The Hertz Corporation engages in the vehicle rental and leasing business. The company is a subsidiary of Rental Car Intermediate Holdings, LLC.
The company engages principally in the business of renting vehicles primarily through its Hertz, Dollar, and Thrifty brands. As of December 31, 2022, the company operated its vehicle rental business globally from approximately 11,600 company-operated and franchisee locations across approximately 160 countries and jurisdictions, including North America,...
The Hertz Corporation engages in the vehicle rental and leasing business. The company is a subsidiary of Rental Car Intermediate Holdings, LLC.
The company engages principally in the business of renting vehicles primarily through its Hertz, Dollar, and Thrifty brands. As of December 31, 2022, the company operated its vehicle rental business globally from approximately 11,600 company-operated and franchisee locations across approximately 160 countries and jurisdictions, including North America, Europe, Latin America, Africa, Asia, Australia, the Caribbean, the Middle East, and New Zealand.
The company is one of the largest worldwide vehicle rental companies and its Hertz brand name is among the most recognized globally. The company has an extensive network of airport and off airport rental locations in the U.S. and major European markets. In addition to vehicle rental, the company previously provided integrated vehicle leasing and fleet management solutions through its Donlen Corporation subsidiary, which sold substantially all of its assets and certain of its liabilities on March 30, 2021.
Strategy
The company’s strategy is focused on excellence in execution of its rental operations, electrification of the fleet, shared mobility, connected cars and selling vehicles from the fleet directly to consumers.
Business Segments
The company operates through two reportable segments, Americas RAC and International RAC (Rental Car).
Americas RAC - Rental of vehicles, as well as the sale of vehicles and value-added services, in the U.S., Canada, Latin America and the Caribbean. The company maintains a substantial network of company-operated rental locations in this segment and the company has franchisees and partners that operate rental locations under its brands.
International RAC - Rental of vehicles, as well as the sale of vehicles and value-added services, in locations other than the U.S., Canada, Latin America and the Caribbean. The company maintains a substantial network of company-operated rental locations, a majority of which are in Europe, and it has franchisees and partners that operate rental locations under its brands. As of December 31, 2022, 65% of the company’s franchised locations were in markets covered by its International RAC segment.
Americas RAC and International RAC Segments
Brands
The company’s Americas RAC and International RAC vehicle rental businesses are primarily operated through its three largest brands — Hertz, Dollar, and Thrifty. The company offers multiple brands to provide customers a full range of rental services at different price points, levels of service, offerings and products. These brands generally maintain separate rental locations (e.g., separate airport counters), and use distinct reservation, marketing and other customer contact activities. The company achieves synergies across its brands by, among other things, utilizing a single fleet and fleet management team and, where applicable, combined vehicle maintenance, vehicle cleaning and back office functions.
The company’s top tier brand, Hertz, is one of the most recognized brands in the world. It offers premium customer service both in the U.S. and internationally. The Hertz brand's tagline of ‘Hertz. Let's Go!’ expresses its commitment to quality, seamless travel and customer service. The brand provides customers with several innovative offerings, such as Hertz Gold Plus Rewards, Hertz Ultimate Choice and access to unique vehicles offered through the company’s electric vehicle (EV) fleet and specialty collections. The Hertz brand seeks to maintain its position as a premier provider of vehicle rental services through an intense focus on service, loyalty, quality and product innovation.
The company’s smart value brand, Dollar, is marketed as a smart choice for financially focused travelers looking for a dependable car at a price they can afford. The Dollar brand’s core focus is serving family, leisure and small business travelers through the airport vehicle rental channel. Dollar operates primarily through company-operated locations in the U.S. and Canada.
The Thrifty brand’s core focus is serving leisure travelers through the airport vehicle rental channel. Thrifty operates primarily through company-operated locations in the U.S. and Canada.
Operations
Locations
The company operates its brands at both airport and off airport locations, which utilize common vehicle fleets, are supervised by common country, regional and local area management, use many common systems and rely on common vehicle maintenance and administrative centers. Additionally, the company’s airport and off airport locations utilize common marketing activities and have many of the same customers. The company regards both types of locations as aspects of a single, unitary, vehicle rental business.
The company’s Americas RAC vehicle rental operations have company-operated locations primarily in the U.S. and Canada. The company’s International RAC vehicle rental operations have company-operated locations in Australia, Belgium, the Czech Republic, France, Germany, Italy, Luxembourg, the Netherlands, New Zealand, Slovakia, Spain and the United Kingdom.
Airport
As of December 31, 2022, the company had approximately 1,900 airport rental locations in its Americas RAC segment and approximately 1,400 airport rental locations in its International RAC segment.
For the company’s airport company-operated rental locations, it is dependent on, and has obtained, concessions or similar leasing agreements or arrangements, that grant the company the right to conduct a vehicle rental business at the respective airport.
