Avis 2007 Annual Report Download - page 7

Table of Contents
For 2008, 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 2007, we made continued progress toward our strategic objectives. We retained approximately 98% of our commercial contracts. Avis and
Budget maintained their marketing alliances with USAA and AARP, which are long-time Avis marketing partners, and Budget grew its award-
winning small business program. We opened approximately 195 new off-airport locations in 2007, and off-
airport revenues represented 19% of
our domestic car rental revenues. We are an “approved” or “preferred” provider for customers of a majority of the largest auto insurance
companies in the United States. In 2007, we continued to increase revenue related to rentals of Where2 GPS navigation system units, loss
damage waivers and insurance products, and other ancillary services. In the
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• 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 for
each of our brands and seek to continue to increase the volume of reservations that we generate through our avis.com and budget.com
websites, which are among our least
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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 employ 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
other ancillary products and services, such as electronic toll collection services and our Where2 GPS navigation product (which was
launched in the United States in 2006 and in Canada in 2007). In October 2007 we acquired a minority interest in Carey Holdings,
Inc., the leading provider of chauffeured ground transportation services worldwide, as well as a one-year option to increase our
holdings to a majority interest. If we exercise our option, we expect to expand revenue by offering our customers a full range of
ground transportation products.
• Capturing Incremental Profit Opportunities.
We plan to continue our focus on yield management and pricing optimization, rigorous
cost controls, fleet diversification and process improvement. We are developing technology that will allow us to strengthen our yield
management and we have implemented technology that enables us to tailor our product/price offerings to specific customer
segments, including technology that allows Avis and Budget to target customers with rates and prices based on past shopping and
rental behavior. We also plan to acquire and develop technology that will help us optimize our fleet acquisition and disposal
decisions. 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 continuing to move to a more balanced multi-supplier model, increasing the risk-vehicle
portion of our fleet and lengthening the average hold period. 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. In 2007, we launched our Performance Excellence process improvement initiative to identify methods to increase
efficiency throughout our operations and generate sustainable cost savings, which we believe will have a significant impact on our
financial performance.