Dollar Rent A Car 2011 Annual Report Download - page 21

Dependence on Air Travel
Approximately 90% of our rental revenues are attributable to airport locations. The number of airline passengers has a significant impact on our
business. Mergers and acquisitions in the airline industry, airline restructuring through bankruptcy, and challenging economic conditions have caused airlines
to reduce flight schedules. The airline industry has also faced considerable challenges in light of global economic conditions, severe weather conditions and
competitive industry conditions. A significant reduction in airline passengers or any event that significantly disrupts air travel could negatively impact our
results, particularly if it occurs during our peak rental season.
Dependence on Third-Party Internet Sales
The Internet has had a significant impact on the way travel companies get reservations. For 2011 and 2010, we received 76% and 75% of our non-
tour reservations from the Internet, respectively, with 42% and 44%, respectively, coming from our own Internet Web sites, dollar.com and thrifty.com. The
remaining non-tour reservations derived from the Internet were attributable to third-party sites, with no third-party site accounting for more than 10% of those
non-tour reservations. Future changes in the way travel-related services are marketed and sold over the Internet or changes in our relationship with third-party
Internet sites could result in reduced reservations from one or more of these sites and less revenue.
Concentration in Leisure Destinations
We have a significant presence in key leisure destinations and earn a large portion of our revenue from these markets. Rental revenue from Florida,
Hawaii, California and Texas represented approximately 60% of our total rental revenue for the year ended December 31, 2011. The severe decline in consumer
spending in recent periods materially adversely affected leisure travel and could be expected to do so again in the future. Reductions in leisure travel resulting
from natural disasters, terrorist acts, or other factors could also have a material adverse impact on our results if consumer spending does not rebound to more
favorable levels.
Fuel Costs
Prices for petroleum-based products, including gasoline, have experienced significant volatility in recent periods and affected automotive travel
patterns in material ways. A variety of factors, including the current economic environment, the continuing significant political unrest and other concerns
involving certain oil-producing nations, could cause further price volatility. Reduced fuel supplies or significant increases in fuel prices could have an adverse
effect on our financial condition, results of operations and cash flows, either by directly discouraging customers from renting cars, causing a decline in airline
passenger traffic, or increasing our operating costs, if these increased costs cannot be passed through to our customers.
Vehicle Financing Considerations
The rental car industry is capital intensive, and we depend on access to the capital markets for financing our vehicles using primarily asset-backed
medium-term notes and variable funding note programs. We expect to have substantial debt and debt service requirements in the foreseeable future. Based on
our completion in 2011 of $1.5 billion in new asset-backed financing, we believe conditions in the asset-backed financing markets have improved
significantly, but we cannot assure you that these conditions will be sustained if the credit markets experience disruptions or volatility as the economy
continues to recover from the financial crisis.
Asset-backed financing facilities require varying levels of collateral enhancement, which we provide through a combination of vehicles, cash and
letters of credit under our bank loan facility.
- 20 -