Olympic Rent-A-Car US case study
Student: JosÃÂ© Filipe Sousa Carvalho
Olympic is a US rent-a-car company facing some changes in the market it operates. A competitor company (Enterprise) is changing its loyalty program. Olympic managers have to evaluate the impact of those changes and to take actions in order to respond correctly to those changes without losing market share and if possible taking advantage of the situation. The aim of this study is to evaluate those changes and to propose a recommendation to respond to these market changes.
The car renting industry in US is a $24 billion industry dominated by 4 big players, Enterprise, Hertz, AVIS and Olympic with the following market revenue shares: Enterprise is the dominant player with 50% share ($12 billion) followed by Hertz with 24%, AVIS with 14%, Olympic with 7% and the other 5% are shared by smaller players.
This business is heavily dependent of the overall state of the economy and since the global crisis of 2008 were there was a 6,5% break in total revenues, the revenues are recovering since 2009 growing between 2 and 3% every year.
This revenue growth is due to the growth of prices rather to the growth in the number of clients.
There are 2 big markets for the rent-a-car business, the Airport rentals and the Local rentals.
The airport rentals contribute with 50% of the total revenue ($12 billion) and are divided into leisure and business clients. Costs are higher due to fees paid to the airports that consist in 10% of the revenue plus the fixed fees for counters.
The local renting contributes with the other 50% ($12 billion) and the main clients are insurance companies. The counters are located at car dealerships and repair shops. Enterprise and Hertz are the main...