In an effort to streamline its operational activities and
enhance customer experience, leading general-use vehicle rental
Avis Budget Group Inc
) recently announced the addition of 235 new positions at its
Business Support Center (BSC) in Budapest.
The move was appreciated by investors, as reflected in the share
price of this stock, which closed at $17.51 on October 15, 2012,
3.12% higher than the previous close of $16.98, after reaching a
high of $17.57.
It is expected that this strategy will facilitate Avis Budget in
streamlining its financial, administrative and customer services in
the Europe, Middle East and Africa (EMEA) operational region.
Moreover, the company anticipates the expansion to result in
significant cost savings.
The expansion will increase the total number of employees to
approximately 550 at BSC and will include personnel with
communication skills in different languages like Dutch, English,
French, German, Italian and Spanish. Avis Budget had set up this
facility in January 2004, and became the first international
company to have a regional service center in Budapest.
The company has always tried to take advantage of other inbound
revenue opportunities by focusing on new ideas and investments in
its brands and technology upgradation. Since the acquisition of
Avis Europe in October 2011, the company remains on track with its
integration plans and expects its 2012 results to gain annual
synergies of over $35 million.
Lately, Avis Budget has launched its own sales force in the
European region to own and leverage the local opportunities and
customers to drive inbound business.
We believe that Avis Budget follows a core global strategy of
partnering with leading travel brands to expand its customer reach
while creating additional demand. The acquisition of Avis Europe
was one of the major steps taken by the company to enhance its
operational foothold in global markets.
Moreover, the company's partnership with leading German
automobile club Allgemeiner Deutscher Automobil-Club testifies to
its commitment to its global strategic initiatives, which are based
on the value of its brands and its ability to provide synergies to
partners, benefitting their brands and businesses.
Further, we remain impressed with Avis Budget's sustained focus
on productivity and cost containment initiatives, which in our
view, would help the company achieve its goal of higher operating
However, significant exposure to foreign currency translations
and heavy dependence on third-party distribution channels remain
the causes of concern. Moreover, due to intense competition from
other established players such as
Hertz Global Holdings Inc
Dollar Thrifty Automotive Group Inc
), the company may find it challenging to maintain the same level
of operating performance.
Currently, Avis Budget carries a Zacks #3 Rank signifying a
short-term Hold rating. Moreover, we maintain a long-term Neutral
recommendation on the stock.
Avis Budget Group is the leading vehicle rental company in North
America, Australia, New Zealand and EMEA. A network of more than
10,000 rental locations and 350,000 vehicles gives the company a
well-established position in a highly competitive vehicle rental
AVIS BUDGET GRP (CAR): Free Stock Analysis
DOLLAR THRIFTY (DTG): Free Stock Analysis
HERTZ GLBL HLDG (HTZ): Free Stock Analysis
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