Hawaii tourists are renting U-Haul vans instead of rental cars due to a massive shortage sending prices up to $700 a day

• A rental-car shortage is is currently rippling across the US.
• Hot travel destinations like Hawaii and Florida are especially impacted by this shortage.
• Some tourists traveling to Hawaii are now opting to rent U-Haul trucks and vans instead.

Hot travel destinations like Hawaii and Florida are facing a massive rental-car shortage that's causing outrageously high rental-car prices and fully booked fleets.

To avoid this shortage and inflated prices, experts are advising travelers to plan ahead. However, some tourists in Hawaii have found a savvier workaround to this rental-vehicle shortage: rent a U-Haul instead.

"We have seen a considerable uptick in U-Haul rentals from customers who are visiting the islands now," Kaleo Alau, the president of U-Haul Company in Hawaii, told Insider in an email statement. "We realize this demand is occurring when tourists are unable to secure a rental-car, or they learn that our rental fleet options are more affordable.

Most of these tourists are opting for U-Haul's less sizable vehicles, such as its pickup trucks or cargo vans, according to Alau. But now, unsurprisingly, some U-Haul locations have less equipment on hand to serve the locals.

"We are working everyday with our primary customer base - the islands' residential movers - to ensure we can still meet their transportation needs," Alau said.

Inflated prices in Hawaii and other markets

Two to three years ago, rental cars in Hawaii averaged at about $50 a day. Now, some rentals are going for over $500 a day, Jonathan Weinberg, the founder and CEO of AutoSlash, told Insider. Prices have even risen to $700 in some extreme cases, Chris Woronka, a senior hotel-and-leisure analyst at Deutsche Bank, told Insider.

Hawaii isn't the only state seeing this "car-rental apocalypse." Destinations like Florida, Phoenix, Arizona, and Puerto Rico are all running low on rental cars.

Travelers looking to book a rental-vehicle in these warm weathered locations a week in advance could see prices about five to 10 times the average, Weinberg said. Those who are planning ahead could still see up to triple the typical costs.

"People are quickly realizing that they need to take the cost of the rental car into account because it's no longer just an add-on," Weinberg said. "It could be the majority cost of your trip, so folks who are planning things last minute are unpleasantly surprised by it."

The cause for this shortage

This rental-car shortage is being caused by a "perfect storm," according to Woronka.

When the COVID-19 pandemic first hit the US and travel halted around the world, several rental-car companies sold off chunks of their fleets to save money. But now, people are coming out of their over year-long coronavirus-induced travel hibernation, and are booking flights and "revenge vacations" again. As a result, demand for rental-vehicles are now clashing with the rental-car companies' diminished fleets.

However, these companies can't just buy their fleets back. Right now, used car prices are skyrocketing, and there's a lack of new cars due to the computer-chip shortage.

To alleviate this issue, car-rental company Enterprise is "working closely with our manufacturing partners since last summer to continue to add vehicles to our fleet to meet the ongoing increase in demand," the company told Insider in an email statement. It has also been moving vehicles from less frequented destinations to more popular travel hotspots, although this could create a "balancing act" problem, according to Woronka.

Hertz - another popular rental-car company - is also expecting "strong demand" through the summer, and is now seeing decreased availability in certain markets, Hertz told Insider in an email statement.

To combat this issue, travelers have started turning to alternatives, such as Turo, a car-sharing company, and now, U-Hauls.