Avis 2007 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 do not include 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 published airport statistics. We maintain the leading share of airport car rental revenue
and operate one of the leading consumer truck rental businesses in the United States.
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 2007, our vehicle rental
operations generated revenues of $5,968 million. The Avis, Budget and Budget Truck brands accounted for approximately 63%, 30% and 7%
of our vehicle rental revenue, respectively, in 2007.
Our operations have an extended global reach that includes approximately 6,900 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 425,000
vehicles, and we completed more than 28 million vehicle rental transactions worldwide in 2007. Domestically, in 2007 we derived
approximately 81% of our nearly $4.0 billion in car rental revenue from on-airport locations and approximately 19% of our domestic car rental
revenue from off-airport locations, which we refer to as our local business. We expanded our local business in 2007, which included an
increase in our insurance replacement revenue by approximately 25%, and plan to continue this expansion further in 2008. We rent our fleet of
approximately 28,700 Budget trucks through a network of approximately 2,500 dealer-operated, 230 company-operated and 85 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 3,600 locations by subsidiaries and sub-licensees of an independent third party primarily under royalty-free
trademark license agreements.
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 2007:
1
• our domestic car rental business generated approximately 92 million rental days and time and mileage revenue per day of $40.06
with an average rental fleet of approximately 340,889 vehicles;
• our international car rental business generated approximately 14 million rental days and time and mileage revenue per day of $43.54
with an average rental fleet of approximately 55,703 vehicles; and
• our truck rental business generated approximately 4.2 million rental days and time and mileage revenue per day of $79.17 with an
average rental fleet of approximately 28,700 trucks.