What changed in this filing

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Item 1. Business

2021-02-17 compared with 2020-02-20 · 138 added, 100 removed, 262 unchanged (48% of the section changed)

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and its subsidiaries.

“Avis,” “Budget,” “Budget Truck,” “Zipcar,” “Payless,” “Apex,” “Maggiore,” “Morini Rent,” “Turiscar” and “FranceCars” refer to our Avis Rent A Car System, LLC, Budget Rent A Car System, Inc., Budget Truck Rental, LLC, Zipcar, Inc., Payless Car Rental, Inc., Apex Car Rentals, Maggiore Rent S.p.A., Morini S.p.A., Turiscar Group and AAA France Cars SAS operations, respectively, and, unless the context otherwise requires, do not include the operations of our licensees, as further discussed below.

“Avis,” “Budget,” “Budget Truck,” “Zipcar,” “Payless,” “Apex,” “Maggiore,” “Morini Rent,” “Turiscar,” “FranceCars” and “ACL Hire” refer to our Avis Rent A Car System, LLC, Budget Rent A Car System, Inc., Budget Truck Rental, LLC, Zipcar, Inc., Payless Car Rental, Inc., Apex Car Rentals, Maggiore Rent S.p.A., Morini S.p.A., Turiscar Group, AAA France Cars SAS and ACL Hire Ltd.

operations, respectively, and, unless the context otherwise requires, do not include the operations of our licensees, as further discussed below.

We are a leading global provider of mobility solutions through our three most recognized brands, Avis, Budget and Zipcar, together with several other brands, well recognized in their respective markets.

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We generally maintain a leading share of airport car rental revenues in North America, Europe and Australasia, and we operate a leading car sharing network, as well as one of the leading commercial truck rental businesses in the United States.

On average, our global rental fleet totaled approximately 660,000 vehicles in 2019 and we completed more than 41 million vehicle rental transactions worldwide.

We typically generate approximately 64% of our revenues from on-airport locations.

We license the use of the Avis, Budget, Zipcar and other brands’ trademarks to licensees in areas in which we do not operate directly.

Our brands and mobility solutions have an extended global reach with more than 10,600 rental locations throughout the world, including approximately 4,100 locations operated by our licensees.

We believe that Avis, Budget and Zipcar enjoy complementary demand patterns with mid-week commercial demand balanced by weekend leisure demand.

Positive momentum from fourth quarter 2019 continued into January and February 2020;

however, travel restrictions broadly implemented in response to the COVID-19 pandemic in March 2020 negatively affected reservations and revenue throughout the remainder of 2020.

By reducing fleet, matching staffing levels to demand and reducing operational costs, and pausing capital spending, among other actions, we proactively managed declining reservations and revenue.

As a result, for 2020, our global rental fleet, on average, totaled approximately 533,000 vehicles, 19% lower compared to 2019 and we completed approximately 22 million vehicle rental transactions worldwide, 47% lower compared to 2019.

Our revenue was approximately $5.4 billion, 41% lower compared to 2019.

We experienced longer lengths of rental compared to 2019, driven by an increase in monthly and leisure vehicle rentals.

Revenue generated from on-airport locations was approximately 50%, a 14% reduction compared to 2019.

We categorize our operations into two reportable business segments:

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“Management’s Discussion and Analysis of Financial Condition and Results of Operations” and in Note 20 to the Consolidated Financial Statements included in this Annual Report on Form 10-K.

COMPANY HISTORY

Avis was founded in 1946 and is believed to be the first company to rent cars from airport locations.

Since its founding, Avis has expanded its business throughout the United States and internationally, becoming one of the largest and most recognized car rental brands in the world.

In 1996, Avis was acquired by HFS Incorporated and in 1997 merged with our predecessor company, with the combined entity being renamed Cendant Corporation.

In 2006, Cendant spun off several significant subsidiaries and changed its name to Avis Budget Group, Inc.

The Company is a Delaware corporation headquartered in Parsippany, New Jersey.

Budget was founded in 1958 to appeal to the value-conscious car rental customer.

In 2002, we acquired the Budget brand and certain Budget vehicle rental operations, including the Budget truck rental business.

In 2011, we acquired Avis Europe, an independently-owned Company licensee, to expand our international operations and globally reunite the Avis and Budget brands.

In 2012 and 2013, we acquired our Apex and Payless brands, respectively, which allowed us to expand our presence in the deep-value segment of the car rental industry.

In 2013, we acquired Zipcar, a leading car sharing network, to better serve a greater variety of our customers’ mobility needs.

In 2015, we acquired Maggiore, a leading provider of vehicle rental services in Italy.

acquired FranceCars, a privately held vehicle rental company based in France, which significantly expanded our presence in the French market.

