Renting dreams to customers from the showroom floor – January 22, 2007
January 22, 2007
Filed under Uncategorized
Owning a dealership that rents Harley-Davidson motorcycles to Las Vegas tourists and residents is a long way from the copper, uranium and gold mines in New Mexico, Nevada and Canada. But former mining manager Chet Diercks, owner of the EagleRider rental franchise in America’s gambling paradise, wouldn’t have it any other way.
“Every year has been better than the last,” says Diercks, who bought an existing EagleRider franchise in January 2001. “The business has been pretty much self-sustaining from day one. Even after Sept. 11 happened, we recovered within six weeks.”
EagleRider offers a wide range of street bikes, mainly from Harley-Davidson, Honda and BMW, as well as off-road motorcycles, ATVs, personal watercraft, snowmobiles, scooters and sport vehicles, but Diercks has decided to stick with the Harleys.
“I don’t know what my reluctance is; I just haven’t diversified,” Diercks says. Harley-Davidson motorcycles have proven a popular draw with renters in the area, and Diercks says he doesn’t want to tamper with a successful formula. Beefing up inventory also would require more space, which Diercks doesn’t have in his current location.
Diercks worked in mining management for 20 years before gold prices plummeted, and he found himself wanting a new career. So he and his family moved to Las Vegas, where he ran a friend’s construction business for more than two years before the EagleRider franchise became available. He bought the franchise after six weeks of evaluation, which included interviews with the principals of Los Angeles-based EagleRider.
“As they were interviewing me, I was interviewing them,” Diercks recalls. “Management has a really good combination of dreams and business sense to put ideas into action.”
The dreams person would be Chris McIntyre, EagleRider president. The company currently has 42 company-owned and franchised locations almost exclusively in the United States (with single locations in the south of Spain, south of France and Cancun, Mexico) that offer rentals, self-drive tours and professionally guided tours. McIntyre says the company hopes to open another 20-25 outlets this year, primarily as rental operations at existing powersports dealers while also targeting standalone locations and resorts. In the next five years, McIntyre says another 300-500 locations around the globe are possible.
“Our goal is to sell the lifestyle,” says McIntyre, who adds the company began in 1992 by renting motorcycles to four Austrians. The company is modeled on the successful automotive rental industry, taking the best-of-breed approach to build both the business model and the EagleRider name. In late January, the company unveiled a cutting-edge online booking system.
Gross profit margin on a rental can top 70 percent, but the overhead of a standalone operation takes a considerable chunk of the profit. Powersports dealers are a great fit because they already have the infrastructure and resources in place to handle rentals as well as the necessary service work, McIntyre says.
In return, the company gives each franchise a dedicated territory, the size of which depends on the location, and aggressive marketing at travel agencies throughout the world. McIntyre estimates that EagleRider promotional materials can be found in 90 percent of travel agencies in Europe, and the number of non-American tourists who rent from EagleRider is a testament to those marketing efforts. The company has support offices in Holland, Germany and France to handle North American bookings.
EagleRider also requires a dedicated rental manager at each location that cannot be the dealership sales manager because of potential conflicts between renting units and selling depreciated ones. A survey from Harley-Davidson shows that nearly one-third of those who rent a motorcycle wind up buying one, which can strengthen the revenue stream at dealerships.
“Our growth plans primarily will be at dealerships because of the natural synergy,” McIntyre says. “We drive rental and resort business to franchisees, and the dealer has quality control guidelines and has to offer a certain level of service.”
Up to 90 percent of rentals are of street bikes, with the remainder split mainly between snowmobiles and personal watercraft, the availability of which varies by market. Last year, the company served more than 48,000 passengers and generated more than $30 million in revenue.
The company has a partnership with the Hilton Family of Hotels and many resorts, combining rentals with other leisure choices. EagleRider also has alliances with booking sites Orbitz, Expedia, Travelocity and Priceline. The new central reservation system, developed in conjunction with Amadeus, allows a user to check real-time inventory at the chosen location for the chosen dates, confirm the price and reserve online. Not only will the system speed rentals, since the user is inputting the data directly, it also will improve check-in and allow EagleRider to capture user data directly to aid in future marketing efforts.
McIntyre says the company slogan is “We rent dreams,” which can apply equally as well to franchisees like Diercks as it does to those who rent from EagleRider.
“I’ve been very happy with my franchise,” Diercks says. “A pretty primitive reservation system has evolved into a state-of-the-art one, and corporate efforts are bringing more business to the company and the franchisees.” psb