This category covers establishments primarily engaged in the short-term rental of passenger cars without drivers.
532111 (Passenger Cars Rental)
Along with the travel industry, the passenger car rental business was negatively impacted in a post-September 11 environment. The conflict in the Middle East, the SARS virus outbreak, and political unrest in the early 2000s also contributed to a drop in travel in the United States. In 2000, the car rental industry took in $19.4 billion, which dropped to $18.2 billion in 2001. By 2002, revenue had dropped another 2 percent at $17.9 billion, the lowest in several years. Car rental companies were forced to cut down on their fleets, while at least one company filed for bankruptcy protection. As in other sectors, consolidation was a major trend, with several of the major car rental players merging to lower costs. Companies also raised car rental prices in order to see an increase in revenue. Analysts predicted a better year for the industry in 2003, with mild recovery and cautious growth expected.
The car rental industry—better known as the "Drive-Ur-Self" business in the early years—had its beginnings not long after the Ford Motor Company introduced the Model T automobile in 1908. An entrepreneur named Joe Saunders is known to have begun renting a secondhand Model T in Omaha, Nebraska, in 1916. He affixed a mileage meter to the left front wheel and rented the car for 10 cents a mile. His first customer was a traveling salesman who had a date with a local girl. By 1925 Saunders had car rental operations in 21 states. The Chrysler Company ran full-page ads boasting that Saunders had purchased $1 million worth of Chrysler automobiles. Saunders went bankrupt, though, during the Great Depression of the early 1930s.
In the early days of the industry, most Drive-Ur-Self cars were rented by local residents. The industry gained a shady reputation because rental cars were often used by bootleggers, bank robbers, and prostitutes. In 1952, The Saturday Evening Post estimated that as many as 90 percent of the cars rented during Prohibition were used for illegal purposes. The industry began to gain more respectability after the Eighteenth Amendment, which outlawed alcohol, was repealed in 1933.
In 1940 the loss of passengers to private automobiles prompted a group of railroads to form Railway Extension Inc., which franchised car rental dealerships in cities stretching from Chicago to New Orleans. The railroads provided space for car rental booths in stations and free telegraph service so passengers could wire ahead and reserve cars, which would be waiting for them when they arrived. The railroads also paid for the advertising. The American Drive-Ur-Self Association, controlled by Hertz, negotiated a less favorable relationship with railroads east of Chicago. Under the Hertz plan, car rental dealerships paid for their own advertising and telegraph service, and cars were not available on-site at the train stations.
During World War II, the U.S. Office of Defense Transportation (ODT) limited rental cars to 1,500 miles per month to conserve gasoline. The limit was cut to 650 miles per month in the Miami area when the ODT discovered that local residents were using rental cars to circumvent gas rationing in the use of private automobiles. Rental car dealers also were not allowed to buy new or replacement cars for their fleets during the war and were required to maintain a record of each rental, including the person's name, address, occupation, and purpose of trip. Rates were frozen at 1942 levels, which averaged between 14 and 18 cents per mile for the first 50 miles. Government agencies and industries with war material contracts often monopolized available cars.
Airline Service. After the war, the car rental industry grew rapidly, carried along by the expanding economy. The railroads revived their car rental plans in 1947, establishing dealers in some 300 cities. But the real growth coincided with a boom in airline passenger service. In 1947 the Hertz Drive-Ur-Self System, then with about 2,300 rental cars nationwide, opened operations at airports in Atlanta and Milwaukee. That same year, Warren Avis, then president of Frost-Avis Inc., a Ford dealership in Detroit, formed the Avis Airline Rent-A-Car System.
Avis was a former Army Air Corps flyer who recognized that airplanes would soon replace passenger trains as America's favorite form of travel. He started with car rental booths at airports in Detroit and Miami and by 1949 had licensed use of the Avis name to rental agencies in New York, Chicago, Dallas, Washington, D.C., Los Angeles, and Houston. More aggressive than Hertz, Avis also arranged for American Airlines and Eastern Airlines to include information about Avis in passengers' ticket envelopes. In 1949, Business Week reported, "this kind of business is operated on an exclusive franchise basis; the first firm in has a big advantage. At present, Avis seems to have a substantial lead."