In 2018, we acquired Morini Rent, which focuses on rentals of cars, vans and refrigerated trucks in Northern Italy, and Turiscar, a well-established vehicle rental company in Portugal, and also invested in our licensee in Greece.

These acquisitions have allowed us to continue to expand our global footprint of Company-operated locations and brand presence.

Our strategy is focused on driving sustainable and profitable growth by leveraging differentiated brands and products, delivering margins from our established businesses, and positioning our company as a global leader in the mobility sector.

Leveraging Differentiated Brands and Products

Our distinct and well-recognized global brands focus on different segments of customer demand and are complemented by a range of regional brands.

We continue to support and build the reputation of our Avis brand as an innovative, reliable and high-quality service provider.

Our investments in technology, including our Avis mobile application and websites, are key parts of our efforts to enhance the Avis experience for our customers.

In 2019, the Avis mobile application was honored with the J.D.

Power award for best mobile travel rental car application.

Our Budget brand is a global leader among value-conscious vehicle rental consumers who are looking to “get more” from their vehicle rental provider and Budget Truck is a leading provider of trucks and vans.

We are also a leading provider in the car sharing network, where our Zipcar brand provides “wheels when you want them” to urban consumers across more than 450 cities and towns and over 600 college and university campuses.

We plan to drive incremental performance by continuing to improve our customer experience by growing ancillary sales, including services such as our curbside delivery product, providing discounted bundling of products, promoting car class upgrades, piloting new customer vehicle choice models (through our mobile application) and new payment features such as allowing customers to pay with more than one credit card.

We plan to continue to strengthen and further expand our global footprint through organic growth and, potentially, through acquisitions, joint ventures, licensing agreements or other relationships.

Improving Margins

We have an ongoing portfolio of strategic initiatives underway to improve our margins, including the following:

Continuing to invest in our connected fleet to benefit from fuel savings and improved utilization, vehicle recovery and damage collections;

Expanding our risk vehicle dispositions through our direct-to-consumer sales channels, including online sales channels and strategically positioned Avis vehicle retail car sale lots, and direct-to-dealer sales channels;

Achieving fleet cost efficiencies through our mileage optimization initiative, which involves understanding a vehicle’s next best action (rent, rest or hold) based upon current mileage, status and customer demand;

Rigorously controlling costs, reducing expenses and increasing efficiencies through process and other improvements.

Evolving Mobility

We believe that our company is well-positioned as a leader in the evolving mobility sector based on our leading brands, global operations and our fleet management capabilities.

We continue to explore a range of mobility opportunities to support future revenue streams.

We have expanded our services to offer vehicle rentals to ride-hail drivers and to package delivery providers.

We are also exploring a new suite of services for potential customers who could utilize our operational experience and our technology to maintain and manage their own fleets.

Our current and growing list of partnerships with mobility service and technology providers, including

companies such as Uber, Via and Waymo, allows us to offer more options to satisfy a wide variety of mobility needs.

We began 2020 with a focus on driving sustainable and profitable growth by leveraging differentiated brands and products, delivering margins from our established businesses, and positioning our company as a global leader in the mobility sector.

As we saw significant impacts on travel demand and the global economy from COVID-19, we proactively managed our business with cost removal and mitigation actions described above.

At the same time, we prioritized health and safety, and launched a coalition designed to enhance the cleanliness and disinfection of

our rental facilities and vehicles.

We also increased the availability of our app-based Mobile Select product and facilities with automated exit gates to provide our customers with contactless, self-service rental transactions.

For 2021, as travel demand starts to normalize and the global economy emerges from COVID-19, we expect our strategy to continue to focus on cost discipline, revenue growth and reinvestment aimed at allowing the Company to increase profitability.

Cost Discipline

Through cost discipline, we aim to improve our Adjusted EBITDA margin by focusing on fixed and variable cost controls as well as vehicle costs.

We believe we can increase our profitability by keeping fixed expenses to unavoidable or fundamentally necessary items and optimizing variable expense in controllable areas with clear metrics and visibility, permitting us to exit the COVID-19 crisis as a stronger, more adaptive company.

Revenue Growth

We seek to increase revenue through the delivery of a differentiated customer experience through technology and service.

We expect to continue to enhance the customer experience we offer, including through an increase in the locations that offer our Mobile Select product, which provides a differentiated customer choice model, our Avis mobile application, recognized as one of the best mobile travel rental car applications, connected cars, and continued improvement in customer service.

We also intend to drive revenue through continued enhancement of our operations in the off-airport, ride hail, package delivery and partnerships channels.

