Blog

Steven Donaldson
Principal

Hertz eats Dollar Thrifty Rental Car- more brands or fewer options?

Today the big brand ate the small brands but did it really? Not that I’m a big advocate of consolidation but Hertz, the premier car rental company, paid $2.3 billion for the lower-valued Dollar Thrifty brands.

dollarthrifty-logo

The reason for this buy was not just financial; buying these brands now allows Hertz to serve a broader spectrum of customers. Dollar Thrifty has always been considered the “value” end of the rental car market while Hertz is about service and higher end vehicles. Now they’ll have it all.

Vertical mix – It’s not about one brand anymore

To capture a bigger share of a market, it’s not just about buying everyone and becoming a Microsoft or Computer Associates which act more like The Borg in tthe 90s Start Trek—everything is absorbed into the massive hive-like human machine. It’s about having different brands to serve different segments of the market.

The hospitality industry strives for diversity — and market share

Similar to the hospitality industry, the rental car market is attempting to gain efficiencies in the back end— the order taking and inventory  management portion of the market—while having different products for different customers and needs. Hilton now has 10 different brands, from the premier Waldorf Astoria and Conrad Hotels and Resorts to the value based Hilton Garden Inn and Hampton Inns. Nowadays you own a market with brands. A spectrum of brands can deliver to consumers of all price points, needs and choices.To gain a greater stake in a market it’s about owning more customer relationships at all levels.

The real question is, can a big company like this  still remain innovative and customer service oriented?  We shall see.

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