Hertz, however, was not long in responding. By 1952 Hertz and its franchised dealers were operating at more than 120 airports. In 1953 General Motors Corp. sold the business back to John Hertz, then chairman of the Omnibus Corporation, which had shed itself of bus operations to concentrate on car and truck rentals. The price was $10.8 million. The following year Hertz opened operations in 50 additional airports and 20 more railroad stations. The company also began buying up franchised dealers. By 1955 the Hertz Rent-A-Car System encompassed nearly 1,000 company-owned or licensed dealers with total revenues of $90 million. Avis had 850 dealers and $35 million in revenues.
In 1956, Hertz and National Rent-A-Car, then the third largest rental car operation in the country, cracked the exclusive franchise that Avis had held with the Miami International Airport for eight years. This opened up the lucrative Florida vacation business.
Price Wars. By the early 1960s, Hertz, Avis, and National were entrenched as the industry leaders. However, there were hundreds of independent companies, many with only a few cars, eager to cash in on the growing market. In 1965 there were more than 135,000 rental cars available in the United States. The industry at that juncture was a $450-million-a-year business, an increase in value of 80 percent from only three years previously.
The average Hertz or Avis rental in a resort city such as Miami or Las Vegas was $10 a day, but the frugal renter could find rates as low as $1. These discount companies often purchased used cars or replaced new cars less often. They also saved by locating their businesses near targeted airports, thus avoiding fees the leaders paid for on-site locations. Budget-conscious vacationers did not seem to mind the inconvenience. Many discount companies, however, were fly-by-night operators and managed to give the car rental industry a bad name before dropping by the wayside. But the success of reputable companies such as Budget Rent-A-Car eventually forced the industry leaders to cut their rates. Avis began offering compact, British-made Ford Cortinas for $3.95 a day and 9 cents a mile. Hertz and National also began offering lower rates on smaller cars. The price wars lasted until 1985, when car rental companies suffered through one of the worst financial years in industry history. After a few years of uneasy truce, the price wars were revived in the early 1990s.
Energy Crisis. The industry was detoured by the energy crisis in the early 1970s. In 1973, federal regulations limited the amount of gasoline available to car rental companies to 1972 levels. This forced rental companies to replace full-size cars with more fuel-efficient vehicles. Even then, many rental cars were sent out with half-empty gasoline tanks. Hertz survived by buying a fleet of ten tanker trucks to shift supplies of gasoline from city to city to deal with local shortages.
The industry also moved into the used-car business in the early 1970s. When it came time to update their fleets, rental companies had traditionally sold their cars to wholesalers, who auctioned them off to used-car dealers. However, the rising cost of new cars and a decision by automakers to curtail fleet discounts made it more attractive for rental car companies to sell their cars directly to the public. In 1975, Kenneth Krabbe, then vice president of Dollar-Rent-A-Car, told Business Week, "You've got to run a rent-a-car business on what you can sell. If you don't make money there, you're through."
Hertz was the first rental car company to move into retailing in a serious way. Hertz opened its first small showroom in southern California in 1971, and by 1974 the company had more than 100 used-car outlets across the country. By 1980 Hertz had become the largest usedcar dealer in the United States, selling 70,000 cars at 139 locations. Frank Olson, then chairman of Hertz, told Forbes that the automakers "did us a favor. They put us out of a lazy man's business." Avis, which unlike Hertz had previously leased most of its cars to reduce financial risk, began buying its cars outright in 1978 so they could then be sold in the used-car market. By 1987 Avis was selling about 50,000 used cars annually. In 1992 rental car companies sold more than 1.5 million used cars.
Unfair Practices. In 1975 the Federal Trade Commission (FTC) accused Hertz, Avis, and National of conspiring to monopolize the airport car rental market. The FTC said the companies, then armed with 96 percent of the airport business, pressured airport authorities into establishing requirements for on-site operations that smaller companies could not meet, such as offering a nationwide reservations system. Off-airport car rental companies were not even allowed to advertise in some airports. An executive at the Philadelphia International Airport told Business Week, "If you're getting 10 percent from one company and 0 percent from another, you don't want to hurt those giving you the money." The FTC also accused the major car rental companies of illegal price fixing.
The case was settled out of court in 1976, without any of the companies admitting guilt. However, they agreed not to engage in any predatory practices in the future. As a result, smaller car rental companies found it easier to negotiate on-site locations at major airports. Budget was especially aggressive, more than doubling its share of the airport car rental business from about 7 percent in 1976 to 17 percent in 1982. In 1983 Olson told Fortune, "Short-term we have to worry about Avis. Long-term it's Budget."
