Avis 2006 Annual Report Download - page 6

Table of Contents
PART I
ITEM 1. BUSINESS
Except as expressly indicated or unless the context otherwise requires, the
“Company”, “Avis Budget”, “we”, “our” or “us” means Avis
Budget Group, Inc., a Delaware corporation, and its subsidiaries and
“Avis Budget Car Rental” or “ABCR” means Avis Budget Car Rental,
LLC, a Delaware limited liability company and its subsidiaries, the companies that comprise our vehicle rental operations.
“Avis” and
“Budget” refer to our Avis and Budget operations, respectively, and exclude the operations of Avis Europe and its affiliates, as further
discussed below.
We operate two of the most recognized brands in the global vehicle rental industry through Avis and Budget. Avis is a leading rental car
supplier to the premium commercial and leisure segments of the travel industry and Budget is a leading rental car supplier to the price-
conscious segments of the industry. We believe we are the largest general-
use vehicle rental operator in each of North America, Australia, New
Zealand and certain other regions we serve, based on total revenue. We maintain the leading share of airport car rental revenue and we believe
we operate the second largest consumer truck rental business in the United States based on available information.
Our car rental operations generate significant benefits from operating two distinctive brands that target different industry segments but share
the same fleet, maintenance facilities, systems, technology and administrative infrastructure. We believe that Avis and Budget both enjoy
complementary demand patterns with mid-week commercial demand balanced by weekend leisure demand. For 2006, our vehicle rental
operations generated revenues of $5,628 million. The Avis, Budget and Budget Truck brands accounted for approximately 61%, 31% and 8%
of our vehicle rental revenue, respectively, in 2006.
Our operations have an extended global reach that includes approximately 6,700 car and truck rental locations in the United States, Canada,
Australia, New Zealand, Latin America, the Caribbean and parts of the Pacific region. On average, our rental fleet totaled more than 410,000
vehicles, and we completed more than 28 million vehicle rental transactions worldwide in 2006. Domestically, we derived approximately 81%
of our nearly $4.0 billion in car rental revenue from on-airport locations in 2006 and approximately 19% of our domestic car rental revenue
from off-airport locations, which we refer to as the local rental segment. In 2006, we significantly expanded our presence in the local segment
and plan to continue this expansion in 2007. We rent our fleet of approximately 30,500 Budget trucks through a network of approximately
2,400 dealer operated, 210 company operated and 100 franchisee operated locations throughout the continental United States. We also license
the use of the Avis and Budget trademarks to multiple licensees in areas in which we do not operate. The Avis and/or Budget vehicle rental
systems in Europe, Africa, the Middle East and parts of Asia are operated at approximately 3,700 locations by subsidiaries and sub-
licensees of
an independent third party primarily under virtually royalty-free trademark license agreements.
Following the completion of the Cendant Separation, discussed in detail below, we categorize our operations in three operating segments:
domestic car rental, consisting of our Avis and Budget U.S. car rental operations; international car rental, consisting of our international Avis
and Budget car rental operations; and truck rental, consisting of our Budget truck rental operations. In 2006:
• our domestic car rental business generated approximately 89 million rental days and time and mileage revenue per day of $40.01
with an average rental fleet of approximately 329,350 vehicles;
• our international car rental business generated approximately 14 million rental days and time and mileage revenue per day of $39.61
with an average rental fleet of approximately 53,310 vehicles; and
• our truck rental business generated approximately 4.6 million rental days and time and mileage revenue per day of $86.28 with an
average rental fleet of approximately 30,500 trucks.