Mobility Services in the age of pandemic
The fact is that COVID-19 has also given a huge setback to the car rental segment, but over time, travellers are preferring personal or mobility services vehicles over public transport because of the flexibility and freedom to travel and which is expected to bring a new ray of hope for car rental industry.
Until the outbreak of the novel coronavirus pandemic early this year, the travel and tourism industry was variously described as ‘thriving’ and ‘booming’. Rapid urbanisation, a rise in disposable income of people, and an increase in the number of Gen Z travellers were a few factors attributing to the growth of the travel and tourism industry worldwide. But then the pandemic happened.
With that came a complete grounding of airlines to hotels and hospitality operations virtually coming to a halt, as countries sealed their borders to prevent the spread of the deadly virus. In fact, the impacts of the pandemic-induced lockdown resulted in economic distress. In no time, the brunt of the chaos unleashed by COVID-19 was felt by almost all industries, including travel and tourism as well as car rental sectors.
Pre-COVID-19 landscape
In 2019, the travel and tourism industry in India witnessed massive growth with people spending more on tourism that significantly supported the growth of the car rental market. Further, a report also suggested that last year more than 50 per cent of car rental revenue came from travelers traveling to and from the airport. Clearly, the tourism sector was growing rapidly, leading to a massive spike in the market volume of car rentals. Unfortunately, everything turned upside down in a matter of a few months. With a travel ban, players in the car rental and leasing segment faced significant challenges in terms of bookings this year vis-a-vis the previous year.
Did the tables turn?
Yes! However, the pandemic caught the world in frenzy, the travel industry along with the car rental segment began to witness green shoots in July. Gradually overcoming the negative effects of the COVID-19, players in the car rental sector identified early indications of improving demand, leaving them optimistic for the rest of the year. In the absence of a personal vehicle, renting or leasing a private car to other modes of public transportation became the buzzword, and new mobility trends started to emerge subsequently.
As the economy began to reopen and travel restrictions were eased, the car rental industry experienced a renewed demand from its customers. In light of the current situation, people are turning to mobility services that are offering unique advantages such as privacy, safety, hygiene, and door-todoor convenience. Here is where car renting or leasing is playing a significant role.
Trends that picked up during the pandemic
Since the lockdown restrictions have been eased and traveling was allowed, the tourism industry has been witnessing signs that customers are willing to travel again even before a vaccine is available at scale. A large-scale transformation has been observed within the travel market. Confined to their homes for more than five months, most people are now planning for a vacation. However, the idea of a vacation is gradually shifting more towards staycations or short -trips and driving holidays to nearby destinations. People also prefer to travel in smaller groups as compared to before. Thus, there is a paradigm shift towards the spectrum of ‘safe experience’ rather than an ‘adventurous’ one. As a result, self-drive rental car service and booking a chauffeurdriven vehicle have seen a sudden surge in demand as soon as the lockdown was lifted and offices as well as other activities resumed.
It is without a doubt that in such times of duress, work-life balance becomes a key priority for most working people. A key trend that has picked up is working-from-hills. So, people are slowly moving away from metros to their favorite hill stations to enjoy the scenic beauty while still maintaining a healthy work-life balance. Keeping these changes in mind, players in the car rental segment are cashing on this trend and curating suitable mobility options for their customers.
Enhanced tech facilities
More than ever before, brands in the car rental segment have pinned their focus on providing a safe travel experience to their customers. Leveraging new-age technologies like Artificial Intelligence, Machine Learning, and Data Analytics, players in the segment are offering advanced features such as keyless entry systems and real-time updates on vehicle sanitisation thereby ensuring their safety during the journey. In addition, app-based and online booking facilities are helping people to book services while sitting in the comfort of their homes.
In the years to come, car rental players will further adopt more and more car rental software and self-service technologies to boost competitiveness and quality of service. Despite its challenges, 2020 gave car rental players an opportunity to flourish with innovation. This shall continue in 2021 and in the years to come and will go a long way as the global car rental market is expected to reach a valuation of USD 131.0 billion by 2025.