The increased competition also led rental car companies into a battle of give-away programs. The leaders—Hertz, Avis, National, and Budget—offered everything from athletic equipment and luggage to televisions and airline tickets for repeat customers who piled up points. In 1983 Fortune reported, "Unintentionally but predictably, the industry has imprisoned itself in a campaign that is horrendously expensive, poisonous to profits, and difficult to stop." By 1985 the companies were financially battered and bruised, but market share had stayed about the same. The companies called an unofficial truce.
Restructuring. The 1980s saw a major restructuring of the car rental industry, as automobile makers purchased controlling interests in the leading companies. In 1987, an investment group headed by Ford Motor Co. paid $1.3 billion to buy Hertz from the Allegis Corporation, which also owned United Airlines. Ford later sold a 20 percent share to Volvo North America Corporation, retaining a 60 percent interest. Ford purchased Budget in 1988. Avis was sold five times between 1983 and 1987, finally ending up in the hands of an employee stock ownership plan (ESOP). In 1989 General Motors Corp. purchased a 25 percent share of Avis. General Motors also purchased a 45 percent share of National in 1988, later increasing its share in that company to 80 percent. The Chrysler Corporation owned Pentastar Transportation Group, which operated General Rent-A-Car, Dollar Rent-A-Car, Thrifty Rent-A-Car, and Snappy Car Rentals.
The manufacturers' interest in the rental car industry stemmed from the fact that rental companies were their biggest single customers and purchasing the company locked in sales. Each of the four major rental companies agreed to purchase 70 percent or more of their fleets from their auto company owners. In 1988, Ford sold more than 100,000 cars to Hertz; GM sold about 85,000 cars to Avis and National; and Chrysler sold about 75,000 cars to its car rental firms. When Mitsubishi Motor Sales of America purchased Value Rent-A-Car in 1991, it replaced the fleet's 25,000 mostly Ford automobiles with its own. Car rental companies accounted for about 10 percent of all domestic auto sales in the early 1990s.
Rental cars also provided manufacturers with an effective marketing tool. Millions of potential buyers were exposed to the car makers' newest models every year. Renters also helped eliminate glitches in new cars by providing feedback to the manufacturers. Car makers generally offered to buy their cars back from the rental companies after four to six months and often shared the cost of advertising if the ads mentioned the manufacturer. In the early 1990s car makers began to request that rental cars be kept in service longer, from six to nine months, because the "almost new" fleet cars were cutting into sales of new automobiles.
Issues in the 1990s. The booming economy of the mid-1990s erased any lingering effects of the previous recession, which had limited air travel and, thus, airport car rentals. Industry-wide revenues jumped from $13 billion in 1995 to nearly $15 billion in 1996. The industry closely watched the economic indicators for any signs of a new recession, but several more immediate issues dominated the headlines in 1996-97.
In March 1997, New York state's highest court ruled that rental car companies can not refuse to rent cars to young drivers solely because of age. As the Wall Street Journal reported in its story, most of the major car companies, including Hertz, Avis, and National, routinely refused to rent to drivers under 25 years old, citing higher accident rates. The decision by the New York Court of Appeals was the first major ruling on what had been an industry-wide practice for decades, legal experts said. The rental car companies criticized the decision, saying it made them too vulnerable to a dangerous group of drivers. Consumer advocates, however, praised the decision. It is now standard practice for rental companies to rent to "under-age drivers," but to compensate their risk by charging a higher rate.
Avis also faced a barrage of bad publicity over a race discrimination case involving one of its franchise owners in the South. The franchisee, who owned several Avis outlets, had allegedly instructed his workers to refuse rentals to African Americans. When the practice was exposed, it received widespread publicity on the television program 60 Minutes and elsewhere. Avis vowed to end the practice immediately, although bad feelings lingered because the practices had reportedly been continuing for several years before Avis moved to halt them.
In early 1997 there arose another controversy, this time over bank debit cards. Hertz, Avis, and other companies decided not to accept debit cards as payment, despite their similar appearance to credit cards. As The New York Times reported, for years the rental companies used possession of a credit card as a crude way to weed out potentially risky renters. But this test no longer works with debit cards; because no loan is involved in a debit card transaction, banks will now give them to nearly everyone with a bank account. Hertz spokeswoman Lisa LoManto told the Times that Hertz was entitled to a certain level of confidence because in car rental, unlike almost any other business, the customer is given total control of a vehicle worth $20,000 or more. Still, it is certain that with more than 60 million bank debit cards now in circulation, the decision not to accept them will lead to some confusion and frustration at rental agency counters.