Off Airport
As of December 31, 2022, the company had approximately 3,600 off airport locations in its Americas RAC segment and approximately 4,700 off airport rental locations in its International RAC segment. The company’s off airport rental customers include people who prefer to rent vehicles closer to their home or place of work for business or leisure purposes, as well as those needing to travel to or from airports. The company’s off airport customers also include people who have been referred by, or whose rental costs are being wholly or partially reimbursed by, insurance companies following accidents in which their vehicles were damaged, those expecting to lease vehicles that are not yet available from their leasing companies and replacement renters. In addition, its off airport customers include drivers for its Ride Sharing Partners.
When compared to the company’s airport rental locations, an off airport rental location typically uses a smaller rental facility with fewer employees, conducts pick-up and delivery services and serves replacement renters using specialized systems and processes. On average, off airport locations generate fewer transactions per period than airport locations.
Customers and Business Mix
The company’s sales force calls on companies, government agencies and other organizations whose employees and associates need to rent vehicles for business or official purposes. The company’s sales force also calls on organizations, such as insurance and leasing companies, automobile repair companies and vehicle dealers whose customers need replacement rentals. In addition, its sales force works with membership associations, tour operators, travel companies, ride sharing companies and other groups whose members, participants and customers rent vehicles for either business or leisure purposes.
The company also markets directly to individual renters. The company advertises its vehicle rental offerings through traditional media channels, partner publications (e.g., affinity clubs, airline and hotel partners) and direct mail. The company also relies on digital marketing and, for the Hertz brand, the company is increasingly seeking to expand access to and use of its Hertz mobile app.
In addition to advertising, the company conducts other forms of marketing and promotion, including travel industry business partnerships and press and public relations activities.
The company categorizes its vehicle rental business based on the general purpose (business or leisure) and type of location (airport or off airport) from which customers rent from the company.
Customers who rent from the company for ‘business’ purposes include those who require vehicles in connection with commercial activities, including drivers for its Ride Sharing Partners, the activities of governments and other organizations or for temporary vehicle replacement purposes (i.e., replacement rentals).
Customers who rent from the company for ‘leisure’ purposes include individual travelers booking vacation rentals and people renting to meet other personal needs (other than replacement rentals). Leisure rentals are generally longer in duration and generate more revenue per transaction than business rentals. Leisure rentals also include rentals by customers of the U.S. and international tour operators, which are usually a part of tour packages that can include air travel and hotel accommodations.
Off airport rentals include insurance replacements, and the company has agreements with the referring insurers establishing the relevant rental terms, including the arrangements made for billing and payment.
Customer Service Offerings
The company offers customers a wide range of services to differentiate itself from the competition and increase and diversify its revenue.
Hertz Gold Plus Rewards Program
At the company’s major airport rental locations and certain smaller airport and off airport locations, customers participating in the company’s Hertz Gold Plus Rewards program are able to rent vehicles in an expedited manner. Participants in the company’s Hertz Gold Plus Rewards program often bypass the rental counter entirely and proceed directly to their vehicle upon arrival at the company’s facility. They are also eligible to earn Hertz Gold Plus Rewards points that may be redeemed for free rental days or converted to awards of other companies' loyalty programs.
Hertz's Gold Plus Rewards program offers three elite membership tiers, which provide more frequent renters the opportunity to earn additional reward points and vehicle upgrades. When Hertz Gold Plus Rewards members make a reservation for a midsize car or above, they have access to exclusive vehicles based on their membership tier via the company’s Hertz Ultimate Choice program, which allows customers to choose their vehicle from a range of makes, models and colors available within the zone indicated on their reservation. Alternatively, they may upgrade at pick-up for a fee by choosing a vehicle from a premium upgrade zone. As of December 31, 2022, the Hertz Ultimate Choice program was offered at approximately 60 U.S. and Canada airport locations.
Other Customer Service Offerings
The company offers electronic rental agreements and returns for its Hertz, Dollar and Thrifty customers in the U.S. The company also offers Mobile Gold Alerts, a service available to participating Hertz Gold Plus Rewards customers, through which a text message and/or email with the vehicle information and location is sent approximately 30 minutes prior to arrival, providing a renter the option to choose another vehicle. The company offers Hertz e-Return, which allows customers to drop off their vehicle and go without the need to visit the rental counter. Customers can also use cashless toll lanes with its PlatePass offering where the license plate acts as a transponder. The company also offers a vehicle-subscription service on a monthly or weekend basis in select locations that provides a flexible, cost-effective alternative to vehicle ownership, with no long-term commitment required, referred to as Hertz My Car and My Hertz Weekend.
Ride Sharing Rentals
The company has partnered with certain ride sharing companies to offer vehicle rentals to their drivers in select cities in North America. This program enables the company to rent vehicles on a longer-term basis than traditional business rentals and is a component of its strategy to be an active participant in the future of mobility.
Drivers for the company’s Ride Sharing Partners reserve vehicles online through Ride Sharing Partner websites and applications and pick up vehicles from select locations. Ride sharing drivers can extend the vehicle rental on a recurring basis. As part of an exclusive partnership with Uber, the company makes Teslas and other EVs available for their drivers to rent on the Uber network in the U.S. In January 2023, the company announced an expansion of its partnership with Uber to make available up to 25,000 EVs for their drivers to rent on the Uber network across Europe by 2025.
