In this space we don’t worry too much about earnings per share and whether public companies are hitting their targets — we’ll leave that to the analysts. We do look to the two U.S.-based public car rental companies for insights into how they’re steering their ships based on current market dynamics. Sifting through their second quarter conference calls, what are Hertz and Avis Budget Group (Enterprise Holdings is privately held) up to that might be relevant to your business?
Both companies have pumped considerable resources recently into replacing or renovating legacy systems to bring them up to par with other sectors of the travel industry. These are costly and time-consuming endeavors — but crucial to keep up in a world regularly using data science and continually upgrading their user experiences. Hertz has pulled in outside talent and given them new c-suite titles such as chief digitization officer and chief retail operations officer.
Specifically, Avis and Hertz have been rolling out yield management systems that better allocate fleet based on demand. This has been a multi-year endeavor that is finally bearing fruit — Avis reported measurable boosts to pricing in locations using its demand fleet pricing tool.
Behind the counter, Avis has added mobile functionality to its manpower planning software. Allowing managers to escape the desktop and work on the go is a growing trend in business. These tools are available to companies of any size, so look into them for more flexibility and productivity for your team.
Every business should be looking to “cut out the middle man” to sell direct and save costs. In car rental, that means avoiding high online travel agency fees by driving direct bookings. Avis has been increasing website conversion rates, which has had the knock-on effect of increasing prepaid reservations to more than 35% of all bookings on its branded sites.
Selling direct also entails fleet vehicles. Avis recently launched a direct-to-consumer car sales site, while Hertz upped its dealer direct and retail sales to 78% in the quarter versus 65% last year.
On the operations front, Avis’ “fixed fleet” concept is now in place in nearly 500 stores. The idea is to allocate a static number of cars to a store, and that allocation can only increase upon higher utilization. While perhaps giving heartburn to a few store managers, Avis achieved higher utilization and reduced shuttling expense.
Ancillary revenues are still a drag, fitting into the general trend that consumers aren’t buying in the traditional ways. The focus today is away from the counter and toward better product placements of vehicle upgrades and insurance-type products in web and mobile environments. (Let’s just put “navigation” in the grave, at least in its present product offering.)
Avis is bundling its ancillary products, and gaining traction by doing so. Avis can measure fuel precisely and easily in its connected vehicles, making it easier to collect incremental fuel revenue — or refund the customer for a car with more gas than it left with.
“Mobility” is now a regular theme on these calls. Avis understands that the free-floating carsharing model is where the growth is, launching Zipcar Flex in London and most recently at Heathrow Airport. Avis believes the service can take on ride-hailing with a lower price point.
Meanwhile, Zipcar is also expanding its commuter service in North American urban markets.
Avis is also taking a look at peer-to-peer platforms such as Turo and Getaround not as a competitor, but as a product offering in its portfolio. Independent car rental companies are already realizing peer-to-peer is a less expensive channel to put a greater portion of their fleet on the road.
Avis has already connected 65,000 rental vehicles. In addition to the aforementioned incremental fuel revenue, electronic tire pressure monitoring makes sure the car doesn’t leave with underinflated tires. Certainly, tracking rental vehicles allows for faster recovery of overdue cars.
Hertz said it has multiple pilots around connected car telematics, though was vague on details.
This is only a toe in the water of a very large data pool — the benefits to be reaped are nowhere near fully realized. It shouldn’t be lost that Avis has committed to a fully connected global fleet by 2020.
Avis is managing a portion of Waymo’s autonomous vehicle fleet, you’re no doubt aware. On the ground, that means providing a roof for the vehicles and a place to charge, and perhaps managing their movements to test areas. There wouldn’t be much need for in-fleeting or de-fleeting right now, and the maintenance is most likely negligible (except to maintain the technology, and one would assume Waymo would handle that). That said, the partnership provides crucial access to a major autonomy player.
Both Avis and Hertz said they see an opportunity to leverage their fleet management experience for the new mobility economy on a global scale. Avis has actually put a name to it, perhaps coining the latest catch phrase: fleet management as a service, or “FMaaS.”
