Avis 2007 Annual Report Download - page 12

Table of Contents
We maintain strong links to the travel industry. Avis and Budget offer customers the ability to earn frequent traveler points with most major
airlines’ frequent traveler programs. Avis and Budget are also affiliated with the frequency programs of major hotel companies, including
Hilton Hotels Corporation, Hyatt Corporation, Starwood Hotels and Resorts Worldwide, Inc. and Wyndham Worldwide. These arrangements
provide incentives to program participants and cooperative marketing opportunities, including call transfer programs and online links with
various partners’ websites. Avis has an agreement with Wyndham Worldwide’s lodging brands whereby lodging customers making
reservations by telephone may be transferred to Avis if they desire to rent a vehicle.
In 2007, approximately 79% of domestic vehicle rental transactions from our owned and operated Avis locations in the United States were
generated by travelers who rented from Avis under contracts between Avis and the travelers’ employers or through membership in an
organization with whom Avis has a contractual affiliation (such as AARP). Avis also has marketing relationships with American Express
Company and Sears, Roebuck & Co., through which we are able to provide customers of these companies with incentives to rent from Avis.
Avis franchisees also have the option to participate in these affiliations. For commercial and leisure travelers who are unaffiliated with any of
the employers or organizations that we contract with, Avis solicits business through media, direct mail, e-mail and Internet advertising. Avis
conducts various loyalty programs through direct marketing campaigns, including Avis Preferred, which allows customers to bypass the
counter, and Avis First, which offers our customers certain benefits for frequent rentals. As a result of these programs, Avis has been ranked as
the top rental car brand for customer loyalty for nine consecutive years by a leading third party research firm. Travel agents are also able to
participate in the Avis travel agent reward program, Club Red.
Similarly, Budget offers “Unlimited Budget”, a loyalty incentive program for travel agents which had approximately 18,600 travel agents
actively enrolled as of December 31, 2007, and the Budget Small Business Program, a program for small businesses that offers discounted rates
and central billing options. Budget also has contractual arrangements with American Express Company and other organizations which offer
members of these groups incentives to rent from Budget. In connection with its focus on price-conscious customers, Budget primarily relies on
retail advertising, including Internet advertising, and on value pricing to drive customers to our Budget website, our call centers and other
distribution channels. Budget also offers proprietary marketing programs such as Fastbreak, an expedited rental service for frequent renters.
Our international Avis and Budget operations maintain close relationships with the travel industry through participation in several non-U.S.
based frequent traveler programs with airlines such as Air Canada and Qantas Airways Limited, as well as participation in Avis Europe’s
programs with British Airways Plc, Deutsche Lufthansa AG and other carriers.
Franchising
Of the approximately 2,200 Avis and approximately 1,900 Budget car rental locations we operated and/or franchised at December 31, 2007,
approximately 39% and 57%, respectively, were owned and operated by franchisees. Revenue derived from our car rental franchisees in 2007
totaled approximately $35 million. Franchised locations range from large operations at major airport locations to franchise territories
encompassing an entire country to relatively small operations in suburban locations. Fleets of our franchisees range from fleets in excess of
3,000 vehicles to fleets of fewer than 50 vehicles. Franchising provides us with a source of high margin revenue as there are relatively limited
additional fixed costs associated with fees paid by franchisees to us. Although franchised locations represent approximately half of the
locations that we own or franchise, they represent only approximately 9% of total domestic revenue generated by the Avis and Budget Systems,
as the average franchised operation is significantly smaller than the average owned location. Generally, we do not actively seek new
franchisees in the United States or Canada.
We enjoy good relationships with our franchisees and meet regularly with them at regional, national and international meetings. Our
relationships with Avis and/or Budget franchisees are governed by franchise agreements that grant the franchisees the right to operate Avis
and/or Budget vehicle rental businesses in certain
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