Hertz 2013 Annual Report Download - page 13

Table of Contents
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Customers and Business Mix
We categorize our car rental business based on two primary criteria: the purpose for which customers rent from us (business or leisure) and
the type of location from which they rent (airport or off-airport). The table below sets forth, for the year ended December 31, 2013, the
percentages of rental revenues and rental transactions in our U.S. and international operations derived from business and leisure rentals and
from airport and off-airport rentals.
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



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
By Customer:
Business 35%
40%
46%
46%
Leisure 65
60
54
54
100%
100%
100%
100%
By Location:
Airport 74%
76%
56%
57%
Off-airport 26
24
44
43
100%
100%
100%
100%
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. Also included in leisure rentals are rentals by customers of U.S. and international tour operators, which are usually a part
of tour packages that can also include air travel and hotel accommodations. 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 and replacement renters. 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 14% of the estimated insurance
rental revenue volume in the U.S. for the year ended December 31, 2013, we have identified approximately 200 insurance companies,
ranging from local or regional carriers to large, national companies, as our target insurance replacement market. As of December 31, 2013,
we were a preferred or recognized supplier of 182 of these approximately 200 insurance companies and a co-primary at 37 of these
approximately 200 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
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Source: HERTZ CORP, 10-K, March 31, 2014 Powered by Morningstar® Document Research℠
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