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Hertz Spreads its Wings in Southern Africa

Zacks Equity Research

In a drive to enhance its operations in the Southern African region, the global car rental company, Hertz Global Holdings, Inc. (HTZ), recently entered into a partnership with Holiday Holdings International. The company’s strategic move is backed by the rising car rental demand in the region as well as improving economic growth.

As per the partnership agreement, Hertz has exclusively authorized Holiday Holdings as the General Sales Agent (:GSA) in the region with the responsibility to enhance rental reservations to more than 8,800 locations in 150 countries from South Africa, Namibia, Swaziland, Lesotho, Zimbabwe and Botswana.

The Zacks Rank #1 (Strong Buy) company believes that the Southern African region possesses enormous growth potential as evident from a 74% rise in reservations for Gulf countries in 2012 and 34% increase in reservations for Spain.  Reservations for Germany, France and United Kingdom also surged 27%, 13% and 7% respectively. Moreover, the deal is expected to furnish various synergistic and growth opportunities to Hertz, which will prove to be accretive to its top line.

Hertz is treading on the footsteps of its arch rival Avis Budget Group Inc. (CAR), which follows a core global strategy of collaborating with leading travel brands to solidify its customer base while creating additional demand. Earlier this month, Avis entered into a partnership with Taiwan High Speed Rail (“THSR”) to enhance its operations in Taiwan.

Hertz’s strategic move of expanding its business operations through partnerships and acquisitions along with a modest economic recovery, new market opportunities, cost containment efforts are expected to bode well for future growth.

Founded in 1918 and headquartered in Park Ridge, N.J., Hertz Global Holdings operates car and equipment rental businesses globally. The company, which competes with JTH Holding, Inc. (TAX) and Mac-Gray Corporation (TUC) reports through 2 segments - Car Rental and Equipment Rental.

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