Travel agents should feel little impact – at least in the short term – from the upcoming merger of car rental giants Hertz and Dollar Thrifty.
Hertz Global Holdings entered an agreement earlier this week to acquire Dollar Thrifty Automotive Group, a strategic move that will expand Hertz’ power in the car rental market.
As part of the $2.3-billion deal, which took two years to pass shareholder and Federal Trade Commission scrutiny, Hertz sold its economy Advantage Rent-a-Car business to Franchise Services of North America.
No change in ‘near term’
“Travel agents and agencies should see no changes in the near term,” Richard Broome, senior vice president of corporate affairs at Hertz Global Holdings, told Travel Market Report.
“At this point, we have been focusing on the merger agreement and, now, securing U.S. government approval,” he said. “Only after we've completed the acquisition process will we be prepared to discuss new programs or changes which may affect the travel agent community.”
The merger is expected to proceed officially in mid-October.
Value-priced and corporate
A car rental industry consultant concurred that the merger should have little effect on agents going forward even though Hertz and Dollar Thrifty take a different approach to commissions.
“It really shouldn’t affect agents,” said Neil Abrams, president of Abrams Consulting Group, while noting that “Hertz stopped paying the travel agencies commissions some years ago and Dollar Thrifty has continued to pay.”
Dollar Thrifty’s program in which agents can earn up to $5 per rental under Dollar Thrifty’s Daily Dividends is likely to continue after the merger, according to Abrams.
Hertz is unlikely to change a formula which has made Dollar Thrifty one of the most successful budget and corporate rental companies, he said.
“[Dollar Thrifty] has continued to strongly support the travel agent community,” he said. “Agents are a big part of their business,” said Abrams.
Higher pricing could result
The merger is more likely to result in higher car rental pricing for consumers due to decreased competition, Abrams said.
“As a result of this deal, there will be three corporations with approximately 93% of the industry,” said Abrams. “The FTC has to be concerned about what this means for the consumer – will there be unfair use of pricing as leverage by this new collection of companies?”