Interview: Hertz CEO Mark Frissora - Business Travel News

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Interview: Hertz CEO Mark Frissora

January 04, 2013 - 11:35 AM EST

Mark Frissora

Mark Frissora

Concluding a two-year pursuit that included a bidding war with Avis Budget Group and a protracted regulatory review, Hertz in late November sealed its acquisition of Dollar Thrifty Automotive Group. While integrating Dollar Thrifty and positioning its brands to consumers and corporate clients will be among Hertz's priorities this year, chairman and CEO Mark Frissora said the rental car giant also is in the midst of incorporating new technologies to transform its rental business.

Comparable to Avis Budget Group CEO Ronald Nelson's plan, revealed this week, "to leverage Zipcar's technology to expand mobility solutions under the Avis and Budget brands," Hertz increasingly is bringing to its core rental fleet technology from its Hertz On Demand car-sharing service. Additionally, Hertz is deploying more video kiosks that bring to touchscreens the rental counter experience and virtual face-to-face interactions.

Named among BTN's 25 Most Influential Business Travel Executives of 2012, Frissora last month spoke with BTN senior editor Jay Boehmer about these developments. An edited transcript follows.

How do you plan to fold Dollar and Thrifty into the Hertz organization?

It's about offering more travel choices for business travelers and all of our travel partners as well. Instead of having one brand, we're going to have three brands you can choose from, obviously at pricing levels that are different. That's the exciting thing, the fact that we now have three growth brands. Our real plan is to accelerate the growth of all three brands. We've begun the transition integration process. We're going to deliver the synergies we promised to Wall Street by eliminating a lot of duplication, etc. More importantly, we're excited by the revenue synergies. We have travel partners that Dollar Thrifty doesn't have, so we're excited about turning those travel partners on to the Dollar Thirty brands.

Is your growth plan built on expanding the reach of each brand to new customer segments or is it really about pure growth—more rental locations, more fleet, etc.?

Probably a little of both. Everywhere we have a Hertz distribution point—whether it's an airport or off-airport location—there's the potential to have a Dollar or Thrifty brand. In addition to that, wherever there's a Dollar Thrifty location there's a potential to have the Hertz brand. They're clearly three distinct segments, so there's an opportunity to participate in those three segments with three brands. On top of that, in addition to just crossruffing the distribution points, there are corporate travel partners that we have. Those partners—whether that's American Express or AAA or Delta Air Lines or Marriott—are very important travel partners of ours. Being able to have Dollar Thrifty as another brand that they can use with their customers is an exciting growth prospect as well. Hotel and airline partners have always been a strength of Hertz, and we now have alternatives for them for their different types of travel consumers. In addition to that, we have an awful lot of opportunity to take Dollar Thrifty and grow it from a marketing perspective. There wasn't really a lot of money spent on marketing. We have some pretty big relationships with online travel intermediaries—Hotwire, Priceline.com, you name it; Hertz does pretty big business with them. So again, now we have some other brands we can use, and it provides a way to differentiate the supreme service offered by Hertz. Hertz was trying to reach different price levels that really we didn’t want to because we offer a value-added service to consumers. We have higher service levels, a better fleet, a newer fleet, and that costs money. We would prefer to get the representative pricing that goes with that.

How do you position Dollar in the corporate market in a way that doesn't cannibalize the premium Hertz business?

We've had no price increases from corporate clients for over five years. In fact, price is down. Part of that is driven by the fact that other publicly and privately held rental car companies put their fighter brands on the corporate rate card. We've already had this cancer, if you will, of lower-priced brands, lower service levels to corporate customers. What this allows us to do is not cannibalize Hertz but hopefully cannibalize our competitors. Today it's rare to find a corporate customer who doesn't have one of our competitors' brands. Hertz has kind of been fighting with its hands behind its back because it's had no other brand to fight with. Advantage was not big enough for us to put on a corporate rate card. We were only in 50 airports and you need to be in about 200 to provide coverage for a big-time Fortune 500 company. So that brand was not big enough. Now that we have Dollar Thrifty, we have lots of options. We're excited that this is going to be incremental growth and not cannibalized growth. We're going to make sure the price boundaries are clear.

