RV Rentals are Strong

By Bert Alanko
CEO, MBA Insurance, and
Chairman, RV Rental Association (RVRA)

Yes, here I am again ol' "Johnny One Note" here to tell you that the RV Rental business is going to be STRONG this year, it was last year and probably will be next year. I am here to tell you that if you are not in the rental business that you are missing out. I am here to tell you again that while other parts of your business may be hurting, the rental business is and has been consistently strong.

So, my question to you is if you are not in the rental business, why the heck not? Where have you been sending all of those people who are calling your dealership, asking if you rent motorhomes, trailers or pop-ups? Probably, you tell them to go down the street to a local rental lot or worse maybe to a competitive dealer. That is to someone who will accept their money by either renting to him or worse, maybe even converting him into a buyer, now or in the future. Ouch, now that is smart, huh.

MBA Insurance has been in this business now going on our 23rd year. When I first started writing these articles for RV News and RV Executive magazines a few years ago we insured about 200 rental accounts. Today, MBA insures over 900 dealers in the busy summer rental season. That is a lot of growth for us. That is a lot of growth for the rental industry. That also represents a lot of growth for many of the individual dealers such as one man who started with a couple of vehicles in his driveway and now this year will have 80 motorhomes and trailers for rent and a big service facility. Way to go Pappy!

Over the years there are many dealers and I mean many that said to Sue (Caldwell, president, MBA) and I that they will never get into the rental business, "don't like it", "don't need it", who are now renting. I can think of a couple of those dealers that will have pretty nice size fleets this year. Every week we receive calls from dealers that we have talked to in the past that are now making the decision to finally get their rental business going. Just last week we issued a policy for a dealer that we first talked to and quoted back in 1987. He said that finally he has the necessary lot space.

Have you ever thought about it? Well, think about it. Maybe a rental business is just what the doctor should prescribe for your business. There are good sound reasons for you to develop a rental business either as a stand-alone or an adjunct to your existing sales operation. Let me list some of the reasons that you should consider renting, in no particular order, (and I'll probably leave out a few good ones).

Rental cash flow can help level out the dips in the economic cycles. The fact is that in the good or the bad times rentals remain strong. This may or may not be a slow sales year but nationally this will be a great rental year. You may see a different customer at different times in the cycles, but rentals rent and the cash keeps coming in. And using a few tricks of the trade you can keep the cash coming from the rental operation during the rental off-season.

A rental operation makes you a more complete dealership. A rental operation increases your visibility in the community. Obviously it is just one more thing that you have to advertise. It is one more reason for customers to come onto your lot not the competitors. If you are a selling dealer it has been said that it is almost a "no brainier" for you to be in the rental business. The only thing that should hold you back is if you do not have the space available. All of the benefits that we mention in this article make the decision to rent an easy one for the selling dealer.

Rental operations can be very profitable if done correctly. We teach this in our rental school; do it right and make money. MBA has dealers that we have insured for 20+ years, they have small to large fleets, and these dealers are making money renting RV's.

Rental operations create good clean used inventory for your sales lot. You will have clean, well cared for, low mileage used units on your lot that you have the first hand history for and that your people can sell with confidence. You make your own used; there is where the extra profit can be found.

Some renters do become buyers. Some renters stay renters who come back and rent time and again. That is right they bring you money, leave, come back to rent and bring you more money. Now that is good business. Some will over time actually become purchasers. One dealer this spring told me that he is working to develop new renters, he has noticed that some of his usual repeat renters are not coming back. Reason; he has been selling vehicles to these past renters. The economy has been good and some of his renters have become purchasers, that is a good thing.

Rental operations provide your dealership with new avenues of self-promotion. You will be advertising in new areas of the yellow pages, the Internet, etc. You will find that you and your customers are using motorhomes and trailers for functions and events that you had never considered previously such as substitute or alternative housing. Your satisfied customers will be some of your best advertising as they tell others of the fun times they had and of course from where they rented the RV.

Renters are basically "newbees", so you are getting to the customers in your area early, introducing yourself and your business to these new people in our market. Give them a positive feel and they will be most likely to give you a shot at their business in the future.

Now Your Cooking.

You're so excited, you can hardly stand it -- can you? You have to get into the business, sooner the better. Good, but let's do it right. Let's start off nice and slow. Don't get too large too fast. I remember the dealer that started with 22 motorhomes, did not last the first season. Walk before you run. Start smart, start small, a couple of units, maybe five or so. Some C's maybe an A, maybe a couple of pop-ups.

The most important thing is to get all of your systems in place up and running so as your rental organization is performing, as a business should, efficiently and profitably.

Get all of your paperwork together, your forms, contracts and management policies.

Develop a rate structure that is going to produce profit. Sounds funny but so many start-ups just look at the competition and want to be a buck or two cheaper, Wrong. If anything you want to be the most expensive. This is what we teach in our rental school; it works. One of the instructors has been renting this way for 23 years, operates a big fleet.

Get organized.

There are certainly other products and services that you will need to get going.

Insurance? Yes, and hopefully you will call us. We can certainly help you with that issue. We have a couple of different rental insurance products at different price points, depends on your needs and requirements. You will want to be able to offer to your customers SLI, Supplemental Liability Insurance, we have it, about 150 of our dealers are currently signed on for SLI.

Everybody ought to be selling SLI, $1,000,000 liability, to his or her customers. Your customers will want SLI, and you make money. How can you possibly beat that?

We have a 300 page Rental Operations Manual available to dealers.

Rental software? Sure we have that also, available to our dealers. No set up fee. Three years in initial development, the Rent-Ware software it is now up and running. The software is in a continuous state of betterment and all updates are at no cost to you and easy to obtain via mail or over the Internet.

Rental dealers need to be aware of the importance of properly executed legal rental contracts. No longer is it safe to assume that using old outdated contracts will, in the time of need, get the job done. To safeguard yourself and your business as well as assisting your insurance carrier in your defense, it is vitally important that rental dealers get their paperwork correct. The law varies state to state as to how rental contracts must be worded, what can be charged for services etc. To this effort MBA has developed rental contracts for each state and for each one of our insurance programs. We provide this information on our web site along with the pertinent state rental law relative to motor vehicle rentals.

In addition to these in- office services we also offer educational and operational services. Our Rental School, open to all dealers, once a year in Las Vegas in February is taught by experienced active rental dealers.

New -- MBA is now going to be able to offer to you the assistance of a premier Loss Recovery service. This will allow you to collect on damages, loss of use and diminution of value that in the past have been very difficult to collect from renters and or their insurance companies.

New -- the Roadside Assistance Service is back, we are awaiting the final word to "go" and then we will make a general announce to our dealer community.

I do hope that you get the feeling that we are having fun with our business and our customers because we are. Rentals can be fun, rewarding and profitable if done correctly. A good rental operation can be a big boost to your business. I strongly suggest that you seriously consider this rental opportunity if you have not already done so. Remember Rentals are Strong.