Does AVIS practice price discrimination?
 

I booked a rental at Frankfurt Intl. for a Group C car on avisworld.com. It asked for country of residence. I selected USA and was given a quote of 768 Euro for a 29 day rental. That included a D002807 AWD. When I changed the country of residency to Germany the price dropped to 525 Euro. I left it at that and printed out the booking confirmation. So why the price difference? The car is actually for my wife who has a German Passport, so I think we can work the residency issue. But again why does Avis discriminate by country of origin?

Well, this is only a guess, but this is how I'd do it if I were running the business -

Renting to foreigners brings a whole host of new risks to rental companies. It's much more difficult to sue and collect in the case of a lost/stolen/damaged car/other claim, for instance.

Hence, to compensate the rental agency for taking on that greater risk, they need to charge higher rates.

Like I say, that's what I'd do, I don't know if that's the actual reason.

d

My company sells products around the world and the only "extra" we charge is to factor in the cost of shipping and we don't always pass along the full price of that.

Seems kind of unfair to charge someone more because of where they are from. But hey, I'm Canadian if we aren't nice to people they don't let us back in the country if they find out http://www.flyertalk.com/forum/wink.gif

You also get a better rate in another country. I booked a car for CDG, France. A German resident would get the car much cheaper, and the CDW and theft insurance was included in the lower rate!

From my experience, Avis generally screws anyone anyway they can...

Seems pretty clear that the answer is Yes, they do practice price discrimination by geography. Why do they do this? Doppy pointed out that there cold be function differences in the cost of some customers. Even if that's not the case, if you have multiple market segments with different demand elasticities, this is profitable.

I don't believe this is anything too uncommon in the travel industry, however.

As an LA resident, I can get into Disneyland cheaper than someone without a Southern California zip code. Hawaiians can get kamaaina discounts at hotels and tourist attractions there. I even got a discount in Waikiki for being American.

Price discrimination can also work in favor of the foreigners. Japanese residents can't get Japan Rail passes, but those overseas can. I think some Eurail passes have similar pricing characteristics.

cnk

If I rent in the UK with my UK driving licence (passport is not an issue) they are required by law to charge me insurance coverage. If I use my canadian licence I can use my North American insurance coverage and credit card CDW as with North American rentals.

Perhaps legal restrictions reverse that difference in Germany? Or perhaps they just base it on past claims history?? :-)

I've done a couple of Avis rentals in the US recently and noticed the same thing: if I put in US as my country of residence, I got a lower rate. Interestingly, I've never been questioned about it either.

All it does is make my rentals take longer, since I can't use my Avis Preferred membership but instead do each rental from scratch. Seems to me that the only thing this policy does is waste my time and Avis's.

I'd have to think that lying to Avis about your country of residence is a violation of the Rental Agreement, which means that if anything were ever to happen to your rental car you could potentially be on the hook since most insurance will not cover a rental car if you violate the Rental Agreement.

I didn't lie. I just left the field at its default. http://www.flyertalk.com/forum/smile.gif Their "help" screen says "Please select the country in which you are currently living." Rather loose for a legal definition, I suspect. (I'm living and I'm currently doing so in the USA.)

Despite those rather dodgy interpretations, I suspect they lose much hope of saying I'm violating the rental agreement when they accept my Australian drivers licence and Australian phone number in the process of generating the rental agreement.

If they had objected at that point, I was travelling with a US resident in each case, so we could have switched the rental to her name.

I would say that there probably are some laws involved in some countries, but I think the overriding consideration of AVIS would be that Europeans are more "familiar" with the laws, customs, etc, of driving in europe than Americans are, the same would be true for American. I think it would be hard for AVIS to say since I live in Texas and I am renting in PA that I don't know the local laws (although it could be very true) I know when I have driven in other countries there has been a bit of a "learning curve" getting used to signage, diferent types of cars and different driving patterns.

I don't really think it is "discrimination" as much as experience. IE. Americans wreck more in Germany than Europeans do. Just my thinking.

And, as I mentioned above, when they do wreck, it's a lot longer and more difficult of a process to get paid. Just mailing the bill takes an extra week.

When I "wrecked" in Germany, it was a several month process for Avis Europe to get paid; despite both me and Visa being willing to pay. The accident happened in March and I think Avis got paid in July or August.

d

Avis Price Discrimination
 

I am currently researching WHY Avis and Budget price discriminate between customers from different countries when renting here in the U.S, whereas, Hertz does not (i.e., same price for everyone).

An earlier thread indicated that the price differences may relate to risk. However, we know, for instance, that U.S. customers pay more than those from Brazil and France, etc. - for the same rental. So it does not appear to be a risk related factor, otherwise, we would expect to see the price increase to foreigners instead.

Does anybody have any industry insight into the pricing discrimination practices of these two companies? Thanks!!!

differences in pricing has to do with individual franchises providing local discounts. In Europe, some franchises are owned/affiliated with specific companies. If I was to start a franchise business in Europe, id buy the rights to half a country, call my company EZMONEE LLC, and operate under the Avis name. I would then purchase the rights, or negotiate rights with another company, also operating under the Avis name, and provide mutual pricing assistance with that company.

This goes on and on until a new company, loosely affiliated, is formed and they make their own company, Avis Europe PLC, and their own website, Avisworld.com.

If you look closely, Avis.com allows you to book on the US residency worldwide. however it is sometimes to your advantage to declare the country of origin because some of the local franchises provide local discounts. Kind of like "domestic phone rates" vs. "international phone rates."

Avis as Cendant really doesnt care what your country of origin is. though they do offere local discounts because locals tend to be repeat renters.

And I heard someone say that Hertz doesnt do this practice. Complete Hogwash. I just tried and I got different pricing for Hawaii dates in March. Everything the same except one was Germany residence and the other was US residence. The price was 60 dollars pre tax different. And the Germans got the BETTER PRICE. Dang nabbit!!!!

Car-rental firms engage in such geographical price discrimination just like the airlines do (e.g., the price of a business-class ticket between the US and Bangkok is 1/2 as much if it is issued in Bangkok rather than the US). The reason is presumably the same: it is profitable, since residents of different countries are more / less cost-sensitive. Of course, it is much easier to game the system with a car-rental firm than with an airline...