Hertz 2007 Annual Report Download - page 34

Reservations
When customers reserve cars for rental from us and our licensees, they may seek to do so through travel
agents or third-party travel websites. In many of those cases, the travel agent or website will utilize a
third-party operated computerized reservation system, also known as a global distribution system, or
‘‘GDS,’’ to contact us and make the reservation. There are currently four principal GDSs, two of which
are now under common ownership, and we have contracts with all of them providing that we will process
reservation requests made through the GDSs. Historically, GDSs were owned and operated by airlines
and were subject to extensive regulation along with their airline owners. In recent years, however, airlines
have greatly reduced their ownership interests in GDSs and the level of regulation to which GDSs are
subject has substantially decreased.
In major countries, including the United States and all other countries with company-operated locations,
customers may also reserve cars for rental from us and our licensees worldwide through local, national
or toll-free telephone calls to our reservations centers, directly through our rental locations or, in the case
of replacement rentals, through proprietary automated systems serving the insurance industry.
Additionally, we accept reservations for rentals from us and our licensees worldwide through our
websites. Our websites, which also allow customers to enroll in loyalty programs, obtain copies of bills
for past transactions and obtain information about our rental offerings, have grown significantly in
importance as a reservations channel in recent years. Third-party travel websites have also grown in
importance to us as a reservations channel.
For the year ended December 31, 2007, approximately 32% of the worldwide reservations we accepted
came through travel agents using GDSs, while 27% came through phone calls to our reservations
centers, 27% through our websites, 8% through third-party websites and 6% through local booking
sources.
Fleet
We believe we are one of the largest private sector purchasers of new cars in the world. During the year
ended December 31, 2007, we also purchased approximately 6,500 used cars that were similar to other
cars in our rental fleet. During the year ended December 31, 2007, we operated a peak rental fleet in the
United States of approximately 338,800 cars and a combined peak rental fleet in our international
operations of approximately 174,300 cars, in each case exclusive of our licensees’ fleet. During the year
ended December 31, 2007, our approximate average holding period for a rental car was 11 months in
the United States and nine months in our international operations.
Over the five years ended December 31, 2007, we have acquired, subject to availability, approximately
67% of our cars pursuant to various fleet repurchase or guaranteed depreciation programs established
by automobile manufacturers. For the year ended December 31, 2007, program cars as a percentage of
all cars purchased by our U.S. operations were 42% and as a percentage of all cars purchased by our
international operations were approximately 65%, or 50% when calculated on an aggregate worldwide
basis. Under these programs, the manufacturers agree to repurchase cars at a specified price or
guarantee the depreciation rate on the cars during established repurchase or auction periods, subject
to, among other things, certain car condition, mileage and holding period requirements. Repurchase
prices under repurchase programs are based on either a predetermined percentage of original car cost
and the month in which the car is returned or the original capitalized cost less a set daily depreciation
amount. Guaranteed depreciation programs guarantee on an aggregate basis the residual value of the
cars covered by the programs upon sale according to certain parameters which include the holding
period, mileage and condition of the cars. These repurchase and guaranteed depreciation programs
limit our residual risk with respect to cars purchased under the programs and allow us to determine
depreciation expense in advance. For this reason, cars purchased by car rental companies under
repurchase and guaranteed depreciation programs are sometimes referred to by industry participants
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