Loyalty programs can help save rental car companies — here's how
Rental car companies have been hit hard by the coronavirus pandemic. Industry giant Hertz filed for Chapter 11 bankruptcy earlier in the year and Enterprise Holdings — the parent company of Alamo, Enterprise and National — recently laid off over 2,000 staff.
It's easy to understand why. With fewer people flying, fewer are renting cars. This is especially true for business travel. Consultants are a key market for rental car companies and virtually none of them are traveling now.
That said, I think rental car companies have room to grow during the pandemic. With road tripping on the rise, legacy rental car companies need to find a way to curate their business toward these customers.
Related: 10 tips for anyone taking a road trip right now
Likewise, these companies need to find ways to actually monetize their loyalty programs for extra income. Moreover, this will help them through the pandemic and become an important income source for years to come.
Here, I'll discuss why and how loyalty programs can save the rental car industry. I'll also provide some insight into how I'd like to see these changes be made — let's dive in!
For more TPG news delivered each morning to your inbox, sign up for our daily newsletter.
[table-of-contents /]
Loyalty programs are insanely profitable
Loyalty programs have been cash cows for airlines and hotels for years now. In fact, the American Airlines AAdvantage program is currently valued higher than Airbnb. On the other hand, Delta expects its cobranded credit card partnership with Amex to be worth over $7 billion by 2023.
These loyalty programs are so profitable because of their partnerships. For example, every time you transfer points, spend on a cobranded credit card or shop through a shopping portal, the airline gets a check for the value of the points.
This doesn't always happen in real-time, however. Just a few months ago, we learned that American Express bought $1 billion worth of Hilton Honors points upfront to help the company through the coronavirus travel downturn.
Related: Chase, Amex spending millions on points and miles — what it means for the future of loyalty programs
How rental car companies can cash in
Interestingly enough, none of the major rental car companies have a cobranded credit card. Likewise, none of the rental car loyalty programs partner with transferable currencies like American Express Membership Rewards or Chase Ultimate Rewards.
Consequently, I think there's a market for cobranded rental car credit cards and partnerships. On the cobrand side, I'd like to see one of the major rental car companies introduce a mid-range credit card that not only earns points but provides benefits too.
For example, Hertz could offer a credit card with Hertz Free-To-Go membership and elite status. This card could have a $99 annual fee, which is the cost of a Hertz Free-To-Go membership. Those who rent cars frequently can justify the cost with these added benefits.
Other interesting benefits could be fee waivers (for tolls, one-way rentals, etc), free tanks of gas and access to preferred rates. These would entice me to continue renting with a single rental car company, even if it's marginally more expensive than the competition.
To sum it up, a rental car rewards card would be a win-win for everyone. Rental car companies would make money from the points they "sell" to banks and the people spending on these credit cards would have a reason to rent with the company.
However, not all consumers will want to move spending to a cobranded rental car credit card. For these consumers, a partnership with a transferable points currency makes a lot of sense. I would personally take advantage of this. This would create a long-term, sustainable revenue stream for rental car companies.
Related: How to never pay full price for a rental car
Customers need a reason to come back for more
The major issue I've had with rental car elite status is that it's, well, not very useful. I'm a top-tier Hertz President's Circle elite member, but the limited benefits don't make me loyal to the company.
Let's be real: at best, I get bonus Hertz points and a better selection of cars in the Ultimate Choice President's Circle lot. That said, the latter benefit is hugely inconsistent — sometimes I drive off with a Chrystler 300S and other times with a Ford EcoSport.
This makes rental car elite status feel like a gimmick. In turn, this leads many travelers to simply book whatever is cheapest, regardless of rental car elite status. I'll admit that I'm in this boat (car?) too; even a $10 difference would get me to go with the cheapest available option.
Rental car companies need to change their loyalty programs for the better to retain their most loyal customers. This is especially important for leisure travelers. While a large company may have a corporate partnership, leisure travelers will go with whoever offers the best price and benefits.
Related: Your points, miles and loyalty guide to Hertz car rentals
Here's how rental car companies can revamp loyalty programs
I think a good place to start is by offering truly confirmed upgrades for customers. Sure, picking from the Ultimate Choice lot or Emerald Aisle is nice. But it's worthless if the available cars aren't a cut above what the customer actually reserved.
One interesting way of rolling this out could be with virtual car selection for elite members. In a perfect world, elite members could view inventory ahead of time and digitally reserve a specific car from the lot — not being stuck with whatever is available on arrival.
Alternatively, rental car companies with "pick your own car" policies could implement a choice policy. You'd have the option of either picking a car from the lot or confirming a one-class (or higher) upgrade ahead of time. This would ensure that upgrades are actually confirmed, not subject to change.
