In 1946, no American car rental agency had airport operations. Warren Avis, a Detroit car dealer and former Army pilot, spotted the opportunity, and opened rental outlets at airports in Detroit and Miami. Within eight years, the company bearing its founder's name had expanded to Mexico, Canada, and Europe. In 1965, Avis was bought by industrial giant ITT, and further expanded operations into Africa and the Middle East. The company also innovated with its development of Wizard, an electronic reservation system.

The company became privately owned in 1977, and bounced from owner to owner for most of the '80s. In 1987, Avis employees took a 71 percent stake in their company, with the remainder held by General Motors. The arrangement lasted until 1994, when Avis was acquired for $800 million by real estate and hotel concern HFS. Financier Henry Silverman, HFS' CEO, subsequently spun off the company's largest franchisee, and Avis Rent-A-Car was born. Silverman, however, retained ownership of the Avis name and the Wizard system.

$2,200,000,000 x 0.04 = $88,000,000

In 1999, Avis Rent-A-Car is one of the world's leading rental companies, boasting a fleet of over 220,000 vehicles, 15 million annual rental transactions, and 700 locations worldwide. 1998 sales hit $2.2 billion, with 89 percent of revenues generated within the United States. One considerable drain on revenues is the four percent royalty that Avis Rent-A-Car must pay to Henry Silverman's Cendant Corporation, the successor to HFS and the owner of the Avis name. In 2003, that fee will increase to 4.5 percent.

Hungry for acquisitions

Despite its strong growth over the years, Avis has never managed to take the number one spot in car rentals. In advertising, the company has tried to spin its weaker market position as an advantage to customers with taglines such as "We Try Harder." Despite the ads, Avis Rent-A-Car doesn't plan on following the leaders forever. The company intends to grow by expanding its business in suburban areas and through a "strategic acquisitions program" targeting key independent Avis franchises. In May 1998, Avis Rent-A-Car acquired Hayes Leasing Company, operator of Avis system franchises in Dallas, Fort Worth, and Austin, Texas. Another notable acquisition came in March 1999, when Avis Rent-A-Car completed its purchase of Richmond's Rent-A-Car Company, one of the country's oldest Avis franchises. Later in the year, the company also obtained Motorent, Inc. of Nashville, the largest remaining independent domestic franchisee. Also in 1999, parent company, Cedant Corporation, agreed to sell Avis three of its fleet management companies, including its 700,000-vehicle fleet unit, the PHH Vehicle Management Services Corporation, and Wright Express.

eGrowth

Expansion continues electronically, as Avis introduces Avis InterActive, the first Internet based information system in the rent a car industry. The software is based on the award winning PHH InterActive system that has brought PHH so much success in the fleet management business. In February 2000, Avis Europe also partnered with Navidec Inc., a leading eBusiness solutions and service provider, to sell used cars over the Internet, starting in the UK.

Correcting problems with discrimination

Avis Rent-A-Car hasn't enjoyed the smoothest relations with minority groups. In 1994, the Justice Department dropped an investigation of Avis when the company agreed to install hand controls for persons with disabilities. Three years later, the Pennsylvania Attorney General slapped Avis Rent-A-Car with a law suit accusing the company of systematic discrimination against members of minority groups, particularly African-Americans.

The company's record in this area seemed to be improving. In May 1998, the DOJ ended a review of Avis Rent-A-Car's diversity practices. The DOJ cited its satisfaction with the company's self-imposed "Zero Tolerance for Discrimination" policy, under which Avis uses a company-wide diversity training program, an improved system to respond to complaints of discrimination, a diversity hotline, measures to diversify the company's workforce and contractors, and other initiatives. Avis Rent-A-Car claims that 42 percent of its employees are members of minority groups. Recently, however, more legal woes have plagued the company. One case involved the U.S. Supreme Court to rule that racial slurs could be banned in the workplace, against protests of freedom of speech. The ruling was in reaction to an earlier hearing that said an Avis employee could no longer subject his workers to racial epithets. Avis also battled a law suit about discrimination against its Jewish customers.

The search is over