How can Hertz balance the convenience of airport rental locations with the potential for higher profits from off-airport sites with lower operating costs?

Introduction

Balancing the convenience of airport rental locations with the potential for higher profits from off-airport sites is a critical trade-off for Hertz. This scenario involves weighing customer experience against operational costs and profitability. I'll analyze this trade-off by examining the business context, user impact, and potential strategies to optimize both convenience and profitability.

Step 1

Clarifying Questions (3 minutes)

• Based on recent market trends, I'm thinking airport locations might be facing increased competition. Could you provide insights into our market share at airport vs. off-airport locations?

Why it matters: Helps understand the competitive landscape and potential growth areas. Expected answer: Higher market share at airports, but growing competition. Impact on approach: Would influence resource allocation between location types.

• Considering user behavior, I'm assuming convenience is a top priority for business travelers. Can you share data on the breakdown of our customer segments between business and leisure travelers?

Why it matters: Different segments may have varying preferences for location convenience vs. price. Expected answer: Significant portion of business travelers, especially at airports. Impact on approach: Would inform targeted strategies for each segment.

• Looking at our cost structure, I'm guessing off-airport locations have significantly lower operating costs. Can you provide an estimate of the cost difference between airport and off-airport locations?

Why it matters: Helps quantify the potential profit increase from off-airport expansion. Expected answer: 20-30% lower costs for off-airport locations. Impact on approach: Would influence the aggressiveness of off-airport expansion plans.

• Considering our digital capabilities, I'm wondering about our current online booking and shuttle service efficiency. What percentage of our bookings are made online, and what's the average wait time for airport shuttles?

Why it matters: Digital solutions could mitigate convenience issues for off-airport locations. Expected answer: Growing online bookings, room for improvement in shuttle efficiency. Impact on approach: Would guide investment in digital solutions and shuttle services.