According to a new research run, it expects of UAE’s ongoing growth as the state car rental sector is achieving remarkable strides during the world economic challenges.
Following years of supplying the luxury travel market, a marked rise in budget travel to the UAE has urged car rental companies expanding their fleets to include more cost-effective vehicles. A further way in which car rental companies in the UAE are remaining reactive to the market can be seen in their allowing the rental of luxury cars by the hour as well as by the day, with customers still wanting to sample the lavish lifestyle of the country’s recent past, despite tightened purse-strings.
The Economy’s Impact On Car Rental
The challenging economic conditions have not been solely detrimental for the UAE’s car rental sector however. Indeed, it grew at a CAGR of 5.38% between 2008 and 2012, reaching AED781.9 million (US$212.9 million). The country’s relatively small size and predominantly road-based transport infrastructure, coupled with the lack of domestic airlines, means that the demand for rented cars remains high. Whilst rental companies have been forced to slash their prices thanks to increased competition in the market, an increase in car loan rejections has boosted demand, with renting being more affordable than buying a car. Additionally, the prevailing economic climate has led more UAE citizens to holiday domestically, which has had a positive impact on the car rental market.
Therefore, Timetric’s research expected constant growth in the UAE’s car rental sector till 2017, with sales forecast to record a CAGR of 4.88%, reaching AED99.2 million (US$270.2 million) in 2016.
About Budget:
Budget Rent a Car System, Inc. is an American car rental company that was founded in 1958 in Los Angeles, California by Morris Mirkin. Budget’s operations are headquartered in Parsippany-Troy Hills, New Jersey.
With its original fleet of 10 cars, the company lived up to the ‘Budget’ name by undercutting the daily and per mile rental rates of the established airport based car rental companies. Mirkin was joined in 1959 by Julius Lederer (husband of columnist Ann Landers). In 1960, the headquarters moved to Chicago, Illinois and the rental fleet expanded with franchised and wholly owned rental outlets.
The company was eventually acquired by Transamerica Corporation, and then sold in 1986 in a leveraged buyout by Gibbons, Green and van Amerongen Ltd., along with management (led by CEO Clifton E. Haley) and selected investors. The company made its first public stock offering in 1987.
Team Rental Group purchased the public company in 1997 and took the name Budget Group. In 2002, it sold the company’s assets to Cendant Corporation, which also owned Avis and in September 2006, Cendant Corporation separated into four independent companies. The real estate division became Realogy, Inc., its hospitality services division became Wyndham Worldwide, and the travel distribution services division became Travelport, Inc., an affiliate of The Blackstone Group. In 2006, following the Travelport sale, Cendant, now composed solely of its vehicle rental services businesses, renamed itself Avis Budget Group.
Of the approximately 800 Budget Rental Car locations in the U.S., 600 are company-operated locations and 200 are licensee locations (including Budget Rent a Car of Buffalo in Buffalo, NY). Internationally, there are 150 company-operated locations and 1,800 licensees.
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