This new Firefly location is now serving the "deep-value" leisure rental market at Los Angeles International Airport.
The Hertz Corp. has recently announced the expansion of its Firefly brand to leisure travelers at airports in the United States. This expansion enables Hertz to re-enter the U.S. “deep-value” leisure rental market, the fastest-growing market segment in the airport car rental market, according to Hertz.
Hertz lost its presence in the deep-value leisure car market when it divested its Advantage Rent A Car brand last year as part of the agreement with the Federal Trade Commission for the acquisition of Dollar Thrifty.
The Firefly expansion into the U.S. allows Hertz to compete with other value rental brands such as Advantage, Payless Car Rental, Fox Rent-A-Car, Sixt Car Rental, U-SAVE Car and Truck Rental and E-Z Rent-A-Car. Payless was acquired by Avis Budget Group in July.
First launched in Europe in March, Hertz opened Firefly in rebranded Advantage locations in Spain, France, Italy, Germany, the U.K., Switzerland and Portugal. Hertz will add five Firefly locations in Europe in the second half of 2013. By year-end, Hertz will operate 38 corporate Firefly locations and seven franchises in Europe, the company said.
The first U.S. location started serving customers in Orlando on Sept. 15. This opening has been followed by new locations in San Francisco, Las Vegas, Los Angeles, Chicago, Ft. Lauderdale, Ft. Myers, Houston, Miami, Oakland, Orlando, Philadelphia, Phoenix and West Palm Beach.
By year-end, Hertz plans to have around 20 Firefly locations serving airports in select U.S. leisure markets. Locations set to open by the end of 2013 include airports in Denver, Honolulu, Kansas City, Minneapolis/St. Paul, Salt Lake City, San Diego, San Jose Airport and Tampa Airport.
A GROWING LEISURE MARKET
The U.S. rental car leisure segment’s U.S. airport market consists of three markets: premium, mid-tier and value. Currently, the mid-tier and value markets are the fastest growing airport markets.
Although the value segment has a smaller market size at $0.5 billion compared to the premium ($6.5 billion) and mid-tier ($4.9 billion) rental car segments, the value segment shows the most growth potential among the three markets, according to data from U.S airport concession reports in Hertz’s recent investor presentation.
The two-year Revenue CAGR (compound annual growth rate) for the value market is 23.2%, while the premium market shows 3.4% growth and the mid-tier market has 4.8% growth.
The Firefly fleet consists of economy, compact, intermediate, SUV, minivan and convertible classes. When comparing rental rates on consumer-facing online rate portals, Firefly’s prices are competitive with other value brands. Random searches on Expedia for a one-day rental for dates in late October show pricing within $2 of Firefly’s value-brand competitors.