We also intend to reinvest in our business, including in our systems and platforms, and potential new business models, including expanding our risk vehicle dispositions through our direct-to-consumer sales channels, which include online sales channels and strategically positioned Avis vehicle retail car sale lots, and in the evolving mobility sector based on our leading brands, global operations and our fleet management capabilities.

We continue to believe that our company is well-positioned as a leader in the evolving mobility sector.

OUR BRANDS AND OPERATIONS

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In addition, we are able to recognize benefits and savings by combining our car rental and car sharing maintenance activities and fleets at times to increase our fleet utilization efficiency and to meet demand peaks.

These benefits are further enhanced by complementary demand patterns balancing our business customers’ utilization during weekdays and our leisure and urban customers’ utilization on evenings and weekends.

These benefits have historically been further enhanced by complementary demand patterns balancing our business customers’ utilization during weekdays and our leisure and urban customers’ utilization on evenings and weekends.

We also operate the Payless and Apex brands, which operate in the value segment of the car rental industry, augmenting our Avis, Budget and Zipcar brands.

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*** Includes Budget Truck and Zipcar.

COVID-19 impacts have changed the composition of our revenues by market compared to prior year.

In 2019, the mix for revenues by market was 64% airport and 36% off-airport.

The Avis brand provides high-quality vehicle rental and other mobility solutions at price points generally above non-branded and value-branded vehicle rental companies and serves the premium commercial and leisure segments of the travel industry.

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Avis Locations *

International

Americas International Total

Company-operated locations 1,700 1,200 2,900

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* Certain locations support multiple brands.

In 2019 , our Company-operated Avis locations generated total worldwide revenues of approximately $5.3 billion , of which approximately $ 2.6 billion was derived from commercial customers and approximately $3.6 billion was derived from customers renting at airports.

In 2020, our Company-operated Avis locations generated total revenues of approximately $3.0 billion, of which approximately $1.4 billion was derived from commercial customers and approximately $1.6 billion was derived from customers renting at airports.

The following graphs present the approximate composition of our Avis revenues in 2020.

We also license the Avis brand to independent commercial owners who operate approximately half of our locations worldwide and generally pay royalty fees to us based on a percentage of applicable revenues.

In 2019 , these royalty fees totaled approximately 1% of our worldwide Avis revenues.

In 2020, these royalty fees totaled approximately 1% of our Avis revenues.

We offer Avis customers a variety of premium services, including:

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The Avis mobile application also allows customers to track Avis shuttle buses to rental locations, find their vehicle, and locate nearby gas stations and parking facilities;

The application also includes the Split My Bill feature, which gives customers the ability to remotely split their bill between two credit cards, allowing, commercial customers to upgrade their car, add an ancillary product or extend their rental on their personal credit card following a business rental;

• Avis Preferred , a frequent renter rewards program that offers counter-bypass at major airport locations and reward points for every dollar spent on vehicle rentals and related products.

Avis Mobile Select, the newest feature on the Avis mobile application, allows Avis Preferred customers to select their specific car via their mobile device upon arrival, proceed directly to the vehicle, and utilize a unique code to exit via our automated Express Exit for a completely contactless rental experience;

• the Avis Select Series , a selection of luxury vehicles including Mercedes, Jaguars, Corvettes, and others;

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Budget Locations *

International

Americas International Total

Company-operated locations 1,350 900 2,250

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We also license the Budget brand to independent commercial owners who operate approximately half of our locations worldwide and generally pay royalty fees to us based on a percentage of applicable revenues.

In 2019 , these royalty fees totaled approximately 1% of our worldwide Budget revenues.

In 2020, these royalty fees totaled approximately 1% of our Budget revenues.

Budget offers its customers several products and services similar to Avis, such as refueling options, roadside assistance, electronic toll collection, curbside delivery and other supplemental rental products, emailed receipts and special rental rates for frequent renters.

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The Budget Truck rental business serves both the light commercial and consumer sectors.

The light commercial sector consists of a wide range of businesses that rent light- to medium-duty trucks, which we define as trucks having a gross vehicle weight of less than 26,000 pounds, for a variety of commercial applications.

The light commercial sector consists of a wide range of businesses that rent light- to medium-duty trucks, which we define as trucks having a

gross vehicle weight of less than 26,000 pounds, for a variety of commercial applications.

The consumer sector consists primarily of individuals who rent trucks to move household goods on either a one-way or local basis.

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The following graphs present the approximate composition of our Budget revenues in 2020.

Zipcar is a leading provider in the car sharing network, driven by a mission to enable simple and responsible urban living.

With its wide variety of self-service vehicles available by the hour or day, Zipcar offers comprehensive, convenient and flexible car sharing options in urban areas and college campuses in over 450 cities and towns.

