Why Does the Price of a Hire Car Change from One Day to the Next?

Who hasn't searched for a flight, a hotel or a hire car, only to return to the same search the following day and find a different price? 

The explanation lies in a discipline that, although largely invisible to consumers, plays a crucial role in industries such as aviation, hospitality and car hire: Revenue Management.

These three industries share a fundamental principle: time is a resource that cannot be recovered. An empty seat on a departing flight, an unoccupied hotel room or a car that goes unhired on a particular day all represent revenue that is lost forever. This is why, in Revenue Management, we consider these assets to be perishable inventory.

It was this principle that led airlines to develop dynamic pricing models in the 1980s, which were later adopted by the hospitality and car hire industries.

However, in car hire, the equation is particularly complex. Our "aircraft" does not have a fixed number of seats, a set route or a defined schedule. Managing a fleet depends on numerous variables: demand at each location, vehicle availability, rental duration, booking changes and unexpected operational challenges.

Just think of a car collected in Lisbon and returned in Faro. It is no longer available at one branch and becomes available at another, where demand may be completely different.

All these factors influence prices, which constantly adjust to reflect the balance between available supply and anticipated demand.

The aim of Revenue Management is not to sell at the highest possible price, but to find the right price at the right time, ensuring the most efficient use of the fleet.

And there is one aspect of this work that I consider particularly important: Revenue Management is, above all, a team sport.

At Guerin, decisions require constant collaboration between the fleet, operations, sales and marketing teams. After all, setting the right price means very little if we do not have a vehicle available where the customer needs it. And having the ideal fleet is of little value if customers are unaware of it.

So, the next time you find a different price for the same car hire booking, remember that there is much more behind that figure than an algorithm. There is a complex operation and several teams working together to strike the best balance between efficiency, availability and service quality.