Is Enterprise still priced to take market share from Avis and Hertz?
Report Available:July 28, 2016
Blueshift’s initial research shows Enterprise continuing to lead the rental car industry as it achieves market share growth and high honors for its customer service. Rental car rates took a dip in June but appear to be strengthening as the summer peak season arrives, including a projected year-to-year increase in daily rates for what was expected to be a record-setting July 4th weekend. CAR and HTZ saw revenue decline in Q1, though both project optimism for volume and demand in Q2, driven by leisure travel.
- Enterprise has long been known as the low-priced leader in the rental car industry, aggressive on price in order to take share from rivals CAR and HTZ. An example of this is seen by Enterprise’s recent growth to 40% market share at the Portland airport, where its double-digit year-to-year growth has made it the largest rental car company on location, while also growing its local workforce by 20% compared to a year ago. Enterprise was also given top honors for travel agent support and customer satisfaction by TravelAge West, as voted on by travel agents and travelers.
- Rental car rates at airports in the top 50 cities began to climb slightly in April and saw a bigger in increase in May, only to fall a little in June. Moving into summer, fleet size appears to be in balance, which is expected to lead to stronger pricing.
- AAA forecast record July 4th holiday travel, to the tune of 43 million Americans, up 1.3% from a year ago, and higher than Memorial Day 2016 by five million travelers. The agency predicted 84% of travelers would drive to their destination, 1.2% higher than in 2015. Drivers were expected to enjoy the lowest July 4th holiday gas prices since 2005. Rental car rates, however, were expected to be 6% higher than a year ago, at an average of $75 a day.
- CAR reported a 1% decline in revenue in its Americas division in Q1 due to lower pricing, though there was a 3% increase in volume, driven by leisure travel, which is expected to drive further growth this year as corporate travel softens. Pricing started to turn a corner and had management optimistic given the modest growth in demand. The company held a national day of hiring event in June, aiming to add 1,500 employees. HTZ saw Q1 revenue drop 8%, but projects fleet utilization above historic peak levels of 82% after a disappointing 77% in Q1.
- Blueshift’s Oct. 8, 2015, report found an improving economy and increased leisure travel leading to a summer of strong rental car booking volume. Sources’ thoughts on summer rates were mixed, with 10 noting flat, seven seeing higher rates, and one noting a decline compared to a year ago. These responses were in line with sources’ summer expectations from Blueshift Research’s earlier June 12, 2015, report. Car- and ride-sharing programs are not yet a threat to the rental industry, though sources noted that chauffeur-driven and single-day rentals may be under threat. Blueshift’s online survey revealed that customers are renting cars more frequently, paying less, and encountering issues more often, specifically a lack of inventory.
Has there been any meaningful change to Enterprise’s pricing approach? If so, what is the effect on HTZ and CAR? What does pricing and demand look like for the industry? What are leisure travel trends this summer? Has HTZ ironed out its issues with fleet management and rental cars? To answer these and other questions, Blueshift will gather data and issue a market research report from independent sources in the following areas: Rental car company regional managers, Rental car store managers, Fleet managers, and Industry specialists.
Companies: Avis (CAR), Hertz (HTZ)
Research Begins: July 11, 2016