Hertz 2011 Annual Report Download - page 37

ITEM 1. BUSINESS (Continued)
Customers who rent from us for ‘‘business’’ purposes include those who require cars in connection with
commercial activities, the activities of governments and other organizations or for temporary vehicle
replacement purposes. Most business customers rent cars from us on terms that we have negotiated
with their employers or other entities with which they are associated, and those terms can differ
substantially from the terms on which we rent cars to the general public. We have negotiated
arrangements relating to car rental with many large businesses, governments and other organizations,
including most Fortune 500 companies.
Customers who rent from us for ‘‘leisure’’ purposes include not only individual travelers booking
vacation travel rentals with us but also people renting to meet other personal needs. Leisure rentals,
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 and GDP 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 11% of the estimated insurance rental revenue volume for the year ended
December 31, 2011, we have identified 203 insurance companies, ranging from local or regional carriers
to large, national companies, as our target insurance replacement market. As of December 31, 2011, we
were a preferred or recognized supplier of 188 of these 203 insurance companies and a co-primary at 44
of these 203 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
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