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Hertz gets bigger, will rental rates too?

By A. Pawlowski, CNN
A Hertz worker helps a customer at its rental-car pickup area at Chicago's O'Hare International Airport.
A Hertz worker helps a customer at its rental-car pickup area at Chicago's O'Hare International Airport.
STORY HIGHLIGHTS
  • Car rental industry giant Hertz is planning to buy Dollar Thrifty
  • Analysts say the merger likely won't mean that deals will be harder to find
  • High rental rates are being driven by tighter fleets and tighter lending, expert says
  • Consolidation is a mixed blessing for consumers, travel expert says
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(CNN) -- Renting a car has been a costly proposition in recent months, and Monday's news that industry giant Hertz is planning to buy Dollar Thrifty may have travelers wondering whether deals will be even harder to find.

Not likely, say industry analysts, who predict car rental rates will stay high for reasons unrelated to the deal.

Some say Hertz's acquisition made sense.

"I really think it's great news," said Neil Abrams of the Abrams Consulting Group, which follows the car rental industry. "It will benefit consumers."

For Hertz customers who don't need the "bells and whistles" of higher-end cars, the deal opens the door to more value-oriented rentals, Abrams said, while giving Dollar Thrifty customers access to Hertz's worldwide system.

Hertz has 8,200 locations in 146 countries, while Dollar Thrifty has 1,550 locations around the globe.

Customers also likely won't see any rental rate changes once the companies merge, Abrams said.

"Enterprise, National and Alamo are one company, but the three brands compete in their own individual pricing tiers. I'm pretty confident the same will occur with Hertz and Dollar Thrifty," Abrams said.

Consolidation can be 'mixed blessing'

Rental car rates reached historic highs in 2009. The high prices have been driven in part by tighter fleets, so there are fewer cars to rent, and tighter lending, which means car rental companies can't buy as many cars, said Chris Brown, executive editor of Auto Rental News.

"We're in an era of higher-priced car rentals and that era is probably going to stay in place for a while," Brown said. "I'm not sure that Hertz buying Dollar Thrifty [will be] a driver of a rate increase."

Meanwhile, Dollar Thrifty will likely continue to operate under its own name and have the same number of locations, Brown said. If the two companies can improve their business processes as a result of the merger, that should trickle down to customer service, he said.

But one travel expert said consolidation is a mixed blessing for consumers.

It's usually good for the businesses, because they can charge higher prices, said Chris Elliott, a travel columnist and National Geographic Traveler magazine's reader advocate.

"It can lead to some streamlined operations, some improved service, but it also has a downside: There's less competition," Elliott said. "Just generally speaking, less competition is a bad thing."

"So now you can't just as a consumer say, well, I'm going to take my business to Dollar Thrifty, because Hertz now owns it," he said.

Since consolidation has left just three big players in the U.S. car rental industry -- Enterprise, Avis (which owns Budget) and Hertz -- that can affect consumers when it comes to pricing, Elliott said.