Hertz 2010 Annual Report Download - page 34

ITEM 1. BUSINESS (Continued)
generally, are longer in duration and generate more revenue per transaction than do business rentals,
although some types of business rentals, such as rentals to replace temporarily unavailable cars, have a
long average duration. Business rentals and leisure rentals have different characteristics and place
different types of demands on our operations. We believe that maintaining an appropriate balance
between business and leisure rentals is important to the profitability of our business and the consistency
of our operations.
Our business and leisure customers rent from both our airport and off-airport locations. Demand for
airport rentals is correlated with airline travel patterns, and transaction volumes generally follow
enplanement trends on a global basis. Customers often make reservations for airport rentals when they
book their flight plans, which make our strong relationships with travel agents, associations and other
partners (e.g., airlines) a key competitive advantage in generating consistent and recurring revenue
streams.
Off-airport rentals typically involve people wishing to rent cars closer to home for business or leisure
purposes, as well as those needing to travel to or from airports. This category also includes people who
have been referred by, or whose rental costs are being wholly or partially reimbursed by, insurance
companies because their cars have been damaged. In order to attract these renters, we must establish
agreements with the referring insurers establishing the relevant rental terms, including the arrangements
made for billing and payment. While we estimate our share of the insurance replacement rental market
was approximately 10% of the estimated insurance rental revenue volume for the year ended
December 31, 2010, we have identified 204 insurance companies, ranging from local or regional carriers
to large, national companies, as our target insurance replacement market. As of December 31, 2010, we
were a preferred or recognized supplier of 188 of these 204 insurance companies.
We conduct active sales and marketing programs to attract and retain customers. Our commercial and
travel industry sales force calls on companies and other organizations whose employees and associates
need to rent cars for business purposes. In addition, our sales force works with membership
associations, tour operators, travel companies and other groups whose members, participants and
customers rent cars for either business or leisure purposes. A specialized sales force calls on companies
with replacement rental needs, including insurance and leasing companies and car dealers. We also
advertise our car rental offerings through a variety of traditional media channels, such as television and
newspapers, direct mail and the Internet. In addition to advertising, we also conduct a variety of other
forms of marketing and promotion, including travel industry business partnerships and press and public
relations activities.
In almost all cases, when we rent a car, we rent it directly to an individual who is identified in a written
rental agreement that we prepare. Except when we are accommodating someone who cannot drive, the
individual to whom we rent a car is required to have a valid driver’s license and meet other rental criteria
(including minimum age and creditworthiness requirements) that vary on the basis of location and type
of rental. Our rental agreements permit only licensed individuals renting the car, people signing
additional authorized operator forms and certain defined categories of other individuals (such as fellow
employees, parking attendants and in some cases spouses or domestic partners) to operate the car.
With rare exceptions, individuals renting cars from us are personally obligated to pay all amounts due
under their rental agreements. They typically pay us with a charge, credit or debit card issued by a third
party, although certain customers use a Hertz charge account that we have established for them, usually
as part of an agreement between us and their employer. For the year ended December 31, 2010, all
amounts charged to Hertz charge accounts established in the United States and by our international
subsidiaries, were billed directly to a company or other organization or were guaranteed by a company.
We also issue rental vouchers and certificates that may be used to pay rental charges, mostly for prepaid
10