Hertz Global Holdings Stock

Hertz Global Holdings, Inc. engages in the vehicle rental and leasing business.

The company engages principally in the business of renting vehicles primarily through its Hertz, Dollar and Thrifty brands. As of December 31, 2023, the company operated its vehicle rental business globally from approximately 11,400 company-operated and franchisee locations across approximately 160 countries and jurisdictions, including the U.S., Europe, Africa, Asia, Australia, Canada, the Caribbean, Latin America, the Middle East and New Zealand. The company is one of the largest worldwide vehicle rental companies and its Hertz brand name is among the most recognized globally. The company has an extensive network of airport and off airport rental locations in the U.S. and major European markets.

Strategy

The company’s strategy focuses on excellence in execution of its rental operations, presenting distinct product offerings through each of its brands, building on its leadership in ride share and selling vehicles from the fleet directly to consumers. The company’s core assets, capabilities and partnerships underpin this strategy and are positioning it at the center of the modern mobility ecosystem. The company intends to continue building on its brand strength, global network and global fleet management expertise, combining those efforts with new investments in technology, electrification, shared mobility and a digital-first customer experience. The company’s key fleet management capabilities will allow it to diversify and profitably grow in new areas of the mobility sector.

Business Segments

The company operates through two reportable segments, Americas RAC and International RAC (Rental Car).

Americas RAC - Rental of vehicles, as well as sales of vehicles and value-added services, in the U.S., Canada, Latin America and the Caribbean. The company maintains a substantial network of company-operated rental locations in this segment and it has franchisees and partners that operate rental locations under its brands; and

International RAC - Rental of vehicles, as well as sales of vehicles and value-added services, in locations other than the U.S., Canada, Latin America and the Caribbean. The company maintains a substantial network of company-operated rental locations, a majority of which are in Europe, and it has franchisees and partners that operate rental locations under its brands. As of December 31, 2023, 72% of the company’s franchised locations were in markets covered by its International RAC segment.

Americas RAC and International RAC

The company’s Americas RAC and International RAC vehicle rental businesses are primarily operated through its three largest brands — Hertz, Dollar, and Thrifty. The company offers multiple brands to provide customers a full range of rental services at different price points, levels of service, offerings and products. These brands generally maintain separate rental locations (e.g., separate airport counters), and use distinct reservation, marketing and other customer contact activities.

The company’s top tier brand, Hertz, is one of the most recognized brands in the world. It offers premium customer service, as evidenced by the numerous published best-in-class vehicle rental awards that the brand has been awarded over time, both in the U.S. and internationally. The Hertz brand's tagline of Hertz. Let's Go! expresses its commitment to quality, seamless travel and customer service. The Hertz brand provides customers with several innovative offerings, such as Hertz Gold Plus Rewards, Hertz Ultimate Choice and access to vehicles offered through the company’s electric vehicle (EV) fleet and specialty collections. The Hertz brand seeks to maintain its position as a premier provider of vehicle rental services through an intense focus on service, loyalty, quality and product innovation.

The company’s smart value brand, Dollar, is marketed as a smart choice for financially focused travelers looking for a dependable car at a price they can afford. The Dollar brand’s core focus is serving family, leisure and small business travelers through the airport vehicle rental channel. Dollar operates primarily through company-operated locations in the U.S. and Canada.

The company’s deep value brand, Thrifty, competes as a cost-conscious offering for travelers seeking to find a good deal. The Thrifty brand’s core focus is serving leisure travelers through the airport vehicle rental channel. Thrifty’s tagline of The Absolute Best Car for Your Money expresses the brand’s focus on being the rental brand that puts the customer in control of where to splurge and where to save. Thrifty operates primarily through company-operated locations in the U.S. and Canada.

Operations

Locations

The company operates its brands at both airport and off airport locations that utilize common vehicle fleets, are supervised by common country, regional and local area management, use many common systems and rely on common vehicle maintenance and administrative centers. Additionally, the company’s airport and off airport locations utilize common marketing activities and have many of the same customers. The company regards both types of locations as aspects of a single, unitary, vehicle rental business. Off airport revenues comprised 34% of the company’s worldwide vehicle rental revenues in 2023. The company’s Americas RAC vehicle rental operations have company-operated locations primarily in the U.S. and Canada. The company’s International RAC vehicle rental operations have company-operated locations in Australia, Belgium, the Czech Republic, France, Germany, Italy, Luxembourg, the Netherlands, New Zealand, Slovakia, Spain and the United Kingdom.

