Car rentals often show wide variation based on visitor origin. This was observed decades ago (I recall an economics professor mentioning it way back), and on a cursory check just now I was quoted up to 40% lower prices at an international airport, for an otherwise identical rental, by presenting as European* rather than American or Australian.
Such a difference cannot be explained by PPP or insurance factors. We might conjecture that consumer expectations account for the price discrimination, e.g. visitors from Europe may be accustomed to high quality integrated mass transit (including to/from the airport) and thus resent a high car rental price, whilst Australians and Americans assume they'll need a rental to get around, with consequently higher willingness to pay.
* tested with UK, France, Germany, Italy, and the Netherlands.
The travel industry is very big on price discrimination (they call it revenue management). Car rental, hotels etc do it a lot, but the most advanced ones are the airlines.
For many flights there is no single price that would allow the airline to operate the flight without making a loss. Some example for a 100 seat plane:
1. Sell all tickets at $100: Plane 100% booked, revenue $ 10,000, which is less than the cost of flight.
2. Sell all tickets at $200: Plane only 60% booked, revenue $ 12,000, better but still less than the cost of the flight.
Reality: Sell 15 tickets at $400, then sell 60 at $200 and sell 20 at $100. Now you make $ 20,000 with a 95% booked plane.
Your new problem is how to avoid the $400 people buying a $100 ticket, because that ruins your whole optimization. The way airlines do that is to make many tariff classes with a lot of rules and a limit to the number of tickets sold at a certain class. They then change that a bit based on demand once the flights gets closer to departure.
The rules are relatively simple things (this was invented in the mainframe computing time and some of those systems are still around), common examples: A minimum amount of time before departure (e.g. you can't but the $100 ticket for a flight that's tomorrow), a minimum stay time (e.g. return flight has to be at least a week after arrival, filters out business travel), only valid if the trip includes a weekend-night (again filters business), only valid on a connecting flight etc.
The optimization is not a simple thing at all, I've seen setups with large Spark/Hadoop clusters to calculate the optimal pricing for each tariff-class and the amount of tickets to allow on each flight for each tariff-class. Because that's the output of most revenue management systems. And then on the other side of things the flight booking sites or travel agents are trying to find the cheapest combination for each customer, because these tariffs are not "an SFO-JFK return" but more like "leg 1 SFO-ATL, leg 2 ATL-JFK, 5 days later leg 3 JFK-SFO" or something like that. And you can buy any combination you want as long as it fits the rules for each tariff class.
That sort of thing is everywhere, and has been a thing forever.
I remember when I was a teenager, my dad had a business importing consumer electronics from Asia and the difference in shipping cost between him paying the shipping company directly or getting a local agent to do it was often more than the cost of the products. It didn't matter if he used an established agent or some random person with zero connections, the price difference was due to him being European and had nothing to do with connections.
That's so crazy, I just need some verification in order to believe it. I've never in my life seen price discrimination by citizenship like that before, with the exception of discounts for locals vs. tourists for museums etc.
What are the links you're using to check the prices? And are you using a VPN to change your IP location, or something to do with the passport associated with an Expedia account or something, or is it a billing address? And what airport and car rental company are you looking at specifically?
I want to make sure it's reproducible. I know Americans in Europe often wind up paying more to rent, but only because many of them require the less common and more expensive automatic transmissions. But you say you're selecting an identical rental so that can't be it.
> I've never in my life seen price discrimination by citizenship like that before
Go to any American car rental website and make a reservation as a visitor/wirh a foreign address (try a Europe or a low PPP country, airport pickup) and compare the rates for yourself. I don't know if a non-US proxy is necessary.
You'll need a foreign credit card to complete a rental for real.
tl;dr: Differences in rates appear to be due to taxes and different default options included, NOT country/citizenship discrimination.
OK... I'm checking out Hertz using a VPN that puts me in Bucharest, Romania. In an incognito tab, at the OTP airport, Dec 1-8, 30+ yrs old, the 3 cheapest car is 233.29 euros with the button "pay at location".
When I do it from a USA IP for the same airport and everything, it sends me to a different Hertz site that advertises the same cheapest car as 216.00 euros with a "pay later" option (same as "pay at location"), or 181.51 with "pay now".
However, when I look at the fine print of what's actually included, the US site does NOT include sales/VAT tax (19%) or theft in the quote, which the Romanian quote does. There might be further differences too, since I'm only going by the bullet points and FAQ, not the actual agreement.
All in all, it makes it challenging to compare prices because they change depending upon the options you select, and the default options are different depending on which country you're booking from. But the prices all seem close enough to suggest that prices are the same, and then any illusions of "oh it's 40% cheaper in this country rather than that one!" are NOT due to nationality, but simply due to whether the quote includes tax, theft, is prepaid or paid at counter, etc.
From this and other remarks you seem very keen to demonstrate this is some kind of myth, but none of those items are relevant to my findings, and I didn’t use such an elaborate method, nor one so prone to glitches.
I simply said “I’m from country X” during the booking process. Same website, same vehicle stock, same inclusions, same taxes, same T&Cs. 40% different rate code (actually 38%, if I recall precisely).
Also, I have first-hand knowledge. I’ve worked on travel sector booking systems. Others here have explained in detail the many varieties of segmentation applied in the sector. From my experience of seeing the actual source code and business rules in a production system, they’re right.
This is not an extraordinary claim requiring extraordinary evidence. It’s already widely known and documented.
It is an extraordinary claim, and no it's not widely known and documented. I can't find any reliable Google results on it at all that indicates it's a common ongoing practice.
And your explanation makes no sense, because prices are advertised clearly in searching long before any "I'm from country X" dropdown, which only appears in the final stages of booking. Prices don't change after you put in your driver's license nationality.
Nor are you providing a single link to any site where anyone can test it out. So yes, it seems like a myth, an extraordinary claim that does require, well not extraordinary evidence, but just evidence at all.
>I've never in my life seen price discrimination by citizenship like that before, with the exception of discounts for locals vs. tourists for museums etc.
Steam does it for most games (though its actually set by the seller)
Such a difference cannot be explained by PPP or insurance factors. We might conjecture that consumer expectations account for the price discrimination, e.g. visitors from Europe may be accustomed to high quality integrated mass transit (including to/from the airport) and thus resent a high car rental price, whilst Australians and Americans assume they'll need a rental to get around, with consequently higher willingness to pay.
* tested with UK, France, Germany, Italy, and the Netherlands.