Hertz Business Model
Jul
The Hertz Business Model revolves around providing rental car services to customers worldwide. Hertz, a leading car rental company, offers customers a wide range of vehicles, whether they need a car for personal use, business trips, or special occasions. With a presence in multiple countries, Hertz has established itself as a trusted and reliable brand in the car rental industry.
Customers can conveniently access Hertz’s services through its website or mobile app, allowing them to book and manage their reservations easily. Hertz offers flexible rental options, including short-term rentals, long-term leases, and even car sales for those looking to purchase a vehicle.
From economy cars to luxury vehicles, Hertz caters to its customers’ diverse needs and preferences. Their commitment to customer service, competitive pricing, and a wide network of rental locations have contributed to their success and customer loyalty.
Contents
A brief history of Hertz
The history of Hertz can be traced back to the early 20th century, when it was founded by Walter L. Jacobs in 1918. Jacobs started the company with a small fleet of Model T Fords in Chicago, initially renting cars to traveling businessmen and tourists. At that time, the idea of renting a car was still relatively new and innovative.
The business quickly gained traction and expanded its operations to other cities, including New York City and San Francisco. By the 1920s, Hertz had become a well-established player in the car rental industry, with a reputation for quality service and a diverse fleet of vehicles.
In 1923, John D. Hertz, a successful entrepreneur and investor, acquired the company and renamed it Hertz Drive-Ur-Self System. Under Hertz’s and Jacob’s leadership, the company experienced significant growth and success. Hertz introduced innovations such as 24-hour access to rental cars and the introduction of the “Rent-a-Car” signage to increase brand recognition.
Throughout the 20th century, Hertz continued to expand its presence both domestically and internationally. The company developed partnerships with airlines and hotels, providing customers convenient access to rental cars at airports and popular travel destinations. Hertz also became known for its wide range of rental options, catering to different customer needs, from economy cars to luxury vehicles.
In 1926, General Motors bought the company, however, John Hertz repurchased it in 1953 The company continued to innovate, introducing services such as the Hertz Fun Collection, which offers customers the opportunity to rent premium and specialty vehicles for special occasions or leisure.
In the 21st century, Hertz faced new challenges and opportunities brought about by technological advancements and changing consumer preferences. The rise of ride-sharing platforms and shifting towards a sharing economy presented threats and possibilities for the car rental industry. Hertz responded by launching its car-sharing service, Hertz 24/7, offering customers a flexible and convenient alternative to traditional car rental.
In recent years, Hertz has focused on enhancing the customer experience through digital innovation. The company developed a mobile app that allows customers to easily reserve and manage their rentals and access additional services such as roadside assistance and loyalty rewards.
Who Owns Hertz
Hertz has a complex ownership history. Currently, It is a subsidiary of Hertz Global Holdings, Inc., a publicly traded company listed on the New York Stock Exchange under the ticker symbol HTZ.
Before its bankruptcy filing in May 2020, Hertz Global Holdings, Inc. was majority-owned by institutional investors and private equity firms. Some of the largest shareholders included The Vanguard Group, BlackRock, and Carl Icahn, each holding significant stakes in the company.
During its bankruptcy proceedings, Hertz underwent a significant ownership restructuring. In July 2021, Hertz emerged from bankruptcy with a new group of owners.
Following the restructuring, Knighthead Capital Management now owns a significant portion of Hertz’s equity, 38.39% of outstanding shares, while BlackRock, Inc., owns 2.58% and Vanguard Group, Inc., 2.53% of the company’s outstanding shares. Other shareholders include Pentwater Capital Management LP (1.47%), Marathon Asset Management, LP (1.43%), Goldman Sachs Group Inc. (1.17%), etc.
Hertz Mission Statement
Hertz’s mission statement is “to be customer-focused, cost-efficient, and provide an unforgettable car rental experience for whatever journey you may be on.”
How Hertz works
Hertz’s business model is built on offering a diverse selection of rental options to meet the needs of different customers. The company provides various vehicles, including compact cars, SUVs, luxury cars, and trucks, allowing customers to choose the vehicle that best suits their requirements.
To rent a vehicle from Hertz, customers can make a reservation through the company’s website or mobile app. They can select their desired pickup location, date, and time, as well as the type of vehicle they need. Hertz’s platform enables customers to easily browse the available options and find the rental that meets their preferences.
Once a reservation is confirmed, customers can pick up the rental vehicle from the designated Hertz location. Hertz’s process is designed to be efficient and time-saving, ensuring a smooth customer experience. The company provides high-quality customer service, with staff members available to assist customers throughout the rental process.
