A few weeks ago I warned that rental car prices are on the rise, and you needed a couple of strategies to beat this.
- Rental companies offloaded vehicle inventories during the pandemic
- Cars have become somewhat scarce
- And they’re reluctant to get ahead of the curve buying new fleets as they try to repair balance sheets
- Traveler demand is picking up, especially in leisure destinations where cars are also most frequently needed
- This creates competition for limited inventory, driving up prices.
That scenario is playing out in Hawaii, and officials pledge to “investigate.” Indeed, they acknowledge they already know the reason but still want to threaten rental companies that are charging high prices. That will only make the situation worse.
Daily prices for rental cars in Hawaii are in the hundreds and the issue has caught the attention of state authorities.
Hawaii has seen car rental prices as high as $600 a day while some are even higher.
The state is looking at whether the dramatic increases in costs are legally justifiable.
National Car Rental, Maui
The Executive Director of the Department of Commerce and Consumer Affairs offers this classic: “I want to emphasize that supply and demand is not the be all and end all. ” Yet the best way to ensure a continued shortage is price controls.
Now, costly rental cars are a problem for Hawaii because it means the total trip cost for Hawaii tourists is higher, that limits tourism, which means less demand for local businesses. It’s understand for local politicians to be concerned.
Although it’s odd to now become concerned about tourism after six months of mandatory quarantine prior to instituting an ever-changing set of rules, and inconsistent application to suddenly blame rental car companies which have suffered tremendously during the pandemic (and haven’t been subsidized the way that airlines have been).
Moreover given the limited supply of cars, high prices are helpful to heal the market,
- Encourages families to economize. If you’re just heading to a resort and planning to stay on property, you may use a rideshare rather than renting a car. That saves cars for others to rent. High prices mean cars will more likely be available for those who need them.
- Incentivizes bringing more cars into the market. Cars are scarce, and they’re costly to bring to Hawaii. High prices make it profitable for rental companies to acquire and ship vehicles into a market where they’re needed. High prices increase supply.
Price controls will limit the supply of cars, delaying recovery of rental car availability in Hawaii, and will mean more travelers rent causing an even greater shortage of vehicles.
I tried renting a car on Tuesday for this weekend. No Hertz branch had calls, even corporate Hertz branches. I have President’s Circle status. Both Hertz customer care and the Hertz regional manager refused to get me a car even though a rental for President’s Circle was ALWAYS guaranteed with 48 hours notice.
It’s not just Hawaii-one of my staff rented an Optima for 4 days in SDF, total charge $533+. I had to rent one for the week, also in SDF, which ended up being $475+. The only reason I even got the car was because I’m Express w/Dollar & they snitched the car from Hertz; everyone else in front of me had been told no cars available, despite having reservations. Add to it the lack of ride share services being available, I’m sure the rental car companies see no reason to pull cars out of storage to bring prices down.
No doubt at these price points tourists will tend away from renting a car for an entire week simply because they want the convenience of being able to hop into their rental car whenever they want. Rather, they will start to rent cars for only the days they are critical and stay put on resorts or ride share on days they do not need to travel more than 10 miles.
No doubt renting cars when they will be intensively used also means that cars will get more miles put on them.
I agree. They made it abundantly clear they are Not the Aloha people anymore. And what’s their stance on the new CDC travel guidance?
My last time in Honolulu I used Turo which was much cheaper for a 1 day rental. Same issue in Ft Lauderdale last weekend the rental car prices seemed insane.
I am planing to go to Hawaii this week for hunting is it a good time to go in this covid situation?
Interesting this is happening in Hawaii because you would think it’s logistically harder for the rental car companies to sell cars in bulk. I wonder if they ship some to the mainland.
I’ll stick with ride share thanks
Don’t care if they all go under
Made a reservation for a small SUV on the big island for five days in mid-April – $1,470… This was 10 days ago. After talking about it we decided that amount of money would give us an ample Uber budget. Since then Hertz now wants $2,400 for that same rental. Crazy pricing.
I was on Oahu two weeks ago and saw it myself. Cheapest car was a compact going for $239. My buddy reminded me about USAA, as I’m a customer, and I was able to get a full-size SUV for $129.
Let’s not forget the $30-$50 parking fees on Waikiki as an added cost. Again, if you are a vet you can do much better with a little searching.
The “aloha” spirit has been gone for sometime now. I doubt the cars were all shipped back to the mainland many most likely sold to asian pacific nations.
I think after all the smoke clears prices will be and stay higher with less services. Daily maid service, food/restaurant offering diminished, refurbishments are done for sometime.
Aloha
Traveling internationally, and no issues or huge price increases. (cuz, you all are still ‘staying home/staying safe’ for some reason)
That said, high prices are good. It encourages the companies to buy more cars.
Supply & Demand.
This isn’t illegal or bad, this is great. Helps get more cars to Hawaii fast (for all the people who decide to go there instead of seeing any other part of our beautiful world)
Gary and BA readers: This won’t help everyone (by a long shot!) but if you are headed to Honolulu or Portland, OR, I purposefully wrote guides to getting around without a rental car (using public transportation only). See https://www.theflightdeal.com/2018/03/23/practical-travel-tips-oahu-hawaii/ and https://www.theflightdeal.com/2019/06/14/practical-travel-tips-portland-oregon/. Hope these ideas may help a few readers….