Zipcar provides its members on-demand, self-service vehicles in reserved parking spaces located in neighborhoods, business districts, office complexes, college campuses and airports, as an alternative to car ownership.

Members can reserve vehicles online, on a mobile device or over the phone, by the minute,

hour or by the day, at rates that include gasoline, insurance and other costs associated with vehicle ownership.

We continue to offer our Zipcar Commuter product in 2019, which is available in several major markets in North America and provides sole access to a vehicle on weekdays and a dedicated parking spot during the week for Zipcar members who may commute outside of the city for work.

We also continue to offer our Zipcar Flex product in London providing for one-way rentals, including to and from Heathrow airport, which can be parked in public on-street spots in designated areas of the city.

Zipcar is a leading car sharing network, driven by a mission to enable simple and responsible urban living.

Zipcar provides its members on-demand, self-service vehicles in reserved parking spaces located in neighborhoods, business districts, office complexes and college campuses, as an alternative to car ownership.

Members can reserve vehicles online, on a mobile device or over the phone, by the minute, hour or by the day, at rates that include gasoline, secondary insurance and other costs associated with vehicle ownership.

We continue to offer our Zipcar Flex product in London providing for one-way rentals, including to and from Heathrow airport, which can be parked in public on-street spots in designated areas of the city.

Our other brands include the following:

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◦ The Payless business model allows the Company to extend the life-cycle of a portion of our rental fleet, as we “cascade” certain vehicles that exceed certain Avis and Budget age or mileage thresholds to be used by Payless.

Apex, which operates in approximately 30 rental locations at, or near, major airports and in several metropolitan cities in New Zealand and Australia with a separate rental fleet.

Apex generates reservations through proprietary websites as well as a contact center and online travel agencies and typically has a greater-than-average length of rental.

• Apex, which operates in approximately 30 rental locations at, or near, major airports and in several metropolitan cities in New Zealand and Australia.

◦ Apex generates reservations through proprietary websites as well as a contact center and online travel agencies and has typically had a greater-than-average length of rental.

• Maggiore, a leading vehicle rental brand in Italy, where we operate or license in approximately 150 rental locations throughout the country.

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• Turiscar, a leading vehicle rental brand in Portugal, which operates primarily in the corporate market, including light commercial vehicles, at more than 25 rental locations throughout the country.

• ACL Hire, a provider of quality vehicle rental and maintenance services in the UK, with a strong focus on light commercial vehicles.

RESERVATIONS, MARKETING AND SALES

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Our Zipcar members may reserve cars by the minute, hour or by the day through Zipcar’s reservation system, which is accessible through the Zipcar website, through the Zipcar application on their smartphone or by phone.

We also provide two-way SMS texting, enabling us to proactively reach out to members during their reservation via their mobile device to manage their reservation, including instant reservation extension.

We also use two-way SMS texting, enabling us to proactively reach out to members during their reservation via their mobile device to manage their reservation, including reservation extension.

Marketing and Sales

We support our brands through a range of marketing channels and campaigns, including traditional media, such as television and print advertising, as well as Internet and email marketing, social media and mobile device applications.

We market through sponsorships of major sports entities such as the PGA Tour, Pebble Beach, the New York Yankees, the Toronto Maple Leafs, Toronto Raptors and Toronto FC.

We also market through sponsorships of charitable organizations such as the Make-A-Wish Foundation and the Red Cross.

We market through sponsorships of major sports entities such as the PGA Tour, Pebble Beach, the New York Yankees, the Toronto Maple Leafs, Toronto Raptors, Toronto FC and AC Milan FC.

We also market through sponsorships of charitable organizations such as the Make-A-Wish Foundation.

We utilize a customer relationship management system that enables us to deliver more targeted and relevant offers to customers across online and offline channels and allows our customers to benefit through better and more relevant marketing, improved service delivery and loyalty programs that reward frequent renters with free rental days and car class upgrades.

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Approximately 50% of vehicle rental transactions in 2020 from our Company-operated Avis locations were generated by travelers who rented from Avis under contracts between Avis and their employers or through membership in an organization with which Avis has a contractual affiliation (such as AARP and Costco Wholesale).

In 2019, the Company introduced Business Intelligence, an online portal complete with rental summary dashboards, visualizations and detailed reports that provides our corporate customers with insight into their program’s performance, giving them direct access to more data in a customer-facing portal offering useful data insights, including options to customize and schedule reports.

This percentage is lower compared to the 2019 percentage of 60% as a result of impacts from the COVID-19 pandemic, which among other things, drove a decrease in commercial travel.

The Company offers Business Intelligence, an online portal complete with rental summary dashboards, visualizations and detailed reports that provides our corporate customers with insight into their program’s performance, giving them direct access to more data in a customer-facing portal offering useful data insights, including options to customize and schedule reports.

