A rise in air travel due to growth in income and corporate budgets will drive demand
New York, NY (PRWEB) February 20, 2014
The global recession put the brakes on the Car Rental industry, but rental agencies have shifted back into gear as travel demand has increased. Air travelers, the industry's primary revenue source, were staying put amid the economic uncertainty, slow income growth, rising unemployment and tighter corporate travel budgets during the recession. In response, operators cut expenses and searched for off-airport revenue. Air travel only began to recover from 2010 onward, and the improvement in domestic trips by US residents has driven the industry. The improvement in the global economy has led to increased consumer confidence, which has translated into spending. According to IBISWorld Industry Analyst Andy Brennan, “Business spending has been spurred by a strong rise in corporate profit, which has increased 9.2% per year on average over the past five years.” As a result, industry revenue is expected to grow at an annualized rate of 3.1% to $36.4 billion over the five years to 2014. This includes a jump of 2.1% in 2014.
The Car Rental industry has continued to consolidate over the past five years, leaving three dominating global brands: Enterprise, Hertz and Avis. This consolidation is evidenced by a decline in the number of industry enterprises, which dropped an annualized 0.5% to 2,436 over the five years to 2014. The biggest news in the industry was the 2012 acquisition of Dollar Thrifty by Hertz, with the global giant attempting to gain market share in the price-oriented leisure travel market. The Federal Trade Commission made Hertz sell its Advantage brand (which it had purchased in 2009) as part of the deal. In a twist, the independent Advantage filed for bankruptcy in 2013 and was sold off to private equity group Catalyst Capital Group in early 2014.
The industry's solid recovery is expected to continue over the next five years. “Demand is expected to increase as domestic travel rates continue to grow, bolstered by the US economy's recovery,” says Brennan. In addition to the rise in air travel, growth will be underpinned by rising personal income and more generous corporate travel budgets.
The industry will also be boosted by a rise in the number of foreign tourists visiting the United States during the five years to 2019. Thus, industry revenue is forecast to grow during this period.
For more information, visit IBISWorld’s Car Rental in the US industry report page.
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IBISWorld industry Report Key Topics
Companies in the Car Rental industry rent or lease passenger cars to customers. Car rentals typically last a short time (30 days or fewer) while leasing agreements are for longer (12 months or more). The industry excludes the rental or leasing of cars with drivers.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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