The travel industry is starting to bounce back, and no sector is seeing it more than the car rental industry. Just take Hertz for example. This leading car rental company just recently announced that its second-quarter profits jumped by nearly 31 percent when compared to last year. This increase is, of course, thanks to an increase in demand for rental cars.
Of course, Hertz is not the only car rental company that has reported an increase in profits as of late. Its profits are more than likely increasing because people are starting to use airports again, since many of the Hertz rental centres are located within airports.
According to reports released by Hertz this week, its profits have increased to $121.4 million. This is being compared to the $92.9 million that the company made during the same period a year ago. In terms of a per-share basis, Hertz noticed an increase of 27 cents, which is up from the 21 cents seen last year. All of this is thanks to the company’s revenue jumping 22 percent to $2.71 billion.
Despite this nice increase, these results were actually in line with what experts on Wall Street predicted. Experts in the travel industry have been saying that the car rental industry would bounce back as more people started using airports again. After all, most car rental companies make their profits at airports, not from residential rental centres.
Overall, sales for car rentals around the world were up 23 percent. Not only that, but worldwide equipment rentals were also up 15 percent. This translated into a 12 percent increase in revenue per transaction.
The real question is, however, can Hertz continue increasing its profits. Although the travel industry has started to bounce back, it is still a long way off before it has fully recovered. Some experts have stated that the travel industry will never be like it was again. Of course, if that is the case, this could be great news for the car rental industry. After all, people might cut out short-haul flights altogether and start driving instead. This will likely result in an increase in car rentals because people are still going to have to make these short-haul trips.
Hertz is already busy putting its profit increase to good use. In fact, Hertz just recently announced that it was buying the UK-based accident management firm CCL Vehicle Rentals. The amount that Hertz purchased this firm for has not been disclosed. Either way, this move makes Hertz the second biggest car rental company in the world, second only to Enterprise Holdings.
The move also gives Hertz a foot in on a $1.5 billion industry. In the UK, insurance replacement is a huge market, just like in other places in the world. Hertz now has a way into this market with its new purchase. It will be interesting to see if the company continues to expand its presence in this market or if it will limit it to just the UK.