Avis also maintains marketing relationships with other organizations such as American Express, MasterCard International and others, through which we are able to provide their customers with incentives to rent from Avis.

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Budget has contractual arrangements with American Express, MasterCard International and other organizations, which offer members incentives to rent from Budget.

Our Zipcar brand also partners with other active lifestyle brands that appeal to our Zipcar members and we organize, sponsor and participate in charitable and community events with organizations that are important to our Zipcar members.

Zipcar maintains close relationships with universities that allow us to market to the “next generation consumer” who, upon graduation, may continue their relationship with us and advocate for broad sponsorship of Zipcar membership at their places of work.

Through our Zipcar for Business program, we also offer reduced weekday driving rates to employees of companies, federal agencies and local governments that sponsor the use of Zipcars.

Our Zipcar brand utilizes a diverse set of marketing and sales strategies to acquire and engage members, including digital marketing, email and in-app messaging, and social media engagement.

Zipcar maintains close relationships with universities that provide access to campuses and various marketing channels to attract students, who upon graduation may continue their relationship with us.

Through our Zipcar for Business program, we also offer direct-bill accounts and employee benefit programs to companies, federal agencies and local governments that support the use of Zipcars.

We have licensees in approximately 175 countries throughout the world.

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Royalties generated from licensing provide us with a source of high-margin revenue because there are relatively limited additional costs associated with fees paid by licensees to us.

We facilitate one-way vehicle rentals between Company-operated and licensed locations, which enables us to offer an integrated network of locations to our customers.

In some geographies we facilitate one-way vehicle rentals between Company-operated and licensed locations, which enables us to offer an integrated network of locations to our customers.

We generally enjoy good relationships with our licensees and meet regularly with them at regional, national and international meetings.

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• additional/supplemental liability insurance or personal accident/effects insurance products which provide customers with additional protections for personal or third-party losses incurred;

products for driving convenience such as fuel service options, chauffeur drive services, roadside assistance services, electronic toll collection services, curbside delivery, tablet rentals, access to satellite radio, portable navigation units and child safety seat rentals;

• products for driving convenience such as fuel service options, roadside assistance services, electronic toll collection services, curbside delivery, tablet rentals, access to satellite radio, portable navigation units and child safety seat rentals;

• products that supplement truck rental including automobile towing equipment and other moving accessories such as hand trucks, furniture pads and moving supplies.

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We participate in a variety of vehicle purchase programs with major vehicle manufacturers.

As a result of the COVID-19 pandemic, we reduced our fleet purchases by 56% compared to 2019 as we sought to proactively manage our fleet size.

The following presents the approximate percentage of fleet purchases by manufacturer in 2020.

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Fleet costs represented approximately 22% of our aggregate expenses in 2020.

Fleet costs can vary from year to year based on the prices at which we are able to purchase and dispose of rental vehicles.

Fleet costs can vary from year to year based on the prices at which we are able to purchase and dispose of rental vehicles, the mix of risk and program vehicles, holding periods, and overall fleet mix.

In 2020, approximately 24% of our average rental fleet was comprised of the following:

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Fleet Dispositions

We dispose of our risk vehicles largely through resale and alternative disposition channels, including direct-to-consumer, online auctions, retail lots and direct-to-dealer sales, as well as through more traditional automobile auctions.

We dispose of our risk vehicles largely through resale and alternative disposition channels, including direct-to-consumer, online auctions, and direct-to-dealer sales, as well as through more traditional automobile auctions.

Alternative disposition channels provide the opportunity to increase vehicle sales prices and reduce relevant fleet costs compared to selling vehicles at auctions.

We have continued to expand the scope of our direct-to-consumer vehicle sales program, growing sales of our risk vehicles directly to consumers through our Ultimate Test Drive online program and our approximately 15 physical retail locations, which offer customers the ability to purchase well-maintained, late-model rental vehicles from our fleet.

We have continued to expand the scope of our direct-to-consumer vehicle sales program, growing sales of our risk vehicles directly to consumers through our Ultimate Test Drive (UTD) online program and our approximately 15 physical retail locations.

Both our UTD program and retail locations offer customers the ability to purchase well-maintained, late-model rental vehicles from our fleet.

We dispose of our program vehicles in accordance with repurchase or guaranteed depreciation programs with major vehicle manufacturers.

Fleet Utilization

In 2019 , our average monthly vehicle rental fleet size ranged from a low of approximately 576,000 vehicles in January to a high of approximately 757,000 vehicles in July.

Our average monthly car rental fleet size typically peaks in the summer months.

Average fleet utilization for 2019 , which is based on the number of rental days (or portion thereof) that vehicles are rented compared to the total amount of time that vehicles are available for rent, ranged from 64% in January to 76% in July.

