Hertz sees rise in profits as reservations increase - Car Rental News
Hertz sees rise in profits as reservations increase
Car Rental News - 04/08/2008
Hertz, the second largest car rental operator in America, lost half its market value so far this year, but is seeing an
For the first half of 2008, Hertz has not seen a drop in earnings, unlike competitors such as Avis Budget and Dollar Thrifty. For the second quarter of 2008, Hertz’s net income is expected to show an increase of 21 percent over the same period last year, based on estimates by Bloomberg analysts. The rental car giant is experiencing increased reservations, including advanced bookings through September, noted the CEO of the company, Mark Frissora.
The profits gain by Hertz is the result of a management decision made in 2006 to move into the $10 billion off-airport car rental market that it left over 30 years ago. The major player in the off-airport market has been Enterprise Rent-A-Car, America’s largest rental car operator by sales volume. The off-airport market involves providing accident-replacement vehicles, and also business and leisure car rentals not related to traditional travel.
“One of the most common misconceptions is that Hertz is exposed only to cyclical industries,” said the managing director of Thornburg Investment Management, Connor Browne. Thornburg is the third-largest investor in Hertz. “They have a number of growth opportunities in more stable areas.”