It’s been seven years since I first joined the board of directors of the American Car Rental Association (ACRA) and six since I was elected president.
Fortunately, ACRA is stronger than it has ever been and will continue to represent the industry in taking on its challenges. As I leave office, I thought it appropriate to reflect on some of the changes we experienced:
Hertz Corporation acquired Dollar Thrifty. After a nearly two-year process, the transaction was completed in the fall of 2012, reducing the number of publicly traded companies to only Hertz and Avis Budget.
Avis Budget acquired Zipcar and Payless. The industry landscape continued to evolve as the Zipcar acquisition put Avis Budget into the hourly car rental/neighborhood market. The Payless acquisition let the company enter the value segment as well.
Enterprise acquired Alamo/National and started franchising in Europe. The 2007 acquisition caught many off guard as Enterprise moved into the airport market in a big way. In a major departure from its operating model, Enterprise expanded into Europe via acquisitions and franchising.
Sixt came to North America. The borders began to blur as one of Europe’s largest operators opened company locations and started franchising in America.
Denny Hecker was imprisoned. The flamboyant car dealer/operator lost everything and put a black eye on the industry, causing significant hardship to many around him.
Franchise Services of North America acquired Advantage and filed for bankruptcy after one year of operations. Sometimes private equity is just not the answer.
Hertz launched Firefly and returned to the value brand segment after divesting Advantage. In only one year, the brand expanded throughout Europe and Mexico and opened 19 locations in America.
Fox, ACE and Economy grew affiliate programs. In a departure from the more traditional franchise model, expansion came via international and dometic growth.
Residual values skyrocketed and eased off; SAAR collapsed and rebounded; Chrysler and GM filed for bankruptcy and nearly impaired the car rental industry as a whole. As we have consistently seen, the fundamentals of our industry are dramatically impacted by the manufacturers.
Credit enhancements climbed as high as 35% after being as low as 10%, impacting everyone in the industry and the ability to borrow and properly fleet. “Too big to fail” hit not only the financial system, but Detroit as a whole. The impact trickled down through auto industry suppliers and the car rental industry.
Prepaid reservations and deposits moved to center stage throughout the industry. Although not as disciplined as the hotel or airline industries, the industry began to take prepaid reservations as a way to mitigate the costs of no-shows.