In 2020, our average quarterly vehicle rental fleet size ranged from a low of approximately 440,000 vehicles in fourth quarter to a high of approximately 610,000 vehicles in first quarter.

Average fleet utilization for 2020, which is based on the number of rental days (or portion thereof) that vehicles are rented compared to the total amount of time that vehicles are available for rent, ranged from approximately 35% in second quarter to approximately 62% in first and fourth quarters.

Our average car rental fleet size and utilization are typically highest during the third quarter of each year.

Our calculation of utilization may not be comparable to other companies’ calculation of similarly titled metrics.

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To accomplish this task, we developed specialized training programs for our technicians.

Our Maintenance and Damage Planning

Department prepares technical service bulletins that can be retrieved electronically at our repair locations.

Our Supply Chain Department prepares technical service bulletins that can be retrieved electronically at our repair locations.

In addition, we have implemented policies and procedures to promptly address manufacturer recalls as part of our ongoing maintenance and repair efforts.

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Our Customer Led, Service Driven ™ program focuses on continually improving the overall customer experience based on our research of customer service practices, improved customer insights, executing our customer relationship management strategy, delivering customer-centric employee training and leverage our mobile applications technology and the enriched experience it provides our customers.

In addition, our social media platform allows us to engage with our customers in their preferred channel, which enables us to meet the needs of our customers while promoting our brands to gain more market share and drive customer loyalty.

The employees at our Company-operated locations are trained and empowered to resolve most customer issues at the location level.

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Results are analyzed in aggregate and by location to help further enhance our service levels to our customers.

We understand our customers’ time is valuable and we offer rental options that provide greater control and self-service capabilities.

While our mobile applications provide a fast customer experience, our customers know a company representative is always available to meet their needs.

During 2020, in response to COVID-19, we launched the “Avis Safety Pledge” and “Budget Worry-Free Promise,” designed to keep our customers and employees safe through a partnership with RB, the maker of Lysol, to enhance the cleanliness and disinfection of our rental facilities and vehicles.

RB is also part of a coalition we formed with Hip Hop Public Health, a national nonprofit organization that creates engaging content to drive behavioral change and supplements our employee training for consistent, responsible habits and to optimize the effectiveness of our cleaning protocols.

Our facilities are also utilizing plexiglass shields along with signage and floor markings to encourage safety habits and social distancing, and we have provided our staff with masks, hand sanitizer and gloves and we make this protective equipment available to our customers.

We also offer rental options that provide greater control, self-service and contactless capabilities.

While our mobile applications provide a fast customer experience, a company representative is available to meet customers’ needs.

Our survey platform includes specific questions to learn more about individual preferences and find innovative ways to better serve and anticipate our customers’ needs.

As of December 31, 2019 , we employed approximately 30,000 people worldwide, of whom approximately 8,800 were employed on a part-time basis.

Of our approximately 30,000 employees, approximately 18,000 were employed in our Americas segment and 12,000 in our International segment.

In our Americas segment, the majority of our employees are at-will employees and, therefore, not subject to any type of employment contract or agreement.

Certain of our executive officers may be employed under employment contracts that may specify a term of employment and specify pay and other benefits.

In our International segment, we enter into employment contracts and agreements in those countries in which such relationships are mandatory or customary.

The provisions of these agreements correspond in each case with the required or customary terms in the subject jurisdiction.

Many of our employees are covered by a variety of union contracts and governmental regulations affecting, among other things, compensation, job retention rights and pensions.

As of December 31, 2019 , approximately 27% of our employees were covered by collective bargaining or similar agreements with various labor unions.

We believe our employee relations are satisfactory.

AIRPORT CONCESSION AGREEMENTS

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Concessions are typically awarded by airport authorities every three to ten years based upon competitive bids.

Our concession agreements with the various airport authorities generally impose certain minimum operating requirements, provide for relocation in the event of future construction and provide for abatement of the minimum annual guarantee in the event of extended low passenger volume.

Our concession

agreements with the various airport authorities generally impose certain minimum operating requirements, provide for relocation in the event of future construction and provide for abatement of the minimum annual guarantee in the event of extended low passenger volume.

OTHER BUSINESS CONSIDERATIONS

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Our vehicle rental and corporate operations expose us to various types of claims for bodily injury, death and property damage related to the use of our vehicles and/or properties, as well as general employment-related matters stemming from our operations.

In addition, we currently purchase insurance coverage to limit our exposure to legal fees and expenses resulting from cybersecurity breaches.

We generally retain economic exposure for liability to third parties arising from vehicle rental and car sharing services in the United States, Canada, Puerto Rico and the U.S.

