Virus crushes car rentals
Published:Sunday | May 10, 2020 | 12:25 AMNeville Graham - Business Reporter
Car-rental companies in Jamaica are facing a serious crush, with at least one medium player looking to shut down operations, and others, big and small, saying that they are barely holding on.
The collapse in the vacation market and travel restrictions have meant no tourists and a blow to all support industries and services in the hospitality market.
“With both airports being closed, about 85 per cent of our business is gone. We may have a few straggling renters holding on, but with no flights coming in, there is no business,” says Michael DaCosta, CEO of the Avis Rent-a-Car franchise.
The company, with its fleet of 750 motor vehicles spread across five locations in Kingston, Montego Bay, and Ocho Rios, says it hasn’t laid off any of its 107 staff, who volunteered instead for cuts to salary and benefits. But with hardly any business rolling in, the agency is about to have another tough round of talks with workers.
“We want to just talk to them to see what lies ahead. Of course, we cannot continue to do what we’re doing forever. The discussion will have to look at ways we can keep going and to look at individual circumstances,” DaCosta said.
Island Car Rentals, Jamaica’s largest, with its car-rental agency of a fleet of more than 1,400 motor vehicles, says they have lost 75 per cent of their business so far, and are anticipating more fallout.
“Our biggest headache right now is finding space to park the cars because business is zero. Both airports are totally devastated,” said Managing Director Michael Campbell.
An even grimmer picture emerged when the Financial Gleaner contacted the owner of Caribbean Car Rentals. William McCalla says he is preparing to close the business that his father started in 1965.
“I have virtually closed down my business,” McCalla said in disbelief at the circumstances. “I have one car on the road out of a fleet of 50. I’ve laid off most of my staff,and we’re not surviving … . I’m coming out of the business,” McCalla said, his voice thick with emotion.
He says he knows of at least one other rent-a-car company that has gone out of business. The Financial Gleaner could not make contact with the company or its owner at the given numbers.
McCalla says he closed his Kingston office, laid off 10 staff, and is now down to a single office in Ocho Rios. He says Caribbean Car Rentals relied mostly on vacationing Jamaicans and repeat clients from abroad for business, noting that the story may be the same for several others in the sector.
“The small people who depend on the walk-in business, vacationing Jamaicans and tourists wanting to explore Jamaica, I suspect, will be hit hardest,” McCalla said.
He wasn’t wrong.
President of the Jamaica Rent-a-Car Association, Patrick Small, says there have been several layoffs, but some members are trying to keep their staff intact. The association represents 26 members.
“We’ve gone flat. The entire Montego Bay airport has been closed, and once that is so, then 99 per cent of the business is locked out,” Small said.
As for the large players, beyond staff and salary adjustments, they have been trying various cost-saving measures.
At Avis, for example, DaCosta says all cars are currently parked at the airports and that about eight to 10 drivers are deployed to do basic checks on the batteries and other mechanisms. The company also said that its bankers have been understanding of their circumstances.
“We’re a capital-intensive company, and that means we have commitments. Our banks have been very good, by the way. They’ve been assisting us with deferrals pending the restart of business,” he said.
Island Car Rentals has also retained its staff but is banking on the Government’s assistance programme for the hospitality sector, Best Cash, to help meet payroll.
“We still have all our staff on at full rate,” Campbell said.
“The Ministry of Finance has promised to pay us $18, 000 per employee for April May and June. We are counting on that because if that doesn’t come through, we will be laying off staff,” he told the Financial Gleaner.
The Jamaica Rent-a-Car Association has reached out to the Government for assistance, but Small declined to comment on precisely what help they are seeking. The association does not anticipate an immediate response from the Government, saying that it is understandable that dealing with the pandemic has to be its priority.
DaCosta says that Government could look at providing concessions in the COVID recovery phase to refresh vehicle fleets.
Campbell wants a more fundamental review of how the tourism market is structured so that visitors are encouraged to consume local services.
“You cannot invite a guest from abroad to come down and who is locked up in a room for 14 days. A guest will come for seven to 14 days, and if he’s going to be locked up in a room, he won’t rent a car. We’re making representation to say that something has to be done about it,” Campbell said of his expectations in a post-COVID-19 Jamaica.