This industry encompasses businesses that rent out cars to their clients for an extended period of time, from days to weeks on end. It also includes businesses that lease cars out to their customers, but these tend to be for a much longer period of time, at least a year or more. The most prominent and well known player in this industry is ZipCar, which is owned by Avis Budget Group LLC. Therefore, there are very few small scale businesses within this industry. The car rental market is currently valued at $23 billion, with almost 20,000 operating businesses. The car rental industry is especially popular with people who need to drive to the airport, drive in the place they are vacationing, or with college students in rural areas who do not have cars of their own.
This larger industry has struggled significantly due to the pandemic and resulting lockdown, and even as the economy begins to reopen most people remain wary of traveling in fear of being exposed to the virus. Furthermore, many states have mandated hotels and other hospitality institutions to enforce stringent restrictions, such as requiring a negative COVID test and banning the use of certain facilities, leading to a decline in revenue. The travel and hospitality industry is heavily dependent on revenue from large group events such as weddings or bachelor parties, something that has been heavily discouraged due to the virus. While some more established sectors of the travel and hospitality industry are expected to make a rebound once the pandemic subsides and vaccine rollout continues, other small scale establishments within this industry are not expected to survive.
The Paid-in-Full Rate is when the SBA loan is fully paid off by the small business owner including interest, indicating financial strength.
The Charged Off Rate is the SBA loan default rate where loans have no confidence in being paid off by the small business owner.
For every 13 SBA loans fully paid including interest, 1 SBA loan was unable to be paid back, or defaulted.
-SBA Loan Data from 2010-2019
-Non-Franchise Businesses taken into account: 10,112
Although increased consumer spending and generally favorable economic conditions led to growth in the car rentals industry, the advent of the pandemic led to a sharp decline in revenue. Stay at home orders severely limited domestic travel, corresponding to an overall drop in demand for car rental services. In fact, in the past five years, average industry growth dropped by 11.4%. While the industry is expected to rebound once travel is reinstated, it is likely that smaller car rental companies will not be able to survive until then and those that currently dominate the industry will only expand their control of the market.
Average Travel & Hospitality Percentage Fees
Standard Travel & Hospitality Franchise Industry Investment
This metric is the standard industry investment amount for a single unit franchise investment in this industry. Our research and analytics team analyzed over 79 franchise concept investment breakdowns in order to calculate this figure.
The Paid-in-Full Rate is when the SBA loan is fully paid off by the franchisee including interest, indicating financial strength.
The Charged Off Rate is the SBA loan default rate where loans have no confidence in being paid off by the franchisee.
For every 66 SBA franchise loans fully paid including interest, 1 SBA loan was unable to be paid back, or defaulted.
-SBA Loan Data from 2010-2019
-Franchise Businesses taken into account: 5,274
Learn more about the Travel & Hospitality Industry
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