Market Trends of Spain Car Rental Industry
Rising Tourism Activities to Drive Demand in the Leisure Application Segment
Rising tourism activities are a primary catalyst for driving the demand in Spain's car rental market. Spain is one of the world's leading tourist destinations, attracting millions of visitors annually to explore its diverse landscapes, historic cities, and scenic coastlines. Tourists often seek the flexibility and convenience of renting cars to traverse the country, especially in regions with limited public transportation. This demand amplifies during peak seasons when tourists flock to popular destinations like Barcelona, Madrid, or the Balearic Islands, where car rentals offer the autonomy to explore at one's pace and convenience.
The country's rich cultural heritage and diverse attractions across various regions create an inherent need for mobility, fostering a robust demand for rental cars. Both domestic and international tourists value the freedom and flexibility that rental cars offer in exploring Spain's myriad historical sites, natural wonders, and off-the-beaten-path locations. Additionally, for travelers interested in experiencing the less-touristy areas or venturing into the countryside, having access to a rental car becomes both a convenience and a necessity, thereby continuously fueling the demand for car rental services in Spain's thriving tourism industry.
According to an industry association, Spain's tourism industry saw an increase in revenues above pre-pandemic levels, while inflation caused a drop in activity for the rest of 2022. Domestic visitors drove the significant rebound, offsetting a decline in arrivals from key overseas markets. In 2022, tourist arrivals in Spain exceeded pre-pandemic levels, leading to a 30-40% increase in car rental bookings compared to 2021. This trend was expected to continue in 2023 and beyond.
Based on such developments, the market is expected to boom during the forecast period.
Demand for Economy Cars and Online Booking is Growing in the Country
The demand for economy cars in Spain is high as they are more pocket-friendly. Coupes, sedans, hatchbacks, and SUVs/MPVs are the typical car models offered at economy prices by most rental companies.
Consumer preferences and cost affordability have increased demand for economy/budget car rental services at Spanish airports. Rental companies in Spain's airports have revised their car rental offerings by including more affordable vehicles to improve consumer preferences when choosing rental services. Car rental companies offer car brands such as Ford, Opel, and Volkswagen as part of their budget/economical car fleet.
The segment is popular with locals, visitors for pilgrimage, and officegoers as it offers economic benefits to people and saves other costs like maintenance costs. With the government's development of the latest projects in the country, several innovative ideas have been launched by both public and private players to enhance growth in the market and provide a major boost to the airport's car rental service.
The economy/budget car segment is gaining momentum, with tourists and business professionals scheduling their visits for the shorter term. This makes them rent economical and budget-friendly vehicles, even 30-40% less than the premium cars. The fleet includes hatchbacks and mid-segment sedans offered at the airport premises by several rental companies.
Considering the factors mentioned above, demand for economy/budget car rental services in Spain’s airports is expected to witness a high growth rate during the forecast period.
Online car rental booking is more prevalent in the country than offline booking. Many start-ups (online booking companies) have entered the market and are attempting to take market share away from the major players. My Tripcar, a GBP 48 billion European start-up, has joined the industry to provide pricing transparency and avoid hidden costs.
Technology is an essential factor expected to boost the online car rental booking market over the forecast period. The increased use of information technology is transforming the industry and allowing operators to provide better customer service. This includes the use of optimized corporate and customer information management, as well as the creation of user-friendly internet booking applications.
