Car rental providers fall after Avis warns of disappointing European demand

Car rental providers Avis Budget (CAR) and Hertz (HTZ) are lower after Avis finance chief Dave Wyshner warned of disappointing summer sales in Europe amid terrorism concerns and other macro negatives, which he said negatively impacted pricing "across the industry." AVIS SAYS EUROPE DISAPPOINTED: Speaking earlier at Deutsche Bank's Leveraged Finance Conference, Avis CFO David Wyshner stated, "In the Americas, the summer travel season ended up being pretty good. Summer pricing was positive year over year, consistent with our expectations. Vehicle residual values have been stable. Car rental demand and volumes have been just under what we anticipated... In Europe, the August peak was disappointing. While our European revenue increased year over year, inbound demand was soft all along the mediterranean, and that negatively impacted pricing in France, Italy and Spain, particularly for those of us who had tried to avoid filling up early on lower-priced business. Trends in July had been largely tracking our expectations, so we weren't anticipating the imbalance between supply and demand that developed in Europe and negatively impacted peak pricing across the industry in August. For what it's worth, my sense is that this softness was driven more by security concerns than by the Brexit vote, or the Olympics, or the broader economy, but all four probably played a role. I'd put the negative impact of the disappointing August on international EBITDA in the single-digit millions range compared to our expectations for the month. The silver lining would be that in-country rental volumes were ok, and the rest of the year in Europe is more dependent on commercial business than on leisure travelers, so we would not expect the impact in future months to be at all like what we saw in August. Generally speaking, then, macro trends in the Americas have remained consistent with our expectations, while it's fair to say that we have now joined many other global travel providers in being more cautious about our international segment due to reduced travel demand in Europe." PRICE ACTION: Shares of Avis and Hertz have each slipped about 6% in afternoon trading.