The rental car giant said booking around the Christmas holidays for places like California and Florida are spiking to twice 2021 levels. More evidence that leisure travel is showing no signs of slowing down.
Hertz Global Holdings Inc on Thursday reported a 12% jump in quarterly revenue, as demand for rental cars stayed strong amid surging leisure travel and constrained production from automakers.
The company’s revenue rose to about $2.5 billion for the quarter through September from $2.23 billion a year ago, while net income rose just 1% to $577 million, or $1.33 per share, reflecting intentionally elevated maintenance costs to address out-of-service levels.
“We managed the fleet pretty aggressively,” Hertz Chief Executive Stephen Scherr said in an interview.
He said Hertz was enjoying the same strong conditions for travel reported by airlines, hotels and others, seeing “undeniable strength in demand across leisure, corporate and for us our ride-share business.”
Scherr said there were “elevated bookings” for international inbound travelers for upcoming trips despite the strong dollar. Booking around the Christmas holidays for places like California and Florida are running twice 2021 levels. “Leisure demand is big,” Scherr said.
The car rental industry, tied closely to airline traffic and hotel bookings, has seen a robust rebound due to pent-up desire to travel after an easing of coronavirus restrictions.
Scherr said the length of corporate car rentals has increased on average by a little more than one day as more business travelers tack on vacation to a work trip.
Consumers have also increasingly opted for rental cars as automakers such as Ford Motor Co and General Motor Co have struggled to fulfill demand due to supply shortages.
Last month, Hertz said it plans to order up to 175,000 General Motors electric vehicles over the next five years, after announcing plans in October 2021 to buy 100,000 Tesla EVs.
Hertz currently has about 40,000 EVs out of 500,000 vehicles in the fleet — and is seeing 50% lower maintenance costs on its EV fleet.
Hertz’s goal is for 25% of its fleet to be electric by the end of 2024.
Hertz said corporate business reached 75% of pre-pandemic levels in the third quarter and corporate rentals are boosting EV demand by businesses seeking to reduce their emissions.
Hertz shares were down about 1% in midday trading.
(Reporting by Priyamvada C in Bengaluru and David Shepardson in Washington; Editing by Maju Samuel, David Holmes and Mark Porter)
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