Car rental firms back in the driver's seat

Car rental companies in the UAE are expecting a sharp acceleration in business this year on the back of a strong economy and increasing tourism in the country.

Car rental companies in the UAE are expecting a sharp acceleration in business this year on the back of a strong economy and increasing tourism.

The Dollar Thrifty Automotive Group and Hertz both recorded a double-digit rise in rentals in the UAE last year and are expecting the same again this year.

"Business in 2012 was very good," said Sam Eltibi, the executive director for the region of Dollar Thrifty. Sales for his units rose by between 10 per cent and 12 per cent last year. By last summer, business for his company had surpassed rentals last achieved before the global financial crisis in 2008. And in the first three months of this year rentals rose by 10 to 15 per cent.

"It's going to be a good year. You can see it across the economy," said Mr Eltibi.

"Real estate is improving. Rents are increasing. There are more tourists. Hotel occupancy is increasing. So the whole tourism scene in the UAE is very positive. Add to it the big infrastructure projects being done in Saudi Arabia is bringing a lot of business across the region," he added.

The situation is similar at Hertz, which recorded growth of more than 20 per cent in the UAE last year.

"We are targeting the same growth and we are working with a lot of partners," said Elyes Mrad, the vice president of sales and marketing at Hertz International.

"We are also putting in place a network of sales agents which continue to support us in the region."

But other companies have noticed the uptick in business and are moving in.

This week, Saudi-based Hanco announced that it was opening its first office outside the country in Dubai. The company estimates that the car leasing market in the UAE is worth more than US$545 million, with annual growth in excess of 5 per cent.

Hanco currently has 25 staff and 100 cars, but if demand matches the company's expectations, it could have up to 100 employees and 800 cars before the end of the year.

The company decided to open in Dubai for several reasons, said Hamad Al Sulaiman, the chief executive and managing director of Hanco

"The first is to serve our existing customers who require regional and international assistance," he said.

"Secondly, this supports the vision of our shareholders to expand the Saudi-headquartered brand into other markets. Thirdly, Dubai is a well-established tourist destination.

"The fourth reason is because Dubai's IT and communications infrastructure is exceptional, and we see the trend for e-business extending into the car leasing business in a similar fashion to the way that it has become the norm for corporate level airline and hotel bookings," added Mr Al Sulaiman.