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Car renters beware

Check carefully before you pick your car rental, because some U.S. airports are adding more than 50 percent of the base rate in taxes and fees, according to a new survey. MSNBC’s Jon Bonne reports.
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Forget those daily rates. Check carefully before you pick your car rental, because some U.S. airports are adding more than 50 percent of the base rate in taxes and fees, according to a new survey by a leading travel Web site. Six of the top 10 taxers were in Texas, the survey said, with Houston and Dallas leading the pack.

The total cost of a car rental at Houston’s Bush Intercontinental Airport could be nearly 72 percent above quoted daily rates, according to the survey, compiled by Dallas followed at 61 percent, with Austin coming in 3rd at over 55 percent. Airports in Cleveland, Kansas City, Phoenix and New Mexico also topped the list.

“People do not at all understand this issue when they go to rent cars,” said Amy Ziff, Travelocity’s editor in chief. “They think, ‘It’s all about my day rate.’”

Car rentals are merely one of a range of travel services that face high taxes by localities. Hotel bills often include taxes of 10 percent or more, and airports frequently charge usage or improvement fees on each traveler’s ticket. Because visitors to a city essentially have no input in a city’s taxes, they are often seen as a lucrative source for tax revenues. But hotel operators and rental car companies are often left to explain why a customer’s quoted rate bears little resemblance to the final bill.

The survey checked rental costs only at airports, not downtown locations, and based its findings on cars to be rented over a three-day period in August. Additional price-hunting by didn’t turn up rates quite as high as the survey quoted, but Houston taxes and fees ranged between 45 and 55 percent above the quoted price, depending on the type and length of the rental. In Dallas, additional charges varied from 34 to over 60 percent. Those charges were often higher on weekly rentals. In the Dallas example, a $168.14 weekly rental in September quoted on Budget Car Rental’s Web site did not include $91.78 in charges. A two-day Budget rental was quoted at a base rate of $98.78, but again did not include $40.31 in charges. The percentage actually went up with better rates quoted by competitors, to over 60 percent. A two-day rental quoted with a base price of $91.90 from Enterprise included a local city tax, a motor vehicle tax, Texas property fees, an $8 airport facility fee and an airport access fee of $10.11.

By comparison, taxes and fees at New York City airports — home to some of the highest rental rates in the nation — added only 13.6 percent on average to the cost of a rental.

Highs and lows
After Texas, the states with the highest extra charges were New Mexico, Arizona, Minnesota and Massachusetts, according to the survey, which checked rates at terminal locations of the largest 100 U.S. airports. Some of the lowest taxes and fees could be found at California airports, including Sacramento (7.7 percent), Los Angeles (8.3) and San Diego (11.6), though Ziff noted the state sometimes allows fees to be included in the base rate and reflected in initial quotes to customers. Rates at the nation’s two largest airports fell in the middle: O’Hare in Chicago came in at 22 percent, while Atlanta’s Hartsfield ranked at 25 percent. (As for base rental rates, New York’s LaGuardia and JFK airports had the highest in the nation, Ziff said, followed by Indianapolis, Ind., Anchorage, Alaska, and Seattle.)

Some airports questioned the study’s findings. Houston officials, for example, said the only difference between fees at Bush Intercontinental and the smaller Hobby airport is a $3.50 charge that recoups costs for the airport’s new rental car facility. The officials said that charge wouldn’t be enough to account for Travelocity’s numbers.

Charges add up
Ernest DeSoto, director of communications for the Houston Airport System, noted that many of the taxes and fees included in the rental price are controlled not by airports but by state and local authorities. And some car rentals haven’t always properly disclosed the charges, he said. Still, he acknowledged the rental agreements can be dizzying.

“There’s all these taxes and fees,” DeSoto said. “It gets very, very confusing sometimes.”

The higher fees impact not just customers, but car rental agencies as well — especially when a customer gets sticker shock at the counter. As with airplane tickets, there may be five or six different taxes and fees added to the base rate.

“It’s very difficult for customers to see that their rate may have been $20, but it comes out $30 or $40,” said Christy Conrad, who’s in charge of public relations at Enterprise. “We usually support what the tax is going for but not how the rental industry is being singled out.”

To that end, Conrad stressed the need for renters to check not only base rates but also to nail down a final quote when they make a reservation. Both Travelocity and Enterprise provide final quotes, including taxes and fees, but many travel and car rental sites do not.

Paying for pet projects
So where is all this money going? Often to fund local projects or airport improvements. In addition to the Houston rental facility fee, the city charges a 5 percent tax on car rentals to fund its new football and baseball stadiums, and an 8 percent state tax, DeSoto said. Minneapolis and Cleveland are among the other cities funding stadiums with the rental fees, and Phoenix is helping to support baseball teams during spring training, the study found. At San Francisco International Airport, Ziff said, renters are helping to fund the facility’s new AirTrain monorail system.

Because travelers usually need rentals and are rarely in a position to argue about the fees, localities often stick them with a bill for pet projects or airport improvements. Those improvements, officials often argue, ultimately benefit visitors — one reason additional airport fees have come into vogue not only in U.S. cities but around the world.

But that argument may be harder to make on car rental fees. “It’s not always out-of-towners paying for it,” Conrad said. She pointed out that half the car rentals in the United States are to local residents.

There are ways to avoid some charges. Though certain taxes may apply no matter where a car is rented, airport-specific fees often can be avoided by renting a car downtown, Ziff suggested. And if nothing else, renters can prepare themselves by shopping around and getting detailed quotes.

“Cars tend to be last on the checklist of things to do for a vacation,” Ziff said. “Put this on your to-do list earlier.”