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“Because of FICO Xpress Optimization, the utilization of our fleet has gone up by two percentage points. This is a big, big deal for a car rental company.”

Jens UtechDirector of Backoffice and Station Systems | Avis Europe

Ever wonder how Avis Europe optimized fleet

usage to drive $19 million in gains?

Client: Avis Europe, a leading car rental company in Europe, Africa, the Middle East and Asia

Challenge: Maximize the use of every automobile in the company fleet

Solution: FICO® Xpress Optimization

Results: Two-point increase in fleet utilization, translating into an economic impact of $19 million

Using optimization to drive customer loyalty and profitable growthAvis Europe, part of the Avis Budget Group, is the world’s third-largest car rental operator with revenues of $8.5 billion (€7.7 billion) in 2014. The car rental sector has, like most of the rest of the travel industry, gone through significant change over the last couple of decades, to a large degree driven by technology innovations. As the industry has evolved, key players have made automation improvements and developed solutions geared toward simplifying and enhancing the customer experience. This has resulted in tight margins and high expectations from customers.

OPTIMIZATION

With FICO optimization technology in place, Avis Europe has:

• Increased fleet utilization by two points, resulting in $19 million in gains

• Increased profitability with sales restriction recommendations to ensure the highest possible percentage of Avis’ cars go to its most profitable customers

• Optimized pricing recommendations based on fleet-use forecasts

• Increased transparency in decision- making helps Avis Europe understand the impact of every decision

• Improved customer experience by providing the right car in the right place for the right customer

OPTIMIZATIONEver wonder how Avis Europe optimized fleet usage to drive $19 million in gains?

© 2017 Fair Isaac Corporation. All rights reserved. 2

8 millioncustomers

3,800offices

178countries

4 continents (Europe, the Middle East,

Africa and Asia)

99,000rental cars

Operating a large multinational rental car company within a highly competitive environment involves enormous complexity. Balancing the mobility needs of over eight million customers across numerous countries on four continents requires highly sophisticated technology.

“We are dealing with straight supply-and-demand forecasting; taking fleet information and working out which customers to sell to and how to best distribute our cars,” says Jens Utech, Avis Europe’s Director of Backoffice and Station Systems. “It sounds simple, but getting it right is a complex business process that involves many variables.”

Manual processes kept Avis Europe stuck in low gearHistorically, Avis Europe used a manual methodology for pricing, reservations and fleet allocation. Station and fleet managers used information from the reservation system to predict future demand. Pricing analysts would comb through the same data in order to come up with their estimation for appropriate rental fees.

In order to stay competitive, Avis Europe took the opportunity to transform its business by using optimization software as a means to more accurately forecast

and increase rental utilization. With a goal of increasing margins through more accurate measurements and decision- making, Avis Europe chose FICO® Xpress Optimization, part of FICO® Decision Management Suite, as a powerful and flexible prescriptive analytics solution for its decision-making.

Fueling transformation and driving profitabilityAvis Europe partnered closely with FICO to develop a new data-driven forecasting system. As with many organizations, Avis Europe started small with one decision area then branched out from there. The impact of applying prescriptive analytics to tough problems throughout an enterprise can be enormous when factored together. To date, the optimization program has created a two-point increase in the company’s fleet utilization, which correlates to a $19 million increase in incremental benefits each year. Specific solution applications include:

• Fleet distribution and utilization: Optimization helps Avis Europe determine the ideal car distribution formula—one that maximizes profit and sets pricing appropriate for demand. The team feeds systems-

based forecasts into FICO Xpress Optimization and the program provides precise recommendations for fleet distribution and utilization.

“Every Friday at 7 a.m., one transporter of cars would go from London Heathrow to Mayfair, due to demand in downtown London on weekends,” says Utech. “That’s what we always did—but there was no way to evaluate if we could do better. Now with optimization, it tells us, for example: On Friday morning, bring only four cars from Heathrow to Mayfair, and bring another four from Stansted Airport,” says Utech.

• Sales parameters: The optimization program recommends sales restrictions based on rental duration and locations for pickup and car return. These strategies ensure that the highest possible percentage of Avis’ cars go to its most profitable customers. “The program helps us boost profitability by recommending when to implement minimum rental period restrictions. For example, the program might tell us not to accept any rental reservations made for less than three days during Christmas,” says Utech.

Avis Europe by the numbersA large multinational rental car company deals with numerous variables throughout each day. Optimization technology is a natural solution for Avis Europe, which is handling:

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• Smoother business processes in the areas of pricing and car distribution: Though Avis has not yet implemented pricing-specific optimization, its fleet-use forecasts lead directly to clues for appropriate pricing. “The optimization program alerts us to special events that will result in a sell-out situation for our fleet. It prompts us to consider raising prices beforehand,” says Utech.

• Transparency in decision-making: FICO’s solution can be completely integrated into Avis Europe’s decision-making processes, resulting in concrete actionable outputs. Increased transparency on the number of reservations at stake for every decision helps the team understand the wide-ranging impact of each decision.

• Improved customer experience: Avis Europe’s customers are also experiencing benefits since the optimization technology was implemented. “We are now in a better position to put the right car in the right place for the right customer,” says Utech.

The overall success of the project is leading the company to implement additional automation with FICO® Xpress Optimization and begin fleet-planning optimization for car-purchasing cycles.

OPTIMIZATIONEver wonder how Avis Europe optimized fleet usage to drive $19 million in gains?

To learn how your organization can take

the fast lane to improved profitability, go to

www.fico.com/optimization.

Why FICOImplementing a transformational project such as this can be daunting, even for leading companies such as Avis Europe. The car rental company knew it needed a partner with powerful technology solutions, analytic expertise and proactive partnership.

Proactive partnership“Through it all, the service Avis Europe has received from FICO has been exemplary,” says Utech. “The FICO team has been quick to respond and help with challenges as they arose. They have a strong desire to help, to listen to our problems and to solve them constructively. FICO is clearly a better proactive partner than just about anyone else I can think of in the industry.”

Powerful technologyFICO’s powerful solvers help the team model with greater accuracy and solve the highly complex problems inherent in the rental car business. Avis Europe put the software through its paces by running head-to-head tests between the industry’s two top programs: FICO® Xpress Optimization and ILOG’s CPLEX, with benchmarks recorded for long-runtime solutions as well as those derived from truncated optimizations. “In both dimensions, FICO was superior to ILOG,” says Utech, whose company faces a daily overnight cycle to optimize short-term planning strategy. “In the fixed-time scenario the results were much better, and even when we ran the longer runtime the results were still better. Xpress is simply a superior product.”