Global Rental Business: Industry Analysis
Ownership of certain items like car or home furnishing used to be important and measured ones status in the society. But, now people are of the view that this type of attitude is simply irrelevant. There used to be certain items that were used for rental business like movies, house, cars, bikes, and costumes. But now these attitudes have been changed. One can now get anything on rental basis, then why will one buy a car or jewellery that is difficult to afford at this point of this.
Here we will discuss current trends in the global rental businesses.
Global Car Rental Industry
The global car rental industry is continuously growing from past few years, but did witness high competition, forcing companies to offer better services to the customers. It is found that the industry will reach US $67.6 billion by the year 2017 with CAGR of 3.5% for the next five years. The industry generally offers all types of car rentals, using cars with good condition for a variety of requirements including corporate, personal, or recreational purposes. Not only do they rent car but the services also include vans, motorcycles, trucks, and scooters that include facilities like global positioning system, entertainment system, and insurance coverage.
It is found that North America holds maximum market share in car rental followed by Europe is estimated to have maximum growth due to the growing airport rentals and recovery in airline activities. Emerging countries like India and China are steadily growing in car rental industry.
Study shows that the industry is facing continuous volatility in the global financial and credit markets leading into price volatility in case of petroleum products and increase in average gasoline prices, impacting consumers’ spending patterns. The industry is witnessing moderate growth due to increase in demand for rental cars by both domestic and international tourists and customers. There is an increase in the travelling expenditure, frequency of air travel, and number of foreigners visiting different countries has also influenced growth.
Some of the well known car rental agencies include Hertz, Avis, National, Alamo, Enterprise, and Budget etc.
The power rental business has started to gain global attention and has found follow a moderate growth in the recent years even after it suffered a setback in the year 2008 due to economic crisis. New markets have started to open up and boost the global revenue obtained from power rental business. Currently power rental market is estimated to earn around $7.8 billion revenue and is predicted to cross $17 billion by 2017.
The market experience CAGR of 17% mainly due to efficient growth of developing countries as their current power demands have started to outpace their permanent power generation capacity. Regions like Asia-Pacific, Africa and Middle East are expected to involve in a fully fledged manner mainly due to load shedding, shortage in power, and unreliable grid stability.
Since start up, Europe and North America are the markets rulers. Now, North America is on the top of global market followed by Middle East and Asia Pacific. By 2017, Middle East might hold the largest market share. In terms of end user industries, utility industry account for maximum share in global power rental revenue, followed by oil and gas industry and construction industry. Some of the popular players in this industry include Aggreko PLC and Ashtead Group PLC of U.K., APR Energy LLC and Carrier Corporation in the U.S., and Atlas Copco AB of Sweden etc. contributing to a good share in global power rental market. Still the major portions of revenue come from temporary projects operated by small scale power rental companies.
Power rental systems are beneficial in case of power outages. The global electricity demand is expected to get double by the year 2030 in an annual rate of 2.4% as stated by the International Atomic Energy Agency (IAEA). The increase in demand is mainly due to growing economies and population. Power rental units act as a supplementary source which provides a backup to power grids.
The response of the global property markets, which is the biggest asset for all, has found to be irregular after the financial crisis. The prices for global property rents have continued to increase after the crisis. The biggest increase was found in Hong Kong, where house prices were up by 24.5%. Property markets have found to be stronger in the developing countries. Prices have showed a boost up by 11.1% in South Africa, by 12.8% in Brazil and by 10.7% in India.
The price-to-rent ratio based on the earnings shows that the global market condition of Canada is extremely weak. Buyers are found to be in short of supply, thus offering a good scope for property rental markets. Housing markets is found to be depressed in almost whole Southern Europe, specifically in Italy, and is not confined to Europe. Home prices are found to fall continuously in the Netherlands and France. UK is facing crucial housing crisis and thus the build to house rent sector is growing.
The figures below shows the rental statistics for Office Buildings from the year 2010 to 2014
Online Rental Businesses
Online rental businesses are found to be on a continuous rise. Now one has to just take a picture of anything which can be rented and post it online. Women are focusing on renting designer clothing for special occasions. One can easily earn what they spend to buy the goods through multiple rental fees even if there are tax strategies.
Online websites like RelayRides is in front in offering office space to houses in lease. Spride Share, Zilok, and Airbnb, are also showing good emergence in online rental markets for private property, automobiles, and power.
The Internet offers good opportunity to make renting and lending easier. There are a lot of businesses coming up that allows consumers to rent even a wedding dress, textbooks, neck ties, designer handbags, jewellery to even a chicken.
Even though the overall rental business is showing a steep rise, still it faces several challenges. We will discuss some of them here.
- For starting full fledged rental business you may require fair amount of products within a short period of time to make your business popular.
- One will have to stick up with the environmental regulations due to the emission of harmful elements and limited product differentiation.
- One will have to find ways to develop evolutionary power rental systems to overcome the challenges facing power rental.
- The car rental industry in the developing markets needs to be more organized as it has led to slowdown in the overall business.
- Lack of proper communication, guidance and coordination inside the businesses. Lack of regular performance monitoring of staffs also creates lack of efficiency.
For New Entrance
The figure shows that there is a lot of scope in digital rental services. Peak shaving of power has come up as an important opportunity for those entering into power rental business. Shortage of power supply in developing countries, lack of proper infrastructure will aid power renting solutions. Increase in tourism and better lifestyle has aided in increased use of car renting, which will in turn offer opportunities for the starters. Increase in population and rise in housing cost has helped in boosting property rentals.
There is a lot of scope for the global rental business to grow in the coming years..
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