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Andre Haddad, Turo CEO, joins Yahoo Finance to discuss the car rental shortage and outlook for the car rental industry.
KRISTIN MYERS: Well, anyone that has tried to rent a car lately knows that even if you are lucky enough to find a car, you're going to be paying an arm and a leg for it. But there is a solution, and that is the Airbnb of car rentals. And that's called Turo. We're joined now by Andre Haddad, CEO of Turo.
Andre, great to have you with us. As I just mentioned, Turo is a peer-to-peer platform for renting cars. Curious to know what kind of growth the company experienced over the last year, especially as these car rental companies have not been able to keep up with the demand that they've been seeing as more and more people have been taking those road trips and have started to travel again.
ANDRE HADDAD: You know, we're uniquely positioned to alleviate this rental car crunch, because our hosts have already cars that they own. And you know, they're already leveraging this underutilized asset, which is the car. As you know, cars are idle the vast majority of the time. So we're uniquely positioned to help alleviate this rental car crunch, which is making travel a lot harder for many people.
And our hosts are telling us that their business is really booming thanks to the surge in travel, as well as the sky-high rental car prices. So we're super excited to see the hosts building their businesses. We have many that have seen their earnings just multiplied by a factor of 10x between January and June of this year. So it's pretty amazing. We've got hosts in Hawaii in particular who are seeing incredible boom in their business. But it's frankly a phenomenon that we're seeing across the country. So we're just delighted to be able to provide an alternative for travelers, and also an exciting opportunity for people to make money with their cars.
ALEXIS CHRISTOFOROUS: Yeah, I know that Kristin, you had personal experience with this, because you were in Hawaii recently and I know that you were saying the rental cars were out of control, the prices for rental cars.
KRISTIN MYERS: It was a lifesaver. It was a lifesaver, Alexis, honestly. Andre, I'm so grateful that I discovered Turo, because I don't know if I would have been able to afford going to Hawaii without that platform and without that service.
ANDRE HADDAD: Well, wonderful to hear. Thank you for being a customer.
ALEXIS CHRISTOFOROUS: I've got a practical question, not having used your service. I'm just wondering how insurance works. I mean, you know, if you have your car sometimes you go, well, no, I don't want so-and-so to drive it. They're not on my insurance. What do you do with a complete stranger using your car, and how do you know that they have a good driving record?
ANDRE HADDAD: That's such a great question. It's like the first question people ask me when I tell them about Turo, so thanks for asking it. You know, we solved the insurance questions. We, with our partner Liberty Mutual, provide the insurance for our hosts and our guests. So you don't have to worry about your personal coverage. You don't have to talk to your insurance company if you're thinking of sharing your car. You just get the coverage directly from our partner, Liberty Mutual, here in the US, and other partners around the world where we have business.
And so it works like the normal insurance. When the car is booked by one of your guests and they're driving it somewhere else, it's at that point in time where the Turo insurance policy covers both you, the host, and your guest. It takes precedence to your personal insurance coverage.
KRISTIN MYERS: So Andre, as you were mentioning, business is booming for you guys throughout this pandemic. But it is also booming for a lot of the hosts that are renting their cars. But what are you anticipating, as we were just discussing in the last segment, about how those daily case counts are dropping? More and more people are getting out there.
I'm sure a lot of these rental car companies like Enterprise and Hertz are going to start buying back some of their cars to really make sure that their supply can meet demand. So what are you anticipating for Turo going forward once we really start coming out of this pandemic? Are there concerns that that growth, that the demand is going to drop as folks perhaps head back to some of those big-box car rental companies?
ANDRE HADDAD: You know, there is clearly, I think, a unique moment in time now with the rental car crunch, the inability for the large fleet car operators like Enterprise and Avis and Hertz to scale up their fleet because of the shortage of cars and shortage of microchips. And you know, I think we've talked quite a bit about these issues on the show. So we do expect that situation to resolve itself over time, although we don't expect it to be resolved very quickly. We think that this situation is going to be challenging for the rental car giants for the next 6 to 18 months.
So during that time, we're going to continue to position ourselves to be a great alternative and a great way for travelers to find other options that are more attractive. And frankly, we're super delighted to allow our hosts to drive their revenue and drive their earnings during that period of time. And what we do know is that once a guest has connected with one of our hosts, they become really loyal to the platform. They tend to use us time and time again. And so this is an exciting opportunity for our host to acquire a lot of new customers, and then to make them return customers over the next many years. And so we're overall very optimistic about the future.
ALEXIS CHRISTOFOROUS: What about your business model, Andre, and your revenue stream? How are you making money? And when you think about innovating in your space, what are some things that we can look forward to at Turo?
ANDRE HADDAD: The way our business model works is that since we intermediate the booking between the host and the guests, we charge a fee to both hosts and guests. And that's how we are able to build our business, build the platform, hire all the people that are building those innovations, that are handling the customer service questions and emails and calls that we receive and make it a successful, profitable business for us as well. And so that's how we monetize the business.
In terms of innovations, we have a very exciting philosophy around innovations in general, which is just trying to make it as easy as possible to earn money with your car when you're the carowner, as well as make it as easy as possible to get a car when you need one. And so we have a very exciting product pipeline ahead. Stay tuned for more announcements around the innovations. But the philosophy will not change. It's just going to make it super easy for hosts to start their business on Turo, as well as scale it and add a second or third or fourth car, and then for guests to be able to find us across all of the destinations of their travel over the next many years.
ALEXIS CHRISTOFOROUS: I'm wondering if you are seeing what sort of the Airbnbs of the world have seen, which is you start out using your own car and then renting that out. But then you start to actually buy other cars for the sole purpose of renting them out. We see people buying homes or apartments now for the sole purpose of renting them out on these peer-to-peer type programs. Are you starting to see that already in your space?
ANDRE HADDAD: We absolutely have seen that. We've seen primarily a lot of our hosts who were interested in scaling their business to convince their mom or dad or brother or sister or friends or neighbors actually to give them responsibility for their car so that they can monetize it for them. You know, a lot of people are interested in earning money with their vehicles but may not be interested in actually becoming hosts themselves. So what they're doing is they become cohosts. They provide the car to their neighbor or their brother or sister, and then they share their earnings. So that's been a great way for many of our hosts to scale up the number of cars that they can monetize on the platform without actually having to go out and buy any new cars.
And then there is another step, which is even further, when hosts are really interested in building a small business on the platform and they want to commit over the long-term. Then they're actually going out and getting additional cars and are dedicating them 100% of the time to the usage on the platform. And that's been hugely successful for many of these hosts, in particular in Hawaii, that are able to alleviate that travel crunch that we're seeing in Hawaii.
KRISTIN MYERS: Andre, really quickly, are you planning to follow in the same footsteps as Airbnb and potentially go public?
ANDRE HADDAD: You know, we have all the options ahead of us. We haven't made any decision at this point. We definitely believe that the business has a huge, huge potential, whether it's privately owned or publicly owned. So we're open to the different opportunities that we have. And we're really focused at this point in making sure that our hosts are able to alleviate this rental car crunch as much as possible and earn as much money with their cars as much as possible, and provide travelers with as many good options as possible. So hopefully for your next trip to Hawaii, you'll continue to use us.
KRISTIN MYERS: I do have to say-- and I want to let everyone know he did not make me say this-- I actually did enjoy using Turo. I will absolutely use it again. So you can count me as one of those customers. I will definitely be returning. Turo CEO Andre Haddad, thanks so much for joining us.