Meanwhile, automakers are also expected to continue playing a major role in the development of the industry. Automakers influence what makes and models of rental cars are available, how long they stay in service before being replaced, and the direction of car rental advertising. During 1996, automakers sold almost 1.5 million vehicles to the rental companies, a volume equivalent to about 10 percent of total production by "the Big Three." In 1991 Vincent A. Wasik, then chairman of National, told Automotive News, "With the substantial ownership positions in the major rental car companies (GM, Ford and Chrysler) the game is really being played at a different level. Customer satisfaction through superior service is now the 'product' that makes the difference."
The mid-to late 1990s saw another wave of ownership changes and consolidation. In 1996 HFS, Inc., a New Jersey-based company with significant holdings in lodging and real estate, took over ownership of Avis, Inc. Republic Industries announced that its intention to purchase Alamo Rent-A-Car for $625 million. In 1994, Ford Motor Co. went from 49 percent ownership in Hertz to 100 percent. That same year, Chrysler sold Snappy Car Rentals to company management and the Jacobson Partners. As Jon LeSage, executive editor of the trade journal Auto Rental News wrote in his 1997 Fact Book, "Car rental is a mature industry … dominated by a small number of major companies. While it is not the most profitable industry in the world these days, there are several advantages in controlling part of the market for the companies and investors who are buying car rental companies."
Overall, the industry was expected to remain very competitive, with many of the leading companies becoming more aggressive in the leisure market. Unlimited mileage offers became a common promotional weapon in the leisure market. There also were increasingly fewer distinctions between on-airport and off-airport car rental companies. Major airports had become so congested—and rental fleets had become so large—that on-site rental companies were forced to shuttle customers to distant car lots. Off-airport companies were able to offer similar service by running shuttle buses between airport terminals and their own locations. Conversely, off-airport rental companies began to lose their financial advantage, as airports introduced access fees for airport shuttle buses.
Like many U.S. industries, the passenger car rental sector was greatly affected by the events of 9/11, which led to fewer Americans traveling and, thus, renting cars. Further challenges in the early 2000s included the war with Iraq, political unrest, high unemployment rates, and lessened travel due to the SARS virus outbreak. From a 2000 high of 19.4 billion industry-wide, 2001 revenues dropped to $18.2 billion and sunk a further 2 percent in 2002 to $17.9 billion, slightly higher than 1999 levels. Accordingly, car rental companies cut back their fleets. There were 1.82 million cars in service in 2000, which dropped to 1.74 million in 2001 and 1.64 million in 2002.
By 2003, the non-airport market had become more important to this industry. The non-airport market helped offset the loss from fewer people traveling by plane. Travelers who used non-airport car rental agencies marked the trend in travelers using rental cars for short-haul trips. The average price of a rental car in 2002 was $58.52. A midsize rental car averaged $55.88, and a full-size car, $61.16. Baltimore was the city that ranked as the most expensive city to rent a car, averaging $86.24 in 2002, whereas Rochester, Minnesota, was the least expensive in the top 100 ranked, averaging $39.32 for a rental car.
Booking rental cars online was another important industry trend in car rental and travel in general. Of the $12.9 billion made in online travel bookings in 2000, 9 percent came from car rentals. National Car Rental introduced its "QuickRent" program in 2003, which allowed customers who booked online to avoid stopping at the counter and go straight to the lot and choose a car from the class reserved.
In an effort to cut costs and raise revenue, mergers and partnerships abounded in the early 2000s. Alamo and National brands merged at many counters in the United States, whereas Dollar Thrifty Automotive Group announced it would combine its two rental car units. Thrifty also partnered with Walmart.com in 2002, with customers able to book their cars online and pay with Wal-Mart credit cards. In 2002, Alamo teamed with Walt Disney Co. and became the official rental car company of Walt Disney World and Disneyland resorts. National had previously been the official rental car of Disney for 22 years. Avis teamed with Sears in 2002, with Sears converting all its Sears Car Rental locations into Avis Rent-A-Car operations that would accept Sears credit cards.
Although some analysts saw the beginnings of a recovery within the industry in mid-2002 and 2003, it was difficult to predict how the industry would fare in the short term. Most agreed there would be moderate growth and some slow expansion in 2003.
