Hertz and Enterprise test stickiness of the subscription model in the car rental space

20 September, 2019

Netflix type subscription models are scant in the airline industry, but rental car companies Enterprise and Hertz are testing the waters in that space. Hertz has launched a subscription scheme in the US cities of Atlanta and Austin and Enterprise recently declared it was introducing a vehicle subscription service in the near future.

It remains to be seen if the ever growing subscription model successfully executed by Spotify and Netflix can be replicated within the travel space, and the price points for the Hertz service seem targeted to business travellers. Hertz is offering customers two tiers of subscriptions. The higher priced offering – USD1,399 – includes luxury sedans, regular SUVs and large trucks.

Customers of Hertz can exchange vehicles twice per month to another model within their respective tiers, and the all inclusive monthly subscription includes vehicle maintenance, roadside assistance, vehicle damage and limited liability protection.

“Subscribe with Enterprise” is available in Minnesota, Missouri and Nevada. Customers can swap vehicles up to four times per month, and its plan also includes insurance, maintenance and roadside assistance. According to Endgadget’s auto blog, Enterprise has tested the model at a price point of USD1,499 per month, plus taxes. The blog also stated that users are not guaranteed their preferred type of vehicle available at their local Enterprise Rent-a-Car locations.

The travel industry will closely monitor the uptake and how Hertz and Enterprise manage their subscription models, and obviously the revenue those packages generate. It remains to be seen if subscription models in the travel industry will gain traction.

The adoption is not widespread among airlines, but Mexican ULCC Volaris introduced its v.pass subscription plan about a year ago and seems to be pleased with the initial results. Users set up their subscriptions based on one way or round trip fights and baggage allotments. An automatic charge is applied to a customer’s credit card each month for 12 months, and when a customer is ready to travel, they log in, choose their flight and pay the required taxes. According to the Volaris website, a monthly subscription for one way domestic routes is MXN299.

During late 2018, Volaris’ business development senior management Juliana Ramirez told PhocusWire that v.pass gives the airline predicable cash flows and an ability to cluster pricing and offload distressed inventory.

The car rental and airline business models are slightly different, but there’s no doubt that Hertz, Enterprise and Volaris have carefully studied the execution at Spotify and Netflix, and are willing to make investments to determine if the model has staying power in the travel space.