American Express Co. has pulled off another striking partnership, announcing that it will issue a cobranded Optima card with Hilton Hotels Corp., beginning this week.
The venerable charge card firm has been using its long-standing relationships with companies such as Hilton and Delta Airlines to muscle its Optima credit card into the cobranding arena, slugging the "home runs" that have been eluding the banking industry of late.
Bankers, who lately have been settling for smaller national programs such as that of software retailer Egghead Inc., or regional supermarket programs, may find the new competition galling as they continue to contend with the likes of Household International and AT&T Corp.
Robert E. Dirks, senior vice president of marketing for the Beverly Hills-based hotel chain, said it had been "waiting patiently for American Express as it moved forward with its cobranding strategy," basically dismissing any other suitors. Discussions have been going on for two years.
He pointed out that the two corporations have strong brand identification and clientele with similar demographics. The companies have shared a marketing relationship since the '60s.
Hilton, with 25 million guests annually and net income of $53 million for the second quarter of 1995, has been a staple of American Express' Membership Miles program for charge card holders.
James L. Accomando, a Fairfield, Conn.-based consultant, said the cobranded program would be successful for American Express, which has undertaken a comeback-kid approach, vowing to retool its entire strategy to be more competitive.
Targeting the business traveler, the no-fee Hilton Optima Card offers automatic enrollment in the 3.5-million-member guest reward program, which provides 10 points for each dollar spent at a Hilton, and numerous perks. Members using the Hilton Optima receive an extra three points per dollar spent.
Leisure travelers using the card earn 500 points per stay and three points per dollar spent.
Cardholders also earn two points per dollar for general purchases, and a bonus of 7,500 points for approval and first purchase. Each year, members receive a certificate for 50% off a three-night stay.
Cardholders can redeem points for hotel upgrades, seven-day cruises, or free nights at one of the 225 Hilton hotels or seven Conrad International hotels abroad. Two free weekend nights, valued from $200 to $500, will cost the cardholder 25,000 points.
Though the rebate structure is more complex than cash-back and rebate offers of most bank cards, Mr. Dirks said members of the program get detailed explanations.
The card carries an 8.9% introductory rate for the first six months, followed by 9.9% over prime, higher than recent bank cobranded offerings, such as the Egghead Visa, issued by First U.S.A., which offers a 5.9% teaser and 5.9% over prime thereafter.
Mary Miller, senior vice president of partnership products for American Express, said the rates are competitive with other hotel cobranded cards. For instance, the Marriott Honored Guest Visa card, issued by First Chicago Corp., carries a rate of 9.9% over prime and a $30 fee.
Ms. Miller acknowledged the possibility of cannibalization of American Express' corporate card program, which many business travelers use for trips, but said the two cards would complement each other. "It's a great program for earning points and then burning them on a free vacation."
Print advertising in The Wall Street Journal, The New York Times, and USA Today will coincide with a 2.5 million direct mail solicitations to guest reward program members, others in the Hilton data base, and selected American Express cardholders.
