am1108

Its really not surprising to see that Hertz is trying to buy DTG. The company made $88 Million (EBITDA) last quarter and a lot of people are "wallet conscious" now days. You have to realize that a lot of Dollar, Thrifty, and Co branded locations are mostly concentrated at airports, you wont really find too many that are local branches unlike Hertz, Enterprise, Avis, Budget who have different locations in various hotels, Sears (Avis Budget), etc. Also they tend to run cars at a much higher mileage than other places.

Auto Enthusiast

I wonder if this goes through, if/how the FL driveout would be affected. Previously, Dollar/Thrifty would offer midsize cars for $1/day plus tax from FL to the Mid Atlantic, Northeast, and Midwest. Hertz would offer something like $5/day for a compact, from and to almost the same places, often more, because of their neighborhood stores.

So there was competition, and trade-offs. $5/day to return to the HLE near your home, possibly pick up at a FL HLE and save on taxes? Or $1/day for a bigger car, but airport pickup only, and may need to drive further away to return the car at your closest airport?

Would Hertz now want to compete with itself? Maybe, if there will still be the appearance of separate companies with separate lots.

am1108

They will probably still have deals like that, its cheaper to have the customers move the cars (when the slow tourist season hits FL) instead of loading them on semi's and paying different firms hundreds of dollars to move them. Although the price might be more like $5 dollars.

iahphx

I'm still amazed the Dollar/Thrifty could really be worth more than $2 billion. Do they really have loyal customers? Who are they? There's just no real reason to rent from them -- except price.

While I rent a lot of cars, I think I only use Dollar/Thrifty once or twice a year. I do make a lot more reservations with them, though. Whenever I book an airline ticket that I'll need a car rental for, I always book the car rental at the same time (just in case car rental rates go up). When this is a few months in advance, Dollar/Thrifty is often the cheapest. As it gets closer to the rental day, other companies tend to get more competitive (or I use Priceline), so I rarely actually use my Dollar/Thrifty reservations (since I do appreciate the option, I do cancel the rezzies I don't use).

Earlier this month, I did actually rent from Dollar at PHX because nobody else (including Priceline) ever became competitive with them. I didn't like my experience at the counter: it was much more hard sell than what I'm used to at the competition. A day after I got the car, I realized there was a pretty large scratch on the front bumper (I didn't notice it in the dark garage). I then worried a bit that I'd be hassled about it when I returned the vehicle -- Dollar/Thirfty is more likely to hassle you than the big boys -- but my concern was unfounded. Still, it reminded me why I don't like to rent from them (even though their cars are about the same as the other agencies).

My immediate future car rental needs will probably not call for Dollar/Thrifty. There are lots of promo rates available this fall. Like I just got a full size at SAT on Priceline for $10/day, and a compact direct from Hertz at PDX for $13/day. I swear, I started renting cars back in the '80s, and I don't think the rates have really gone up since then (the taxes have, though!). Given this reality, I can't imagine why anyone would pay more than $2 billion for a third tier car rental company which has no brand loyalty.

wetrat0

I agree. I just rented from Thrifty literally for the first time (based solely on needing a low price) and the experience was fine, but the shuttle took a bit long to come, so I won't be back again until they have the lowest price. Most of the other customers looked like tourists who are undoubtedly also picking the lowest price.

I think this is more about placing upward pressure on prices through consolidation.

Auto Enthusiast

If you join the Dollar/Thrifty frequent renter programs, the T&Cs state they will not hassle you on insurance.

iahphx

You would think this would be the case -- and consolidation certainly has raised airline fares -- but, so far, I've never seen consolidation impact car rental pricing. This is remarkable because there already IS a lot of consolidation: Enterprise owns National/Alamo, Avis owns Budget, etc.

And, of course, if Hertz raises Dollar/Thrifty's prices, what would be the point of running these companies? To truly raise prices and reduce costs, you'd want to shut these businesses down. Like United doesn't compete with Continental.

Interesting. I guess I should join. I've never bothered, because I use them seldomly.

jackal

Once this goes through (and there's a 90% chance it will), there will be three rental companies operating eight brands. Unfortunately, the vast majority of the public will continue to believe there are eight companies competing for their business.

