Avis 2006 Annual Report Download - page 7

Table of Contents
For 2007, our objective is to enhance growth, profitability and our position as a leader in the vehicle rental industry. We expect to achieve our
goals by focusing our efforts on the following core strategic initiatives:
In 2006, we made considerable progress vis-à-
vis our strategic objectives. We retained approximately 98% of our commercial contracts at Avis
and Budget and, we believe, generated more U.S. rental car reservations through our own websites than any other company. Budget entered
into marketing alliances with USAA and AARP, which are long-time Avis marketing partners, and grew its award-winning small business
program. We opened approximately 200 new off-airport locations in 2006, and off-airport revenues represented 19% of our domestic car rental
revenues. We are now an “approved” or “preferred” provider for customers of a majority of the largest auto insurance companies in the United
States. In 2006, we began offering Where2 GPS navigation system units. In the area of cost management, we have reduced our reliance on
individual suppliers, such that our largest fleet supplier in 2007 is expected to represent only 38% of our vehicle purchases, versus 53% in
2005. We are utilizing sophisticated yield-management technology to optimize our pricing, and we continue to analyze and streamline our
operations to gain efficiencies. And, most importantly, our more than 30,000 employees continue to provide reliable, high-
quality vehicle rental
services that foster customer satisfaction and customer loyalty.
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2
• Optimizing Our Two-Brand Strategy. We plan to continue to position our two distinct and well-recognized brands to capture
different segments of customer demand. With Avis as a premium brand preferred by corporate and upscale leisure travelers and
Budget as a value brand preferred by cost-conscious travelers, we believe we are able to target a broad range of demand, particularly
since the two brands share the same operational and administrative infrastructure while providing differentiated though consistently
high levels of customer service. We aim to provide products, service and pricing, and to maintain marketing affiliations and corporate
account contracts, which complement each brand’
s positioning. In addition, we use various marketing channels as appropriate to each
of our brands and seek to continue to grow the volume of reservations that we generate through our avis.com and budget.com
websites, which are among our least
-
expensive sources of advance bookings.
•
Expanding Our Revenue Sources.
We plan to expand the revenues we generate from sources beyond on-airport time and mileage
rental fees. We seek to grow off-airport revenue for Avis and Budget by opening new locations and continuing our effort to identify
and attract local demand. In particular, we plan to increase our revenues in the insurance replacement sector, in which we have
historically had a more limited presence, and we have formed a dedicated local sales team to expand our insurance replacement, local
truck rental and off-airport general-use rental volumes. Separately, we look to expand our revenue sources by offering additional
products and services to existing on- and off-airport customers, including additional insurance coverages and insurance-related and
ancillary products and services, such as our recently launched
Where2
GPS navigation product.
• Capturing Incremental Profit Opportunities.
We plan to continue our focus on yield management and pricing optimization, rigorous
cost controls and fleet diversification. We are developing technology that will allow us to strengthen our yield management and we
have put in place technology to tailor our product/price offerings to specific customer segments. Specifically, we plan to continue to
expand our technology that allows Avis and Budget to target customers with rates and prices based on past shopping and rental
behavior. With respect to fleet diversification, in an effort to mitigate expected increases in fleet costs, we are seeking to adjust our
relationships with vehicle manufacturers by moving to a more balanced multi-supplier model, increasing the risk-vehicle portion of
our fleet, lengthening the average hold period, and reducing the average vehicle size and number of options. In addition, we believe
the expansion of our revenue sources (discussed above) will permit us to generate incremental profits from our customer base, while
at the same time enhancing their vehicle rental experience.