Oligopoly brief: Cendant
Cendant
is becoming a dominant force in the travel industry in the US and in
Europe. Cendant is a name made up in 1998, a modish name with the
“-ant” or “-ent” ending typical of that era (Viant, Scient, Versient).
It was originally named HFS Inc. Curiously HFS once owned, spun the
company off, then Cendant brought it back in 2002.
During the
1990s Cendant grew rapidly through acquisitions in key travel and
property areas. It skirmishes its risk by being a major franchisor.
The
Cendant empire is a major player in a number of areas. It is the
largest hotel/motel franchisor in the world. It has 6,400 locations
under such names as Days Inn, Super 8, Ramada, Travelodge, and others.
In addition, the company owns Avis and Budget auto rental companies
(together 3,800 locations across the world) It has a major online
travel presence (to be expanded greatly by the planned acquisition of Orbitz), and is big in renting vacation homes and selling timeshares.
The
motel business keeps growing. The company often has several of its
motels in the same location, offer slight perceived differences, a true
case of pseudo-variety. The company is branching up, with a recent
acquisition of the US hotels in the Ramada hotel chain and an
announcement it will acquire international rights from Marriott.
Ramada's hotels are a step up from motels, so they fit well within
corporate strategy. The company is also planning to expand its motel
chains in the UK, Scandinavia, and through Europe. The Super 8 chain is
planning to open 50 motels in China by 2009.
It is big in the
auto rental industry, with two of the biggest American auto rental
companies. Internationally, its PHH Arval division is the #2 company
managing and leasing vehicle fleets for major corporations (a division
of GE is #1).
Cendant owns the world' first, second, and fourth
largest real estate brokerage companies (Century 21, Coldwell Banker,
and ERA), and its relocation service has a 52% market share. The
company is still buying independent regional brokerages in the US.
Cendant
is also expanding into marketing consulting and tax preparation, where
it is #2 after HR Block in the US. But basically it has stuck to three
areas of core competency where it is one of the leaders,
Cendant
is under some, stress due to fraudulent accounting scandals, with some
former employees having been indicted and some shareholders suing the
company. The company has an excellent cash flow and islikely to weather
the storm.
Update 10/24: I just noticed that Cendnat has announced it will
spin of its mortgage operations and its fleet management subsidiary.