After a year when strong profits and growing traveler demand sent the overwhelming majority of travel-related stocks flying higher, the rental car industry finds itself looking for a jump start.
The category, dominated by the three big players Hertz, Avis and Enterprise, finds itself grappling with an inability to increase profitability from their oversize fleets, while improving their operations to meet the changing needs of travelers.
The disparity in returns between the two publicly traded rental car stocks, Hertz and Avis, and other travel-related stocks is eye opening.
Shares of the six major U.S. airlines are up an average 66 percent in the last year. Over the same time frame, cruise operator stocks have jumped an average 42 percent, online travel sites an average 40 percent, and hotels an average 28 percent. ( Tweet this. )
By comparison, Avis stock is up just 4 percent, while Hertz is down more than 25 percent in the last year. In addition, Hertz has delayed filing its 10K financial report to review its internal records for fiscal years 2011 through 2013.
The industry's struggles are happening despite consolidation in the sector, where the number of players has been cut in half over the past decade.
"We look at [the rental car industry] and say why can't this become more like airlines when you went from maybe eight hub airlines to four," said Brian Johnson, an analyst with Barclays who tracks the rental car industry. "We have gone from six rental car industry companies to three, yet we haven't seen the same type of benefits to investors from consolidation that we have with airlines."