Hertz offers additional services and features during the rental period to enhance the customer experience. These include GPS navigation systems, child safety seats, and additional drivers, allowing customers to customize their rental to meet their needs. Hertz also provides roadside assistance, ensuring that customers have support in case of any emergencies or issues during their rental period.
To return the rental vehicle, customers can simply drop it off at a Hertz location at the end of the rental period. Hertz’s efficient check-out process ensures a quick return, with staff members available to inspect the vehicle and complete the necessary paperwork.
In addition to its standard car rental services, Hertz offers a range of additional programs and services to cater to specific customer needs. These include Hertz Gold Plus Rewards, a loyalty program that provides benefits such as faster pickup and exclusive discounts, and Hertz 24/7, which enables customers to rent vehicles hourly for short-term needs.
How Hertz makes money
While the basic rental service is the company’s primary revenue driver, Hertz also generates revenue from additional services and partnerships. The following are the main ways through which Hertz makes money:
Vehicle Rentals
The core of Hertz’s business model is offering customers the option to rent vehicles for various durations, including daily, weekly, and monthly rentals. Customers can choose from multiple vehicles, including economy cars, luxury cars, SUVs, and trucks. Hertz charges customers a rental fee based on factors such as the type of vehicle, rental duration, and location. The rental fee is Hertz’s primary source of revenue.
Fleet Management
In addition to renting vehicles to customers, Hertz provides fleet management services to companies and organizations. These services include vehicle acquisition, fleet maintenance, fuel management, and logistics. Hertz charges its corporate clients a fee for managing their vehicle fleets, helping them optimize their operations and save costs.
Global Partnerships
Hertz has established partnerships with various airlines, hotels, and travel agencies worldwide to enhance its customer reach and provide additional services. Through these partnerships, Hertz offers exclusive discounts and benefits to customers who book their car rentals in conjunction with flights or hotel stays.
Additional Insurance and Protection Plans
Hertz offers additional insurance and protection plans to provide customers with peace of mind and protect them against potential risks. These plans include options for collision damage waivers, personal accident insurance, and supplemental liability coverage. Customers who purchase these plans pay an additional fee, contributing to Hertz’s revenue.
Extras and Add-ons
To enhance the rental experience, Hertz offers customers additional services and add-ons. These services include GPS navigation systems, child safety seats, ski racks, and mobile Wi-Fi devices. Customers who opt for these extras and add-ons pay an additional fee, which adds to Hertz’s revenue.
Fees and Charges
Hertz generates revenue from various fees imposed on its customers. These fees may include late return fees, additional driver fees, young driver fees, and fuel charges. In addition, Hertz may charge penalties for vehicle damage or violations of the rental agreement. These fees contribute to Hertz’s overall revenue stream.
Hertz Business Model Canvas
The Hertz Business Model can be explained in the following business model canvas:
Hertz Customer Segments
Hertz’s customer segment comprises a diverse range of individuals and organizations that require rental car services for various purposes. The customer segment of Hertz can be categorized into the following:
- Individual Users: Individual users form a significant portion of Hertz’s customer segment. These users are individuals who rent cars from Hertz for personal use. They may include tourists, travelers, families, or individuals who require a car temporarily for personal reasons, such as weekend getaways, family vacations, or special occasions. Hertz provides a wide selection of vehicles to cater to individual users’ diverse needs and preferences;
- Business Travelers: Hertz caters to the needs of corporate clients and business travelers who require rental cars for business purposes. These customers include professionals, executives, and employees traveling for meetings, conferences, client visits, or other work-related activities. Hertz offers specialized services for business travelers, including corporate rental programs, special rates, and personalized solutions to meet their specific requirements;
- Insurance Replacement: Another segment of Hertz’s customer base consists of individuals who require a rental car as a temporary replacement for their vehicles due to accidents, repairs, or insurance claims. These customers rely on Hertz to provide suitable vehicles when their cars are unavailable. Hertz works closely with insurance companies and offers tailored solutions to assist customers in such situations;
- Partners and Affiliates: Hertz collaborates with various partners and affiliates to expand its customer reach and offer additional benefits to its users. These partners may include airlines, hotel chains, travel agencies, loyalty programs, and other businesses within the travel and hospitality industry. Hertz’s partnerships with these entities enable them to provide exclusive offers, discounts, and seamless integration of services for their mutual customers.
