Enterprise Holdings (“EH”), one of the largest privately held companies in America, owns and operates more than 1.7 million vehicles in over 70 countries worldwide. With annual revenue of $19.4 billion, more than 91,000 employees and over 9,000 airport and neighborhood locations, Enterprise is the largest global car rental service provider by revenue, employees and fleet size. [i]
Enterprise Holdings offers customers a “total transportation” solution primarily through three EH owned car rental brands that serve different customer segments at airports and neighborhood branches:
- National: Premium brand that appeals to business travelers who value convenience, high quality service and loyalty reward programs
- Enterprise Rent-A-Car: Affordable neighborhood-market brand that attracts “home city” renters [ii]
- Alamo: Affordable brand that targets budget-conscious travelers
EH also operates a Car Sales division which allows the company to sell its lightly-used rental fleet directly to consumers and a Fleet Management Business that helps clients acquire, maintain and monitor their commercial vehicles.
Best-in-Class Back Office Integration
EH’s commitment to a three brand portfolio allows the company to provide distinct car rental experiences while benefitting from integrated back-office operations. The company accomplishes this by employing a number of innovative tactics:
- Co-location: EH proactively co-locates Enterprise, National and Alamo at airports in order to allow the brands to “share” cars when demand at one outstrips the others [iii]
- To facilitate sharing, EH deliberately removes brand identification from its vehicle fleet allowing for seamless vehicle reallocation
- The proximity of co-located lots reduces wait times for customers who (unknowingly) are being allocated a vehicle from a different EH brand
- Fleet Management: By proactively sharing its fleet, EH allows managers to balance weekday business traveler demand at National with the influx of vacationer/leisure customers at Alamo on weekends. This competitive advantage reduces overhead costs and enhances inventory management (this also applies broadly to optimizing maintenance, fuel and IT costs across brands)
- Leverage at Airports: Prior to the acquisition of Vanguard (the parent company of National and Alamo) in 2007, Enterprise struggled to grow its airport footprint and obtain good locations at major hubs. The volume of sales traffic from operating three brands gives EH leverage to negotiate prime locations at airports
Enterprise Rent-A-Car’s leading position in the “home city” rental market and its distribution network of more than 5,500 offices gives EH unrivaled proximity to potential customers (i.e., there is an Enterprise with 15 miles of 90 percent of the U.S. population). [iv] Controlling this network has allowed Enterprise to develop a supply chain that leverages its fleet size to compete in all aspects of the “local transportation” ecosystem. Some unique advantages include:
- Data Driven Insights into Local Markets: Enterprise operates a propriety Automated Rental Management System (“ARMS”) to streamline communication between collision repair centers, insurers, local Enterprise branches and drivers after an accident. By tracking daily repair cycle times, vehicle status and overall collision shop performance, Enterprise gives its channel partners unique local market data while winning new customers [v]
- Agile, Local Fleet Inventory Management: Enterprise’s local network allows EH to utilize its fleet more efficiently than rivals by providing neighborhood-based services including van pooling, car sharing and hourly rental programs
Enterprise operates a sophisticated customer satisfaction tool across its three brands. The Enterprise Service Quality Index (“ESQi”) allows EH to measure and proactively manage its customer service experience. ESQi’s insights reinforce EH’s commitment to customer service as a core pillar of its business. According to Andrew Taylor, the company’s founder, ESQi shows that “customers who were fully satisfied with our [EH’s] service were three times as likely to rent from us [EH] again.” As a result, the company uses ESQi scores as an important component of compensation and promotion for mangers across its brand portfolio. [vi]
Since EH is a private company its profitability profile and financial statements are not available. Nonetheless, the company has clearly thrived in recent years. EH’s portfolio of brands now accounts for nearly 36 percent of the U.S. airport market versus 28 percent in 2007.[vii] Furthermore, 2015 marked the fourth consecutive year that Enterprise, National and Alamo placed in the top three spots of J.D. Power’s North American Rental Car Satisfaction Survey. [viii] EH’s sustained success can be attributed to its complementary business and operating models that allow management to provide a high level service to customers by leveraging EH’s economy of scale and integrated logistics and back office operations.
For those interested in learning more about Enterprise’s acquisition of Vanguard in 2007, see below:
[i] See company website: https://www.enterpriseholdings.com/Default.aspx
[ii] Home city rentals are best defined as people who need a rental car while their own is being repaired.
[iii] Andrew C. Taylor. “How I Did It…Enterprise’s Leader on How Integrating an Acquisition Transformed His Business.” Harvard Business Review. Sept 2013: 41-44. Print.
[vi] See endnote iii