Robert Lambert is senior vice president of commercial sales for Avis Budget Group, which describes itself as North America's "largest general-use vehicle rental company." He spoke last week with Management.travelabout a range of issues impacting the car rental industry and the company's corporate clients. An excerpt follows.
How has the influence of procurement departments within your clients' organizations impacted requests for proposals and other aspects of your relationships?
I think we are seeing a switch back to what we would call the travel experts, or the product experts. All too often, we rely solely on procurement to buy a service. Underline the word service. The only thing that is taken into consideration is price. That puts a lot of pressure on the people that have to serve the traveler, if the end users are not getting what they thought they were going to get. We are seeing a pendulum swing back toward the product experts--meaning the travel manager community--having a little more say. I have seen and heard that some of our customers have been able to overrule procurement in some cases, when the product match or the product need is just not there and the only focus was price. That is a good thing for us; we are in a service business. Travel is still personal.
Looking at environmental concerns, is it mostly on the car rental firms or the car manufacturers to more widely deploy hybrid vehicles across your fleets?
We believe there is a demand out there and we have announced recently that we are putting a fair number of hybrids in our fleet, starting with the most obvious place, in California, given the demand that the state of California has. A lot of it does have to do with the manufacturers. Up until recently--maybe six months ago--it had been difficult to get hybrids. Manufacturers put a very high price on them and financially it did not make sense to buy a lot of them. Now, the manufacturers are putting out more reasonable and tolerable pricing. That allows us, where we can, to put them out there. I do not think you are going to see [fleets with] 50 percent hybrids, but there are pockets around the country where the need will be there and will expand to meet the need. There are customers who have a need and asked us if we have had hybrid capabilities, but I would not say that any of them are putting it in as a stipulation, where we would have to do it to be part of their program.
How are relationships with corporate accounts changing, in terms of off-airport rentals and other developments within your business?
We are a car rental company, but there is a little bit more to it than that because we do have more of a suite of products than we have ever had before. Other than just the daily transient car rental business, we are in the replacement side of the business with insurance replacement, fleet replacement, etc. We are also in the truck business from the Budget side of the house. In many of the companies we do business with, in certain sectors, there is a need for replacement trucks. We are getting deeper than traditional daily car rental needs to determine opportunities that a customer may bring to us. With smart, open-ended questions to a customer, they may say, "Gee, we never thought about it that way." We have been working on off-airport business for corporate customers for quite some time. Many companies have different plants, facilities and offices across the country, and that right there is one of the first questions we ask. There is always a need there. Also, a number of companies travel by private aircraft, so the need to serve a fixed-base operator or something to that effect, also falls into the mix. Sometimes you define off-airport as away from the major airports to an FBO that may be near a corporate facility somewhere. A trend you will see in the future is the air taxi market. Down the road, you'll find the small business owners and managers utilizing air taxi services and, in some cases, getting away from scheduled airline service to use small airports, just because it may be easier.
Avis Budget Group in 2006 enhanced Avis Interactive, the Web-based reporting tool for corporate clients. Can you provide an update on that product and discuss how much it is being used?
Yes, customers are using it. Yes, they like it. It gives them the opportunity to create--within their own timeframe and their own needs--any sort of query they like, and to produce that right on their desktops. We spent considerable resources upgrading it and a lot came from listening to the customers. We have spent the last six months to a year doing that in terms of product upgrades. That goes back to our Where2 global positioning navigation system and to our e-receipt product, which came directly from a customer saying they would like receipts sent via email. Then there is the E-ZPass system, which provides [automatic collection of] tolls for car renters, without the customer having to stop and wait in those long lines. We are pushing that out to Puerto Rico and pretty much the rest of the country. We started in the Northeast and went to Chicago, Texas, Florida and California.
In terms of the broader car rental market, there has been plenty of ownership changes over the years, including spin-offs, initial public offerings, privatization and the recent Enterprise play to acquire Vanguard. Has the market begun to settle, or do you suspect there is more movement to come?
Over the next three to five years, there will be fewer companies. All the major brands will be there and we all will be competing. I do not see any major product changes, or any major changes to services, but there will be fewer companies. We as an organization feel that way overall. But at the end of the day, car rental still will be one of the best values out there in the travel industry.