Hertz 2014 Annual Report Download - page 29

Table of Contents
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
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SEC.
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                     


   
                    
                   
                    


                    
                 
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Our results of operations are affected by many economic factors, including the level of economic activity in the markets in which we operate. At
times in the past, the United States and international markets have experienced declines in economic activity that have affected the car rental
market, including a tightening of the credit markets, reduced business and leisure travel, reduced government and consumer spending and volatile
fuel prices. The car rental industry is particularly affected by reductions in business and leisure travel, especially with respect to levels of airline
passenger traffic. Reductions in levels of air travel, whether caused by general economic conditions, airfare increases (such as due to capacity
reductions or increases in fuel costs borne by commercial airlines) or other events (such as work stoppages, military conflicts, terrorist incidents,
natural disasters, epidemic diseases, or the response of governments to any of these events) could materially adversely affect us. In particular,
we derive a substantial proportion of our revenues from key leisure destinations, including Florida, Hawaii, California and Texas and the level of
travel to these destinations is dependent upon the ability and willingness of consumers to travel on vacation and the effect of economic cycles on
consumers' discretionary travel. To the extent travel to these destinations is adversely affected, our results of operations could be materially
adversely affected.

The markets in which we operate are highly competitive. We believe that price is one of the primary competitive factors in the car and equipment
rental markets and that the internet has enabled cost-conscious customers, including business travelers, to more easily compare rates available
from rental companies. If we try to increase our pricing, our competitors, some of whom may have greater resources and better access to capital
than us, may seek to compete aggressively on the basis of pricing. In addition, our competitors may reduce prices in order to attempt to gain a
competitive advantage, capture market share, or to compensate for declines in rental activity. To the extent we do not match or remain within a
reasonable competitive margin of our competitors’ pricing, our revenues and results of operations could be materially adversely affected. If
competitive pressures lead us to match any of our competitors’ downward pricing and we are not able to reduce our operating costs, then our
margins, results of operations and cash flows could be materially adversely impacted. Additionally, our business may be affected by changes in
technology that impact the competitive environment and we could be further affected if we are not able to adjust the size of our car rental fleet in
response to changes in demand, whether such changes are due to competition or otherwise. See Item 1, ‘‘Business—U.S. and International Car
Rental Operations—Competition’’ and ‘‘Business—Worldwide Equipment Rental—Competition’’ in this Annual Report.
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Source: HERTZ GLOBAL HOLDINGS INC, 10-K, July 16, 2015 Powered by Morningstar® Document Research℠
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