Lyft use doubled amongst business travelers from Q1 2017 to Q1 2018. Over the same period, Uber declined–but not nearly as much as so did car rental and taxis declined even more.
The data comes from Certify's quarterly SpendSmart(tm) report.
Should I believe the data?
Certify relies on expense reports of its customers, many of which are directly linked to credit card spending, in this case using 10 million transactions. While probably useful, 10 million transactions isn't actually that many–remember this includes everything you might expense for your business, from pens and paperclips to airplanes and parking (and there are around 189 million adults with a credit card in the US, so this is a very small sample–less than 0.01% of transactions).
However it is not nearly as subject to confirmation or recency bias as other methods of data collection, like surveys. If car rental is down 32% for business travelers according to this study–it's likely down in reality too.
What does this mean for a car rental business?
Knowing about industry headwinds does nothing to stop them. Instead of talking about the weather, what can you actually do?
The primary advantage Lyft and Uber have over car rental is the user experience–especially at certain airports. A long walk to the car rental center (or worse–a shuttle), a long wait in line, fighting off upselling–you'd be at your meeting already if you had chosen to Lyft.
Another important, secondary advantage, is cost. Car rentals are sometimes very affordable–but other times, they are not. Furthermore in certain markets the amount paid to the car rental company is only a fraction of the cost of renting a car. Parking at LA hotels can be $30 or $40 per day–more than renting the car. Combined with the inconvenience of collecting the car, business travelers opt for ride-hailing. Even when it is more expensive.
Ride hailing plateauing?
Does the battle for marketshare between Lyft and Uber mean that ride hailing ridership has plateaued? Unlikely. As these companies continue to innovate, they will find new ways to offer convenient and affordable services to business travelers and other segments. Looking at the rentals in credit card data might hide a bigger opportunity–how many rides, a la carte, are available for ride hailing. One 2-day rental might be 5 car trips. So a lot remains to be lost by car rental–and picked up by ride hailing.
Mobility and the connected car factor in as well. With more options, more consumers may choose to rent in their own market–eschewing car ownership altogether. That trend was highlighted by Alex Sixt recently of Sixt car rental. While an opportunity for car rental companies–it won't help companies with major airport fleets. Nobody is going to go to their local international airport to get a car to drive to Whole Foods.
One other thing
Traditionally, car rental companies assume the last minute traveler is a price-insensitive business traveler, charging the highest rates at the last minute. I personally have chosen to Uber or Lyft instead of renting a car last minute, and this trend is probably still very hard to tease out of traditional revenue management modeling. What worked last year–when 61% fewer people used ride hailing–might not work this year.