Hourly car rentals have grown into an estimated $1.8 billion business in the U.S., which represents nearly six-percent of the $30.5 billion U.S. rental car market.
By itself, that’s large enough for firms like Hertz and Enterprise to take note, but as Bloomberg explains, hourly rentals are expected to grow to $3.3 billion in North America by 2016, with the global market exceeding $10 billion.
Herz was the first to take on Zipcar, and now has plans to make its entire U.S. fleet of 375,000 vehicles available for hourly rental within the next year. As with real estate, however, the secret to hourly-car-rental-success is location, location, location.
That plays in Zipcar’s favor, since the company boasts some 500,000 members in the U.S., and says that some 10-million people live within a 10-minute walk to a participating Zipcar vehicle.
That’s a claim that Hertz simply can’t make, since most of its rental locations are in airports or urban-core locations. Enter Enterprise car rental, which has built its business on branching out into neighborhood locations.
With some 5,500 domestic locations, Enterprise claims that 90 percent of the U.S. population lives within 15 miles of a branch. While not every location offers hourly car rental (yet, anyway), the opportunity is there.
For now, Enterprise offers hourly rental at some 50 college campus locations, as well as New York, Philadelphia and Boston. In terms of outlets, Enterprise has over 540 locations and 58,000 car-sharing members.
Today, Enterprise can boast that its hourly rental fleet is the second-largest in the United States, and the company is careful about pacing its growth in a sustainable manner. In other words, they’re not the 800 pound gorilla yet, but they plan to be.
The competition hasn’t helped Zipcar’s profitability, and its stock price has dropped roughly 30-percent this year. Perhaps a bigger threat is that the key markets are already saturated, meaning that future growth for Zipcar will be at a much slower pace.