Lately there has been a lot of talk about the economy bouncing back. This has resulted in good news for the travel industry. However, it seems that the industry itself is still far from where it wants to be. Take Hertz, for example. The company expected, earlier this year, that its end of year profits would be good. Now, however, Hertz has been forced to lower its earnings prediction. According to the car rental giant, it had to lower its prediction due to lower-than-expected demand from business travellers. This weak demand was mostly seen in the United States airport car rental division for the company.
Mark Frissora, who is the chief executive for Hertz, said that weak consumer confidence has really taken its toll on the market in general. Hertz has been effected by this just like all other companies. For Hertz, it has been the decline at airports that has really hurt. This was the statement that he gave while talking at the MKM Entertainment and Leisure Conference held in New York just last week.
Mr Frissora added that this lower prediction was definitely a result of companies not renting as many cars. He said that this new prediction was not a result of leisure travellers at all. In fact, Hertz has been enjoying an increase in the leisure industry. This is because people are starting to get their conference back. Companies, on the other hand, are still looking for ways to save money, and one of the best ways to do that is to cut out traveling altogether. Thanks to things like video conferencing, travelling for meetings is no longer needed. Also, more companies are giving employees who have to work their own company cars, which means there is no reason to rent a car.
According to Hertz, it expects to see revenue of close to $10.8 billion. This means that it will be getting close to $1.68 to $1.77 a share. Of course, this is lower than the $10.95 billion that the company had originally predicted. In recent trading, the company saw its shares fall 17 percent from $21.37. This drop was before the company made the announcement of lower-than-expected earnings. Thus, shares are likely to drop again.
Now, Hertz is looking to reduce the impact of this lower prediction. The company plans on doing this in two ways. First it will reduce the size of its fleet all over the world. This will happen over the next six months or so. This will mean that Hertz has fewer cars to keep up with, reducing its operating costs. It is also hoping to launch its Firefly brand sooner than expected in the United States.
So far, Hertz has about 20 Firefly locations planned around the United States. These should open up by the end of the year. The Firefly brand will offer cheap car rentals. It will be launched in areas were other value car rental companies have been dominating the market. If it proves to be a success, Hertz will roll out more Firefly brands.