Avis Budget reports decline in commercial volume

Travel News 25 Feb 2016

Avis Budget Group reported "weaker than expected" commercial volume for 2015, but ridesharing apps were not a factor, executives said during the company's fourth-quarter earnings call. 

The company's commercial volume declined 3 percent year over year during the fourth quarter, including a 2 percent decrease in the United States.

The decline is in no way attributed to the rise of ridesharing. The rental types most susceptible to those businesses—one-day rentals and low-mileage rentals—make up only about 3 percent of Avis Budget's rental volume, and that percentage stayed flat year over year. Additionally, total volume in cities where Uber and its competitors have the biggest penetration increased 2 percent year over year in 2015, consistent with overall growth.

Avis Budget also interviewed 100 corporate travel managers, who largely said ridesharing was a potential replacement for taxi services but not for their companies’ car rental needs.

Time and mileage revenue per day for rentals outside the Americas declined 17 percent year over year to $31.68 per vehicle during the fourth quarter, owing largely to currency exchange effects; absent those, the decline was 6 percent. Within the Americas, that figure declined 2 percent year over year to $38.60.

Even so, executives said 70 percent of the commercial accounts renewed during 2015 signed at either flat or increased rates, consistent with the previous year's performance.

Net revenue increased 0.8 percent year over year to $1.9 billion during the fourth quarter.

Avis Budget reported a $5 million loss in the fourth quarter, compared with a $23 million profit in the fourth quarter of 2014, due in part to acquisition and integration costs. For the full year, net income was $313 million, up 28 percent year over year. The company acquired Italian car rental company Maggiore Group, as well as licensees in Scandinavia and Poland.

Avis Budget plans more than $50 million in incremental investments this year, including expansion of self-service rental technology.