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Take on Touring: Rake it in with Rentals

As a powersports dealer, you sell the American dream, but why not offer it up as a limited time opportunity through a rentals program?

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As a powersports dealer, you sell the American dream, but why not offer it up as a limited time opportunity through a rentals program?

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Adding rentals as a profit center offers you a unique opportunity to expand your dealership’s reach well beyond the city limits.

The first thing to realize is that adding rentals to your business isn’t like picking up a new product line. You have to invest fully to make a profitable rental business a reality.

 “We’ve turned rentals into a business, not something else to consider,” says Tim Lach of Hawaii Harley-Davidson Rentals. “You have to be in the rental business, not say, ‘Oh yes, we also rent motorcycles.’ Rentals is one of those segments of your business that connects to the other segments in a positive way or you shouldn’t be doing it. Our service department benefits from our rental business hugely because we keep our bikes well-maintained. When the customer damages our bike, that’s a profit center, isn’t it? We don’t get angry when somebody crashes our bike. We don’t want anybody to get hurt, but people drop motorcycles, and that creates more profit.”

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In addition to service, smart fleet management can give a significant boost to your bottom line. “The dealership has a great opportunity to turn new bikes into new-used bikes with low depreciation and income opportunity,” says Jim Enenkel, general manager of Eaglerider Flagstaff/Sedona.

Lach concurs: “We haven’t made one dollar in the rental business until we’ve sold the vehicle we were using. That has to be on the forefront of anybody’s prospective venture into the rental business. If I buy a vehicle for $10,000 and I bring in $5,000 renting it and sell it for $5,000, what have I done? I should’ve just stayed home. Now if I’m a dealer and I’m buying my vehicles at dealer invoice and commit that vehicle to my rental fleet, let’s say it’s $10,000. And I rent that vehicle for $5,000 and then still sell it for $10,000, I’m probably on the right side of the equation to keep my accountant happy.”

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Beyond the bikes, a rental business can greatly expand your customer base.  “If you can get more door swings from rentals, the more butts you’ll get on bikes and the more sales you’ll get,” says EagleRider co-founder and president Chris McIntyre. “International visitors will spend tens of thousands of dollars on merchandise alone.”

There’s obviously an opportunity for great returns across the entire dealership in rentals. If you’re ready to make an investment in this profit center, you don’t have to build it from the ground up. Partner with an industry leader to simplify your entry into rentals.

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MBA Insurance

Managing your liability is likely one of your top concerns as you consider adding rentals.
MBA Insurance not only helps you manage risk, but their rentals program, now in its 10th year, extends beyond the policy, offering dealers rental contracts, check-in and check-out forms and maintenance logs.

“We provide them with everything they’re ever going to need to get going on the paperwork side and on the insurance side,” says MBA’s Josephine Johnson.

Unlike typical policies, MBA offers dealers two separate policies that work together. One policy protects for allegations of negligence, which offers $1 million in coverage. The other is a more traditional policy with no minimum fleet size. Dealers can start out paying as little as $70 a month for insurance on a single rental motorcycle.

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MBA also recognizes that the rental business can be seasonal in some parts of the country, so the
company allows dealers the flexibility to cover the bikes on a month-to-month basis.

When the renter comes in to take the bike, MBA requires them to pay a $15 per-day insurance. “The dealership doesn’t collect that premium — it’s all done on our website,” says Johnson. “We charge the renter’s fee over credit card directly and then give them the certificate of insurance. This gives the rider separate coverages away from the dealer’s policy. We give the rider liability coverage, so if they hurt somebody else, we cover the bike for the physical damage less the deductible.”

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Hawaii Harley-Davidson Rentals’ Lach is a huge proponent of the MBA Insurance program.

“It’s probably the most progressive company that’s come along to help a motorcycle rental operator with a clear and concise program. They’re dedicated, they’ve been around a long time, they’ve been through the ups and downs, and their systems work very well. Rental agencies have to have a sound foundation, and that’s what they’ve provided.” says Lach. “ Consider this: how many insurance brokers actually spend the time to understand the business they’re selling insurance to? Not many. Of all the companies I’ve done business with, MBA could open a rental operation tomorrow and be successful. That speaks volumes for how well they understand their client.”

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EagleRider

I had the distinct pleasure of learning about the EagleRider franchise opportunity first-hand at the company’s convention in La Quinta, Calif., in February.

From the seat of a Harley-Davidson cruising through Joshua Tree National Park, it was hard not to be intoxicated by the passion shared by the EagleRider corporate staff and their franchise operators.

“We started with passion, a lot of enthusiasm, spare change and just four bikes in a garage,” says McIntyre. “Today, we’re at about 4,000 motorcycles globally.”

EagleRider currently boasts 72 locations, and while Harley rentals are still the mainstay of their business, EagleRider locations rent out a full range of motorcycles as well as scooters, ATVs and PWCs — it’s up to the individual franchisee to determine the makeup of the rental fleet.

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The EagleRider franchise fee is $20,000 to $30,000 with an ongoing royalty of 10 percent.

This investment comes with a lot of perks, not the least of which is the EagleRider brand name.

“People from Europe recognize the EagleRider brand and are drawn into the business,” says Enenkel, who notes that they get a lot of walk-in traffic based on their prime location on Route 66. He’s seen more than one customer decide to park the RV and rent a Harley to explore the Grand Canyon. “Others rented in a different EagleRider location and are in need of some oil or are having another little issue — they see the EagleRider sign and stop, because they know that we are one big family and they are in good hands.”

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That family atmosphere was apparent at the EagleRider convention as franchisees discussed plans for group tours and cross-promotions as well as partnerships to offer riders the once-in-a-lifetime experience of riding across country one-way. The parent company encouraged these one-way partnerships by dropping the royalties on these excursions to 5 percent.

The convention also concentrated on the other benefits of owning an EagleRider franchise, including training, marketing and central reservations as well as standardized operations and procedures.

While many of EagleRider’s locations are set in prime tourist destinations like San Diego and South Beach, I was surprised to find that there’s a growing market for rentals in America’s heartland.

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At the EagleRider convention, I connected with Stephanie Schmidt, business manager at Cleveland’s Original Harley-Davidson Sales Company.

Schmidt heads up the rentals program at her family dealership, and she says they’ve garnered business from locals interested in checking motorcycling off their bucket list as well as international riders exploring The Rock and Roll Hall of Fame and the winding roads of the Cuyahoga Valley National Park.

All of America is worth exploring on two wheels. Now is the time to invite the world to your front door through a rentals program.

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