Hertz 2012 Annual Report Download - page 80

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Continued)
During the year ended December 31, 2012, in our European operations, we experienced a 3.1% decline
in transaction days and a 3.2% decline in RPD when compared to the year ended December 31, 2011.
Revenues from our U.S. off-airport operations represented $1,306.4 million, $1,198.6 million and
$1,079.8 million of our total car rental revenues in the years ended December 31, 2012, 2011 and 2010,
respectively. As of December 31, 2012, we have approximately 2,520 off-airport locations. Our strategy
includes selected openings of new off-airport locations, the disciplined evaluation of existing locations
and the pursuit of same-store sales growth. Our strategy also includes increasing penetration in the
off-airport market and growing the online leisure market, particularly in the longer length weekly sector,
which is characterized by lower vehicle costs and lower transaction costs at a lower RPD. Increasing our
penetration in these sectors is consistent with our long-term strategy to generate profitable growth.
When we open a new off-airport location, we incur a number of costs, including those relating to site
selection, lease negotiation, recruitment of employees, selection and development of managers, initial
sales activities and integration of our systems with those of the companies who will reimburse the
location’s replacement renters for their rentals. A new off-airport location, once opened, takes time to
generate its full potential revenues and, as a result, revenues at new locations do not initially cover their
start-up costs and often do not, for some time, cover the costs of their ongoing operations.
On September 1, 2011, Hertz acquired 100% of the equity of Donlen, a leading provider of fleet leasing
and management services for corporate fleets. For the year ended December 31, 2012 and for the four
months ended December 31, 2011 (period it was owned by Hertz), Donlen had an average of
approximately 150,800 and 137,000 vehicles under lease and management, respectively. Donlen
provides Hertz an immediate leadership position in long-term car, truck and equipment leasing and fleet
management. Donlen’s fleet management programs provide outsourced solutions to reduce fleet
operating costs and improve driver productivity. These programs include administration of preventive
maintenance, advisory services, and fuel and accident management along with other complementary
services. Additionally, Donlen brings to Hertz a specialized consulting and technology expertise that will
enable us to model, measure and manage fleet performance more effectively and efficiently.
As of December 31, 2012, our worldwide car rental operations had a total of approximately 10,270
corporate and licensee locations in approximately 150 countries in North America, Europe, Latin
America, Asia, Australia, Africa, the Middle East and New Zealand.
On November 19, 2012, Hertz acquired 100% of the equity of Dollar Thrifty, a car and truck rental and
leasing business. Dollar Thrifty had approximately 290 corporate locations in the United States and
Canada, with approximately 5,700 employees located mainly in North America. In addition to its
corporate operations, Dollar Thrifty had approximately 1,120 franchise locations in 83 countries. Dollar
Thrifty brings to Hertz an immediate leadership position in the value-priced rental vehicle market
generally appealing to leisure customers, including domestic and foreign tourists, and to small
businesses, government and independent business travelers.
Equipment Rental
HERC experienced higher rental volumes and pricing for the year ended December 31, 2012 compared
to the prior year as the industry continued its recovery in North America. The recovery has been led by
strong industrial performance, especially oil and gas related, and improvement in the construction
sector in part reflecting higher rental penetration. We continued to see growth in our specialty services
such as Pump & Power, Industrial Plant Services and Hertz Entertainment Services. Additionally, there
continue to be opportunities for 2013 as the uncertain economic outlook makes rental solutions
attractive to customers. Our European equipment rental business, which represents approximately 7%
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