Bob Stuart
Los Angeles - The Hertz Corp. executive vice president of sales and marketing Bob Stuart late last month sat down here with Business Travel News editor-in-chief Chris Davis to discuss the car rental company's strategy in dealing with the corporate market, its approach to corporate pricing, the state of corporate demand and Hertz's approach to on-demand renting. Edited excerpts of the discussion follow.
What is Hertz's strategy now regarding the corporate side of the market?
We always want to make sure that we're appealing to all audiences. It's a big deal to us. It's a third of our business, even with the Dollar Thrifty acquisition. One of the things that we just worked on is our Gold Plus Rewards program. You used to need 40 rentals a year to become a President's Circle member, and 20 rentals a year to become a Five-Star member. We reduced those tiers significantly. We're making access into our loyalty and our highest status a lot easier to earn, and we're getting great responses on that. In our President's Circle, our transactions are probably up 60 percent just in that segment because we're making it more accessible. They earn points quicker and can redeem them quicker.
When did you make that change?
We did that in first quarter. The other thing that we did is now you earn [points] real-time. If I earn Five-Star or President's Circle this month, now I start earning those benefits real-time. It's a pretty neat thing.
What was the impetus behind making those changes?
Stickiness with our customers. We want their business rental, but we also want their leisure rental, so it creates more stickiness. Our Gold customers are loyal and they rent more often, like three to one, versus a non-Gold renter. So, it's an important segment for us to continue to get the stickiness with.
What's your sense of the corporate market now, in terms of demand? Are you seeing that business bouncing back?
Yes, absolutely, and it's by geographies. In Europe, you've got to go country by country. Some countries are pretty robust; other countries are flat. Some are down. But overall, Europe has come back fairly nicely. Asia has a different story. Corporate is tied very highly to the mining industry, [especially] Australia and New Zealand. We're seeing softness on that end of it.
But on the corporate side, the United States is coming back. Still, they're always looking for productivity. We focus a lot on how we can give them productivity. We've been getting price increases. We need to do it; our costs are going up. So we find other ways to give them savings, and there's a million ways to skin a cat.
One that we brought to them was, if [the buyer] reimburses [travelers] for personal mileage, we do the calculations for them and anything over 100 miles, we show them the benefits [in that they would] save money if they rent a car versus reimbursing [using] the IRS rate of 55 cents a mile.
We look at their patterns now. Part of Gold Plus Rewards and the [data] warehouse that we have is that you can see patterns. Are they flying in on a Sunday or Monday, and are they leaving on Friday? And is that renter doing that repeatedly? So, we start asking questions. When they're doing that, are they paying parking for a full week? Well, then we say, "You are better off if, when you leave on Monday and return on Friday, that you actually rent a vehicle for the weekend, versus paying $25, $30 a day to park." So, we'll tell them, just drop the car, pay for the weekend rental and drop the car back off when you get to the airport. And then go on your way.
I've personally been involved, and I have converted people to doing that. Because there's real savings there and it adds up pretty quickly. I'm looking at different ways I can skin a cat.
Is that something you're doing as standard procedure?
We want to make sure that we're doing ongoing, continuous improvement, so we're always going in ways to see how we can help them. And again, that gives us stickiness with the corporate customers as well.
Looking ahead, what sort of rate increases are you targeting going into 2015?
It depends. We segment our customers. We probably have eight tiers that we look at. And so we'll look at where we think we're on the balance. But someone may have gotten more out of whack than others. And you gradually try and bring them back.
How are folks responding to that?
They're on board with it. I mean, not everyone, but you've got to share with them the data. That's powerful. And you show them the history, you show them the trend levels and you show them what's happening. But then you give them alternatives: These are ways you can go back and get productivity.
There was some talk in the industry about renewals and how perhaps not everybody would want to renew all corporate clients. Is that the approach you're taking as well?
We're going to look at the profitability of it. They need to be attractive to us.
Does that entail, when a contract ends, perhaps not agreeing to re-up?
I think we have those conversations, but we're not arrogant about it. We don't wait for the contract to come up. We have this conversation six, eight, nine, 10 months out. Our customers, we're pretty entrenched with them. We will never go in there and surprise them. That's not our tactic ever. We have ongoing dialogue. We talk to them; if [a renewal] is coming up, these are the things we're looking for, and what are your expectations? And then we try to come up with a win-win for both. It's been pretty good.
What's the strategy around on-demand renting?
That's our 24/7 product that we've been trying to perfect the latter part of the year. We're really in the throes. We're piloting this program [and] trying to commercialize it. We're trying to make sure that when we go full-scale with this, it's a flawless, seamless experience.
We bought a company, Eileo, from Paris [in 2009]. We bought it for the technology. We tried to really understand the model. Do we want to be on universities? Do we need to go into the big urban areas? So we actually took 16 off-airport locations and we put 24/7 cars with kiosks, and we actually allowed them to call our customer service desk in Oklahoma so we can unlock the doors for you. So you didn't need a key fob, and you didn't need an RFID card.
During that time, we found that half of the reservations were made when that location wasn't open, and it was made within two hours of when they were actually transacted. So, they made it at 7 p.m. after the location closed, and they're actually entering the vehicle at 9 p.m.
Then they were doing the same on the return. Some of them were returning them when the location was closed. To us, it showed there was an unbelievable opportunity for on-demand.
We now have a keypad—think of an ATM machine—in the driver's side windshield and we will deliver to your device a six-digit PIN code. Pop that in and it unlocks the door. You go inside, you look at the top. The tablet says, "Do you have a valid driver's license?" It asks you a couple questions, and, boom, you're on your way.
When you return it, you just put the six-digit PIN code in and it locks the vehicle and you're done. It's that simple. Again, we have all kinds of great technology with that tablet. We have Wi-Fi. We have hands-free technology. We have a concierge where you can push a button if you're in an emergency situation and we'll actually call the vehicle and ask you if everything's okay.
We'll also give you restaurant tips and hotel tips. The suite of products that we're going to have available on the tablet's going to be amazing.