With more than 10 million golf carts circulating across the U.S. at this very moment, the use cases for golf cart rentals continue to expand in almost every type of community. Resorts, campuses, gated communities, corporate grounds, marinas and campgrounds all pose ideal opportunities for rentals.
So, how do you build a sustainable program that maximizes every cart’s earning potential?
This question was answered by Joyride’s Account Executive and lightweight vehicle expert Rob McPherson at last week’s inaugural Golf Carting Expo conference in Charleston. During a detailed presentation, he charted how to turn your slowest-moving inventory into your most profitable asset, and how smart dealers are making money from the same carts twice through strategic rental programs.
Today, we’re taking tangible examples to share a blueprint for success when renting out golf carts at campgrounds and across an array of industries.
The world wants golf cart rentals
When virtually every point of action in our everyday lives is conducted via a phone, why should you expect people to endure long counter lines and paper rental forms? On-demand is the new ownership, with cars already being rented immediately, and golf carts are next. In fact, 64% of urban millennials prefer rental, ride hailing or car sharing services over owning a vehicle.
Meanwhile, smart cart technology is already mainstream. Keyless unlock, touchscreens, GPS and analytics are now expected.
With 60% of new golf carts sold in the US already IoT-enabled (meaning they are connected to the internet and ready to be shared and tracked), full market penetration is anticipated within the next decade.
MOVING WITH THE TIMES
The global golf cart market will reach $3.5 billion by 2034, driven by increasing demand in golf courses, resorts, retirement communities and commercial applications beyond golf.
Golf cart rental business models
Traditional ways of renting golf carts include the business models “walk up and drive off” and “drop off and pick up.” For dealers, both models are limited by either lot space, truck capacity or driver labor expense. While most dealers do deliveries since they are located on larger lots on the outskirts of towns, it’s extremely costly to move carts around. The truck and driver can combine for over $50/hour in expense, which is typically recouped with a delivery fee.
Joyride has envisioned something different to make rentals more accessible and headache-free. An IoT-enabled software platform enables a new kind of golf cart rental called “scan and go.” This novel approach requires a mobile app for the customer to use, and an installed IoT device to control and track the cart.
The combined effort enables you to leave carts on-site at places where they are traditionally rented, but without the need for anyone to physically be there to oversee the process.
By leaving the vehicles there, you are free from lot size constraints and operational expense of moving them around – enabling much higher margins. Most importantly, this model is extremely scalable since you can add more capacity to your rental fleet without needing to hire more employees or buy more trucks.
Don’t let your inventory sit
Your dealer demos, trade-ins and used vehicle inventory all present an opportunity to earn this high margin revenue at nearby locations. Nicer LSVs can live at resorts and hotels, and traditional golf carts can reside at campgrounds and RV parks. By keeping this inventory in a rental fleet where it can be generating income, you have the ability to make a blended margin – profit coming from both the eventual sale, and the rental income leading up to the sale.
If the carts are kept in places where renters will want them, you can double your margin on a used cart sale.
Carts that are strategically placed at high visibility properties also have a great marketing value for your business. For example, if you put temporary stickers on them to advertise them being for rent, people will also get more exposure to your brand.
Case study: Campgrounds
What do the margins look like, exactly? Among the most exciting areas for cart rentals are campgrounds. Most dealerships already have relationships with these property owners, as there is an inherent demand for carts in large, spread-out areas. Campgrounds and RV parks typically have space to keep and charge carts without issue.
Here’s an example: A campground in New Jersey used Joyride’s platform to launch this year with 30 golf carts. The campground charged $83/day per rental, and over their seven-month season, they averaged 9.5 rental days per month.
The total? They earned $165,585 in rental income without adding additional overhead to manually operate vehicle rentals.
No wonder their fleet expansion plans are in the works for next year. Here’s a look at the economics:
- Capital Expense: 30 cart purchases and 30 x Joyride platform subscriptions = $130,470 outlay
- Operating Income: $165,585 gross revenue, 15% to the campground ($24,837) and 10% in CC and Joyride fees ($16,559)
- Margin: $124,189
- Year 1 Return on Capital: 95%
What’s the real earning potential?
Over a five-year period, one cart can nearly 5X its initial investment. Additionally, because the marginal income on the rentals can be so strong, it takes the pressure off needing to sell the vehicle to get it off the lot. Therefore, you can maintain higher sales prices for your Certified Pre-Owned options.
What else to consider when launching
Here are some questions to ask:
What kind of insurance do you need for liability with cart rentals? There are two types – private property and LSV insurance. Private property is much less expensive.
Signage: How do you convince people that they can turn the cart on and go just by scanning the QR code?
Pricing Options: How much of a discount should multi-day rentals get? Should you offer hourly rentals in the shoulder season?
Charging and Cleaning Strategy: What are the best ways to incentivize the property owner to make sure these two critical operational tasks are happening on a daily basis? What kind of revenue share makes sense?
Dynamic Pricing: Running fleets at multiple locations gives you the ability to tailor your pricing depending on the location. How much more can you charge on key weekends?
What’s next?
While there are several factors at play when devising a cart rental program, the bottom line is that your bottom line stands to increase greatly when you rely on a full-scale platform that automates the experience for both owners and customers.
With rental apps that are either custom branded or out-of-the-box with our Revii in-house brand, backend analytics and operational tools that do the job of an entire team, the outlay is minimal and the upside significant. If your interest is piqued and your business is ready to maximize its earning potential, Rob is ready to discuss. Contact us here to calculate your own rental ROI, and watch Revii in action through an exclusive Golf Carting TV interview with Rob here.
