Avis Enhances Rental Services - Analyst Blog

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Continuing with its commitment toward enhancing rental experience for its customers and making travel more convenient, Avis Budget Group Inc . ( CAR ) recently announced the kickoff of its Avis Preferred(R) Select & Go at 25 airports across the United States. However, only the customers registered with the company's express rental program - Avis Preferred, can avail this service.

In June 2012, one of the world's best vehicle rental service providers, Avis Budget, introduced this vehicle selection service with a mission to cover 50 airport locations around the United States and Canada by the end of the year 2012.

According to the company, under the Select & Go service, customers can avail three unique facilities. Firstly, with the start of this service, members of Avis Preferred will now be able to keep and drive their pre-assigned vehicle directly from the airport. Secondly, if members want to exchange their car from a designated area, they can do so without any additional charges. And thirdly, if members wish to upgrade their vehicle from a designated area, they can do so by just paying the additional amount.

The main motive behind the facilities offered is to ensure that the members do not have to visit the rental counter of the company. The members will be able to collect their selected vehicle just outside the airport by showing their valid driving license to an Avis' personnel.

The company has always tried to take advantage of the other inbound revenue opportunities by focusing on new ideas and investments in its brands and technology upgrade. The company has installed virtual car rental technology in over 25,000 vehicles.The technology permits travelers to reserve, pick up and return rental vehicles through their smart phones. Additionally, they also get an automated electronic receipt after the completion of rental, enabling the company to minimize cost while enhancing profitability.

Our Recommendation

Avis follows a core global strategy of partnering with leading travel brands to expand its customer reach while creating additional demand. The company recently made its first appearance in Taiwan, in an effort to expand its Asian operations. Avis Budget's decision to enter Taiwan is backed by growing car rental demand on the island as well as its speeding economic growth.

Moreover, in order to expand its geographical presence, the company is pro-actively looking for strategic acquisitions and alliances to enhance its growth opportunities. The recent acquisition of Avis Europe is one of the major steps taken by the company to enhance its operational foothold in global markets, especially in China and India.

However, significant exposure to foreign currency translations and heavy dependency on third party distribution channel remains causes of concern. Moreover, due to intense competition from other established players, such as Hertz Global Holdings Inc . ( HTZ ) and Dollar Thrifty Automotive Group Inc . ( DTG ), the company may find it challenging to maintain the same level of operating performance.

Currently, Avis Budget has a Zacks #3 Rank, which signifies a short-term Hold rating on the stock.

Avis Budget Group is the leading general-use vehicle rental company in North America, Australia and New Zealand. Moreover, with a formidable network of more than 10,000 rental locations and 350,000 vehicles, the company boasts a well-established position in a highly competitive vehicle rental industry.


 
AVIS BUDGET GRP (CAR): Free Stock Analysis Report
 
DOLLAR THRIFTY (DTG): Free Stock Analysis Report
 
HERTZ GLBL HLDG (HTZ): Free Stock Analysis Report
 
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: CAR , DTG , HTZ , R

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