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“Can anyone make money in this business anymore?” Sounds like a question that would be asked of a management consultant by a beleaguered travel agent at one of ASTA’s conferences. Actually, however, the question was asked of me by a senior auto rental executive at the recent annual American Car Rental Association conference in Orlando.

The world of travel services, of which both travel agents and auto rental executives are integral parts, is a vexing business. Its quite different today than it was five years ago, and in another five years, it will be unrecognizable. Technology, customer requirements and expectations and supplier influences have all changed the way we do business and the economics of the business. The only rule of the game today is that there are no rules, and there doesn’t appear to be a formula for operating a successful business that you can depend on for more than a year at a time.

So what do they have in common, these comrades in arms fighting each and every day to eke out a buck of profit? We, as providers of necessary services, are both “under-respected” and “over-expected.” Our customers and vendors want more for less, and we feel overwhelmed by outside factors we can’t control.

We can either watch opportunity pass us by . . . or we can step up our “game,” challenge the way we do business, and confront the realities of an industry where the old way of business just won’t work. Unless we attempt to understand, listen and evolve, we simply won’t be around.

Auto rental operators and travel agencies need each other–not as partners, but as allies. We must consider the realities of our respective businesses, and communicate them to our customers. For example, do you know that about a dime out of every travel dollar goes towards auto rental? The auto rental decision is typically at the bottom of the list of considerations. (When was the last time a customer planned a trip because of a great rental vehicle at the destination?) Consider that a good dinner at a nice restaurant in a large city will probably cost your customers more than a full days rental of a $30,000 vehicle. And, what’s your customer more likely to complain to you about–the cost of the meal or the rip-off price of the rental vehicle?

The auto rental industry must educate the travel agent community about the realities of the rental business, and the travel agent must do the same for customers. I’m simply tired of auto rental operators apologizing for and being embarrassed by a relatively conservative increase in rental rates. The fact is that the price to rent a car comes as close to the proverbial 10-cent phone call as any product or service I can think of. Yes, within the past year, there has been some upward movement of between 5 and 10 percent in rates. Forecasts for the next year are for some increase in rates as well. However, this must be considered relative to a flat, if not distressed, pricing structure throughout the first half of the decade. This is bad enough.

Lay this against a cost base–vehicle-holding expense being the largest component–which is two-and-a-half to three times what it was in 1990, and the result is sustained economic turmoil, out of which the industry is just beginning to climb. Add to the mix consumer protection laws that put a financed asset in the hands of a virtual stranger who has limited exposure and liability.

This is the beginning of the education, but it can’t stop there, and it certainly is not a one-way process. You must let your auto rental vendors know your problems, your issues and your mandate to receive a fair fee for a valuable service as a critical channel of distribution of rental vehicles. You have the right to demand that your customers get what they pay for, and that you get compensated for delivery of the business.

Let’s face it! There are more than 1.5 million rental vehicles being driven on U.S. roads on an average day. These vehicles generate well in excess of 100 million rental transactions each year. The agent community is delivering close to half of these rentals. With that kind of volume, the tiniest percent of problem rentals means a lot of dissatisfied customers who look to their travel agents as the source of the problem, and in many cases, the solution. The travel agent must let the rental operator know what’s going on. One of the greatest fears of managers of auto rental companies is not knowing about the customer that was lost, perhaps forever.

From time to time, I will use this forum to speak out on important and relevant topics. Consequently, if there is a relevant or timely issue you want addressed that’s specific to the auto rental business, write toASTA Agency Management.

Neil Abrams, formerly of Hertz Grp., established Neil Abrams Associates, Inc., a management consulting organization based in Purchase, N. Y., in 1982. Abrams Consulting International, an NAA subsidiary, advises auto rental and travel companies worldwide.