Airport

As of December 31, 2023, the company had approximately 1,900 airport rental locations in its Americas RAC segment and approximately 1,500 airport rental locations in its International RAC segment.

For its airport company-operated rental locations, the company is dependent on, and have obtained, concessions or similar leasing agreements or arrangements, that grant it the right to conduct a vehicle rental business at the respective airport. The company’s concessions were obtained from the airports' operators, which are typically governmental bodies or authorities, following either negotiation or bidding for the right to operate a vehicle rental business.

Off Airport

As of December 31, 2023, the company had approximately 3,300 off airport locations in its Americas RAC segment and approximately 4,700 off airport rental locations in its International RAC segment. The company’s off airport rental customers include people who prefer to rent vehicles closer to their home or place of work for business or leisure purposes, as well as those needing to travel to or from airports. The company’s off airport customers also include people who have been referred by, or whose rental costs are being wholly or partially reimbursed by, insurance companies following accidents in which their vehicles were damaged, those expecting to lease vehicles that are not yet available from their leasing companies and replacement renters. In addition, the company’s off airport customers include drivers for its Ride Share Partners.

Customers and Business Mix

The company conducts various sales and marketing programs to attract and retain customers. The company’s sales force calls on companies, government agencies and other organizations whose employees and associates need to rent vehicles for business or official purposes. The company’s sales force also calls on organizations such as insurance and leasing companies, automobile repair companies and vehicle dealers whose customers need replacement rentals. In addition, the company’s sales force works with membership associations, tour operators, travel companies, ride share companies and other groups whose members, participants and customers rent vehicles for either business or leisure purposes.

The company also markets directly to individual renters. The company advertises its vehicle rental offerings through traditional media channels, partner publications (e.g., affinity clubs, airline and hotel partners) and direct mail. The company also relies on digital marketing and, for the Hertz brand, it is increasingly seeking to expand access to and use of its Hertz mobile app.

In addition to advertising, the company conducts other forms of marketing and promotion, including travel industry business partnerships and press and public relations activities.

The company categorizes its vehicle rental business based on the general purpose (business or leisure) and type of location (airport or off airport) from which customers rent from it.

Customers who rent from the company for business purposes include those who require vehicles in connection with commercial activities, including drivers for its Ride Share Partners, the activities of governments and other organizations or for temporary vehicle replacement purposes (i.e., replacement rentals). Most business customers rent vehicles from it on terms that the company has negotiated with their employers or other entities with which they are associated, and those terms can differ from the terms on which it rents vehicles to the general public.

Customers who rent from it for leisure purposes include individual travelers booking vacation rentals and people renting to meet other personal needs (other than replacement rentals). Leisure rentals are generally longer in duration and generate more revenue per transaction than business rentals. Leisure rentals also include rentals by customers of U.S. and international tour operators, which are usually a part of tour packages that can include air travel and hotel accommodations.

Off airport rentals include insurance replacements, and the company has agreements with the referring insurers establishing the relevant rental terms, including the arrangements made for billing and payment.

Customer Service Offerings

The company offers customers a wide range of services to differentiate itself from the competition and increase and diversify its revenue.

Hertz Gold Plus Rewards Program

At its major airport rental locations and certain smaller airport and off airport locations, customers participating in the company’s Hertz Gold Plus Rewards program are able to rent vehicles in an expedited manner. Participants in the company’s Hertz Gold Plus Rewards program often bypass the rental counter entirely and proceed directly to their vehicle upon arrival at its facility.

Hertz's Gold Plus Rewards program offers three elite membership tiers that provide more frequent renters the opportunity to earn additional reward points and vehicle upgrades. When Hertz Gold Plus Rewards members make a reservation for a midsize car or above, they have access to exclusive vehicles based on their membership tier via the company’s Hertz Ultimate Choice program which allows customers to choose their vehicle from a range of makes, models and colors available within the zone indicated on their reservation. Alternatively, they may upgrade at the pick-up location for a fee by choosing a vehicle from a premium upgrade zone. As of December 31, 2023, the Hertz Ultimate Choice program was offered at approximately 60 U.S. and Canada airport locations.

