How Hertz Works: Business and Revenue Model
What is Hertz?
Hertz is a renowned name in the car rental industry. The American-based car rental company follows a basic car rental business model. As of now, the company is operating its car rental business in 145 cities actively and is planning to make an expansion soon.
Hertz is an unclaimed name with a 13-times winner of the “best car rental company award”, powered by Travel and Leisure readers.
With a significant market share of 18.6% (IBIS World, 2014), the company is known to be one of the toughest competition for other car rental startups and businesses. The across the globe services powered at Hertz makes it one of the unconquered names in recreating the car rental experience to its travellers. Undoubtedly, Hertz has set a standard of services for the carpooling industry.
Some Important Information about Hertz
The Growth Trajectory of Hertz
Since the launch, the company has been surrounded by multiple ups and downs. From turning 100 years old to file a bankruptcy, the journey has been a roller-coaster throughout. Here is a sneak peek at the previous advancements and latest additions to the company.
Launched in 1918, the company started with a fleet count of 12 and soon started to expand its wings to the European market and South America. After a bunch of episodes of sales and acquisition, the company soon started to reflect its individual presence in the market by getting an entry in New York Exchange stocks. And the journey continued to grow in an upward trajectory, including the investments, change in the management and further growth to the demographic capture and the fleet count.
However, 2020 found a certain setback as the company filed a bankruptcy in the month of May. If reports are to be believed, post the bankruptcy declaration, the company was able to raise a significant amount of funds in its next investment round. This “new” investment has helped to nullify the bankruptcy damage and look forward to further growth.
Car rental is indeed a powerful and multi-dimensional business vertical that holds the capacity to capture a strong market. If done right, you too can be the next “ Hertz” and can sustain for more than 100 years in the market.
The working business model – Hertz
To all those, who are wondering what makes Hertz successfully complete “100” years unconquered; here is the working business model.
Different Segments in the business model
#Segment 1: Customer Segment
The vehicle rental services offered by Hertz serves the general customers and adds a high amount of revenue to them. The end-users or customer segment of Hertz could be divided into two main segments.
Hertz provides vehicle rental services to companies and general consumers across the world. The customers are known to add a greater revenue stream to the business. These customers can be broadly categorised into business and leisure categories. Let us know about them in detail.
- Corporations & Organisations
It includes medium and large corporations where employees are intended to make frequent travel for work purposes. It includes independent business delegates and smaller business group travellers.
- Individual travellers
It includes travellers that come with the leisure category. It covers all family trips, holidays, and other destination travellers.
- Tours companies
Lastly, the professional tour and travel companies also play an important role as they are also a segment that brings a better fair of share to the services. They are however connected with both point A and point B indirectly.
# Segment 2: Franchises
Another most important segment that holds a greater value proposition is Franchise. Hertz gets a higher percentage of revenue and profit share from the Franchise sector. Businesses looking for launching car rental services often contact Hertz to launch their car rental business under the name of the brand.
Till now, Hertz has served more than 150 countries in North America, Europe, Latin America, Africa, Asia, Australia, The Caribbean, the Middle East and New Zealand. However, the larger part of the company revenue comes from the US native market. Hence, we can say that Hertz is capturing a great market globally.
Hertz Revenue Business Model
There are certain value propositions that include the various channels of revenue source for the company. You can evaluate and find how the company is growing exponentially in the following years.
Customers
This is the main source of revenue for the business. The rental services offered to customers bring a high share of revenue to the company and are able to bring the most of the ROI to the business for years. Almost 60 per cent of the company’s revenue comes from its customers. This is why the company is a customer-centric company that looks to add ease and comfort to its customers’ journey.
Partnerships
Apart from the customers, the high source of revenue comes from the partners. The partnership model comes with a success ratio since its launch. This is why it is also considered a strong channel for revenue flow. In the last few years, Hertz has taken progressive steps to build the channel and relationship with its partners. We can say that in the coming times, there will be more chances to bring more revenue from this partnership business model. We are looking forward to seeing the high surge in the revenue figures with more growth to the partnership model.
Franchise
This is also one of the most important parts of Hertz’s revenue growth. From picking up its existence in the market to capturing a huge market in the 150+ nations, Hertz gets a decent revenue growth from the Franchise business model. Experts believe that the renowned brand establishment of the business has helped it to capture the franchise attention and bring a high source of revenue for the company. Similar to the partnership business model, the coming years will witness a revenue spike in its stream.
The Futuristic Growth
When we speak about the future of Hertz, we speak about nothing less than growth. The future is sharp and brighter than ever before. Post pandemic, there is high demand for rental services, which mark the presence of the business in the market for a sustainable period of time.
Experts believe that the future is growth and Hertz will see another glorious year of success in the upcoming times.
Be the next Hertz
Undoubtedly, Hertz is a great name when we talk about the successful car rental business model. Choosing the best, we can say that Hertz has come a long way.
If you wish to become the next Hertz in the market and start your growth, you can choose to connect with our experts. We will help you to replicate the business model with nothing less than perfection.
To know more about how you can replicate the success mantra and launch your own car rental business, feel free to connect with our experts at Jugnoo.
We offer the best car rental software offerings that can make your launch and execution in the market swiftly.
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