Hertz 2010 Annual Report Download - page 35

ITEM 1. BUSINESS (Continued)
and tour-related rentals. In addition, where the law requires us to do so, we rent cars on a cash basis. For
the year ended December 31, 2010, no customer accounted for more than 1.5% of our car rental
revenues.
In the United States for the year ended December 31, 2010, 84% of our car rental revenues came from
customers who paid us with third-party charge, credit or debit cards, while 8% came from customers
using Hertz charge accounts or direct billing, 7% came from customers using rental vouchers or another
method of payment and 1% came from cash transactions. In our international operations for the year
ended December 31, 2010, 52% of our car rental revenues came from customers who paid us with third-
party charge, credit or debit cards, while 27% came from customers using Hertz charge accounts, 20%
came from customers using rental vouchers or another method of payment and 1% came from cash
transactions. For the year ended December 31, 2010, bad debt expense represented 0.2% of car rental
revenues for our U.S. operations and 0.3% of car rental revenues for our international operations.
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.
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 center, 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.
For the year ended December 31, 2010, approximately 32% of the worldwide reservations we accepted
came through travel agents using GDSs, while 30% came through our websites, 22% through phone
calls to our reservations center, 11% through third-party websites and 5% 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, 2010, we operated a peak rental fleet in the United States of approximately 321,300
cars and a combined peak rental fleet in our international operations of approximately 170,800 cars, and
in each case exclusive of our licensees’ fleet. During the year ended December 31, 2010, our
approximate average holding period for a rental car was thirteen months in the United States and
fourteen months in our international operations.
Under our repurchase 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
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