global travel gross bookings will reach nearly $1.5 trillion this year and more
than $1.6 trillion by 2021.
While the majority of that spending is made on air and accommodations, ground
transportation is accelerating as a category for activity, innovation and
Whereas a few years ago, car rental, rail, bus, taxi and shuttles were the
primary subsets of this sector, now the lexicon has expanded to include
ride-hailing, ride-sharing, carpooling, bikes, scooters and more.
These newer entrants have entered the market digital-first, forcing existing
players to innovate to keep up with consumers’ expectation for fast, frictionless,
While this growth creates more choice than ever before for travelers, the category’s
high fragmentation also creates more potential for confusion.
In its 2019 U.S. Travel and Hospitality Outlook report,
Deloitte analysts write: “Even the most diligent of travel planners can get it
wrong - particularly those navigating unfamiliar cities or making spontaneous
For ground transportation suppliers with ambitions of evolving
with changing customer expectations, multimodal integration offers a promising
"Next-gen trip services will combine disparate supply, new
types of content like transfers and parking and real-time transit information -
and tie it all together with AI, personalization and a single, integrated
The car rental sector of ground transportation
has undergone substantial transformation in the past decade, driven by the rise
of mobile, on-demand technologies and consumers’ adoption of sharing economy
models in so many aspects of their lives.
Companies such as
Uber, Lyft and Didi have shaken up the status quo.
In response, both
traditional, long-standing ground transportation suppliers and new entrants are
redefining the services and experience they offer to travelers.
For the part two of
our series on ground transportation, we talk to three mobility solution
providers – two of the world’s largest car rental suppliers and a relatively
new peer-to-peer car sharing company – to find out how they are redefining this
Phocuswright’s U.S. Car Rental 2018 report, over the past several years, the
car rental segment has grown at a slower rate than the overall travel market.
Projections for 2018 indicate a 3% growth in gross bookings to $19.7 billion.
But within that
figure is a strong performance from mobile bookings, which Phocuswright
predicts will grow by double digits until 2022 and will steadily account for a
greater share of total bookings, from a predicted 8% in 2019 to 11% in 2022.
“In the past decade, car rental brands may have been too
preoccupied with fending off new entrants to the space to invest as heavily in
their mobile programs as they should have. This oversight left room for nimble
car-sharing and ride-hailing companies to innovate and compete on technology
and convenience, especially in the mobile channel,” says the Phocuswright
One of those
“nimble” companies is Turo, a peer-to-peer car-sharing company founded in 2010.
As of 2018, the
company says it has 350,000 cars available to rent in more than 5,500 cities in
the United States, Canada, the United Kingdom and Germany.
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To date the company
has logged about six million booked days of cars and has 10 million customers
signed up on the platform.
Turo functions similar
to other peer-to-peer marketplaces. Car owners list their vehicles on the site
for free, and when a booking is made, owner and customer meet to exchange the
Rentals are covered by Turo for up to $1 million in liability
insurance and protection for damage and theft.
“The car you book
is the car you are going to get,” says Michelle Peacock, vice president and
head of government relations at Turo.
“You can ask questions - does it have these features,
XM radio, can you give me a car seat? It’s an amazing amount of information and
Peacock says the average host customer makes $625 per month
For now, most transactions take place with a
person-to-person exchange of the car.
“There is something really powerful about receiving the key
from the car owner and knowing this is his or her car,” Peacock says.
November, Turo has been testing remote access and ignition via its mobile app,
with plans to expand to additional markets in the future.
In announcing the new Turo Go connected car option, created
in partnership with auto access hardware provider Continental, Turo CEO Andre
Haddad says in the future the company hopes to have the capability integrated
in vehicles coming off the assembly line.
“We're talking with a number of forward-thinking auto
manufacturers, including Mercedes-Benz, about solutions to further integrate
instant mobility into our service. We see a future where new, connected
vehicles leave the manufacturing line 'Turo-ready'," Haddad says.
Along with product development, one of Turo’s immediate
concerns is its ongoing battle with the car rental industry in several states.
“In the last couple of years, Enterprise has launched a
nationwide campaign at the state government level to essentially regulate peer-to-peer
car-sharing out of existence,” Peacock says.
“We are not opposed to being regulated. We are happy to have
any discussion with any lawmaking body about an appropriate regulatory
framework if they feel it’s necessary.
"But it has to be for peer-to-peer
car sharing - not fitting us into a rental car framework. They are completely
rare that one of the most innovative companies in a sector is also the oldest.
in 1912 in Germany, Sixt is one such a company.
2008, the company says it became the first worldwide car rental supplier to
offer booking via an iPhone.
