Harrisburg

Prevailing by a Pandemic: Price range Harrisburg’s Blacktop Story – Auto Rental Information Journal

With about six acres of blacktop, Cramer says it was always going to be a challenge to do the project internally.

Photo courtesy of Solomon Cramer.

If there’s one (of many) lessons learned throughout the coronavirus pandemic, it’s the need to be flexible with your plan. With the fluctuating shelter-in-place orders, new rounds of government lifelines, shifting customer needs, and the specter of second waves, what seemed like a good idea at the end of March might not be a good idea today.

Just ask Solomon Cramer, licensee owner of Budget Rent a Car of Harrisburg, Penn. With business at a standstill in March, his controller came to him with an idea to use internal staff to seal the company’s long-term parking, which would be the only time it’d be devoid of cars or people.

It seemed like a great idea, Cramer thought, particularly as it would put idle employees to work and save the company the $20,000 a third party would’ve charged.

And then, things got complicated.

In April, he cut his staff to a skeleton crew. He worked proactively with his long-term rental customers, offering them allowances and deferments. “The key was to keep the vehicles on the road burning gas, generating some revenue, and keeping our customer base solid,” he says.

By the end of April, he recalled his furloughed staff to prepare for summer. “We didn’t know what to expect, but I wanted to get everyone back to work as soon as possible,” he continues. “I’m a firm believer that 90% of the value of my company walks out the door every day at 6 pm.

The nightmare scenario for us was to lose all the human capital and training investment we had painstakingly made over the last decade plus. It was only six months ago (and two months back in April) that everyone’s biggest challenge was finding good people to work.”

And then an unexpectedly hot used car market blossomed, as supply issues drove prices sky high and let him sell off excess fleet at a significant profit. “With a smaller fleet size, we were able to push rates north,” he says.

As business returned in fits and starts, revenue per day (RPD), revenue per unit (RPU), and utilization all increased, though total revenue essentially stayed flat. “Our goal was to move away from business that wasn’t profitable. We turned away marginal credit as well as marginal rate.”

When buying vehicles became more expensive, the tight vehicle market had another unexpected consequence — a surge in demand for his long-term rental business. “We’ve pivoted from a ‘push model’ — offering incentives for customers to take additional vehicles — to a ‘pull model’ with a significant waiting list for vehicles,” he says.

Luckily for Cramer, since he sublicensed his airport location in 2017 his business has only been exposed to local market fluctuations and hasn’t been hurt by the huge declines the lack of airport travel has caused, he says.

“We were (only) down low- to mid-single digits in revenue in June and July, while August is trending about even with 2019,” he says. “If we hadn’t pruned the fleet so much, I’m sure we would be in the black in revenue growth, but the reduction in fleet expenses has more than offset the slight dip in revenue. I’d much rather be sitting on a waiting list for demand than a lot of idle vehicles.”

Through it all, long-term relationships with suppliers and customers have been critical. “We’re all just figuring out the challenges of the new normal, and open communication and transparency have been key.”

Cramer says any downturn, especially a shock like COVID-19, forces businesses to reevaluate their model’s profitability and “sacrifice those sacred cows that turn out to be less holy than you first thought.”

Back to the resealing job: With about six acres of blacktop, Cramer says it was always going to be a challenge to do the project internally, so he went ahead and hired a third party.

“As I’ve watched the pros use the proper machinery, I’m quite happy we didn’t undertake the project,” he says. “But even if we had the desire to do it, we are far too busy with revenue-generating opportunities right now to take on such a task.”

In times of macro-economic shocks, how you react immediately is important, but more often it’s about being flexible with your plan as circumstances change. Cramer says his operation is more efficient than ever. “There is always opportunity amidst chaos,” he says. “You just have to find it.” 

Related Articles

Leave a Reply

Your email address will not be published. Required fields are marked *