Skift Take

Car rental companies have bounced back in the last year by becoming smarter about how they reach customers and invest in technology.

Global rental car giants Hertz Global Holdings and Avis Budget Group have scrambled in recent years to compete against the influx of ridesharing rivals into the ground transportation market.

Travelers are still renting cars when they’re on vacation, and rental car companies are staying relevant by introducing new technology tools, like Avis’ new Avis Now booking tool, and more competitive pricing. In addition, Hertz has a pilot program with Lyft and Avis Budget acquired Zipcar in 2013.

Both companies are expecting strong results for full-year 2016, according to recent earnings announcements, despite concerns about Brexit and the impact of terror attacks in Europe.

“From a macro perspective, it doesn’t appear that Brexit will have a material impact on 2016 results,” said Hertz Global Holdings’ John Tague on the company’s Q2 2016 earnings call. “However, security concerns emanating from France and elsewhere on the continent will likely soften our European growth expectations for the remainder of 2016. Despite that, we continue to expect year-over-year profitability improvements in our international group.”

Tague said that Hertz’ pilot program with Lyft in Las Vegas is going well, but that the company has yet to commit to expanding its relationship with ridesharing giants Uber and Lyft.

Avis Budget Group, similarly, said that global travel trends are overwhelmingly positive for the car rental business now. Europeans are still traveling, and Americans are starting to pay more for car rentals.

“At this point, the overall impact on summer travel patterns from the Brexit vote or other issues in Europe has been minimal,” said Avis Budget Group CEO Larry D. De Shon. “We continue to be optimistic that the important summer holiday season will live up to our expectations. In fact, we are encouraged by the global trends we are seeing this summer.

“Consumers are traveling, and with industry fleet levels somewhat tighter than in quite some time, we are continuing to see positive year-over-year pricing in the Americas. Europeans still seem inclined to travel this summer, and while international pricing will probably continue to be challenged due to competitive dynamics, demand remains strong and growth in ancillary revenues is mitigating pricing pressures.”

Pricing in the corporate travel space, however, is under pressure.

“On the commercial side, we said pricing was down about a point in the quarter, and as we take a look at the kind of the mix you see, what you’ll see is the large commercial pricing will continue to be kind of under pressure,” said De Shon. “It’s a highly competitive business segment, so that’s always going to be under pressure. And the goal is to continue to try to drive more of the mid-market and small business accounts.”


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Tags: avis, avis budget, hertz, lyft

Photo credit: Car rental companies aren't seeing a slowdown in leisure demand despite uncertainty in Europe. Avis renters on the go. Avis

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