.  Interest in the term “Airport Car Rental” has recovered recently, even outpacing early 2020 search volume.  The chart below from Google Trends outlines the recent surge in searches.

Inventory Will Improve

Car rental companies have been hesitant to fully fleet up ahead of seeing demand bounce back.  The travel cancellations of last year, combined with the lack of renters, forced rental car companies to aggressively reduce their fleet.  While the Spring travel season showed signs of promise, almost every company was surprised by the eventual number of renters; especially in popular, sunny destinations.  With a few months to prepare for the true Summer season, these same companies can do their best to increase fleet to better meet demand.  Most already put in their orders for the Summer earlier in the year, and did so with less hesitation than the Spring orders.  However, increased competition for vehicles through traditional, auction and non-traditional channels, along with limitations in manufacturing, may ultimately produce a smaller than desired total fleet count.

Renters Will Be More Savvy

Flight, hotel, car.  When making travel reservations, this is most one of the more frequently used orders of priority.  With car rental pricing and availability in the news and many travelers personally experiencing the tightening of inventory, renters will be more savvy when it comes to booking their rental car.  The car rental portion of the trip may be what decides the itinerary, instead of the flight.  And, once travel dates are chosen, the rental car may be what is reserved first.  Renters should also follow the advice we laid out recently on alternative booking options (try different dates, search for alternative locations and BOOK NOW!).

Rates Will Remain Historically High

Memorial Day and the Summer season will continue to produce historically high rental car rates.  The best response is to reserve your rental car early and cancel if you need to.  Most pay on arrival rates are fully cancellable if your travel plans change.  Gone are the days of reserving your rental car the day before, or even just showing up at your destination and finding the best deal – at least for this Summer.  Our internal data shows that prices are continuing to climb as the pickup day arrives.

Average daily rate is increasing at the pickup date approaches.

Our final piece of advice?  No surprise here.  As soon as you begin travel planning, search for your rental car first and book early!

A Trio of Domestic Travel Announcements

Three recent news releases and updates point to the rising tide of optimism around future domestic travel prospects.  Travel demand continues to pick up currently, but this summer looks to be when a larger majority of domestic travelers will be open to reuniting with their inner exploring nature.  While some destinations have already welcomed the return of vacationers and residents of certain states have ventured beyond their own borders, national and state level news in recent days have expanded the pool of considered destinations and willing travelers.

CDC Guidance for Vaccinated Travelers

As a growing percentage of the US population have received their full vaccination for COVID-19, many have awaited guidance from the CDC on what, if any, modified behaviors this group could adopt.  On April 2, the CDC updated their guidance, issuing a statement that fully vaccinated people can travel with low personal risk and would not require any testing or post-travel self-quarantine measures provided their local government authorities do not require it.  Not only does this provide relief to vaccinated travelers, it also removes some friction in the process of traveling that may have prevented someone considering a future trip.

New York State Drops Testing and Quarantine Requirements

A day before the CDC announcement, New York State Department of Health revised their guidance for travelers arriving into the state.  Any domestic traveler, whether a resident of New York returning to their home or a visitor from another state, is no longer required to test or quarantine upon arrival.  The NY DOH still recommends testing and/or quarantined for domestic travelers, providing exceptions for those fully vaccinated or having recently recovered from COVID-19.  While this opens the state of New York to inbound domestic travelers, it also provides more freedom to NY residents to explore the United States – and many are eyeing Memorial Day and this Summer to return to travel.

California Aims to Lift Restrictions June 15

Provided the continued downward trends for cases, hospitalizations and deaths in the State of California along with the increase in vaccinated residents, a recent announcement from the CA Department of Public Health revealed the plan to remove restrictions on June 15, 2021.  A mask requirement will still be in place, but businesses, restaurants, movie theaters, museums and other facilities would then be open to operate at 100% capacity with limited public health restrictions.  Californians would then be enticed to resume their own exploration of their state and potentially look forward to inviting in other domestic travelers as well.

Our Recommendation: Book Early – Cancel if you need to!

We can’t overstate this recommendation in a more urgent way.  Reserve your rental car now!  If Spring Break and the recent Easter Holiday weekend taught us and travelers alike anything, it was that booking early during this time of travel demand recovery is key to securing the best possible price and even ensuring you have a rental car at all. 

***If you don’t have time to read this whole blog (TLDR), follow this advice. If you have upcoming travel plans, book your rental car now!  Click here to search for your car rental on AutoRentals.com.

What is happening?

$300/day car rentals? Is this real? In some extreme cases, yes, this is the current reality. Or, potentially even worse, there are no rental cars available at all. As travel demand continues to rise for Spring Break and Easter weekend, rental car companies are struggling to keep up with demand.

Our internal data and analysis have shown a spike in not only the average price per day (which has increased 100% in the past 30 days), but also in the percentage of searches with no availability. While the latter is starting to trend back downward, prices have remained stubbornly high.

Why is this happening?

Our earlier prediction on Dec. 15, 2020 of elevated rental car rates laid out four main reasons that the market and other forces would result in the current situation.  At that time, we encouraged everyone to reserve their rental car early.

1. Rental car fleet is dramatically lower than typical for this time of year.
2. Car rental companies became experts of selling their fleet direct to consumers, further reducing their fleet size.
3. In-fleeting, or adding inventory, will go more slowly than usual. Our thinking here was mainly around corporate risk avoidance for fleet planners, which still holds true. However, another factor is at play here with manufacturers delaying planned orders because of a computer chip shortage that is affecting production.  Car Rental companies are sticking by plans to be ready for a higher travel demand by the peak summer season.
4. Travel demand will spike as cases decrease, vaccinations increase and restrictions are loosened. There is a wave of pent up travel demand waiting to be released. Previously, we felt this would peak in Summer 2021, but all signs point to this happening now for Spring Break 2021.

What can you do about it?

If you are seeing higher than average prices or no rental cars available, here’s what we suggest.

• Change your travel dates. If your travel dates are flexible at all, search for other dates. This will especially be helpful if you can travel during off-peak / shoulder date ranges. Late April through mid-May typically sees lower travel demand. So does early June and late August. All bets are off the table when it comes to 100% reliable forecasting, but those date ranges should be fairly reliable when it comes to leisure travel destinations.
• Search for alternative pick up locations. While this could mean a completely different location that may not be as popular, it could also mean looking at rental car options not at the airport. Finding a rental near your hotel or final destination may mean lower rates and lower taxes. Try searching for city locations beyond the airport, or use our Zip Code search capabilities to hone in on specific locations. This may mean you will have to be creative in getting to the rental car facility away from the airport (think shared ride service, hotel shuttle or taxi), it could be the difference in taking that trip or not by finding an available and affordable rental car.
• Book as far in advance (NOW) as possible. Considering a trip for the summer? Search for that rental car first and make your reservation immediately. Most rental car reservations are flexible and can be fully cancelled or modified all the way up to the day before your scheduled pick up date.

Our goal is to always find the perfect car for the best price for you. We encourage you to use these options to reserve that perfect rental car as soon as possible!