Since then it has launched several
forward-thinking initiatives such as DriveNow in 2011 - a joint venture with
BMW to provide premium car-sharing - and the creation of an Alexa skill for
voice booking in 2017.
in February, the company released what Sixt USA chief operating officer Daniel
Florence says is its coolest technology to date – a new app that combines car
rental, car sharing and ride hailing in one system that can be used for both
booking and payment.
With a fully connected fleet we know exactly how many cars we have, where they are and the status of that vehicle.
Jeff Kaelin - Avis Budget Group
are all these cool terms that get used in the sharing economy like ride
hailing, car sharing and let’s not forget the old-fashioned car rental piece,
but at the end of the day, with all of those components you are renting a
service. You are either renting a car by the minute, the day, the week,
whatever it may be,” Florence says.
the goal from our point of view is to create a full mobility platform that
allows you to have access to all of those things from one application, and it’s
powered by Sixt.”
says its platform connects travelers to 240,000 vehicles, 1,500 affiliated
partners and more than one million drivers in 110 countries worldwide.
ride-hailing option, Sixt Ride, provides taxi, private car and limousine
services for on-demand or advance bookings.
Sixt Share, launched in February,
is in effect an extension of the company’s car rental business that gives
customers the option to book by the minute (and up to 27 days), access cars via
the Sixt app and return them to flexible locations in addition to Sixt
says Sixt Share has been developed with knowledge gained from the company’s
DriveNow joint venture (in January 2018 Sixt sold its stake in that car-sharing
service to its partner, BMW, for $259 million).
[DriveNow] we developed a lot of the technology, a lot of the processes,”
have a clear understanding of the logistics of car-sharing, how it works and
where customers are impacted the most. So we can take that and drive it forward
beyond just your traditional sharing economy model.”
entered the U.S. market in 2011 and now has 56 branches, including counters in
19 of the top 25 airports in the country.
says Sixt is now the fourth largest car rental company in the U.S. and in the
next two to three years plans to nearly double its locations to more than 100.
Avis Budget Group
For Avis Budget Group, the future of mobility is “connected,
integrated and on-demand” and a key to making that a reality is connected car
“It’s a vehicle that communicates with us on a regular
interval and a vehicle that allows us to ask it questions,” says Jeff Kaelin,
Avis Budget Group’s vice president of product development.
That means the company can know a car’s odometer reading,
fuel level, diagnostic trouble codes, and other data through remote, digital
As of the end of 2018, 100,000 of the company’s cars
globally are equipped with connected car technology and Kaelin says they are
working toward a fully-equipped fleet – about 600,000 vehicles – by 2020.
The benefits, he says, touch both the company’s operational
processes and its customer experience.
On the business side, Kaelin says a connected car brings
efficiency to what are traditionally time-consuming, labor-intensive business
“With a fully connected fleet we know exactly how many cars
we have, where they are and the status of that vehicle,” he says, which facilitates
vehicle recovery, asset management and – in the future – predictive analytics
to minimize the likelihood of vehicle failures.
For consumers, a connected car rental can be managed
entirely in the Avis mobile app, including selecting the make, model and
features of their vehicle, returning the vehicle, locking and unlocking doors,
locating the vehicle and seeing when the next courtesy shuttle arrives (about
300 of the company’s shuttles are also equipped with connected car technology).
And in the future, Kaelin says the combination of connected
cars, the mobile app and keyless technologies from the company’s partnership
with Continental will allow it to provide vehicle access on-demand.
“Historically, to rent a vehicle from us meant coming to a
rental facility or to an airport,” Kaelin says.
“In the future... it will enable us to put vehicles where
customers want them and to be able to grant them access to those vehicles when
they want to use them.”
Since the app launched in 2016, Kaelin says there have been
about two million transactions in the app, and those customers report
satisfaction ratings that are 20- to 25% higher than customers not using the
Much of the company’s testing and learning around connected
cars has been conducted in its Mobility Lab, opened in Kansas City in December
“As we roll out new technology, we use that fully
functioning location to test and pilot those changes,” Kaelin says.
“It’s where the digital experience meets the physical, which
is really important and the key to our success.”
One idea currently being tested – push notifications to
customers about popular tourist sites as their connected cars enter geo-fenced
regions around those attractions.
Kaelin says the company has also learned from its
acquisition of Zipcar, which it purchased for $491 million in 2013, about “what
the future looks like when you manage a distributed fleet and when you provide
those type of on-demand services.”
It also has partnered with RocketSpace startup accelerator
“To stay relevant [requires] looking outside of your own
front door,” Kaelin says.
“It’s given us the ability to evaluate far more startups on
an accelerated time horizon then we could have otherwise done on our own. We’ve
had the opportunity to meet a lot of interesting partners and to test some
potential concepts for the future.”