Under The Hood - 1999-07-19

<B> Under The Hood</B>

By Lynn Woods

<B>Avis Acquires PHH, Wright Express</B>

Avis Rent A Car has purchased the fleet division of Cendant Corp., including fleet management and fleet card companies PHH and Wright Express, for $1.8 billion. While Avis hailed the deal as a move that will leverage its ability to acquire fleet--PHH accounts for 700,000 cars worldwide--help its international expansion and result in numerous other beneficial synergies, the company also will assume $3.2 billion of Cendant's debt. Meanwhile, William Adler, former president of the vehicle management services division of PHH, has joined forces with Abrams Consulting Group Inc., a Purchase, N.Y.-based consultancy specializing in car rental. Called AdlerAbramsAdvisors, the new fleet management division will provide consulting and market research services to the commercial fleet management and leasing industry. Citing recent studies that indicate 12 percent of fleet managers have travel responsibilities, Adler said that pairing auto rental with fleet management was a natural response to the current consolidation trend. "As companies seek to improve their profits through cost savings, they're focusing on leveraging resources, and integrating and consolidating various functions," he said. "Those most successful today are establishing practices that go beyond managing the fleet," such as implementing a one-card combining travel, fleet and possibly procurement expenses.

<B>Big Apple Houses The Hub Connection</B>

N.Y.-based corporations seeking to simplify the booking process for black car services and be assured of a vehicle might want to check out The Hub Connection, a Queens, N.Y.-based centralized call center. The way it works is simple: After establishing an account, which entails a one-time voucher charge and distribution of a rate booklet, travel managers (or whomever is booking black cars) call the 800 number each time they need a car. The Hub Connection can book cars either from a preferred vender or on an availability basis from its pool of black car companies, all of which are required to have Lincoln Towncars. A set rate, both to airports and hundred of destinations in the tri-state area, applies, regardless of the provider. All bookings are confirmed--either through a callback or while the travel manager waits briefly on the phone--and no matter how many car companies are used, the corporation receives a single invoice. President Ed Cleary said a Web-based call option is available, although most clients still prefer to call. Electronic billing also is offered, and the company offers a software package through its participation in the Genisys Reservation System that integrates the booking with the air reservation made through the CRS. The Hub Connection has about 20 accounts, including a couple of large law firms and a major bank. It also can hook up clients with black car services in 250 cities.

<B>More Consolidation in the Limo Industry</B>

Falling in step with the limo and sedan industry's consolidation mania, A+ Limousine in southern New Jersey has merged with Air Brook Limousine, located in the northern part of the state. The combined companies' annual revenues are expected to reach $1.6 million. Air Brook also is negotiating with three other operators, according to president Donald Petroski. For the past two years, Air Brook has been serving its customers with a nationwide 800 number (800-USA-LIMO) that routes callers to limo companies in 300 cities. "Because callers deal directly with the operator, there are no add-on charges," said Petroski. He added that participating companies are selected on the basis of recommendations from other operators and business associations. Meanwhile, the latest acquisition by Carey International, which has been aggressively buying up companies since going public in 1997, is Classic Limousine Airport Service, a Stamford, Conn.-based company with annual revenues of approximately $11 million. Classic Limousine is the largest chauffeured vehicle service in Connecticut and is the primary vendor for corporations requiring service to Boston and New York.

<B>Budget Offers Natural Gas Rentals</B>

After offering electric-vehicle rentals earlier this year, Budget Rent a Car, in partnership with EV Rental Cars, a firm that specializes in the rental of environmentally sensitive vehicles, now gives customers at Los Angeles International Airport a second alternative option--five Honda Civic GX sedans fueled by compressed natural gas. Considered the cleanest-burning alternative fuel available, natural gas is less expensive than gasoline, costing from 25 to 40 percent less. EV Rental Cars said the Honda Civic GX has the lowest emissions of any internal combustion engine vehicle ever tested by the government. Renters using the natural gas vehicles will receive fueling cards from Pickens Fuel Corp. and Southern California Gas, which, along with EV Rental, Budget and American Honda Motor Co. Inc., are participants in the new venture.