Hertz Value Propositions
Hertz value propositions consist of:
- For Individual Users: Hertz provides a convenient and reliable rental car service that meets their personal transportation needs. With a wide range of vehicles, they can select the car that best suits their preferences and requirements. Hertz offers competitive rates, flexible rental options, and a seamless reservation process, ensuring a hassle-free experience for individual users;
- For Business Travelers: Hertz understands the unique requirements of business travelers and aims to cater to their specific needs. They offer efficient and comfortable transportation solutions, ensuring business travelers can focus on their professional responsibilities without worrying about transportation logistics;
- For Insurance Replacement: When individuals face unexpected vehicle damage or loss, Hertz is a reliable partner for insurance replacement. They offer temporary rental solutions, providing customers with suitable vehicles while their cars are being repaired or replaced. Hertz collaborates with insurance companies to streamline the claims process, ensuring a seamless transition for customers;
- For Partners and Affiliates: Hertz’s partnerships and affiliations with other businesses in the travel and hospitality industry offer added value to customers. These collaborations can provide exclusive benefits, discounts, and integrated services. Customers who utilize services from Hertz’s partners can enjoy seamless connectivity, loyalty rewards, and a personalized travel experience.
Hertz Channels
Hertz channels consist of:
- Reservation System: Hertz has a robust online and mobile reservation platform that allows customers to book vehicles easily. It provides real-time availability, pricing, and vehicle specifications;
- Physical Locations: Hertz has a widespread network of rental locations, including airport terminals, neighborhood branches, and car sales centers. These physical sites allow customers to pick up and drop off vehicles conveniently;
- Partnerships: Hertz partners with various travel agencies, airlines, hotels, and online travel portals. These partnerships enable customers to access Hertz’s services through these intermediaries and provide additional distribution channels;
- Call Center: Hertz operates a customer support call center that handles reservations, changes, and general assistance inquiries. It serves as an essential channel for resolving customer issues and maintaining relationships.
Hertz Customer Relationships
Hertz customer relationships consist of:
- Self-Service: Hertz offers a self-service model, allowing customers to reserve, modify, and cancel bookings through its user-friendly online platform. Customers have control over their rental experience and can manage their accounts independently;
- Personal Assistance: Hertz provides personal assistance through its customer support call center and in-person at rental locations. This allows customers to receive guidance, troubleshoot problems, and get answers to specific queries;
- Loyalty Program: Hertz operates the Hertz Gold Plus Rewards loyalty program, which rewards frequent renters with exclusive benefits, such as faster check-in, priority service, and free rental days. This program builds long-term relationships and encourages customer loyalty;
- Feedback and Reviews: Hertz actively encourages customers to provide feedback and reviews after their rental experience. It values customer opinions and uses them to improve services, enhance customer satisfaction, and address any concerns.
Hertz Revenue Streams
Hertz revenue streams consist of:
- Vehicle Rentals
- Fleet Management
- Global Partnerships
- Additional Insurance and Protection Plans
- Extras and Add-ons
- Fees and Charges
Hertz Key Resources
Hertz key resources consist of:
- Vehicle Fleet: Hertz’s fleet of vehicles is a critical resource. Maintaining a diverse fleet that meets customer demands and ensures a range of vehicle options and availability requires substantial capital investment;
- Reservation System and Technology: Hertz’s advanced reservation system and technological infrastructure are pivotal in managing bookings, inventory, pricing, and customer information. It is essential for efficient operations and customer service;
- Brand and Reputation: Hertz’s strong brand recognition and reputation as a trustworthy rental car company are essential resources that attract customers and establish confidence in their services;
- Rental Locations: The widespread network of rental locations is crucial, allowing Hertz to reach customers across different geographical areas. It enables convenient pick-up and drop-off locations for customers;
- Partnerships: Hertz’s partnerships with travel agencies, airlines, hotels, and other entities are valuable resources. These partnerships provide access to a more extensive customer base and expand its distribution network.
Hertz Key Activities
Hertz key activities consist of:
- Car rental services
- Fleet management
- Reservation management
- Car sales
- Marketing and advertising
- Insurance and risk management
- Loyalty program management
- Location expansion
Hertz Key Partners
Hertz key partners consist of:
- Car manufacturers
- Insurance companies
- Travel agencies
- Hotels
- Credit card companies
- Vehicle financing companies
- Local businesses
Hertz Cost Structure
Hertz cost structure consists of:
- Fleet acquisition
- Employee salaries
- Vehicle maintenance
- Marketing expenses
- Technology infrastructure
- Rental location expenses
- Fuel and energy costs
- Insurance premiums
- Regulatory compliance costs
Hertz Competitors
As a leading player in the car rental industry, Hertz faces stiff competition from several notable competitors. These companies, including Avis Budget Group, Enterprise Holdings, Sixt, Europcar, National Car Rental, Thrifty Car Rental, Dollar Rent-A-Car, and Alamo Rent-A-Car, all aim to capture a share of the car rental market by targeting different customer segments and offering various value propositions.
