Hertz decides to turn-this-thing-around
Steve’s breakdown: A turn-a-round plan like this one will most likely involve an advertising review of some kind. In fact, they said it: “Hertz is focused on four areas for growth: fleet, service, marketing and technology.”
ESTERO, FL: Hertz is getting back to basics as part of its turnaround strategy.
In a call with company analysts Tuesday, new CEO Kathryn Marinello said her immediate focus is to get the troubled rental car giant’s U.S. operations back on track.
“Stateside, we’re going to be taking a back-to-basics approach to generate revenue growth,” she said.
The approach, she said, is a core strategy in any turnaround situation. It’s easier said than done, but the former General Motors executive said she is confident that with her automotive and operating experience and leadership skills, “we can get it done here.”
Since joining Hertz in early January, Marinello has streamlined the reporting structure, giving her more direct interaction with managers — and a greater ability to fast-track decision-making and to quickly change course if necessary.
She has put together a team of fleet, operations, pricing and sales and marketing leaders who report directly to her. One goal is to ensure they’re all working toward common objectives and holding themselves and their teams accountable.
Hertz is focused on four areas for growth: fleet, service, marketing and technology.
“Our mission is to be the preferred global rental car company, driven by people who care and who deliver the cars our customers want,” Marinello said.
“If we can get service and product quality and availability right, revenue will quickly follow,” she said.
Growth will require investment, but Marinello said she is not ready to estimate the cost of those investments, even in the short term.
“I’m not prepared to quantify the level of investment we plan to make this year because, candidly, it’s too early in my tenure to know with certainty,” she said.
The overarching goal is to win customer preference through customer satisfaction, Marinello said.
The company is taking multiple steps to improve satisfaction, including rolling out a more flexible Hertz Ultimate Choice offering, which allows customers to choose their cars on site with no wait.
By the end of the year, Hertz expects to expand the choice program to all airport locations nationally.
Other improvements include:
- newer cars that better match customers’ demands;
- better investments in recruiting and training employees;
- a new employee incentive program that rewards best-in-class service.
Strategic marketing is a key element in revenue growth, and so are technology investments, which could not only improve the efficiency of Hertz’s operations but enhance customer experience, Marinello said.
“It’s clear we have lot of work ahead, a lot of hard work in front of us, but it’s all within our control,” she said.
Until Marinello gains more clarity about and experience with day-to-day operations, she said the company won’t release financial projections for the year. “It wouldn’t be credible at this point,” she said.
She is looking to make investments today that will create long-term value.
“That doesn’t mean we have to wait three years to see progress,” Marinello said.
The conference call followed Hertz’s release of its fourth-quarter and year-end results for 2016 on Monday.
Hertz reported a fourth-quarter loss from its continuing operations of $438 million, or $5.28 per share, which included $254 million in impairment charges. That pushed its full-year losses to $474 million, or $5.65 per share.
On an adjusted basis, the company lost $59 million, or 71 cents a share, in the quarter, but it still came out positive for the year with earnings of $41 million, or 49 cents a share.
The quarterly and yearly earnings missed Wall Street expectations, which didn’t factor in the steep impairment charges or other one-time costs.
Hertz faced many challenges in 2017, including problems with fleet mix, lower pricing and higher vehicle depreciation costs.
“While 2017 will continue to be a transition year, we expect progress on the fleet and service actions will ramp up steadily,” Marinello said.
“This is a resilient company with great brands and great people, the value of which cannot be discounted,” she said. “We’ve got a solid foundation to build on.”