The impact of the strict and extended inbound Covid testing policy in the U.S. shouldn’t be underestimated, especially when it comes to larger business customers. The ripple effect is evident in Hertz’s latest results.
The relatively late removal of the Covid test requirement for U.S. arrivals in mid-June dented car rental giant Hertz’s business travel bookings.
The company reported a strong set of second quarter results Thursday, with total revenue increasing 25 percent to $2.3 billion, and net income jumping to $940 million, versus a $169 million loss a year earlier.
However, its corporate volume was at 70 percent of 2019 levels for the quarter, with international inbound at about 40 percent.
To offset that it’s exploring how it can better leverage Egencia’s customers to capture more of the mid-market travel segment. That’s a practical move as Egencia, owned by American Express Global Business Travel, fits into the Certares family of holdings, of which Hertz is a part of, too, since its bankruptcy exit.
In June, Hertz generated more than double the revenue it generated from Amex GBT in January.
Short Burst Travel Trips
Hertz’s CEO is unfazed by the lack of progress compared to many hotel groups that are seeing a near return to their pre-pandemic levels of corporate travel sales. It’s moving in the right direction at least, seeing as Hertz was stuck at 60 percent in the first quarter.
“I’m more optimistic though about some of the data underneath that,” said Stephen Scherr, the Hertz CEO. “For example, not only are we seeing activity pick back up, we’re actually seeing the number of days of a rental start to return back to a normal period. It suggests to me that more business people are taking more short-burst travel trips. They’re not taking fewer, longer trips, they’re taking more short trips. That’s quite encouraging.”
Meanwhile, he thinks it will take a bit of time for that U.S. rule lifting to play itself out, and highlighted the momentum in Europe was greater than in the U.S., which is Hertz’s core business.
Another bright spot is contract renewal rates, which were at 97 percent, and they were “uniformly” higher, the company said.
Scherr is also prepared to explore more agency relationships in the future.
“(Amex GBT) is useful to us as a channel, because there’s a common thread between the two. But it’s an arm’s length engagement,” he said.
Other relationships already exist, but not at the same “stature” as with Amex GBT — “but there’s nothing to prevent us from pursuing multiple channels … I want to stay with Amex GBT for a little while because there’s a lot to be had there,” he added.
Scherr, who only joined in February, also said he was feeling more used to be in the driving seat. “As is always the case, you get an increasingly better feel for the business and nuances, so I feel quite comfortable now,” he said.