By Ryan Hohag, Director, Global Air and Car Practices
As the business travel market continues to evolve, one area where we’re seeing a lot of change is ground travel.
The inclusion of rideshare solutions as part of a holistic business travel ground program is emerging, led in part by an increased focus on sustainability. To guide us through these changes, we spoke to Ryan Hohag, Director, Global Air and Car Practices to get his insights.
How has demand for rideshare solutions in business travel changed, and why?
We are beginning to see a growing demand for rideshare in business travel. Some companies have revealed that in the last year, 90% or more of their ground volume for business travelers was with rideshare rather than rental car companies.
The pandemic has not only heavily impacted how travelers are approaching ground transportation, but it’s also had an impact on rental car availability, too. Facing global chip shortages and lingering supply issues, many rental car companies are still struggling to rebuild their fleets and meet demand. Because of these challenges, we are continuing to see high rental car prices that aren’t expected to go down anytime soon, especially with a projected surge in demand over the summer.
What are some of the key considerations to look at when adding rideshare to your ground program?
There are several variables you need to consider before getting started: location, availability, regulations, cost comparisons, and sustainability. These will help you shape what solutions you should be using and help your travelers make informed decisions on how they should approach the ground part of their trip.
You need to compare rideshare both to rental cars and public transportation. Sometimes, it’s about avoiding the need to drive, and the related stress. For example, in larger, confusing cities with aggressive drivers, travelers may be less comfortable renting a car and driving themselves. In that scenario, rideshare could be a good option.
What are some of the pros and cons of choosing rideshare in business travel?
Cost is definitely a driving factor when choosing to use rideshare over car rentals. Right now, rental car prices are much higher than they were pre-pandemic. If you’re on a long business trip where you don’t need a car every day, then a rental car may not be cost effective because you’re paying for it every single day, whether you use it or not. If you’re in an urban locale where you’re mostly using ground transport for shorter distances, for example from a hotel or conference center to a dinner, a five-minute Uber is going to be much easier and cheaper. Plus, in certain international destinations, using rideshare can cut costs, because a company won’t be responsible for additional insurance or certain types of licenses.
One disadvantage of rideshare is unpredictable availability from location to location and during peak hours. And for international locations, rideshare is subject to local regulations and is even banned in some cities. So that aspect requires more research and planning, whereas as long as you reserve your rental car, you can guarantee you’ll have it. It’s also worth noting that some of the duty of care issues relating to rideshare (like adherence to COVID protocols, background checks, drug and alcohol testing) are improving.
You’ve mentioned the sustainability aspect as a rapidly evolving area. What’s new?
Rideshare is really coming into the spotlight as a component of corporate travel policies and incentives to reach sustainability goals. As this evolves, we’re seeing new partnerships emerge. For example, Hertz announced that they were planning to buy 100,000 Teslas. This means Hertz will have the largest electric vehicle (EV) rental fleet in North America and, as a result, roughly one out of every five vehicles in Hertz’s entire global fleet will be electric.
Hertz also has a partnership with Uber. So, half of those cars, about 50,000 of them, are being offered for rent to Uber drivers. So far, over 15,000 Uber drivers have opted in to this program. In general, Uber seems to have done a bit more in this space than Lyft. For example, travelers can request an Uber Green – which guarantees your ride is in an electric vehicle – and contributes to your sustainability goals.
Whether you’re using rideshare or renting an electric vehicle, it’s important to consider how the electricity that powers it is produced. This can vary from city to city and country to country. It matters whether clean energy is being used to power these cars, because in some cases the energy is produced in ways that do more harm to the environment than a gas car. It’s a strange pitfall that many people don’t think about when renting an electric vehicle.
What’s ahead for the rideshare space?
The rideshare space is developing very rapidly. Historically, a lot of companies have restricted rideshare from their travel policy or banned it altogether. That’s typically due to duty of care, among other factors.
Integration with expense management tools and increased visibility into costs are improving, too. Companies like Uber aren’t transportation companies, they are tech companies, so they are well-positioned to make leaps in terms of FinTech partnerships. Some airline partnerships have emerged already where a traveler can link their mileage account and earn miles for ground trips.
The old way of thinking was that rental cars are better for business travel, but rideshare has really caught up quickly. There’s no obvious answer to which one is better than the other for your travel policy. You have to take into consideration the specific needs of your program, your travelers and the kind of trips they’re taking.