How Online Booking Systems Reduce Operating Expenses for Bike, Ski, Scooter, and Golf Cart Rental Companies

Rentrax in particular has specialized in maximum cost reduction for rental businesses with our advanced SKU-based inventory management system. We allow operators to manage their inventory ski-by-ski or bike-by-bike, while abstracting these details away from your customers, a rare feature in the competitive booking software industry.

Wage Costs and Administrative Overhead

A competent implementation of an online booking system like Rentrax is likely to reduce the Selling, General and Administrative Expenses (SGA) line on your income statement by 30% over 12 months. It usually takes one season with the new system to analyze and adapt to the new way of doing business.

Let’s analyze how this is possible. I’m going to need to invent a hypothetical business here and make some assumptions, but I’ll show you how you can fill in the blank with your own information by replacing the number highlighted in yellow with your own.

A Snapshot of a Rental Business, Pre-Implementation

Let’s say we have a medium-sized scooter company in Florida taking bookings on paper right now. This business:

  • Takes 4,000 bookings per year in one location.
  • The average time it takes to process a booking is 30 minutes (the industry average is between 20 and 45 minutes).
  • The average value of their bookings is $150. They have 16 part time staff primarily focused on taking and processing bookings.
  • The minimum wage in Florida is $8.46/hour (which increased this year, like many states and provinces).
  • The part-time staff all work 25 hours per week for 5 months.

To make this match your business, replace the numbers highlighted in yellow with your own numbers. It might be hard to quickly find these exact numbers easily without an electronic booking system, but you know your business well enough to make accurate estimates. 

This company’s pre-tax revenue is about $600,000 (4,000 * $150) before taxes. The SGA expense line for this business is $67,680 (16 staff * 25 hours * 4 weeks * 5 months * $8.46).

The Effects of Implementing an Online Booking System

The industry average for the number of bookings taken by an online booking system is between 20% and 40% of all bookings. For this business, let’s go with 30%. This means that 30% of all bookings are fully automated – they cost almost no administrative overhead. The booking system automates:

  • Entering personal information.
  • Recording the time of the booking.
  • Managing your rental inventory to make overbooking impossible.
  • Collecting the customer’s signed rental agreement.
  • Collecting the renter’s height, weight, or other attributes that are required for sizing.
  • Calculating the DIN for skis based on these attributes.
  • Capturing and storing the customer’s credit card information securely.
  • Calculating price and tax based on time.
  • Sending email and SMS communications related to receipts, directions, and asking for reviews.
  • Holding a damage deposit amount on the customer’s credit card without having to charge and refund a large amount.

Something you may have noticed when you’re on the phone or on email taking bookings is that some people (probably about a third) know what they want. They’ve already read reviews, have decided to book with you, and already have their activities planned. These are the people that actually don’t want to call you and state their personal details over the phone so one of your staff can slowly write the details into a stationary black book.

The other two thirds, the folks that need some help choosing their bike or skis, or want to chat with a local operator about planning their day or their trip, will still call you. Implementing an online booking system still allows the people who want or need to call you to book to do so. It means that the customers who don’t want to call you in the first place will not have to anymore.

A New Snapshot of the Same Rental Business, Two Years Later

The business now:

  • Takes 4,500 bookings per year in one location.
  • The average time it takes to process a booking is 15 minutes (the industry average is between 20 and 45 minutes without a booking system).
  • The average value of their bookings is $150.
  • They have 9 part time staff primarily focused on taking and processing bookings.
  • The minimum wage in Florida is $8.46/hour (which increased this year, like many states and provinces).
  • The part-time staff all work 25 hours per week for 5 months.

The numbers that changed are the number of bookings, the number of staff, and the time to process a booking. Let’s see why.

Why the Number of Staff went Down

One in three customers walk into the store, state their name, and the staff hands their equipment and marks the equipment as being rented. When the customer comes back, the staff marks the equipment as returned. That is the full extent of administrative overhead for ⅓ of your bookings in the new reality.

For the other ⅔ of bookings, the processing time is still significantly reduced. Email followup for receipts, most calculations, the rental agreement, and inventory management are still automated, so processing time still drops by half.

Within two seasons you will be able to adjust your part time staff count down by about a third. The beautiful thing about the seasonal rental industry is that you don’t need to fire anybody, you just hire less seasonal staff next year.

Why Bookings went Up

You saved $21,150 (5 staff * $8.46 * 25 hours * 4 weeks * 5 months). With an online booking system, you can easily see which assets are the most popular and tend to book out the fastest in the peak season. With the money you saved on administrative overhead, you can invest in more assets like scooters, bikes and skis, to be able to maximize your revenue in the narrow windows like July 4th weekend. 

The new snapshot of the business is a pre-tax revenue of $675,000 and $46,530 on SGA.

Conclusion

Rentrax costs a few thousand dollars per year and takes about 30 hours spread over three weeks to implement, with one-on-one live support helping you every step of the way. A medium sized rental business currently operating on paper will see an upside of tens of thousands of dollars, resulting in an ROI of several thousand percent.

If you’d like to conduct an analysis like this one specifically for your business call us at 1 800 248 1370 or send us an email at sales@rentrax.com. We will provide a tailored proof of concept for your business using your pricing and inventory as a test so you can transform your business with confidence in your digital partner.

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