Seeing Through The Rental Deal

Redspot Car Rentals

After initialling boxes that “gives us the right to come to your home and seize one of your children,” Bryson is given directions to the car park. “I never did find the car, of course,” he ends.

Typically, renting a car – for a day or a year, it doesn’t matter – is not an experience that fills the traveller with joy, no matter that it might be the start of an adventure or vacation. This is a major reason why one company took the initiative to offer a “Drive Away” package on its fleet that actually means what it says. The “all-inclusive” rates offered by Redspot.Sixt really ARE all inclusive. No hidden extras for collision damage waiver, additional drivers, full insurance or even toll charges – it really is all-in. The transaction at the rental desk is faster and less daunting, and you don’t have to put a lien on your family members.

Redspot was founded by Dan Mekler, who in 1989 took on two courtesy cars, started to experiment with delivery to hotels in the central business district of Sydney, and soon discovered a large gap in the availability of car rentals on the weekend. He is still very much at the wheel, driving growth through his more customer-focused approach, and enjoying being the ‘underdog’ in a business largely dominated by household, global but often characterless brands.

“We’re confident that we’ve got a better way to rent a car, so we’re not a bitter, angry underdog at all. Instead we playfully poke fun at our competition and can have a laugh with our customers,” proclaims the company’s website, which also portrays the said underdog doing to a car wheel what Redspot would like to do to hidden extras.

Now with a fleet of around 2,000 vehicles (from the Nissan Micra to a Hyundai 8-seater minivan, but not offering the more exotic, luxury or sports models that cater to an extreme minority of renters), Redspot allied itself earlier this year with SIXT; a global brand, true, but with distinctly Bavarian roots and a similarly independent mindset. It’s a marketing alliance – Redspot will remain independent and proudly Australian but with the advantage of servicing all SIXT business incoming into the country. Redspot customers will be serviced worldwide by SIXT, which has some 3,500 outlets in its networks.

“This means we can now service wholesale, corporate and even airline business that we previously could not compete for as a one-nation operator. We are partners; they have no financial interest in our business, nor are we a franchisee,” says Dan, who adds that he has no intention of changing that status or diluting that hard-won independence now or in the future. Other rental companies had approached him in the past, but none were prepared to allow him such freedom until SIXT started talking.

Domestically, he says, nothing has changed and Redspot remains very much the underdog. “We are certainly the youngest player on the block; we are still expanding our network so there is a lot of growth to come before we can claim to be anything else. We have to offer a level of service and a customer experience that warrants people wanting to come back to Redspot and become our ambassador, more so than our competitors because they have more established brands and market positions.”

Lacking the scale of the competitors’ budgets, the company has nevertheless attained a strong position in the airport markets. “Just being on-airport is a banner and a marketing benefit that we value highly. But we have to be smart and make every dollar of marketing spend count to get our message across.”

Dan’s background is in automotive engineering and technology and he and the team understand maintenance and the operation of fleets, so they are able to purchase vehicles and servicing competitively despite running a smaller fleet than most. Vehicle quality is important, not just from the resale perspective but also for reliability, spares and serviceability. “We have a very hands-on approach to this side of the business,” explains Dan.

The company has seen substantial progress in recent years in the software that drives reservation engines. “The key to success these days is to have reservation channels that are easy to use and navigate, as well as giving recognition to loyal customers and access to the information they should be able to get.” But Dan adds that it is also important to have partners who spread the word (wholesalers, travel agents and concierges, for example) and it is vital to ensure compatibility across numerous platforms. Accordingly, Redspot’s new website is also available in a mobile-friendly format. “We are constantly looking at IT as it’s so important in everything we do,” says Dan. There is currently a big programme of spending on infrastructure too – such as auto car washes and parking, refuelling and maintenance facilities.

Dan acknowledges that the Drive Away all-inclusive rate (other packages are also available) has been emulated by some other companies, while SIXT (a family-owned business just like Redspot) already operates a similar scheme in many of its European locations. “What we are offering today has a lot to do with why we have been so successful. We developed it because we realised there were a number of competing interests for component sales – such as insurance – that rental companies were being sold by third parties and which were affecting profitability.”

As Bryson found out, Dan says, the structure of a rental agreement was too complicated with a host of ‘extras’ on top of the usual quoted product. The Drive Away rate “was intended as a solution to both problems – the profitability issue for the car rental company and the value issue for the customer, who did not want to be ripped off at the counter with all the add-ons.” Because the rate is so popular with customers it also offers a superior yield for the company and there is no need to ‘upsell’ the initial ‘bargain’ rate. Overall, it adds up to a “value package at a much better rate than our competitors. It is not unusual for us to be 30 to 40 per cent cheaper than our competitors on a like-for-like basis.” It is also a simple transaction and “fully transparent. We have been inspected by ACCC and given the nod of approval. You will notice the difference in documentation between us and our competitors.”

Most of the company’s locations are at airports – almost all the national ones are covered (one of the latest being at Adelaide where the operation has since June been at a desk in the terminal instead of off-airport) and the regional ones are being addressed as they become available for tender. “Downtown locations are of interest to us. That is our next opportunity.”

Expansion will be both corporate and licensed – Redspot has a number of existing locations that are run by licensees, similar to a franchise but not quite the same thing, although “the customer will see no difference between the operations – they will appear exactly the same,” says Dan. “But there are instances where it is not viable for us to run an operation that could be more economically and better run by a local family or a smaller operator who could run on a less formal basis than a larger city airport with 18 or 24 hour a day operation.” New Zealand is also seen as an opportunity market and discussions are underway with a view to an early appearance of the logo across the Tasman.

Redspot is also chasing more corporate business, its fastest growing sector. Its Business Club is open to big and small businesses and is said to be “really easy to join. There are no contracts, no obligations and once you sign up, everyone in the company can hire cars at your special Redspot SIXT corporate rate.”

Dan says he wants the brand to become a household name, known for the all-inclusive rate and high levels of service. When he started out he thought that, “if we ever get to 500 cars that would be a major achievement. When we got there a few years ago it was actually something of an anti-climax because by that stage our goal had been set higher again.” But size isn’t everything – “it’s our marketing base and how we are regarded. It’s more important to us that we are recognised as a quality operator, the pick of the bunch. Our bigger competitors are maybe not quite as close to the market as we are.”

Making Sense of Management

Management is the art, or science, of getting things done through people. Sounds fairly straightforward – except for the fact that people are not robots waiting to do our bidding. People have their own minds, motivations, and goals. So how do managers keep operations – and the people behind them – running as planned?

December 19, 2018, 9:21 AM AEDT