Holiday Autos sets the future for massive growth……

With the travel industry globally going through so much change and in particular in relation to channels of distribution and how consumers book the various elements of their travel, it was opportune last week that The Mole was able to have a chat with two leaders of the sector that could be facing most change, the car rental and broker business.

Michael Hay and Chris Hamill [Pictured right with Chris on the left and Michael on the right] own and operate Holiday Autos, which Mike started as World Cars in 1999.

He was approached by Holiday Autos to represent them in Australia in 2002 and took on running the two brands for a few years, then making the decision to commit to a future as Holiday Autos, working under a licence from Holiday Autos Europe covering Australia and New Zealand.

Chris joined Michael in the company in 2000 taking on the role of Managing Director, with Mike remaining firmly involved as Chairman, but both of them are very much “hands on” in the business, taking reservations and handling phone calls and anything else that needs to be done during busy periods.

Mike and Chris told The Mole that so far this year business is up 16% and in 2006/2007 Holiday Autos in Australia made a very pleasing profit, much of that down to their belief in keeping a firm control on costs, with no flashy offices and only taking on staff when they need them. They said that their staffing fluctuated between ten and twenty depending how busy they are, with a team of what Mike calls “Super Mums” on call, working shorter hours in the low season and then longer hours in high seasons.

Demonstrating the excellent relationship between them at the helm of the business Chris jokingly said that the company had no staffing problems except for Mike, but on a more serious note saying they both worked very well together and that they had worked hard to build a pool of people to call on which put the company in a very strong position to speedily balance supply and demand.

Chris added that they even have some team members networked at home and they believe that this is the way of the future, re-confirming Mike’s long standing policy of keeping costs low, with one example being that they proudly reckon they must have one of the lowest office rents in the travel industry at $30,000 a year for 250 square metres, with some companies though to be paying much, much more than that a month.

Regarding their future plans, Mike said that the company is shortly going to make some announcements related to the company’s growth in New Zealand and also before Christmas they will be announcing some new appointments, heralding a combination of expansion and improved technology, making the business smarter and better prepared to deal with the future in their competitive environment.

Chris said, that many people do not realise that Holiday Autos globally is the world’s largest car broker, making almost one and a quarter million bookings this year. He added that the guys at Holiday Autos’ HQ in Europe have been watching what has been going on in Australia over the last year or so and in particular in recent months, concluding that there was tremendous potential down here and also in New Zealand, accordingly making the required commitment to get serious about “down under”.

Chris added that while Driveaway is the biggest in Australia, Holiday Autos is the only specialist that only deals in car rental, not taking on all the other aspect of travel including accommodation, etc, saying, “At Holiday Autos we have stuck with our knitting, doing what we do best, now being the only company that only offers car rental……. this is our niche.”

He also added that many people do not realise that Holiday Autos is part of lastminute.com one of Europe’s leading leisure and travel organisations and Sabre and also that they offer low cost car rental in over 5,000 locations worldwide, in over 40 countries.

He said that from the outset Holiday Autos has had a policy of demystifying the car rental booking process, offering their consumers affordable, fully inclusive no surprises prices. The introduction of fully inclusive pricing when holiday autos started 20 years ago was a revolution in the car rental industry and they say that they have continued to revolutionise car rental ever since

He said that prior to that, customers were quoted a rental price exclusive of a whole host of extras, often presented at the desk at pick up time, confusing customers, who often ended up paying for things they didn’t need.

Chris said that another key point of difference and early innovation was when Holiday Autos introduced the car rental industry’s first ever best price guarantee.

Mike said that they estimated that Driveaway was about double the size of Holiday Autos in Australia, but worldwide he estimates that the Holiday Autos group is about triple the size of Driveaway’s owners Auto Europe.

In his typical style Mike said, “So we’re a bloody big global player and we’re the Holiday Autos team here in Australia, with lots of clout……….and we’re now getting serious in Australia about being huge.”

He added, “There were lots of small brokers, but they are disappearing as they are having difficulty obtaining competitive rates from the big car rental companies who only want to deal with larger partners.” “There are two big players here though and we are determined to be the leader.” “Without rushing it we are going to grow in Australia and New Zealand and we have plenty of surprises planned!”

Regarding the online world, The Mole asked Mike and Chris how they thought that aspect of their business would develop and Chris said, “In the online world, we think it is important that agents remind their clients that a lot of online companies are not licensed and the client is very exposed when they book with them”.

“Also, many online operators say their rates are all inclusive however many have hidden extras!” “When the client finds out on collection, it is too late to do anything about it and impossible to get hold of anyone back in Australia.”

“Agents need to be comparing apples with apples and use these comparisons as part of their sales pitch.” “Licensing and TCF bonding is also obviously very important and clients should look out for that too”.

“With Holiday Autos, when your client picks up their car, the deal is all fully inclusive, so they have nothing extra to pay and that includes the CDW and all other insurances and in many cases the insurance excess is reduced as well”.

“For example, with domestic car rental in Australia everyone has an insurance excess in the case of an accident.” “Some insurance excesses are almost $3000.” “Our excess is as low as $385 as we already include excess reduction in our rates.” “This can save the clients over $25.00 per day by booking with us”.

“In some countries we can’t include the excess reduction charge, but in those cases, we make it very clear to our clients before they leave.” “There are no secrets with our pricing.” “It’s either included or we make our agents very aware of extras….if any”.

