Business model of Hertz

Customer Segments

Hertz provides vehicle rental services to companies and general consumers across the world.

The company’s customers can be organised broadly into business and leisure categories, including:

• Corporations and Organisations, including medium and large corporations whose employees and associates travel frequently for work and require the rental of vehicles for business purposes;
• Individual Business travellers, including independent business people and employees of smaller corporations who travel occasionally on business and need transportation when away from home;
• Families and Holidaymakers, including families and groups of holidaymakers that require transportation in countries overseas or need transport to and from airports or ports; and
• Travel Companies and Tour Operators, including business that provide travel packages or tours in holiday destinations that utilise Hertz’s car rental services as part of their own service offerings.

Hertz serves consumer and corporate customers across more than 150 countries in North America, Europe, Latin America, Africa, Asia, Australia, The Caribbean, the Middle East and New Zealand. The company’s largest market is its native US, which accounts for the bulk of its annual revenue.

Value Propositions

Hertz provides value to its customers in the following ways:

• Brand Recognition and reputation – Hertz is among the largest and most well-known providers of car rental services in the world, particularly in the US, and has a longstanding reputation for providing customers with efficient, high-quality, and reliable services;
• Network and Reach – Hertz controls a n extensive network of service locations across more than 150 countries worldwide, ensuring that kits services are available to as broad a customer base as possible;
• Convenience and Accessibility – Hertz ensures that kits service outlets are located in convenient and accessible locations, in particular maintaining a presence in numerous airports and ports around the world, so that its customers are able to access easily the company’s services when needed;
• Customer Service – Hertz provides its customers with high-level customer service at its outlets and over the phone, as well as offering regular customers rewards and discounts through its loyalty scheme; and
• Large and Varied Fleet – Hertz operates a large fleet of vehicles that includes an extensive range of models, brands, and vehicle types, ensuring has it has vehicles available to suit the needs of all of its customers.

Channels

Hertz primarily serves its customers through its network of around 10,200 corporate and franchisee locations in North America, Europe, Latin America, Africa, Asia, Australia, The Caribbean, the Middle East, and New Zealand. This includes outlets operated under the company’s Thrifty and Dollar brands.

Hertz notably organises its service outlets into two categories: Airport, comprising all locations based at domestic and international airports around the world; and off Airport, comprising all of the company’s locations outside of airports.

These service locations are staffed by sales and support personnel who service customers directly.

For its larger corporate customers, Hertz employs a direct sales force that is engaged in establishing and maintaining customer relationships with corporate clients.

The company conducts sales and marketing programs under which its sales personnel call on companies and other organisations directly offering various vehicle rental services.

While Hertz primarily conducts its business directly, it also allows customers to make vehicle reservations online through its website at www.hertz.com, as well as through its mobile app Hertz Car Rental, which is available on both Android and Apple iOS devices. Hertz additionally uses its website as a means of providing customers with information and news updates.

Customer Relationships

Hertz provides its services on partly self-service basis, with customers able to reserve vehicles for rental online and via the company’s mobile app without interacting with sales staff.

Pick-up of these vehicles =, however, has to be completed via one of the company’s sales outlets, where the company’s staff are able to deal directly with customer queries and complaints.

Hertz provides ongoing support services to its customers online, over the phone, and at its outlets.

Customers are able to access information on the company’s policies, frequently asked questions, and rental procedures via the Hertz website, or can contact dedicated support personnel over the phone for a more personalised response to enquiries or complaints.

Hertz offers new and existing corporate clients a more tailored service via its direct sales force, with larger clients having their own relationship management contacts. Hertz seeks to establish longstanding relationships with these clients, often under extended sales contracts.

Hertz is additionally able to interact directly with consumers through its various social media accounts – including with Facebook, Twitter, YouTube, and Google+. 

The company frequently handles customer issues and publishes updates through these social media channels.

Key Activities

Hertz functions as a holding company. Through its subsidiaries, notably The Hertz Corporation, the company provides vehicle rental services to customers around the world.

It organises its operations into three reportable business segments: US Car Rental (US RAC), which comprises the company’s rental of vehicles, such as cars, crossovers and light trucks, as well as ancillary products and services, in the United States; International Car Rental (International RAC), which comprises the company’s rental and leasing of vehicles and provision of as ancillary products and services internationally; and All Other Operations, which comprises the operations of the company’s Donlen Corporation business, which provides fleet leasing and fleet management services, and other business activities.

In additi0n to its namesake brand, Hertz also operates via the Dollar and Thrifty brands. The company operates a network of more than 10,000 corporate and sales facilities across more than 150 countries worldwide.

Key Partners

Hertz works closely with a varied network of partners to ensure that it provides a high-quality, competitive service to its customers and remains a market leader.

The company’s partners can be organised broadly into the following categories:

• Supplier and Vendor Partners, including suppliers of equipment and providers of third-party services that support the company’s core vehicle rental operations;
• Automotive Partners, including various vehicle manufacturers that collaborate with the company to provide vehicles for the Hertz, Thrifty, and Dollar rental fleets;
• Airline and Travel Partners, including various domestic and international airlines, travel companies, and tour operators that partner offer discounts and services to customers on behalf of Hertz and its brands;
• Technology Partners, including technology companies that assist the company in developing up-to-date systems and service offerings, ensuring that Hertz remains at the head of its industry; and
• Strategic and Alliance Partners, including a range of commercial and institutional partners with which the company collaborates on marketing, business development, and other projects.

Hertz has a large number of automotive partnerships, offering vehicles from manufacturers such as Ford, Toyota, Hyundai, Kia, Volvo, Mercedes, and Chevrolet. It also has airline partnerships with leading airlines such as Etihad Airways, Lufthansa, Qatar Airways, Virgin Atlantic, and United Airlines.

Key Resources

Hertz’s most important resources are its fleet of vehicles, its suppliers and supply chain, and its partnerships, notably its automotive and airline partners.

The company’s business also depends on its personnel – in particular its sales and support staff, its network of sales and service outlets, and its IT and communications infrastructure.

As noted above, Hertz operates out of more than 10,000 locations worldwide. The company owns approximately 3% of these locations.

The remaining locations are leased or operated under concessions from governmental authorities and private entities.

Cost Structure

Hertz incurs costs primarily in relation to the development, maintenance, and management of its fleet of vehicles, as well as the payment of salaries and benefits to its employees.

This includes the procurement of vehicles from manufacturers as well as the repair and maintenance of these vehicles. In 2017, Hertz’s direct vehicle and operating expenses totalled approximately USD 5 billion.

Hertz also incurs costs in relation to the development and maintenance of its IT and communications infrastructure, the payment of utilities at its various facilities, and the management of its partnerships.

Hertz’s selling, general, and administrative costs for 2017 amounted to USD 880 million.

Revenue Streams

Hertz generates revenue through the provision of car rental services to consumers and corporations. Revenue is derived primarily through the collection of rental fees levied directly from customers.

The company also generates a portion of its revenue from franchise fees, as well as from reimbursements by customers of airport concession fees and vehicle licensing costs.

In 2017, Hertz recorded an annual revenue of USD 8.8 billion, the bulk of which, around 68%, was generated by its US RAC segment.