How to beat record-high rates for rental cars

If you haven't rented a car for a while, be prepared for sticker shock along with extra fees for everything from earning frequent-flier miles to canceling a prepaid booking.

"This past year, we saw record rate hikes," says Neil Abrams, a consultant for New York-based Abrams Consulting Group, which tracks car rental rates.

Reacting to a downturn in business due to the global recession, rental companies reduced their fleets as much as 25 percent by replacing fewer cars. "That created an artificial demand and higher prices," Abrams said.

Shortages over holiday periods left many scrambling to find available cars. AAA of Washington reported that the average daily rate for car rentals in Seattle shot up 56 percent, from $39 to $61 per day, not including taxes, during Christmas week in 2009 compared to the same period the year before.

Abrams predicts more modest rate increases this year but says certain types of cars will be harder to come by (such as convertibles in Florida or SUVs in ski areas) as rental companies shift more of their fleets to more fuel-efficient vehicles.

Companies will continue to make do with fewer cars in the short run while they wait for business travel to rebound, predicts Clem Bason, president of the Hotwire Group.

Other changes are afoot. Just as airlines started charging for checking bags and hotels began charging for canceling reservations, car-rental companies are looking for ways besides price increases to boost their bottom lines.

For travelers, finding the best deal requires wading through fine print; checking several different car rental and third-party Web sites, asking for AAA and AARP discounts and avoiding airport pickup (but not necessarily drop-off) locations.

A few tips and some trends worth tracking:

• Watch for changes in cancellation policies. With the exception of prepaid bookings, the major car rental companies don't require a credit card to hold reservations and don't charge for cancellations or no-shows. That could soon change.

Avis Budget Group, which operates Avis and Budget, will begin testing taking credit card information to hold certain types of reservations, says spokesman John Barrows.

The company's fleet of cars worldwide is 25 percent smaller than it was two years ago.

"That places a premium on the ability to have all of our cars available," he said, which means finding ways to eliminate multiple bookings and no-shows.

In the future, Barrows predicts there could be fees for failing to cancel reservations for certain types of high-demand cars — hybrids or passenger vans, for instance — just as many hotels require a 24-hour notice on cancellations.

"What I think you'll continue to see is the slow move of the industry in this direction," he said, "the way it happened with hotels."

• Airport surcharges. Rental prices are highest at airport locations where extra fees, taxes and facility charges can add an extra 30 percent or more to the total price.

Better public transportation in many cities (including new light rail service between Sea-Tac Airport and downtown Seattle) makes picking up a car in downtown locations easier than it once was. If that's not an option, springing for a cab or shuttle might be worth it.

Example: Enterprise recently quoted a weekly rate for mid-February of $177, including all taxes and fees, for a Chevy Aveo or similar economy car picked up at its Westlake Avenue location in downtown Seattle. The price was $527 for pickup and drop-off at Sea-Tac.

It's also possible to save by picking up a car in town, then dropping it off at the airport at no extra charge.

An online search for a one-week economy car rental from Avis in early March showed the price at $315 for pickup and return at Sea-Tac compared to $246 for pickup downtown and return either there or the airport.

There are always exceptions. If you've booked early, it's smart to recheck prices closer to the time you pick up the car.

My husband and I routinely shave one-third off the price of a Hertz car by picking it up at a suburban location and dropping it off at the airport when we visit family in Cincinnati.

The last time we booked, however, we rechecked the day before and found the price had dropped at the airport location, but not in town, probably due to a surplus of cars at the airport. We canceled the old reservation, booked a new one and saved $30 over our original booking by picking the car up at the airport.

• Prepaid pitfalls: Some rental car companies offer discounts for prepaying, but read the fine print for cancellation penalties ($10-$50) and additional charges that can't be prepaid and will have to be paid at the rental counter. Locking in a rate by prepaying could cost you.

Example: Hertz recently quoted a weekly prepaid rate of $157.19 on its Web site for a compact car at McCarran International Airport in Las Vegas. While that's the amount that would be charged to a credit card at the time of booking, there was an additional $89.61 in taxes, government fees and airport surcharges to be paid at the rental counter, for a total of $246.80.

The bottom-line charge still represented a $39.30 savings over the total "pay later" rate of $298.71, but the restrictions on prepaid bookings are many, including no refunds or credit for unused days and a $25-$50 cancellation fee for rebooking if rates go down.

Check to see if an AAA or AARP discount might yield the same savings as a prepaid booking, without the restrictions or penalties. In this case, a AAA member could have rented the same car at an unrestricted "pay later" rate of $258.85, just $12 more than the prepaid price.

• Frequent-flier surcharges. Some companies charge a fee on rentals that earn airline frequent flier miles. Hertz charges $1 per day or a maximum $5.25 per rental. Avis charges 75 cents per day for miles earned on most airlines; $1 for Southwest. Budget charges 75 cents per day.

• Price shopping: Comparison shopping for the same type of car picked up and dropped off at the same location is essential for finding the best deal.

Start by scanning what's available on www.kayak.com and www.carrentals.com, which list prices with taxes for cars available through smaller, local agencies with off-airport locations, as well as the major companies. Always ask about AAA or AARP discounts.

Last-minute deals often show up on Hotwire.com. You're guaranteed a car from a major car-rental agency, but don't learn which one until after you book and your credit card is charged. Bookings are nonrefundable. Priceline.com offers similar deals.

• Insurance: Extra insurance coverage adds to the cost of any rental, and odds are you won't need it, at least in the U.S.

If you get in an accident while driving a rental, your auto insurance policy will likely pay most of the damage. Check with your insurance agent.

Your credit card company likely will provide secondary collision/theft/damage coverage, provided you pay for the car with the same card and you decline the rental company's collision waiver (CDW) coverage.

Polices vary according to the type of credit card. Some types of vehicles are excluded as well as coverage in some countries (often Jamaica, Ireland, Israel).

Call your credit card issuer for details, and see a comparison chart at www.creditcards.com/credit-card-news/rental-car-insurance-policies-1273.php.

Carol Pucci: cpucci@seattletimes.com