In 2002 the three leading companies in the car rental industry were: Enterprise Rent-A-Car, Inc. (27 percent, with a 2002 fleet of 525,000 cars); Hertz Corporation (20 percent, with a 2002 fleet of 525,000 cars); and Alamo/National, (16 percent, with a 2002 fleet of 150,000 cars). Others dominant in the industry included Avis Rent A Car, Inc., now a subsidiary of Cendant Corp., (more than 200,000 cars); and Budget Group, Inc., also bought by Cendant in 2002. These companies accounted for more than 90 percent of the airport and near-airport car rentals. Hertz, Avis, and Budget also had strong international presences. Hertz alone had 500,000 cars for rent in 140 nations.
Enterprise Rent-A-Car, Inc. Enterprise represents the greatest growth story of the past few years. Since 1993 it has nearly doubled the size of its fleet and is now the largest car rental company in the United States. Its strategy was to leave the highly competitive airport rental market to the other companies and concentrate on the non-airport market. It operates more than 2,600 outlets (Hertz operates about 1,200), many near auto repair shops, so that Enterprise could rent to customers whose vehicles were in the shop for work. With the exception of Alamo, many of the major airport and near-airport car rental companies are owned wholly or in part by automakers, although the amounts of ownership continue to vary as firms buy or sell controlling interests. In 2002, Enterprise had sales of $6.5 billion and employed 50,000 workers. It offers lower rates than its competitors and is the only company to target local rentals.
Avis. With the rise of Enterprise, Avis Group Holdings, Inc. has slipped from its long-time position as second largest car rental company in the United States to third. Avis was bought by the Cendant Corporation in 2001. Avis, with a fleet of some 220,000 automobiles, had sales of $2.5 billion in 2002 and employed 19,500 workers. With the majority of its business comprised of business rentals, Avis made plans to draw more of the leisure market. In an effort to bolster revenue, the company opened test kiosks in several California locations that sold products for travelers, including maps, batteries, and snacks.
Originally known as Avis Airlines Rent-A-Car System, the company was founded in 1946 by Warren Avis, who owned an automobile dealership in Detroit. Avis started with rental operations at Detroit's Willow Run Airport and Miami International Airport. He then licensed the Avis name to independent car rental companies to serve airports in New York, Chicago, Dallas, Washington, D.C., Los Angeles, and other cities. In 1948, Avis began to open offices near hotels and business districts and dropped "Airlines" from the company name.
Avis sold Avis Rent-A-Car System in 1954 to Richard S. Robie, operator of a car rental business in New England, for $8 million. At the time, there were 185 Avis locations in the United States and Canada, and working agreements had been established with local companies throughout Europe. Under Robie, the company developed the first nationwide plan for one-way rentals and introduced its own credit card. Robie sold the business in 1956 to the Amoskeag Company, which created a holding company—Avis, Inc.
Avis grew rapidly in the late 1950s and early 1960s, expanding its fleet from 1,200 to 7,500 vehicles, but the changes in ownership that would characterize Avis continued. Amoskeag sold the business in 1962 to Lazard Freres & Co., a New York investment banking firm. In 1965 Avis was purchased by the International Telephone & Telegraph Corporation (ITT). Under ITT's leadership, Avis strengthened its presence in Europe, where it became the leading car rental company. Avis also created the first online computerized car rental reservation system in 1972 with the introduction of the Wizard System. ITT was ordered to divest Avis in 1972 as part of federal antitrust proceedings. When ITT was unable to find a buyer, Avis became a public company in 1974, with 52 percent of the stock held by a court-appointed trustee.
In 1977 Norton Simon, Inc. purchased control of Avis for $174 million. Revenues had grown to more than $673 million, with Avis accounting for about 25 percent of the car rental market. Under Norton Simon, Avis was riddled by dissension from its licensed dealers. The dissension became public in 1982 when Avis launched an advertising campaign with Norton Simon chairman David Mahoney as spokesman. The franchise group took its $5 million advertising budget to a different agency and created its own ads promoting low rates. In the confusion, Hertz widened its lead over Avis. National and Budget also gained market share. Avis posted a $50 million loss in 1982.
Changes in ownership continued in the 1980s. In rapid succession, Esmark, Inc., purchased Norton Simon in 1983, and Beatrice Company acquired Esmark in 1984. In 1985 Kohlberg Kravis Roberts & Company acquired Beatrice in a leveraged buyout. A year later, a management group and the Wesray Corporation purchased Avis for $265 million and the assumption of $1.34 billion in debt. In 1986 Wesray disposed of about half of Avis' European rental operations and its leasing operations in America. In 1987 Wesray sold the rest of Avis to an employee stock ownership plan for $750 million and the assumption of $1 billion in debt. General Motors purchased its 25 percent share of Avis in 1989. These changes continued with the HFS deal in 1996.