Supply and demand for rideshare = much higher cost.
For those prices you could hire a local driver for the day.
Hawaii probably is the worst state ever admitted (against the will of the western public) to the union. We get nothing but horrible judges, terrible politicians, anti white hate, and ridiculous prices. People much older than me recall of nasty native Hawaiian treatment toward white tourists in the late 1980s. These are the white tourists that enrich Hawaii with tourist dollars. I hope Hawaii pushes for complete independence. Give it back to the Hawaiian (genetic) people and we can be rid of their nonsense. We don’t need the condescending attitude of native Hawaiians or their problems. Native Hawaiians commit a disproportionately higher amount of violent crime than some groups and they also disproportionately have an alcohol problem. Taxes are ridiculously high.
The beaches are nothing compared to the Caribbean water color wise. The nature is no better than Belize. Volcanos exist in Iceland and even Italy. Fly to Tahiti and then to Bora Bora. The hate for tourists won’t be there like it is in Hawaii. Bora Bora has beautiful water on par with the Maldives and Sardinia.
Went there late March. About 2-3 weeks before, rates were still very low – less than $50/day – and flight back was 3/4 empty. Then – coincidentally? – around when the new stim checks were approved by Congress rates shot up and the hotel I booked went from wide open to booked solid, return flight went to near 100% full. Still many closed hotels.
And rental car rates went up – although Avis seems to be playing the hold rates low and sell out game, while Hertz is playing the keep rates higher game.
My guess is this phase passes after this summer with those checks burned up and people get their first trip in.
But fewer cars on the lot than before. Hertz sold a chunk of cars last year although Sixt opened in early 2020 at HNL with a nice fleet to dilute things.
@Jackson Waterson: Check out Samoa, the independent country and not the third-world US territory a hundred miles away called American Samoa. Samoa (well, actually American Samoa too) are more authentic Polynesian experiences than Hawaii. Some incredible natural beauty. Samoa has two Sheratons. American Samoa doesn’t have any nice hotels.
Check out the reviews of all of the major rental car companies in hawaii. They’re all garbage. Poor customer service, absurd pricing, and most problematic is their poorly maintained fleet. And this was pre-covid! AFAIK, they are affiliated with their corporate parents but are independently run businesses.
Grabbed the only convertible in the executive aisle at TPA this afternoon. 4-day rental = $320.
Just in time to watch the EPA slobber on themselves over the Piney Point breach, they are as useless as the CDC. Its time to trim the pork.
you may use a rideshare rather than renting a car. That saves cars for others to rent. High prices mean cars will more likely be available for those who need them.
It is incomprehensible to me how a supposedly educated person can write such nonsensical drivel. Need is not contemplated in this method of resource allocation. Only wealth is. The cars will go to those people for whom $600 per day is affordable without regard to their comparative “need” to have the car. Even that doesn’t work because they’ll sell out of cars even at that price. If you really want to have the last car on the lot available to someone who “needs” it, you should price it at $10,000 a day — or a million. The only reason you imagine that this is a need-based allocation is because the $600 price is one that you would not normally pay, but that you personally could afford to pay if you wanted the car enough.
Some business owners in Hawaii who feel their business got burned badly by the pandemic may now be trying to drive up their margins by playing up relative scarcity of supply.
Price gouging as a way to try to replenish depleted savings or otherwise build up savings? This wouldn’t be the first time this kind of thing has happened.
Yes, in a vacuum, price controls ensure a continued shortage…but only if the set price is not substantially above marginal cost. At some point a price spike basically turns into a “rent” (particularly somewhere like Hawaii, where you can’t really move extra inventory in quickly, so the value of the price signal to the rental company is limited…it isn’t, say, Los Angeles where you can just have some cars driven in from Las Vegas), particularly if the underlying conditions are transitory.
To be fair, I don’t think a compromise is unreasonable…”You can charge higher rates but we need to see that you’re using the windfall to solve the underlying problem rather than just pocketing it” feels reasonable.
BTW, Gary, one point to “folks choosing other options”: Per the underlying news story, at a minimum this is also causing serious knock-on loads for taxi companies Honolulu. Price signals pushing people in an alternative direction only really works if the alternatives aren’t swamped as well.
Whether this is a transitory spike or it’ll back off as other places (e.g. New York, California) reopen is the wild card here…but if I was those Hawaii officials I’d be insisting that if rates were high/supply was constrained for more than the next few weeks, the rental companies need to be arranging to ship cars in sooner rather than later.
Prices went sky high in San Diego when I was there recently. Lucky for me I booked before the spike. $200 / 4 days (Upgrade car, so $250). But I recall checking shortly before my flight, prices were starting at $400-$500 or something like that — for a lesser car
When vaccinated folks start dying big in the next cycle…prices will retreat again.
we’re just getting started…..
The increase in rental car cause has nothing to do with aloha. It is so silly to blame the prople of Hawaii for higher rental car prices. Place the blame where it belongs, on the economic uncertainty caused by the epidemic and giant corporations that own rental car companies.It is so silly to blame Hawaiians for not wanting to catch Covid from visitors who come in from outside their communities. Lack of aloha? No, just common sense. Look at your history. Europeans brought disease and devastation to the islands. It’s a lot to ask, I know, but it would be great if people actually studied and appreciated the history of the areas where they visit so they know what the heck they’re talking about.