Sixt's Kennedy discusses:
- How he transformed Sixt's approach to competition in North America
- New features coming next year
- The demand landscape for electric vehicles
Germany-based car rental company Sixt has set its sights on being a viable competitor to the major players in the United States since 2011, when it began operating in the country. It wasn't until this year, though, that it not only made the J.D. Power North America Rental Car Satisfaction Study but also came in third place, behind only National and Enterprise, and with a score well ahead of the industry average. BTN senior editor of transportation Donna M. Airoldi spoke with Sixt head of North America Tom Kennedy about that survey, the company's strategy for the region, the growth of its corporate travel market, and what's in store for the future. Edited excerpts follow.
BTN: What do you think made the difference this year for Sixt to debut in the J.D. Power North American car rental survey?
Tom Kennedy: Historically, we were small and therefore weren't really touching enough customers nationally to be relevant in the survey. When I started [at Sixt], we were in 29 airports. We'll open our 50th airport this month. … So, No. 1, we grew to the scale where we were relevant. No. 2, we really focus as a company on customer service. … If you look at the professionalism of our team, we take very good care of our people, but we also train them very specifically. Then, candidly, we all fail at some point. As a customer service group, if we don't do something the customer wanted, we make sure we recover that customer and take care of it on the back end. We make sure we're premium in how we take care of the customer's issue and solve it for their complete 100 percent satisfaction. All those factors go into our philosophy … and it all fits together in how we were able to get that No. 3 ranking.
BTN: You joined Sixt in November 2020, the middle of the pandemic, after a career working in travel for car rental companies, airlines and hotels. How did you tackle the challenges then and recover to where you are you today?
Kennedy: I was recruited by the Sixt family and came out of retirement to help them build out the U.S. business. Given my experience, it's hard to find folks that have that travel experience that aren't under non-competes. I didn't have to deal with the challenges of the early pandemic and all the cars that had to be returned or sold. The goal for me was to come in and take a look at our fleet strategy, take a look at our position in the market. The biggest challenge was that we were not growing, and how could we grow profitably?
We didn't have the right fleet strategy; our holding costs were very high. I don't think we had the right focus on how to open markets. Then in our existing markets, what were we missing from a customer standpoint? We tackled all those to make sure the product was right on the fleet. We had the right duration of how we hold the cars, and we kind of aggressively attacked with airports we were not in that we should be that are in larger markets.
BTN: How did those changes help your corporate business segment?
Kennedy: We could not compete for contracted corporate business if we didn't have enough presence. No. 1 was to solve the presence, and No. 2 is the process, and we're still working on this, but Sixt historically was a counter product. I said, you have to have a counter-bypass experience particularly for business travelers but also frequent leisure travelers. They want to get the car, they want speed. We started introducing a new process this year of a counter-bypass experience, which we're still refining, but we're rolling it out next year. Once we had the presence, then a different process and the right product, now we're relevant. Now we can go and compete to be an alternative to the big three in the U.S. market. That was really the goal over the last four years of coming into the company. And of course we have a big presence in Europe, so if you're a global company, we obviously can provide you global service whether you're in the U.S., Canada or Europe.
BTN: Which are the two airport locations opening soon?
Kennedy: John Wayne in Orange County, [Calif.], and New Orleans. Our strategy is to be in the top 70 to 80 airports, and then some smaller airports that fill out the network.
BTN: Now that you are more relevant, how has the corporate segment been performing for the region?
Kennedy: We're still very, very small, but we've been growing pretty well on a percentage basis. [Previously,] no corporate would entertain us as an alternative to Avis, Hertz or National because we just didn't have the presence. Now that we're in 51 airports this year and have a counter-bypass process, and we'll be launching a revised loyalty program, which also is important in the U.S. market for those frequent travelers, I think we have all the components now to aggressively compete for that corporate frequent traveler.
We're starting to get traction. We have some big brand names that we have either a secondary or tertiary position in, and we offer an alternative to the big three. We have availability midweek, we have newer cars, we have a better experience. We have a very premium, competitive product that I would argue is the gold standard, which historically has been National. … Our objective at Sixt is to be like an alternative to National.
BTN: What are corporate travel managers asking for?
Kennedy: The most important thing is availability in product, [particularly] midweek and where business travelers are traveling. [They also want to know] is it clean? Newer? A good product? And [they also want] transparency, consistency of what you're charging. Then, "How do you recognize me if I'm going to give you my business?" Meaning, what's your loyalty program, which we're going to relaunch and make it better. "How do you take care of my business travelers?" Because the corporate travel manager does not want to hear from their internal people. They want a worry-free relationship.
BTN: You've mentioned the upcoming new loyalty program. Can you share any details about what will be different?
Kennedy: It'll be sometime in 2025. We're tweaking it now. We want to make sure when we do launch it, it's pristine and it comes out from somewhat of a differentiation from what's offered there today. We do have a more known loyalty program in Europe, and in the U.S. people aren't aware we have a loyalty program. I think that's partly because it's not been designed around the U.S. traveler and was more designed around the European traveler. The U.S. and European travelers have different needs and aspirations. So, a loyalty program in the U.S., be it airlines, car rental or hotels, is table stakes. You have to have it; it has to be competitive.
BTN: What else differentiates Sixt?
Kennedy: If you look at our app, you can rent, rideshare and subscribe all on our app. I think we find business travelers and even frequent leisure travelers really like how they interact with us as a full mobility provider. … We’ll continue to improve on how we get that customer journey to be seamless, quick and worry-free. I also think we'll be testing things. We have in [a few] airports now a thing called "Proovstation." That's where the car is scanned and when you return, the car is scanned again [for damage]. One of the customer pain points is damage: "I didn't cause that damage, it was somebody before me, I don’t want to get charged for it." We're installing these Proovstations.
BTN: Where are they located?
Kennedy: We're in Miami, Fort Lauderdale, Atlanta [and Charlotte, with] Washington National and [Orlando coming soon]. We're going to expand it where we can where the airports have that infrastructure available. We're also going to test [technology with which] you can return the car and it will be checked for fuel levels and mileage and what time it was returned. There's a transponder in the car that electronically uploads that information. There's no human intervention. If you can eliminate the human judgement and put more of it into an automated way, the customers have greater trust in our relationship with them.
BTN: What is Sixt's sustainability strategy, specifically with electric vehicles?
Kennedy: In some markets, EVs are very welcome and needed and wanted, like in California. We're going to follow what the customer demand is.
The charging infrastructure of airports is very limited. Our ability as an industry and a company to be able on a return to recharge that car in a quick way is very challenged in certain airports. That has to be built up. Airports are working with the car rental industry to install that infrastructure, but it's going to take a little more time.
We are all a function of buying these assets and having to resell them at some point. … With EVs evolving, with technology evolving so rapidly, the range for example, getting better battery life, the number of models coming into the market, that puts pricing pressure on older EVs and therefore can put pressure on the resale of those EVs. That's something as an industry and a company we have to be very careful about. Right now, there is a limited amount of demand for [EVs] because there still is range anxiety. There are a lot of factors that go into that customer demand mix. I would say we are a close follower, and we'll go with what our customers want.
BTN: Do corporate managers ask you about EVs for their deals?
Kennedy: They want to know what your EV strategy is. But we find a lot that when the corporate travelers actually travel, they don't really want an EV. They would rather have an [internal combustion engine] vehicle because they're familiar with it, they know the technology, they don't have to worry about the range anxiety concerns and the recharging. So, the travel manager usually wants to bring that up, and we are more than happy to provide and offer that availability for them. But when the traveler shows up, they honestly would rather have an ICE vehicle than an EV.