Car Rental Cos. Expand Services

Car rental vendors increasingly are entering other areas of the corporate market, providing an opportunity for them to cross-market their services to end users.

The types of synergies that could be developed between travel rentals and a company's local transportation needs are endless, although so far the different categories of rentals are almost always handled separately. But as corporate travel managers continually evaluate ways in which they can save money, and car rental companies develop infrastructures for new types of services, the opportunity to bundle prices for business travel rentals, company cars and employee leisure trips with one vendor could become increasingly attractive.

The local rental market is providing some particularly strong growth opportunities for rental firms. The growth of small and medium-sized businesses, the opening of more satellite offices by corporations and corporate America's continual focus on cost savings are contributing to a higher curve of growth in business-related car rentals in the local market, according to Jon LeSage, executive editor of Auto Rental News in Redondo Beach, Calif.

Corporate replacement is one type of local business need that represents a lucrative opportunity for car rental companies. This could take the form of a rental for a local salesperson who doesn't own a car, or providing automobiles to a corporation that has downsized and therefore cut back on its fleet of leased vehicles, LeSage said.

"If more car rental companies identified this segment, they could go to their corporate partner and say, 'we'll take care of your deplaning business travelers and corporate replacement needs,' " he said. "They could bring something to the table."

Some car rental vendors are moving to exploit these opportunities. At Enterprise Rent-A-Car, the industry's undisputed local-market leader, "the business segment is growing," said Jeff Brummett, Enterprise's vice president of rent a car. "We have accounts that utilize the virtual-car concept: We own their fleet of pooled cars, or employees use our cars for monthly rentals."

With 3,000 locations in the United States-double the number of Hertz's-Enterprise is ideally positioned to exploit this growing demand for local business rentals. But the airport-based companies are beginning to explore some of those opportunities as well.

Hertz entered the local replacement market in June 1995 with its H.I.R.E. (Hertz Insurance Replacement Entity) subsidiary. It currently operates in the Los Angeles, Boston, Rhode Island, New Hampshire, Denver and Dallas areas and is poised for nationwide expansion, according to Joe Nothway, Hertz's executive vice president and general manager for U.S. rental car.

"Monthly business rentals are lucrative," Nothway said. "A lot of businesses have training programs in which people rent by the month." To market the new business, Hertz is calling on its corporate accounts and working with trade groups, Nothway said.

To provide self-moving services to corporations and their relocating employees, Budget Car and Truck Rental has formed alliances with five relocation companies: PHH Corp., Mobility Resources, Americorp., Physicians Relocation and Coldwell Banker Relocation Services, a division of the national real estate firm Coldwell Banker.

"In the past 18 months, there's been a trend toward employee self-moves," said Tom Zorn, vice president of truck operations at Budget. "We have some corporate accounts that we supply self-move services for."

Employees who are referred to Budget's Self-Move Program receive a toll-free number that connects them to coordinators, who can advise them of their moving options. The program includes a guide with tips, a free 20-minute prepaid long-distance calling card, route planning and emergency road service. Users also can purchase insurance plans.

Ironically, Coldwell Banker is owned by HFS Inc., the new parent company of Avis. HFS also recently acquired PHH Corp., the nation's largest corporate relocation business.

HFS, which also owns hotel and other residential real estate franchises, could develop synergies between PHH, which has a fleet of 100,000 cars and a corporate customer base, and Avis, which has a large corporate business.

To that end, HFS in February appointed two people as vice presidents of business development, a new position. The executives, Michael Field and John Daley, will be responsible for developing cross-marketing initiatives among the HFS-owned companies.

In Los Angeles and Houston, Hertz has teamed up with its parent, Ford Motor Co., to offer a program to commuters called VanShare. Groups of up to 15 commuters can acquire new Ford Club vans configured for seating from nine to 15 passengers for a one- or two-year period. The monthly fee ranges between $900 and $1,200, depending on the city, mileage and size of vehicle, and includes emergency roadside service, maintenance, liability coverage, and collision and comprehensive insurance.

The service was launched last summer. Although so far only individuals have signed up, the program is available to companies.

Thrifty Car Rental has developed a flourishing niche in the off-airport parking business, with 14,000 spaces at 50 airport locations. "It's opened doors that have never been open before," said Bob Thunnel, Thrifty's national sales vice president.

All corporate accounts receive a 15 percent discount on parking, although the service is open to companies that are not Thrifty accounts. Thrifty also offers its accounts a 15 percent discount on some truck rentals.

"There's a huge local corporate market," said Thrifty spokesman Chris Payne. Close to half of the firm's business is local, and a significant portion of that is corporate, he said.

Concurrently, some car rental companies are targeting the travel needs of small businesses. Avis' Corporate Awards program, which is aimed at companies that do up to $50,000 worth of car rentals a year, has thousands of accounts, the company said.

In addition, Alamo has signed up more than 400,000 members for its True Blue rewards program since its introduction last year, said vice chairman and chief marketing officer Roger Ballou.