Corporate customers will have a choice. Some of their people need a fast, premium, high-quality service. For those, we have Hertz. If you just need something in the middle and decent service, we've got a brand for that as well. You want it to be economical? We can give you an economical service now. But there are people that are wiling to pay for a better class of service and a better experience overall.

How will the corporate sales force be aligned? Will each brand have its own sales force or will one sales force sell all brands?

Dollar Thrifty didn't have a big sales force. They had about 20 people. Hertz has in the U.S. roughly 260 people selling to different levels of accounts. We'll probably incorporate and train both [sales forces] on each respective brand. That's the way we do it now. Even with Advantage, we make sure everyone is trained to sell the brands. Whether it's Dollar, Thrifty or Hertz, it will be easy for people to sell all three, whether that's to corporate customers or off-airport customers.

A few years ago BTN surveyed travel procurement professionals about how they view supplier categories, and more than airlines or hotels, they saw the car rental segment as a commodity. How can Hertz shift the dialogue with corporates to be about value and service versus price?

What we'll be launching [in 2013] is a whole host of technology innovations. Already you can book through mobile devices, through kiosks that are virtual, where you can talk to a live reservations agent on a video kiosk. You can make last-minute bookings on those kiosks.

We're also deploying our Hertz On Demand technology at all of our off-airport and on-airport locations so you can get hourly rentals, which is efficient and very fast at every airport and off-airport location. It will be 24/7, and that's happening [in 2013]. We've had that technology and it's just being rolled out into all of our fleet. Then we have what we call the video kiosk, which enables it to be done anywhere, any time. With that technology, you can get into a car with a PDA, with a key fob that's activated with RFID technology or we even have now a heat-sensitive touchpad that will be in the dashboard. You'll be able to touch the windshield with a four-digit code that we'll give you at the video kiosk, the door locks will pop open and you drive away.

So, we are really using technology as a way of differentiating us from competition and adding value. That's just one big way we're doing it.

The second big way is the Donlen acquisition. We go into corporations now and we're selling corporate leasing programs, but more importantly we're selling fleet management capability. Donlen had DriverPoint and several high-technology solutions for managing fleets, and now we're becoming a consultative selling organization where we go into corporate clients with large fleets and we can help them manage that fleet through a software solution. We help enable their fleet with technology so they can have dashboard measurements to see where their drivers are, what their drivers are doing. We provide that as an integrated package with our rental program. That is really new and different. We've been rolling it out, and it's very successful. As you can imagine, purchasing agents love this because we're giving them ideas on how to save money.

It's interesting to see car-sharing technology become more integrated into the core rental business. Car sharing seemed to be more for consumers than corporates, but that's not necessarily so.

Sometimes a business traveler wants to go in and out of an airport on the same day—two hours, three hours. In those cases it might be more economical to use a Hertz On Demand technology, an hourly car rental—get charged $30, get a full tank of gas, NeverLost GPS all included. That's a heck of a deal. It's more efficient than paying $80 a day or something like that.

We've always tied rental car demand to air traffic, but it seems like they're being decoupled in some ways, and there are more ways to create that demand.

Yes, there are. As you think about off-airport, we've now grown to 2,500 locations, soon to be 4,000 with the video kiosks. When you look at that application, about 20 percent of our off-airport revenues are business travelers—and that's growing. Business travelers today don't want to pay fees at the airport. It's become expensive in some airports to travel.

As you look at the population shift that's going on, there's going to be roughly eight mega markets developing over the next 20 years. Those are all moving into big consumer-centric circles in much more densely populated areas. Take an area like New York City—that's what the world is moving to. All the youth is moving from suburban sprawl into the cities. A very city-centric life means that things like Hertz On Demand or that technology will be fantastic.

We've got about 600,000 cars right now. Instead of having 3,000 locations that we have today, I now have 600,000 locations with this new technology. Every single car has the technology of our counter and reservations center inside the vehicle, so now I think of that as a point of distribution. I can deliver that car anywhere in the United States, any time and place.

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