Mike chipped in, “Agents know they can trust us and we recently launched our agent friendly campaign, with the “we love you” campaign ads offering a whole load of incentives for agents, including scratch and win tickets, CD and DVD vouchers, a chance to win a GPS system and last but not least, a chance to win $500 towards the agency’s next night out! In addition, our car cash vouchers can be used by an agent for their own car rental booking additional commission or to reduce the client retail price.

“Journeys Plus is another incentive we have introduced so if any client goes into any agency and asks us any questions about any detail of their journey the agent can call us and ask and we will answer those questions free of charge, with no obligation to book, with the answers coming from reliable sources and our massive database of travel information and expertise.

“We also offer a 24hr service, because as the owners we’re passionate about our business and we are more than happy to make ourselves available to agents 24 hours a day.” “If there’s a problem, always ring as the phone will be on”.

Getting back to world of on line, Chris said, “Some of our competitors are trying to encourage agents to book on line offering higher commission which is fine, however if the agent has to phone the company for any reason, even to ask a simple question, the commission level drops.” “Some agents love using our online system, some prefer to call.” “If an agent does book online with holiday autos and then needs to call us, that’s no problem at all…….and most importantly, there’s no change in the commission to the agent”.

“We had an agent call us and say that they had dealt with one operator about a booking he had on line with 16% commission.” “He had not heard from the operator for ten days, so he called to chase confirmation and amazingly as he had called them on the phone, his commission was reduced down to 12%……..” crazy stuff”!

Chris added, “We are winning lots of support from agents because we pick up the phone quickly and the service we offer is reliable and friendly”. “Mike and I are on the phones at times during the day which I believe is extremely important to our staff, our preferred partners and other clients who can be re assured that we are continually in touch with all aspects of the business.”

“Also, all of us here are very passionate about what we do, quickly solving any problems.” “Mike and I are often on the phones at night, particularly to Europe, so we really do believe in going that extra mile.” “Even though we are part of a very big organisation we have and always will retain that personal touch which many of our competitors have lost.”

“We also pride ourselves on our reservations area with phones being answered in six to eight rings by a consultant.” “Lots of our competitors are saying that this happens, but we believe that we are the only one that really delivers.”

The Mole asked Mike and Chris about how they were dealing with all issues in the car rental industry these days and in addition to their planned growth, what did the future holds for a company like theirs in this competitive market place?

Their response was, “Our direct on line consumer business is a tiny, tiny part of what we do. We have no intention of expanding that, although by organic growth we realise that it will grow.” “Our business is all about volume and our travel partners provide this volume for us”!

“Our online affiliate programme has been extremely successful for us”. “This is one key area where we will be spending for growth.” “We have the technology to work with affiliates and that is how we will continue to grow.”

While many of our competitors are spending small fortunes on search engines, we are not as we value the relationship with agents too much.” “It is something we are very sincere about.” “Interestingly, we know that the term car rental London was costing $4.80 a click a couple of weeks ago on Google ad words and Overture, so there are guys that are spending serious dollars chasing direct business on search engines”!

“Some of our competitors are convinced that they can get agents to book on line and they can then switch off the phones and the service, but we believe that you always have to have a serious call centre for support.” “We will never force agents to the net, we will provide the net as an option but we will not force it on the agents, it’s their choice! We will always be there for them to answer their questions.”

“One of the big reasons behind us working so closely with the Holiday Autos group is their technology.” “Our online booking system has live XML feeds to many suppliers, it has a user friendly agents booking system and as we have mentioned an excellent affiliate option for online partners”. “Our XML solution makes dynamic packaging really easy and straight forward.” “It seems as though we receive technology updates from Holiday Autos practically weekly which puts us at the global leading edge of technology in the car rental space.”

The Mole asked Mike and Chris about the recent coverage of Kemwel.com.au in the trade press, to which they both responded, “We have stayed out of recent issues related to Kemwel however, we thought it was quite amusing that the companies involved tried to distance themselves from each other.”

“Also there has been a lot of yelling and screaming by the industry and we will be interested to see if any of these people make any tangible decisions in the near future”?

The Mole asked Mike and Chris if they thought the car rental market was saturated and they said, “What is happening in the industry is a move by many of the car rental companies away from working with the smaller car rental brokers and suppliers, because the cost of managing a small account is becoming too expensive and not worth the suppliers time and effort. As a result, we sense that suppliers are walking away from the smaller brokers and wholesalers.

“The online space is extremely crowded and has been for some time now, with the car rental industry in a transition phase with suppliers thinking long and hard about rate structures and pricing platforms”. Chris explained, “At the end of the day the successful companies will be those that can provide a friendly product to the user, while providing suppliers with volume, a seamless booking process and a healthy return on their investment in the relationship”.

“We try to be as honest and open as we can with our suppliers, our agents and our customers.” “The guys in the big car rental companies are getting tired of being pitched against each other to get their prices down, which has dramatically affected their profit and yield?”

Mike and Chris concluded by saying, “From a Holiday Autos perspective, we believe that this is a time of great change and we have to and are responding to that change, but without forgetting who our most valuable relationships are actually with.”

“We both say, watch this Holiday Autos space over the coming months and years ……you will be amazed – the change is happening!”

Report by The Mole