Rates, Fees and Value-Added Services
The company rents a wide variety of makes and models of vehicles. The company rents vehicles on an hourly (in select international markets), daily, weekend, weekly, monthly or multi-month basis, with rental charges computed on a limited or unlimited mileage rate, or on a time rate plus a mileage charge.
The company also generates revenues from reimbursements by customers of airport concession fees, unless the law limits or forbids the company from doing so, and of vehicle licensing costs, fueling charges, and charges for value-added services, such as supplemental equipment (e.g., child seats and ski racks), loss or collision damage waiver, theft protection, liability and personal accident/effects insurance coverage, premium emergency roadside service and satellite radio.
Reservations
The company distributes pricing and content and accepts reservations through multiple channels. Direct reservations are accepted at Hertz.com, Dollar.com and Thrifty.com, each of which has global and local versions in multiple languages. Hertz.com offers a range of products, prices and additional services, as well as Hertz Gold Plus Rewards benefits, serving both company-operated and franchise locations. In addition to its websites, direct reservations are enabled via the company’s Hertz and Dollar smartphone apps, which include additional connected products and services.
Franchisees
In certain U.S. and international markets, the company has found it efficient to issue licenses under franchise arrangements to independent franchisees who are engaged in the vehicle rental business. Franchisees rent vehicles that they own or lease and may provide related services to customers, primarily under its Hertz, Dollar or Thrifty brand. In many markets, franchisees operate franchises for multiple brands.
Seasonality
The company’s vehicle rental operations are historically a seasonal business, excluding the year ended December 31, 2020, which was impacted by the COVID-19 pandemic, with decreased levels of business in the winter months and heightened activity during the spring and summer months (peak season) for the majority of countries where the company generates its revenues. To accommodate increased demand, the company typically increases its available fleet and staff in the second and third quarters of the year (year ended December 2022) to add a significant number of part-time and seasonal workers. A number of the company’s other major operating costs, including airport concession fees, commissions and vehicle liability expenses, are directly related to revenues or transaction volumes and thus also increase in the second and third quarters. Certain operating expenses, including real estate taxes, rent, insurance, utilities, facility maintenance and other facility-related expenses, the costs of operating the company’s information technology systems and minimum staffing costs, remain fixed and therefore do not vary based on seasonal demand. The company’s peak season historically has been the second and third quarters of the year.
Fleet
During the year ended December 31, 2022, the company operated a peak rental fleet in its Americas RAC and International RAC segments of approximately 428,700 vehicles and 118,700 vehicles, respectively. Purchases of vehicles are financed by active and ongoing global borrowing programs and through cash from operations. The vehicles purchased are either program vehicles or non-program vehicles. The company periodically reviews the efficiencies of an optimal mix between program and non-program vehicles in its fleet and adjust the ratio of program and non-program vehicles as needed based on availability, vehicle economics and contract negotiations.
During the year ended December 31, 2022, the company’s approximate average holding period for a rental vehicle was 25 months in its Americas RAC segment and 18 months in the company’s International RAC segment, which are consistent with the company’s average holding periods in 2021.
In 2021, the company announced its plan to significantly expand the company’s EV rental fleet in North America over time. During 2022, the company continued to add EVs to its fleet and to identify additional vehicle manufactures who intend to sell the company EVs as they become available in the years ahead.
The company maintains vehicle maintenance centers, which provide maintenance for its fleet, many of which include sophisticated vehicle diagnostic and repair equipment, and are accepted by automobile manufacturers, as eligible, to perform warranty work.
Other Vehicle Disposition Channels
During the year ended December 31, 2022, the vehicles sold in the company’s U.S. and international vehicle rental operations that were not repurchased by manufacturers were sold through a variety of channels, including auction, dealer direct wholesale channels, direct sales to third parties and retail channels, including sales on the Carvana platform.
The company-operated retail sales channel, Hertz Car Sales, consists of a network of company-operated vehicle sales locations throughout the U.S. dedicated to the sale of vehicles from the company’s rental fleet. Vehicles disposed of through the company’s retail outlets provide for ancillary vehicle sales revenue, such as warranty, financing and aftermarket products.
The company also offers Rent2Buy at its retail locations in the U.S., an innovative program in which customers are able to rent a vehicle from the company’s rental fleet and if the customer purchases the vehicle, the customer is credited with a portion of their rental charges. The purchase transaction is completed through the internet and by mail in those states where permitted.
Competition
The company’s principal vehicle rental industry competitors are Avis Budget Group, Inc., which operates the Avis, Budget, ZipCar and Payless brands; Enterprise Holdings, which operates the Enterprise Rent-A-Car Company, National Car Rental and Alamo Rent A Car brands; and SIXT.
History
The Hertz Corporation was founded in 1918. The company was incorporated in Delaware in 1967.
The Analyst Price Target shows the analysts’ low, high, and average target at a glance.
