Avis 2010 Annual Report Download - page 24

Table of Contents
significantly increasing our fleet costs. In addition, our vehicles may be subject to safety recalls by their manufacturers, which could have a
similar impact on our business if we remove such recalled vehicles from our rentable fleet. If a large number of cars were to be the subject of
simultaneous recalls, or if needed replacement parts are not in adequate supply, we may not be able to re-rent recalled cars for a significant
period of time. We could also face liability claims related to vehicles subject to a safety recall. Depending on the nature and severity of the
recall, it could adversely affect our revenues, create customer service problems, reduce the residual value of the cars involved, harm our general
reputation and/or have an adverse effect on our financial condition and results of operations.
Weakness in general economic conditions in the United States and worldwide, weakness in travel demand and the housing market, and/or a
significant increase in fuel costs can adversely impact our business.
Historically, our results of operations have declined during periods of general economic weakness, and our results were adversely impacted in
2008 and 2009 due to the economic recession. If economic conditions in the United States and worldwide were to weaken, our financial
condition and results of operations could be adversely impacted in 2011 and beyond.
In 2010, we generated approximately 81% of our domestic car rental revenue from our on-airport locations; therefore, a decline in airline travel
will typically have a direct adverse impact on our results of operations. Significant airline capacity reductions, airfare or related fee increases,
any event that disrupts or reduces business or leisure air travel such as work stoppages, military conflicts, terrorist incidents, natural disasters,
epidemic diseases, or the response of governments to any of these events, could result in reduced air travel and have an adverse effect on our
results of operations. Significant increases in fuel prices, a severe protracted disruption in fuel supplies or rationing of fuel could discourage
customers from renting cars or reduce or disrupt air travel.
Our truck rental business can also be impacted by the housing market. If conditions in the housing market were to weaken, we may see a decline
in truck rental transactions, which could have an adverse impact on our business.
We may not be successful in implementing our business strategies.
For 2011, our objective is to focus on growing our business profitably, strengthening our position as a leading provider of vehicle rental services
and maintaining and enhancing efficiencies achieved through process improvement and other actions, including certain core strategic initiatives,
such as optimizing our two-brand strategy, expanding our revenue sources, capturing incremental profit opportunities, and controlling costs and
promoting efficiencies. If we are not successful in these initiatives, our financial condition, results of operations and cash flows could be
adversely affected.
We are dependent on third-party distribution channels, and the success of our business depends in significant part on these relationships.
We generate approximately 47% of our domestic car rental reservations through third-party distribution channels, which include:
In 2010, approximately 18% and 2% of our domestic car rental reservations came through our largest GDS source and our largest non-GDS
third-party source of reservations, respectively. The operators of some third-
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traditional and online travel agencies, airlines and hotel companies, marketing partners such as credit card companies and membership
organizations, and other entities that help us attract customers; and
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global distribution systems, such as Amadeus, Galileo/Apollo, Sabre and Worldspan that connect travel agents, travel service
providers and corporations to our reservations systems.