I'd like to see rental car companies add other elite status benefits too. A few that come to mind include fee waivers for tolls, complimentary gas fill-ups and free car drop-off. These features are convenient and make rental car elite status feel truly premium.
Rental car companies need to streamline their redemptions
Finally, rental car companies need to make it easier to redeem points. Nowadays, rental car point redemptions are extremely convoluted. Hertz is a good example of this. While 750 points are technically enough for a free rental day, it's only for very specific dates. Even worse? These dates vary by location.
To make these redemptions worthwhile, rental car companies need to standardize their award charts. They can start by implementing on and off-peak dates that actually make sense and are streamlined across all locations.
Sure, this makes redemptions easier and less cost-effective for the company, but it would also entice customers to earn these points. This is especially important if a rental car company rolls out a credit card or transfer partner.
Related: National vs. Hertz: which car rental program is best?
Bottom line
In an unpredictable travel world, travel companies need to do whatever they can to entice travelers, build loyalty and plan for the future. When it comes to rental cars, these companies need to find a way to revamp their loyalty programs to be true marketing tools and moneymakers, both for now and in a post-coronavirus world.
TPG featured card
at American Express's secure site
Terms & restrictions apply. See rates & fees.
| 3X | Earn 3X Miles on Delta purchases. |
| 1X | Earn 1X Miles on all other eligible purchases. |
Pros
- Delta SkyClub access when flying Delta
- Annual companion ticket for travel on Delta (upon renewal)
- Ability to earn MQDs through spending
- Various statement credits for eligible purchases
Cons
- Steep annual fee of $650
- Other Delta cobranded cards offer superior earning categories
- Earn 100,000 Bonus Miles after you spend $6,000 or more in purchases with your new Card within the first 6 months of Card Membership and an additional 25,000 bonus miles after you make an additional $3,000 in purchases on the Card within your first 6 months, starting from the date that your account is opened. Offer Ends 04/01/2026.
- Delta SkyMiles® Reserve American Express Card Members receive 15 Visits per Medallion® Year to the Delta Sky Club® when flying Delta and can unlock an unlimited number of Visits after spending $75,000 in purchases on your Card in a calendar year. Plus, you’ll receive four One-Time Guest Passes each Medallion Year so you can share the experience with family and friends when traveling Delta together.
- Enjoy complimentary access to The Centurion® Lounge in the U.S. and select international locations (as set forth on the Centurion Lounge Website), Sidecar by The Centurion® Lounge in the U.S. (see the Centurion Lounge Website for more information on Sidecar by The Centurion® Lounge availability), and Escape Lounges when flying on a Delta flight booked with the Delta SkyMiles® Reserve American Express Card. § To access Sidecar by The Centurion® Lounge, Card Members must arrive within 90 minutes of their departing flight (including layovers). To access The Centurion® Lounge, Card Members must arrive within 3 hours of their departing flight. Effective July 8, 2026, during a layover, Card Members must arrive within 5 hours of the connecting flight.
- Receive $2,500 Medallion® Qualification Dollars with MQD Headstart each Medallion Qualification Year and earn $1 MQD for each $10 in purchases on your Delta SkyMiles® Reserve American Express Card with MQD Boost to get closer to Status next Medallion Year.
- Enjoy a Companion Certificate on a Delta First, Delta Comfort, or Delta Main round-trip flight to select destinations each year after renewal of your Card. The Companion Certificate requires payment of government-imposed taxes and fees of between $22 and $250 (for itineraries with up to four flight segments). Baggage charges and other restrictions apply. Delta Basic experiences are not eligible for this benefit.
- $240 Resy Credit: When you use your Delta SkyMiles® Reserve American Express Card for eligible purchases with U.S. Resy restaurants, you can earn up to $20 each month in statement credits. Enrollment required.
- $120 Rideshare Credit: Earn up to $10 back in statement credits each month after you use your Delta SkyMiles® Reserve American Express Card to pay for U.S. rideshare purchases with select providers. Enrollment required.
- Delta SkyMiles® Reserve American Express Card Members get 15% off when using miles to book Award Travel on Delta flights through delta.com and the Fly Delta app. Discount not applicable to partner-operated flights or to taxes and fees.
- With your Delta SkyMiles® Reserve American Express Card, receive upgrade priority over others with the same Medallion tier, product and fare experience purchased, and Million Miler milestone when you fly with Delta.
- Earn 3X Miles on Delta purchases and earn 1X Miles on all other eligible purchases.
- No Foreign Transaction Fees. Enjoy international travel without additional fees on purchases made abroad.
- $650 Annual Fee.
- Apply with confidence. Know if you're approved for a Card with no impact to your credit score. If you're approved and you choose to accept this Card, your credit score may be impacted.
- Terms Apply.
- See Rates & Fees