FOR BETTER OR WORSE
TBY talks to Fawaz A. Danish, CEO of Budget Saudi Arabia, on the importance of having a truly national presence, how to commodify a quality service, and investing during downturns to gain market share.
BIOGRAPHY
With an honors law degree from King Abdul Aziz University, Fawaz A. Danish then studied international commercial law at the George Washington University. Since returning, he has worked for the Arab Alliance Group for Cooperative Insurance and the Jeddah Chamber of Commerce and Industry in various capacities. In 2002, he joined United International Transportation Co. Ltd., (Budget Rent A Car) with a mandate from the chairman to deliver operational efficiency and increase shareholder value. He led the company by creating a new strategic vision built on good corporate governance principles, transparency, and best management practices. Under his leadership, the company was awarded the “Best Managed Company in the Middle East 2014” for the Transport and Shipping Industry by Euromoney.Budget is the largest firm in Saudi Arabia. How do you compare to others in the region?
We are the largest franchisee in the world for Avis Budget Group and one of the largest car rental and leasing companies in the Middle East. We have about 25-28% market share in the Saudi Arabian car rental industry. Budget Saudi is the only car rental and leasing company listed in Tadawul, the stock exchange in Saudi Arabia, and our shares are publicly traded in the market. This was one of the strategic moves that allowed us to scale up the business to its current level.
Such dominance is rare in any sector in the Middle East, much less in the highly competitive rental car market. How did you do it?
Budget Saudi was established in 1978. We have built a wealth of experience in nearly four decades. By this, I mean our key employees have decades of professional practice. Our visionary founder is the executive chairman of the group. Our formidable team has excelled in every area of our operations. The average tenure of our top management is nearly two decades. This shows the depth of experience with our team and the consistency in management practices, but there are other factors that contributed to our position. We have invested heavily in our infrastructure as well. We understand that we do not produce a tangible product; our product is our service. When renting a car, it is necessary to trust that it will function well and is safe. We create a customer experience each time they drive a Budget vehicle.
Is there a new push for you to be present in smaller, secondary cities, and what recent investments have you made in your maintenance and retail infrastructure?
As long as there is an airport, we are present. Budget Saudi Arabia has been present in all the major airports in the Kingdom for several decades. We have also recently expanded into smaller cities. With 105 retail locations, we are present in every province of the country. This is a major advantage for us because our clients, corporate or retail, can find us everywhere they travel. Once an airport opens in a city we build our infrastructure there, including workshops and branches, and we recruit and train our team.
How are you adjusting to the new macroeconomic situation?
2017 will provide excellent opportunities for Budget Saudi Arabia compared to our competitors. When we buy in a difficult time, we dictate the price. Most of our competitors are family-owned businesses that are less willing and potentially less inclined to invest during poor economic conditions. We intentionally invest more during downturns. We know that we will gain more market share in an economy where our competitors are not willing to invest. We are still keen on investing because we believe we can gain a higher market share of the existing pie even though it is stagnant at the moment.
Do you see scope for growth at Budget Saudi Arabia due to the reforms that being implemented in line with Vision 2030?
The government's Vision 2030 will bring a great deal of business to us. With the private sector coming up, companies will employ more people because Vision 2030 is all about employing more Saudi citizens. We have approximately 200,000 students abroad, and when they return to the Kingdom they need to work, and the country needs to create jobs for them. Job creation will definitely add to our economy because we depend on domestic travel. When people have jobs, they have higher spending power and will use to this travel within the country. We are enthusiastic about the reforms and are ready for them. More private sector activity means employing more people, which creates higher demand for our services.
FOR BETTER OR WORSE
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