Following years of commercial rental rate declines, Avis Budget Group CEO Ronald Nelson on Thursday reported a 2 percent year-over-year rise "in our realized commercial pricing" during the first quarter. Nelson last May told investors that the company would "have some spine and ask for a rate increase that delivers a profitable account," and a year later that strategy combined with a business mix shift has begun "to bear fruit," he said during an earnings call with analysts and media.
Avis Budget achieved its first commercial gain in years "through rate increases to our existing book of business or through our initiative to shift our mix to more profitable customers and channels," according to Nelson.
Nelson said the shift in Avis Budget's business mix came in part from the rental car operator's efforts to grow in the small-business segment, which saw first-quarter revenue up 8 percent year over year. Such clients generally are subject to higher rental rates than larger accounts.
Nelson expected commercial pricing for the full year to be up 1 percent from 2013 levels.
The company on Thursday reported a $4 million net profit for the three months ending March 31, up from a $46 million loss for the prior-year period.
Revenue rose 10 percent year over year, "primarily due to a 6 percent increase in rental days and the acquisitions of Payless and Zipcar," according to the company.
North American rental car pricing, which includes both commercial and leisure pricing as well as car-sharing subsidiary Zipcar, rose 2 percent year over year.