Other Customer Service Offerings

The company offers electronic rental agreements and returns for its Hertz, Dollar and Thrifty U.S. customers. Simplifying the rental transaction saves customers time and provides greater convenience through access to digitally available rental contracts. The company also offers Mobile Gold Alerts, a service available to participating Hertz Gold Plus Rewards customers, through which a text message and/or email with the vehicle information and location is sent approximately 30 minutes prior to arrival, providing a renter the option to choose another vehicle. The company offers Hertz e-Return, which allows customers to drop off their vehicle and go without the need to visit the rental counter. Customers can also use cashless toll lanes with the company’s PlatePass offering where the license plate acts as a transponder.

Ride Share Rentals

The company has partnered with certain ride share companies to offer vehicle rentals to their drivers in select cities in North America and Europe. This program enables the company to rent vehicles on a longer-term basis than traditional business rentals and is a component of its strategy to be an active participant in the future of mobility. Using vehicles for ride share rentals also results in an increased supply of higher mileage, and thus more economical, used vehicles for the company’s vehicle disposition programs.

Drivers for the company’s Ride Share Partners reserve vehicles online through Ride Share Partner websites and applications and pick up vehicles from select locations. Ride share drivers can extend the vehicle rental on a recurring basis.

Rates, Fees and Value-Added Services

The company rents a wide variety of makes and models of vehicles. The company rents vehicles on an hourly (in select international markets), daily, weekend, weekly, monthly or multi-month basis, with rental charges computed on a limited or unlimited mileage rate, or on a time rate plus a mileage charge.

The company also generates revenues from reimbursements by customers of airport concession fees, unless the law limits or forbids it from doing so, and of vehicle licensing costs, fueling and electric charging, and charges for value-added services such as supplemental equipment (e.g., child seats and ski racks), loss or collision damage waiver, theft protection, liability and personal accident/effects insurance coverage, premium emergency roadside service and satellite radio.

Seasonality

The company’s vehicle rental operations are a seasonal business with decreased levels of business in the winter months and heightened activity during the spring and summer months (peak season) for the majority of countries where it generates its revenues. To accommodate increased demand, the company typically increases its available fleet and staff in the second and third quarters of the year (year ended December 31, 2023) to add a significant number of part-time and seasonal workers.

Fleet

During the year ended December 31, 2023, the company operated a peak rental fleet in its Americas RAC and International RAC segments of approximately 467,000 vehicles and 124,600 vehicles, respectively.

During the year ended December 31, 2023, the company’s approximate average holding period for rental vehicles sold was 20 months in its Americas RAC segment, down 20% compared to 2022 due in part to its decision to sell newer vehicles instead of older vehicles due to residual values. In its International RAC segment, the company’s approximate average holding period for rental vehicles sold was 16 months, down 11% compared to 2022 due in part to increased program vehicle dispositions.

The company maintains vehicle maintenance centers which provide maintenance for its fleet, many of which include sophisticated vehicle diagnostic and repair equipment, and are accepted by automobile manufacturers, as eligible, to perform warranty work. Collision damage and major repairs are generally performed by independent contractors.

Other Vehicle Disposition Channels

The company-operated retail sales channel, Hertz Car Sales, consists of a network of company-operated vehicle sales locations throughout the U.S. dedicated to the sale of vehicles from its rental fleet. Vehicles disposed of through the company’s retail outlets provide for ancillary vehicle sales revenue, such as warranty, financing and aftermarket products.

Competition

The company’s principal vehicle rental industry competitors are Avis Budget Group, Inc., which operates the Avis, Budget, ZipCar and Payless brands; Enterprise Holdings, which operates the Enterprise Rent-A-Car Company, National Car Rental and Alamo Rent A Car brands; and SIXT.

History

Hertz Global Holdings, Inc. was founded in 1918. The company was incorporated in Delaware in 2015.