Exclusive Interview: Ian Brown, CEO of Rentalcars.com
ChinaTravelNews, Ritesh Gupta - It doesn’t come as a surprise anymore when established travel intermediaries decide to take a plunge and then end up not really making meaningful presence in China. Yes, as witnessed over the years, intermediaries, be it for running a successful online transactional platform or even traffic generation business globally, fail to make inroads in this market.
Ian Brown, CEO of Rentalcars.com
So when I got an opportunity to speak to Ian Brown, CEO of Manchester, England-based Rentalcars.com, the conversation started with a pertinent question: If on one hand, China remains an attractive market, be it for outbound, inbound or domestic segments, then why would a major OTA group sell its stake in China to exit from the domestic business at this juncture?
Being precise and speaking for the car rental category, which is flourishing in China, Brown mentioned that China has been consolidating its position on the world stage, and is already the second biggest car rental market after the U. S.
Delving deeper, Brown says that in his experience Chinese consumers tend to be “smart, well-informed and mobile savvy”. “The Chinese market is at the extreme end of price aware and price sensitive,” he says. As much as the category is price-competitive, a brand clearly has to find a way out to win over customers in this battle, and yet make business a feasible proposition.
Another critical aspect is being transparent with supplier service levels and protection products. For instance, how long should customers expect to have to wait at a desk? How good are different car rental brands around the world at dealing with the specific needs of Chinese customers? Is there a difference between loss damage waiver and collision damage waiver? Is any of this mandatory while renting a vehicle? There can be many questions for a traveller from China driving, say, in the U. S. “The fantastic thing about having more than two million verified reviews on our platform is that almost every question has already been answered about each supply location and brand, often by travellers from your own country.”
“We’ve seen a significant trend recently to ‘strip down’ U.S. inbound products to the bare bones for the Chinese market so that car hire brands can achieve the lowest possible advertised price point in China. For instance, products that used to include maybe $1m or so of third party liability cover are being stripped back to legal minimums of $10,000 – $15,000 in many places,” says Brown. “That’s of course fine if the customer is educated about car hire, fully understands what they are buying, and has an alternative insurance policy in place. “However, one of the risks we are seeing is that Chinese customers may not fully understand what they are and aren’t covered for when they drive in another country such as the U.S.” If they have an accident with another vehicle and the occupants are injured, those legal claims can easily run into the hundreds of thousands of dollars,” pointed out Brown.
He further added, “A key part of our mission at Rentalcars.com is to create complete transparency for our customers on the product they are buying and what is / isn’t included. That isn’t always the case as you look at some other sales channels in China.”
Streamlining the booking experience
Other than competitive pricing, and transparency of service levels and protection, there are other usual challenges that one would expect to be resolved.
One is mapping. As we learnt over a period of time, those brands that are using Google Maps generally tend to face problems with their user experience metric. As local e-commerce specialists point out, Google Maps is not reliable in China, Chinese apps would use Baidu Maps, for example. “We do use Google maps in some specific parts of our site. If that is not working in a particular source market, it doesn’t affect the booking process. We’re in the process of looking right now at how to use Baidu Maps most effectively,” he said. As Brown points out, even though mapping is an important feature, the lack of it really doesn’t hamper the performance in a big way.
A bigger aspect is payment. As we know, the so-called alternative payment methods aren’t really alternative in this market. Brown acknowledged that Rentalcars.com is eyeing addition of options such as Tencent’s WeChat payment after working out China UnionPay. “We’re about to release the next iteration of AliPay and UnionPay live on the site. Then we’ll look to see what we should do next,” shared Brown.
But, overall, Brown is quite satisfied with the way Rentalcars.com operations have shaped up in this market over the last couple of years.
He says the performance of the site is “dramatically better than even one year ago”. The website is translated and customised for Chinese travellers, and the team has focused on core aspects of running an efficient car rental service. “The expectations of Chinese travellers in terms of the core car rental product actually aren’t actually all that different from what we see in other markets. Our Chinese customers look for vast options in terms of car choice, destinations served, attractive pricing, payment methods, and customer reviews to help them in taking a decision. That has to combine with speed and ease in searching and booking. We are the largest multi-supplier car rental booking platform in the world by some way and that’s the core of what we do. We back this up with full Mandarin/ Cantonese support by phone for those customers who prefer to deal with a live person,” says Brown.
Making the most of parent group support
A major advantage that Rentalcars.com is currently having in its kitty is the continuous strengthening of the ties between its parent group Priceline and China’s biggest OTA Ctrip.com. In May this year, the US-based group chose to invest an additional $250 million in Ctrip.com, to own securities representing approximately 10.5% of Ctrip’s outstanding shares.
One of the core advantages that Rentalcars.com and other entities of Priceline group have now is the “market insights” that are available from an entity of Ctrip’s stature. Brown believes that both brands – Ctrip and Rentalcars.com stand to gain from their commercial partnership.
Brown didn’t specify any number for contracting targets (it is estimated that there are over 10,000 car rental operators in China) but the team is in a position to capitalize on 11 offices in Mainland China that the Priceline group operates.
“We are already live with eHi, Avis, Tongye and Reocar and have a number of other contracts close to completion. We don’t have a set number in mind as a supply target in China, in the same way that we don’t have a set target in any other country,” shared Brown. He added, “Rather we look closely every day at where our customers want product in the world that we aren’t yet fulfilling as well as we could, and then we address those gaps with quality local supply partners fast.”
“China has been a country where, certainly a year ago, we were behind vs. demand. We now have 15-20 colleagues in the Rentalcars.com business focussed on China in different ways, and the great advantage of 11 Priceline Group offices in Mainland China alone so we are physically present in the market in multiple locations,” added Brown.
Of course, there is also B2B side to Rentalcars.com’s operations. The company already has multiple tie ups in this region, and the team is looking at expanding ties in an aggressive manner.
“A few months ago we launched ‘Rentalcars Connect’ as our self-standing B2B business for airlines, OTAs, and other strategic distribution partners. Rentalcars Connect is - we are told by our airline and OTA partners - the best converting, best margin generating, best customer loyalty producing car hire platform in the industry.”
Essentially what the team has done is combine the full potency of the Rentalcars.com platform (as the largest in the sector globally) with a very powerful yet flexible B2B integration so that any partner can maximise their car rental earnings with ease. It currently powers 59 airlines around the world including Air China, HK Airlines, HK Express, and Singapore Airlines.”
But more than anything else, it is the B2C story that is fascinating to say the least. A story that sees a brand winning the confidence of Chinese customers to operate in a profitable manner in the long-run.
Ian Brown, CEO, Rentalcars.com is scheduled to speak at the upcoming 2015 TravelDaily Conference, slated to take place in Shanghai (September 16-17).