In this blog series, The Effects of COVID-19 on the Travel Industry, we take a closer look at five major sectors of the travel industry and explore current trends and impacts of the pandemic.

In our series, we’ll cover the effects of COVID-19 on:

After more than a decade of explosive growth and the emergence of many innovative startups, the travel industry faces one of the biggest challenges in its history. The global COVID-19 pandemic has devastated economies worldwide, hitting hospitality businesses, airlines, and transportation services particularly hard. Studies suggest the impact will be 9 times worse than 9/11.

The travel business sector is suffering a considerable decline, as companies have been forced to handle meetings through video conferencing. Many may choose to continue with remote communications and eliminate their business travel budgets. To adapt to the new normal,  companies are evaluating existing protocols, such as:

  • Traveler safety
  • Duty of care for employees
  • Policy compliance
  • Eliminating bypass and pre-trip approval

Global Car Rental Trends

Global Rental Rates will Rise

Global rental car rates are expected to rise by 1%, primarily due to an increase in international tourism.
The car rental industry will have to face stiff competition from disruptive business models such as Drivy, a European car rental service that allows owners to rent out their cars when not in use. The usage of on-demand transportation services and apps is expected to continue rising.

 

Technology

Advanced 5G network connectivity will have a major influence on the development of driverless vehicles that could drastically increase road safety. The new network infrastructure will also allow for increased usage of in-car mobile hotspots and digital assistants.

 

Pandemic Impact

The American Car Rental Association (ACRA) has reported a 50-70% average decrease in rental demand at airport locations. The general decrease in demand has resulted to Hertz filing bankruptcy, one of the largest bankcruptcies to result from the pandemic.

The continuous decline in demand has provoked rental car companies to cancel new fleet orders until the end of 2020, freezing production at car manufacturing plants.

Car rental companies are employing coping strategies such as boosting hygiene protocols through regular sanitation and allowing curbside rental transactions, as well as adapting infrastructure to critical care transportation, mass transit, and delivery vans.

Global Chauffeur Car Rental Trends

Technology

Digital platforms using supplier websites that allow online reservations seem to be gaining popularity, against the traditional phone-in reservation model. Increased digitization and growing datasets are also going to speed up the evolution of mobile apps that offer passenger tracking.

In addition, service providers are looking at replacing air filters in vehicles with high-efficiency particulate air (HEPA) filters.

 

Disruptors

Decreased availability of licensed chauffeurs due to lower wages affects the rising demand for seasoned chauffeurs to handle increasing limo fleets.

Ride-hailing competitors with similar limo service availability like Uber LUX, have directly impacted the growth of existing chauffeured service companies.

 

Pandemic Impact

The global taxi and limousine services market is expected to plummet by 43.7% from 2019 to 2020. Providers have had to adapt to the pandemic in drastic ways, including:

  • Reducing the number of available seats and installing seating charts to promote social distancing
  • Minimizing driver interactions with guests and requiring drivers to wear protective facial gear
  • Offering passenger amenities only upon request
  • Replacing air filters with HEPA units

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