AmEx and JPMorgan Will Keep Sharing Marriott's Credit Card Program
December 05 2017 - 1:02PM
Dow Jones News
By AnnaMaria Andriotis
J.P. Morgan Chase & Co. and American Express Co. will remain
credit-card issuers for the Marriott International Inc. rewards
program, the hotel chain announced Tuesday.
The longstanding U.S. partnership, in which J.P. Morgan issues
Marriott credit cards and American Express issues Starwood Hotels
& Resorts credit cards, was in question after Marriott
purchased Starwood last year and began negotiations with the
issuers. One possibility in the process was merging the rewards
programs down to one issuer, which would have pushed all of the
roughly $60 billion spent on the hotel chain's credit cards in 2016
to one lender.
Maintaining the status quo is a win for AmEx in particular,
where the Starwood program is the card issuer's second-largest
co-brand program, following Delta Air Lines Inc. Some AmEx
investors were nervous about the prospect of AmEx losing this
relationship just as the company is showing signs of rebounding
from the loss of the Costco Wholesale Corp. partnership that was
taken over by Citigroup Inc. and Visa Inc. in 2016.
Starwood accounted for 5% of AmEx's world-wide loans and 2% of
its billings in the second half of 2016, according to AmEx data.
The Starwood program also is estimated to account for about 4% to
5% of AmEx's earnings, said Mark DeVries, an analyst at Barclays
PLC.
"The uncertainty had been an overhang on AXP shares," Mr.
DeVries wrote in a note Tuesday. "But the announcement today
resolves that uncertainty and effectively takes the worst case
scenario off the table for AXP."
Holding onto the account also helps departing AmEx Chief
Executive Kenneth Chenault to leave on a relatively strong note and
removes a large potential problem for Stephen Squeri, who will take
over as AmEx chief in February.
AmEx and Marriott shares were up about 1%, while J.P. Morgan
shares were up 0.3% in late-morning trading.
Travel co-brand programs have lost some of their cachet with
consumers in recent years as banks have rolled out more generous
rewards on general-purpose credit cards. Consumers can use those
cards to redeem points for a variety of rewards and travel expenses
as opposed to limiting them to certain hotel chains or
airlines.
The programs have also become costlier for lenders to win.
Hotels and airlines have gained more leverage over card issuers in
negotiations in recent years following consolidations in those
sectors. In a presentation earlier this year, Stephanie Linnartz,
Marriott's global chief commercial officer, said that there would
be "upside at contract renewals" for the hotel chain.
Marriott and Starwood hotels tend to attract different
borrowers, with Starwood often skewing to more affluent travelers.
Marriott said in its announcement Tuesday that it expects to
introduce new co-brand cards starting in 2018 with improved
benefits aimed at a mix of spenders, including affluent and
small-business customers.
Write to AnnaMaria Andriotis at annamaria.andriotis@wsj.com
(END) Dow Jones Newswires
December 05, 2017 12:47 ET (17:47 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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