Avis 2009 Annual Report Download - page 12

Table of Contents
direct marketing. Avis focuses its marketing around its industry-leading customer loyalty and its award-winning “We try harder” marketing
campaign. Budget builds its marketing around retail advertising, key partnerships and online marketing campaigns.
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 2009, approximately 82% 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 organizations such as
American Express Company and Sears, Roebuck & Co., through which we are able to provide customers of these entities 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 rental counter when renting a vehicle, and Avis First, which offers our customers enhanced benefits for frequent rentals.
Additionally, Budget offers “Unlimited Budget”, a loyalty incentive program for travel agents, which had approximately 19,000 travel agents
actively enrolled as of December 31, 2009, 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 value-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 Qantas Airways Limited and Air Canada, and have been selected as Air Canada’s preferred
worldwide car rental supplier, and also through 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 1,800 Budget car rental locations we operated and/or franchised at December 31, 2009,
approximately 42% and 57%, respectively, were owned and operated by franchisees. Revenue derived from our car rental franchisees in 2009
totaled approximately $29 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 in excess of 3,000
vehicles to fewer than 50 vehicles. Franchising provides us with a source of high margin revenue because there are relatively limited additional
fixed costs associated with fees paid by franchisees to us. Although franchised locations represent approximately 49% of the locations that we
own or franchise, they represent only approximately 7% of total domestic revenue generated by the Avis and Budget Systems, because the
average franchised operation is significantly smaller than the average corporate owned location. Generally, we do not actively seek new
franchisees in the United States or Canada.
7