 |
NRMA’s acquisition of Thrifty in 2006 is part of our strategy to increase the range of benefits we can provide to our Members. Chris Sheedy met NRMA Motoring + Services’ President Alan Evans to discover more about the purchase and to find out about the great benefits you can enjoy.
What is the reason behind the 75% acquisition of Thrifty? We constantly research what our Members are doing and what they want. One of the things that clearly came through, especially with today’s cheaper airfares, is that Members are engaging much more in fly/drive holidays. In fact, car rental is one of the largest Member product sales we do presently. |
Secondly, people are more mobile and will travel interstate for weekends. The third point is that there is a large number of people, particularly in the cities, who, even though they’re Members, are changing their lifestyle by relinquishing their cars – but they still want a car to drive occasionally.
So we saw among our own Members a real market opportunity and decided that if the occasion arose we’d look at the acquisition of a car rental company because it matched our Members’ mobility needs.
What made it an attractive purchase?
Thrifty is one of the top car rental companies and it’s the only one that had Australian ownership. Hertz, Avis and Budget are all multinational, and Europcar has also gone into overseas ownership.
We didn’t want to be dictated to by an overseas board, we needed to have an independent operation that we could manage properly for our Members’ needs and for the needs of the business. Thrifty met all of these criteria.
How does Thrifty complement your other business strands?
We’re about helping people travel safely. The way people travel to their destinations due to changing lifestyles has altered somewhat, so we had to make a move to match that.
We have done a lot of work over the past three years to increase our travel offerings to Members, and we saw a natural fit between Thrifty and our ability to better deliver a service that is valued by Members.
Providing roadside assistance is still our core activity and it always will be the number one activity of NRMA, but with two million Members we thought the opportunity was there to make sure we got better deals for them.
How can you be sure you’re meeting the needs of Members?
We’re much closer to our Members than other companies are to their customers. We do a lot more work in figuring out what their needs are and matching those needs. Not every Member of the NRMA will use a car rental agency but a heck of a lot of Members will, and we need to match their needs.
How much did Thrifty cost and how was it funded?
NRMA Motoring + Services acquired 75% of the shares in Thrifty for a cash consideration of $9.8 million.
During this NRMA board’s period we have turned the company around. We’ve stopped the losses and turned it into a proper organisation by restoring the balance sheets. When I came on as a director four years ago we had just over $400 million in assets and we’re now over $900 million in total assets. So we’ve turned the company around and we bought Thrifty with Members’ funds for the benefits of Members.
Where did this money come from?
Before you purchased the business, Thrifty was not doing well financially and obviously needed improvement. Can you see results already?
We made an assessment before the purchase and discovered it could be turned around, and in a very short time we have achieved that.
We realised it could actually work to do two very beneficial things: provide a commercial return for an NRMA investment and provide benefits to our Members in terms of lower charges for car rentals.
What sort of performance targets have you put in place for the new business?
We’ve set hurdle rates (for return on investment) at the current interest rate plus 5%. We will actually exceed this rate, and as an extra bonus Thrifty will provide substantial benefits to our Members.
So who will manage the relationship between NRMA and Thrifty?
Because we’ve got a 75% shareholding, it has to be set up as an independent company and we’ve established a board that includes myself, our CEO Tony Stuart, and another director Kyle Loades, who has a great deal of experience in the motoring field.
Kyle has been involved in sales, resale and fleet leasing – all those sorts of things are his speciality. So we’re the independent board reporting to the NRMA board, and we’re responsible for managing Thrifty in conjunction with the 25% shareholder and Managing Director John Walker, who has remained with the company with our support.
It’s working out quite well because between us we have a great deal of knowledge about the motoring world. We also bring expertise in terms of different business skills to Thrifty.
For a time you owned Thrifty and also had a Members’ deal with Hertz. Did this create any problems?
Up until April 2007 we had an exclusive arrangement with Hertz to provide our Members with rental cars, and that suited us as it allowed us to sit down, review the Thrifty business, reform the business and get it up to speed. I have to say we have turned the business around and it is going to make a very significant profit this financial year. It gave us time to work out how we would interact with our Members, and we are very excited to announce that we will be providing very substantial discounts for our Members who hire Thrifty cars.
Not now, but I will be having discussions with Thrifty International to try to make sure that we have offers to most places our Members wish to travel. I’ve had a couple of meetings with Thrifty New Zealand and there are real opportunities emerging there, not only for us but also for Thrifty customers in New Zealand coming to Australia. We’ll continue to develop these relationships in the markets that our Members travel to. You’ve always encouraged Members to drive safer vehicles. Will this reflect in the vehicles being provided via Thrifty?
Your purchase is Thrifty Australia, but will these discounts be available elsewhere?
We are very strong at encouraging Members and fleet owners to drive and provide safer vehicles. We encourage governments to make sure any vehicles they purchase have a four-star ANCAP crash rating, and that’s the same policy we’re considering at Thrifty.
Is that typical within the car hire industry?
No, we intend to be the first to evaluate this and to further research this trade-off versus low prices with Members. We’re also moving down the path of making sure we’ve got vehicles that can run on ethanol blend fuels, and we’ll be bringing some hybrids into the fleet as well, so we’ll have safer and greener cars.
There are so many ways you can benefit by using Thrifty car rentals |
| When you rent your Thrifty car it’ll just be a matter of presenting your Member card or quoting your Member number to receive a substantial discount. |
| It will be the best available rate at the time of booking less a percentage that will depend on the specific location you rent from and via which outlet you decide to book. |
| There will be a standing Member discount of 10% off the best rate of the day for cars rented through Thrifty directly, both on the phone and at any Thrifty counter. If you make a booking through NRMA Travel by calling 13 11 22, you will also receive the 10% discount. |
| If you book online through the Thrifty website or the NRMA Travel website, you will receive 15% off the best rate of the day – this represents an additional 5% saving. |
| When you rent a Thrifty car you will also automatically receive a substantial reduction in the premium payable in the case of an accident, and if you take out a premium protection policy as part of your daily rental you will also receive a discount on the cost of this premium. |
| If you require a child seat as part of your rental, you will receive this at no charge for the length of your rental. |
| In addition, Thrifty will offer you regular promotions and offers, over and above those mentioned above, during the year. |
NRMA Motoring + Services’ CEO Tony Stuart says the company has been busy in the past couple of years diversifying its investments to secure Members’ funds for the future. “We have acquired or invested in several new businesses that will help make membership more valuable by delivering exclusive Member benefits,” says Tony.
NRMA’s investments include:
As well, NRMA has purchased five holiday parks:
“Buying holiday parks means that there are dedicated places across NSW for NRMA Members and their families to stay – now and in the future,” says Tony.
“Most recently, NRMA has acquired a majority shareholding in travel wholesaler, Adventure World. This marks a significant step in the growth of our travel and holiday operations, which includes holiday packages, hotels, tourist parks and the online Travel Planner.”
Look out for Member offers across these investments in future issues of Open Road.
4WD