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In Europe, we insure the risk of liability to third parties arising from vehicle rental and car sharing services in accordance with local regulatory requirements primarily through insurance policies provided by unaffiliated insurers.

We may retain a portion of the insured risk of liability through local deductibles, and by reinsuring certain risks through our captive insurance subsidiary AEGIS Motor Insurance Limited.

We retain a portion of the insured risk of liability through local deductibles, and by reinsuring certain risks through our captive insurance subsidiary AEGIS Motor Insurance Limited.

In Australasia, motor vehicle bodily injury insurance coverage is compulsory and provided upon vehicle registration.

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When a customer elects to purchase supplemental liability insurance or other optional insurance related products, we typically retain economic exposure to loss, since the insurance is provided by an unaffiliated insurer that is reinsuring its exposure through our captive insurance subsidiary, Constellation Reinsurance Co., Ltd.

Additional personal accident insurance offered to our customers in Europe and Australasia is provided by a third-party insurer, and reinsured by our Avis Budget Europe International Reinsurance Limited subsidiary.

Additional personal accident insurance offered to our customers in Europe and Australasia is provided by a third-party insurer, and primarily reinsured by our Avis Budget Europe International Reinsurance Limited subsidiary.

We also maintain excess insurance coverage through unaffiliated carriers to help mitigate our potential exposure to large liability losses.

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We also seek to support the well-being and development of the people we employ and the communities in which they work.

The following initiatives reflect our commitment to achieving these goals:

Diversity and Inclusion:

We are committed to providing equal employment opportunity to all applicants and employees without regard to race, religion, color, sexual orientation, gender, gender identity, age, national origin, ancestry, citizenship, protected veteran or disability status or any factor prohibited by law, and as such we affirm in policy and practice to support and promote the concept of equal employment opportunity and affirmative action, in accordance with all applicable federal, state, provincial and municipal laws.

As an equal-opportunity employer, we are proud to provide an inclusive workplace that embraces and celebrates demographic, cultural and lifestyle differences.

Employee Benefits:

We care about our employees and their families.

We strive to offer them comprehensive and high value benefits programs that take care of their health and financial needs.

Our Communities :

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Over the past seventy years, we have developed strong competencies in responding to business disruptions.

Whether the disruption is man-made or an extreme weather event such as a hurricane, flood or wildfire, our business continuity programs are central to how we respond in times of crisis.

Whether the disruption is man-made, an extreme weather event or a global health crisis, our business continuity programs are central to how we respond in times of crisis.

Our program’s focus is on preparing and protecting our people, property and infrastructure.

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Our efforts include:

◦ Car Sharing:

Our Zipcar car sharing technology was designed and specifically built for our car sharing business and has been continually refined and upgraded.

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Our fleet consists primarily of vehicles from the current and immediately preceding model year - this ensures the highest possible standards of air emissions control.

Our hybrid fleet is one of the largest in our industry with 19,000+ hybrid vehicles globally .

Our hybrid fleet is one of the largest in our industry with approximately 21,000 hybrid vehicles globally .

Our most recent Corporate Social Responsibility Report (“CSR”) is available on the Company’s website.

The information contained on the Company’s website is not included in, or incorporated by reference into, this Annual Report on Form 10-K.

OUR HUMAN CAPITAL RESOURCES AND MANAGEMENT

Our human capital objectives include identifying, recruiting, retaining, incentivizing and integrating our existing and future or prospective employees.

Our compensation program is designed to attract, retain and motivate highly qualified employees and executives.

As of December 31, 2020, we employed approximately 20,000 people worldwide, of whom approximately 5,000 were employed on a part-time basis.

Of our approximately 20,000 employees, approximately 8,300 were employed in our International segment.

In our Americas segment, the majority of our employees are at-will employees and, therefore, not subject to any type of employment contract or agreement.

In our International segment, we enter into employment contracts and agreements in those countries in which such relationships are mandatory or customary.

The provisions of these agreements correspond in each case with the required or customary terms in the subject jurisdiction.

Many of our employees are covered by a variety of union contracts and governmental regulations affecting, among other things, compensation, job retention rights and pensions.

We strive to maintain satisfactory relationships with all of our employees, including the unions and work councils representing these employees.

As of December 31, 2020, approximately 21% of our employees were covered by collective bargaining or similar agreements with various labor unions.

We believe our employee relations are satisfactory.

We have never experienced a large-scale work stoppage.

Employee Benefits

Supporting our employees with the right benefits is one of the most important things we do.

We understand benefits are a key element to a total reward package, so ensuring we provide meaningful benefit programs and resources across the globe is an integral part of how we reward employees, including with respect to healthcare and retirement.