Five minutes to join can save 20 minutes--or more, at some really busy and perennially understaffed locations (like LAS)--waiting in line and going through the rental process. No reason not to.

iahphx

But despite the common ownership, most of the brands DO seem to compete against each other, even when they share a counter. Like this summer, I rented a car from "Budget" at FRA (because it was the cheapest) even though there really is no "Budget" there (it's Avis). Alamo and National almost always have different rates everywhere in the USA.

Dollar/Thifty is a little unusual in this regard because they almost always have the same rates. Any chance that Hertz will start making them compete against each other?

Auto Enthusiast

Or maybe they will have the same rates as Hertz.

jackal

Plans are right now to continue operating the brands independently (both until the targeted October acquisition as well as for the foreseeable future afterwards). Of course, there will be some back-end infrastructure deduplication, but it will likely be run similarly to how Alamo and National are run by Enterprise.

The brands aren't really competing for each other. They are competing for different segments of the market. Alamo and Budget compete for the leisure traveler looking for lower rates. National and Avis compete for the business traveler looking for full service. Is there overlap? Of course, but by holding two brands, they can attempt to cover the full spectrum of the market without compromising their own brand identity.

I suspect it will remain the same for Hertz. They bought the Dollar Thrifty brands because they believed they were strong brands that would help them enter the value market much better than they were able to with Advantage. However, as I just said, brands do overlap (sometimes--although rarely --Hertz offers low rates to get cars moving out on the road, and sometimes Dollar and Thrifty raise their rates when demand is high), and so there still is the potential for the consumer to lose with fewer real choices.

It's funny to see what Hertz considers the difference between the two brands. Here, we all know they are identical. Heck, inside DTAG, they can't even figure out the difference between the brands (except that taking up two columns on Travelocity seems to get them more reservations). But Hertz is claiming that Dollar is aimed towards the value-seeking business market and Thrifty is marketed more towards the discount budget traveler. Maybe they are, but it ain't workin' that way in practice.

iahphx

Yeah, I noticed it, too. If you offer the same service at the same price, how is the customer supposed to know there's a difference? I guess if you spent a lot of money on advertising, they might form different impressions, but otherwise it just seems exactly the same.

Of course, other travel companies operate the same way. I love when Choice Hotels tries to explain the difference in their dozen or so different brands. The Wyndham hotel group is much the same.

am1108

IAHPHX, you answered your own question. They do a lot of Hard sell on the insurances, GPS, Toll Devices, etc. and they really scrutinize the damages on the car ... thus making a profit on the said damages. As I said in an earlier post the vehicles are run at a higher mileage than other places, so they get A LOT more worth out of the car than they bought it for, remember that not everyone is paying the same low rate and different markets will have different prices. Also Dollar/Thrifty doesn't really advertise like the other companies do nor do they have the infrastructure like Hertz does. In fact Dollar-Thrifty has been making money the last couple of years, every quarter they announce that they surpassed the earnings for the same quarter of the previous year.

Really as long as your making money who wouldn't want to buy you? Notice that Avis was previously (if not currently) trying to acquire Dollar Thrifty.

wetrat0

I was actually wondering why there isn't a scheme like this: High end brand (aka Hertz) buys new cars and rents them until they have 10k or 20k miles, then transfers them to low end business unit (aka Dollar/Thrifty) who rents them until they have 30k or 40k miles. Then you have product differentiation and can more successfully segment the market between premium and value customers. If I knew this was going to happen I would definitely go to Hertz, and maybe Hertz will do this. However, it seems like with the other combined companies they just use the same fleet and pretend to be separate entities. I did a rental at Alamo recently, via Priceline, that was literally the same cars as National. I printed my contract at the Alamo kiosk and they pointed me to the row of cars marked "National/Alamo".

jackal

Good idea on paper, but Hertz is now running cars about as old as Dollar Thrifty does (at least I've gotten some 40,000-mile cars from Hertz). Dollar Thrifty recently authorized their fleet folks to keep cars upwards of 60,000 miles, although I have yet to see some cars actually make it up that high yet.

Enterprise serves as the dumping ground for Alamo National's older cars, after which point Enterprise does a pretty good job of selling them.