Hertz. In 2002, Hertz operated a worldwide fleet of some 525,000 vehicles at 7,000 company-owned or licensed car rental locations in 150 countries and reported sales of $4.9 billion and 28,900 employees. In 2002 the majority of Hertz's sales came from the airport rental market, both business and leisure. Ford Motor Company bought all remaining shares of Hertz, the company it spun off in 1997, in 2001 and is now its full owner.
Hertz had its beginnings in 1908, when Walter L. Jacobs founded the Rent-A-Ford Co. in Chicago. By 1923 Rent-A-Ford had a fleet of 200 cars and $1 million in revenue. That same year Jacobs sold the business to John Hertz, then president and owner of the Yellow Cab and Yellow Truck and Coach Manufacturing Co. Hertz renamed the business the Hertz Drive-Ur-Self System. Hertz converted the rental fleet to the oversized sedans used by Yellow Cab, but customers balked at renting the bulky automobiles, and the fleet was switched back to regular passenger cars. General Motors Corp. purchased Hertz in 1926 and sold it to the Omnibus Corporation, then headed by John Hertz, in 1953. Omnibus changed its name to the Hertz Corporation in 1954. The RCA Corporation purchased Hertz in 1967.
In 1985 Hertz was purchased by UAL, Inc., the owner of United Airlines, which planned to expand into other travel-related services. UAL, however, which changed its name to the Allegis Corporation, abandoned the strategy within months. Allegis sold Hertz in 1987 for $1.3 billion—more than twice what it paid in 1985—to the Park Ridge Corporation, a holding company created by Ford and Hertz management.
In 1988, Hertz pleaded guilty to defrauding insurance companies and motorists by inflating the cost of repairs—or charging for repairs that were never performed—after cars were damaged in more than 100,000 accidents between 1978 and 1987. Hertz was ordered to pay a fine of $6.85 million—the largest fine ever imposed at that time in a criminal consumer fraud case. The company was also ordered to pay restitution of more than $13 million to the motorists and insurance companies.
In 1999, Hertz announced plans to offer a navigation system in 50,000 of its rental vehicles. The system is offered in several different vehicle makes and models.
Budget. Budget Group had car and truck rental operations at more than 5,000 locations in the United States in 2002 with 2001 sales of $2.16 billion and 11,400 employees. Ford was a minority owner in the company until it was wholly acquired by Cendant Corp. in 2002.
Budget Rent-A-Car was founded in Los Angeles in 1958 by Morris Mirkin, who started with a fleet of 10 cars. The Budget Rent-A-Car Corporation was started in 1960. Initially, the company focused on the discount leisure market with its off-airport locations, but its image also appealed to economy-minded small business travelers. Budget began pursuing corporate accounts aggressively in 1989. Budget promoted its cars with the advertising tagline "The Smart Money Is On Budget."
Hoping to increase sales and visibility, Budget began offering its cars for price bidding online in late 1999. In this way, consumers can comparison shop without going to another rental company.
Alamo/National. With rentals waning in a post-9/11 environment, parent of Alamo and National, ANC Rental Corporation, filed for bankruptcy protection in 2001. To cut costs, ANC combined the operations of Alamo and National brands at the end of 2002. ANC had total revenues of $2.3 billion in 2002. Alamo/National was also the leading car rental company in Florida and the largest independent car rental company in the country. In 2002, Alamo had a fleet of 150,000 automobiles in 550 locations worldwide. Leisure customers account for 75 percent of Alamo's market share.
Alamo was founded in 1974 with a fleet of 1,000 cars and operations in Miami, Fort Lauderdale, Tampa, and Orlando. The name "Alamo" was chosen because it placed the company ahead of its major competitors in the telephone directory. Alamo initially focused on the discount rate leisure market, cultivating relationships with travel agents, and operated solely at off-airport locations. Travel agent referrals continued to account for more than 50 percent of Alamo's business in 1993.
Alamo opened its first on-airport site in 1981 in Atlanta and began moving into business rentals aggressively in the mid-1980s. In 1983 the company also opened a 77,000-square-foot rental plaza near Orlando International Airport. Alamo claimed that the plaza was the largest car rental facility in the world.
The crimes against tourists in Florida in 1993 rocked Alamo, the rental leader in the state. The family of a slain German tourist eventually sued Alamo for $10 million, charging that the company had been negligent in complying with the Florida governor's executive order concerning the removal of identifying marks from rental vehicles.
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