As a global company, benefits will vary by country to reflect local practices and cultures, but our commitment to providing comprehensive and meaningful benefits and resources is consistent across the world.

We continuously review and, when necessary, update our programs to ensure they remain flexible, competitive, and aligned to what is important for our employees and their families.

Global Gender Pay Equity

To ensure we are compensating both men and women employees fairly and equitably, we transitioned to a global Center of Excellence total rewards function five years ago with the aim to standardize and harmonize our rewards programs across all countries.

As a result, we have established pay programs that provide for equal incentive pay opportunity for all employees in same or similar positions across the globe.

Additionally, we utilize global guidelines and standards to inform compensation decisions for all new hires and promotions.

To monitor our performance for our management employees, we evaluate base salary placement relative to our internal salary ranges for men and women.

For our hourly field workforce (non-management employees), we maintain pay equity through our standardized compensation practices in which all employees begin at the same start rate, based on their location and position, and annual pay increases are applied consistently to all employees based on tenure.

Recruitment and Development

Our talent strategy is solidly rooted in attracting and retaining a diverse workforce.

We run numerous recruitment programs that aim to give back to our local communities.

Our Talent Acquisition teams have strong relationships

with organizations that help us reach a diverse pool of candidates including LGBTQ+ and those with physical or mental disabilities.

We believe that our employees possess a wealth of knowledge that could and should be shared with others.

We have a wealth of established learning and talent programs that we make available to our employees and in 2019 we launched a bespoke digital learning platform that has transformed the way we produce, manage and share learning resources.

Diversity, Inclusion and Belonging

We embrace diversity and inclusion.

We value each employee around the world, whose talent, skill and personality have helped establish us as a leading global mobility provider.

We believe that embracing and promoting diversity is a critical component of our success and we have committed to creating a safe, supportive and inclusive environment.

As an equal-opportunity employer, we are proud to provide an inclusive workplace that embraces and celebrates demographic, cultural and lifestyle differences.

We strive to have a diverse and inclusive work environment where co-workers feel valued for their uniqueness, recognized for their diverse talents, and where they can bring their whole selves to work.

We have created employee resource groups (“ERGs”), company-sponsored group comprised of employees from diverse backgrounds that advocate equality, opportunities for advancement, and facilitate discussion around best practices and resources to more targeted cultural and racial understanding and diversity.

These ERGs provide a space where employees can foster connections and develop in a supportive environment.

As of the end of 2020, we had three ERGs :

Power of WOMEN;

Power of Veterans;

and Power of COLOR.

Health and Safety

The health and safety of our employees is our highest priority because our people are our most valuable asset.

Consistent with our operating philosophy, we are committed to safety and our core belief is that health and safety is every employee’s responsibility, not only for our employees but for our customers, vendors, and all stakeholders.

We currently collect incident rates to track safety performance for our United States operations, which represents our largest employee population.

In addition to numerous proactive actions taken to ensure employee safety, our focus is also evident in our response to the COVID-19 pandemic, including the launch of the Avis Safety Pledge and the Budget Worry-Free Promise to help provide a safe and convenient rental experience by enhancing our cleaning protocols.

We contracted with a council of medical professionals to provide feedback and consultation on our safety protocols and practices.

In addition, we partnered with an organization that creates innovative behavioral based training to ensure our staff is properly skilled and educated on safety related to the pandemic.

In response to COVID-19, we have also added work-from-home flexibility for employees who can work remotely;

implemented temperature screening of employees at the majority of our locations in the United States;

established new physical distancing procedures;

provided additional personal protective equipment and cleaning supplies;

modified certain work spaces with plexiglass dividers;

implemented protocols to address actual and suspected COVID-19 cases and potential exposure;

and required masks to be worn in all locations where allowed by local law.

We will continue to provide our staff with hand sanitizer, gloves and masks and conduct daily health self-assessments before shifts where we are permitted to do so.

We will continue to offer an enhanced sick leave policy and offer employees COVID-19 testing free of charge.

We take a holistic approach to well- being.

We understand that to deliver our best performance, our employees need to be healthy and happy in all areas of their lives.

Our Live Well program focuses on helping our people achieve all aspects of well-being through habits and activities that promote physical, financial and emotional well-being.

We are subject to a wide variety of laws and regulations in the countries in which we operate, including those relating to, among others, consumer protection, insurance products and rates, franchising, customer privacy and data protection, securities and public disclosure, competition and antitrust, environmental matters, taxes, automobile-related liability, corruption and anti-bribery, labor and employment matters, health and safety, claims management, automotive retail sales, currency-exchange and other various banking and financial industry regulations, cost and fee recovery, the protection of our trademarks and other intellectual property, and local ownership or investment requirements.

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Item 1. Business