Courting Customers in Your Own Backyard

Today, everyone is clamoring for a slice of the local market. Sales managers who once courted travel agents are now making golf and lunch dates with insurance adjusters. Hertz commercials no longer feature harried businessmen rushing through airports; they show the girl next door taking a drive up the coast with her dog. Once considered the step-child market segment, the local rental market is now head of household. Just ask Enterprise Rent-A-Car, which brought in $5.49 billion in revenue in fiscal year 2003.

Auto Rental News Editor Cathy Stephens recently met with Neil Abrams, president of Abrams Consulting Group, to discuss the ongoing battle for market share in the local car rental market.

Auto Rental News: It seems like every rent-a-car company, from small independents to airport market leaders like Avis and Hertz, is focusing on expanding its local market share today. What’s driving this shift in growth strategies?

Abrams: From a practical standpoint, the local market takes the curve out of the curve, so to speak. It flattens the peaks and valleys in the business. With the local market dominated by Enterprise, the thousand-pound gorilla here, you see that’s where the opportunity lies. You don’t need to take a huge amount of market share from Enterprise to have a substantial business opportunity, given what they have and how much the company dominates.

Enterprise probably has 85% to 90% of the local market with about 5,000 locations domestically. It’s an amazing company with great people, but there is still local market business out there that small operators can get. The business is there.

At the airport, on the other hand, you’re fighting over every deplaning passenger. Travelers don’t make their travel decisions based on getting a great car rental deal. They travel for a business meeting or to go to a resort, for example. The car rental does not initiate a travel decision. So the car rental operators end up fighting over deplaning passengers in a defined market.

The local market offers much more opportunity for salesmanship and service, market penetration and sales strategies. With just one company dominating, the local market is wide open. So our firm has tried to persuade our airport clients to either get in local market operations, or to at least consider that.

When you realize that the cost of airport rental to a customer has all of those airport-related fees — facility fees, concession fees, various pass-throughs — you have a compelling reason to push your customers and employees to rent off-airport if possible.

CONTINUED:  Courting Customers in Your Own Backyard
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