Still some way to go, but Hertz is confident blended travel trips will boost its bottom line this year.
Car rental company Hertz’s corporate business has yet to recover to 2019 levels in the U.S.
The famous yellow brand reported its first quarter results on Thursday, where it revealed its leisure business had bounced back.
“We believe that the post-pandemic recovery in the Americas is substantially complete for domestic leisure,” said Alexandra Brooks, interim chief financial officer, during an earnings call. But corporate and international inbound had progressed to 80 percent and 60 percent of 2019 levels respectively, she added.
However, for its international segment, corporate business was at 75 percent of 2019 levels while leisure and inbound business were further down at 50 percent.
New boss Stephen Scherr remains upbeat, though, as he looks towards more revenue from electric vehicles, as well as blended travel trips.
When quizzed whether the rise in business travelers tagging on vacations to their work trips could make predicting demand more challenging, Hertz chair and CEO Scherr said it was actually a “net benefit” with corporate customers asking Hertz about split billing for employees.
“If you have a professional that travels from New York to Los Angeles for meetings on a Wednesday and Thursday, that person in all likelihood pre-pandemic would fly back Thursday night. The fact they’re staying with the latitude to work Friday remotely in Los Angeles in my example, and then spend the weekend, adds three days to the rental,” he said.
“I suspect the hotel chains are benefiting from that as well, while the airline has a round trip no matter the days on which it plays,” he added
Scherr also believes corporate demand from electric vehicles, as well as tougher city regulations on carbon emissions, will play into its hands as it provides vehicles to companies like Uber.
“Hertz and our EV fleet is the most affordable entry point for drivers to get into those electric vehicles and use them,” he said. “The driver benefits, the company benefits by meeting requirements the city is putting in place.”
Dollar and Thrifty Digital Initiatives
Meanwhile, Scherr shared more details after his comments earlier in February that the Dollar and Thrifty brands were “performing shy of their potential.”
He wants to now engage customers of those brands on a “lower cost basis” with features like kiosks.
“We’ve begun to co-develop a digital forward customer experience, including direct channel and digital properties designed to provide customers with a touchless experience and at an affordable value point,” he said.
The project will launch this summer across a selection of airports, and Scherr said it was “an enormous and addressable growing market and one I didn’t feel confident we were tapping into.”
Hertz reported revenue of $2 billion for the three months to March 31, 2023, which was, up 13 percent year over year. Net income was $126 million.
CORRECTION: An earlier version of this article said Brooks was senior vice president and chief accounting officer.
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Tags: business travel, car rentals, climate change, corporate travel, earnings, hertz, lyft, sustainability, uber
Photo credit: Hertz boss Stephen Scherr thinks blended travel trips are a positive for the car rental giant. Source: Casey Brooke Lawson/Hertz Casey Brooke Lawson / Hertz