Two years ago, Marriott split its customers between two card issuers following its acquisition of Starwood Hotels and Resorts. Rather than choose one over the other, the chain has challenged American Express to draw a clear line between its cobrand card and that issued by JPMorgan Chase.
Amex has had a relationship with Marriott for more than 60 years and with Starwood Preferred Guest cards for more than 20 years, so there’s a lot of history to build on — and a lot at stake.
Marriott’s Chase card concentrates more on mass consumer and premium consumer products. For Amex to avoid losing its customers to that mass audience, it has to play into its reputation as a card for the elite.
For the past year, Amex has viewed the contract wins on the hotel/travel fronts as key to recovering from its loss of the Costco Wholesale card portfolio to Visa in 2016. The card brand’s renewal with Marriott-Starwood came shortly after it had secured similar deals in 2017 with Hilton and Delta. Marriott International closed its acquisition of Starwood in 2016.
“We are leaning into a lot of our 30-year leadership in luxury cards on the new premium luxury card,” said Courtney Kelso, Amex’s senior vice president for U.S. commercial cards. “For American Express, travel and service has been part of our DNA.”
In launching the Starwood Preferred Guest American Express Luxury Card this week, American Express says the new premier card will also be part of Marriott’s introduction in August of one set of unified benefits for members of Marriott Rewards, The Ritz-Carlton Rewards and the Starwood Preferred Guest cards.
It will mean Amex cardholders will have access to book stays and earn or redeem points for the first time at 29 participating global brands making up 6,500 hotels in 127 countries and territories.
“As a defensive play, Amex has gone through a lot the last couple of years, so protecting its Starwood card is really important to them,” said Brian Riley, director of card services for Mercator Advisory Group. “The relationship between Amex and Starwood benefits both sides, without a doubt.”
The rewards market for cards may not be as hot as it was last year when the Chase Sapphire Card brought about significant changes with its offer of 100,000 points at signup, but that market continues to apply pressure on issuers introducing new products, Riley said.
Chase even had to bite the bullet for the fourth quarter of 2016, as the promotion and the generosity of the points on the Sapphire Card contributed to a $2 million loss. In addition, retention models on U.S. credit cards hovers around 15%, meaning the issuers have a fair number of factors to juggle to make a rewards card a lasting relationship.
“A big challenge these cards have had is that everything is front-loaded and based on a lot of points,” Riley said. “But something that has to be considered is whether the cardholder will stay.”
In that regard, American Express is focusing on the new Starwood card in a way that would create year-to-year value, Riley added.
While the Starwood luxury card carries a $450 annual fee, American Express is banking on the fact its users can redeem more than $2,000 in value with it.
Every dollar spent with the card in a Marriott or fellow properties will earn six points, while dining and airfare earns three points, and all other types of spending will earn two points. An annual $300 statement credit exists for purchases on the property, while spending levels can lead to gold or platinum status as well as the potential to have 15 night credits added to an account.
Other perks include additional complimentary cards, TSA precheck status and a priority pass for unlimited access to more than 1,000 airport lounges globally for the cardholder and a guest.
“All of our products start from customer feedback and our close relationship with what our customers want and how they spend, and what would enhance their experience,” Kelso said. “Our business model is about the long-term relationships we create with our customers.”
Ultimately, it’s a case of American Express doing what it does well, and Marriott enhancing a program that its visitors already view favorably, Mercator’s Riley said.
“Marriott has its own great rewards program and when you marry in the American Express potential here, it can really juice up the value of that rewards program,” he added.