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Keith Alexander

Hertz Blames Web Options For a New Fee

By Keith L. Alexander
Tuesday, February 15, 2005; Page E01

Renting a car at Hertz just got more expensive.

You won't see it in the daily rate you're charged for a Mercury Marquis or a Volvo sedan. But starting tomorrow, your total bill will be $2.50 higher than it was last week because one of the nation's largest car rental companies will now charge a reservation fee on vehicles in the United States.

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Hertz spokesman Richard Broome said the fee is to cover the costs of increasing staff and other resources to handle the company's expanded reservation operation, set up largely because of the growth of Internet travel sites.

"All we seem to do is add reservation options for the customers, which is great, because we want to be wherever the customer is. But we have to support these new distribution channels," he said. "These reservation systems seem to multiply constantly and are more complex."

Hertz is the first car rental company to charge the reservation fee. Avis is "discussing" the fee, spokesman Ted Deutsch said. Dollar and Thrifty have no plans to add it, but both are monitoring the move, according to spokeswoman Emily Gill. Enterprise does not have a reservation fee.

William McGee of Consumer Report's Webwatch called the Hertz fee a hidden rate increase. He said it should not be passed on to consumers -- it should be part of the company's distribution costs.

"They're taking a page from the airlines that are trying to do the same thing," he said. "The term fee has been twisted. We are opposed to this idea of breaking out a cost of a product and calling it a fee when in fact it's just the cost of doing business."

Hertz's Broome said the fee was not a rate increase but a way to help the company "find a way to cover our cost."

Car rental companies have more fees, taxes and surcharges than airlines, hotels, cruise lines and vacation packages, according to a 2003 report by Consumer Report's Webwatch. The main reason is that local governments and airport operators heavily tax car rental companies and use the proceeds to build stadiums, convention centers and other facilities. Instead of raising taxes on residents who could vote them out of office, local politicians tax tourists, says McGee, the author of the study.

Some governments charge a car rental transaction fee ranging from a few cents to several dollars. If the car rental agency operates at the airport, it passes along a consolidated facility charge, which airport operators require for the terminal they built to house the car operations. That fee is usually about $5 to $10 a day. Rental companies also pass on a concession fee, which the agencies pay to operate at the airport. That fee is usually 10 percent of the final bill. Another fee imposed on car rentals is the local sales tax.

One of the best ways around the airport fees is to rent a car from an off-airport location, McGee said.

Fees can increase the final cost of a car rental by 70 percent or more, depending on the state, according to a study by the travel Web site Travelocity.com.

In Texas, where fees are highest, the taxes added 71.7 percent to the car rental bill at Houston's Intercontinental Airport, according to the Travelocity report. At Dallas International, fees increased the bill by 61.1 percent.

Fees had the least impact at car rental agencies in California, according to the Travelocity study. At Los Angeles International, taxes added about 8 percent to the bill.

Understanding the fees on travel Web sites can be a challenge. McGee found that Web sites quoted different tax rates in response to identical queries.

Whether other companies will follow Hertz in charging a reservation fee is unclear. In 2003, Hertz was first to charge a fee of 50 cents to $2 a day to renters who wanted to credit their rental to their frequent flier program to earn additional miles. Avis has a similar fee.

Question of the Week: American Airlines recently decided to remove pillows from its flights to reduce costs and save money. Business Class wants to know what else airlines can do to cut costs. What other perks or amenities can you do without in exchange for lower fares? Please send your comments, your name and a daytime phone number to alexanderk@washpost.com.


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