- Avis Budget Group: A significant competitor to Hertz, Avis Budget Group operates multiple brands, including Avis, Budget, and Zipcar. They offer many car rental options, targeting both leisure and business travelers;
- Enterprise Holdings: With its well-known brand, Enterprise Rent-A-Car, it is a significant player in the car rental industry. It has a strong presence in the United States and focuses on both airport and local market segments;
- Sixt: Sixt, a global car rental company based in Germany, competes with Hertz primarily in the European market. Known for its premium fleet and customer service, Sixt targets both leisure and corporate customers;
- Europcar: Europcar is another major car rental company in over 140 countries. It offers a wide range of vehicles, from economy cars to luxury models, targeting both individual and corporate customers;
- National Car Rental: Another subsidiary of Enterprise Holdings, National Car Rental competes with Hertz mainly in the business travel segment. It focuses on providing exceptional customer service and a seamless rental experience;
- Thrifty Car Rental: Thrifty Car Rental is a subsidiary of Hertz Global Holdings and operates primarily in the United States and Canada. It offers affordable car rental options targeting budget-conscious customers;
- Dollar Rent A Car: A subsidiary of Hertz Global Holdings, Dollar Rent A Car focuses on value-conscious travelers. They provide accessible rates and a diverse fleet of vehicles in various locations;
- Alamo Rent A Car: Alamo Rent A Car is another prominent Enterprise Holdings member. It caters to leisure travelers, offering competitive rates and a convenient rental process.
Hertz SWOT Analysis
The SWOT analysis provides a comprehensive overview of Hertz’s strengths, weaknesses, opportunities, and threats, enabling a deeper understanding of the company’s positioning in the car rental industry. By examining these factors, we can gain insights into Hertz’s internal capabilities and external market dynamics.
Hertz Strengths
- Wide global presence: Hertz operates in over 155 countries, providing car rental services to customers worldwide;
- Strong brand reputation: Hertz is renowned for its quality service and extensive vehicle selection;
- Fleet size and diversity: Hertz owns and operates a large and diverse fleet of vehicles, catering to various customer needs;
- Loyalty programs: Hertz offers loyalty programs that encourage repeat business and foster customer loyalty;
- Vital customer service: Hertz is known for providing reliable customer service and ensuring customer satisfaction.
Hertz Weaknesses
- Financial leverage: Hertz has a significant debt burden, which may impact its ability to invest in technological advancements and expansion;
- Aging fleet: Despite their large fleet size, Hertz struggles with fleet rejuvenation, which can lead to increased maintenance costs and customer dissatisfaction;
- Limited presence in emerging markets: While Hertz has a strong presence in developed markets, it has limited penetration in emerging markets, missing out on potential growth opportunities;
- Dependence on airport locations: Hertz heavily relies on airport car rentals, making it vulnerable to fluctuations in air travel demand;
- Limited brand differentiation: The car rental industry is highly competitive, and Hertz needs help differentiating its brand from other major players.
Hertz Opportunities
- Expansion into emerging markets: Hertz can tap into growing markets, such as Asia and Africa, by establishing a more robust presence and expanding its services;
- Electric and hybrid vehicles: The increasing demand for sustainable transportation opens up opportunities for Hertz to expand its fleet with electric and hybrid cars;
- Ride-sharing partnerships: Collaborating with ride-sharing companies can help Hertz reach a broader customer base and offer combined rental and ride-sharing services;
- Business travel segment: Hertz can target the business travel market by offering customized services and perks to attract corporate clients.
Hertz Threats
- Intense competition: Hertz faces fierce competition from other major car rental companies, as well as alternative transportation options such as ride-sharing services and public transportation;
- Economic downturns: Economic recessions or fluctuations in disposable income can impact consumer spending on car rentals and travel, affecting Hertz’s revenue.
- Price sensitivity: Customers often compare prices before making a rental decision, making it essential for Hertz to maintain competitively priced offerings;
- Changing consumer preferences: Shifting consumer preferences towards car-sharing or subscription services could disrupt traditional car rental models and threaten Hertz’s market share;
- Government regulations and taxes: Changes in laws, taxes, or environmental policies can impact Hertz’s operations and increase costs;
Conclusion
Hertz’s business model is built on providing customers with convenient and flexible car rental solutions. By offering a wide range of vehicles, multiple booking options, and exceptional customer service, Hertz has been a leader in the car rental industry for decades. However, the company faces challenges such as increasing competition and the emergence of new technology-driven transportation solutions.
To remain competitive, Hertz must continuously adapt and innovate its business model to cater to changing customer demands and embrace technological advancements.
