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Capital One is working to recover travel spending by opening an airport lounge that anyone can use — even those without one of the issuer's credit cards.
The first Capital One Lounge opens soon in the Dallas/Fort Worth Airport, offering food, cocktails, wine for sale and quiet work zones available along with yoga, cycling and shower facilities with secure luggage storage. Plans also call for giving space to families by providing nursing rooms and low-level tables and chairs for kids, along with a soundproof relaxation area stocked with blankets, eye covers and earplugs. A soundproof multifaith room will also be available for travelers to pray, meditate or reflect, Capital One said on its website.
This is a much different approach than the elite business lounges offered by the likes of American Express and certain airlines. Capital One’s lounges will be open to the general public, and Capital One cardholders will be eligible for special entry rates, depending on their card, a Capital One spokesperson said.
A second Capital One-sponsored lounge is planned for next year at Dulles International Airport outside Washington, D.C., with plans for a contactless digital entry pass available through an app. Capital One hopes to eventually establish a network of airport oases, the company said.
Capital One’s move into airports builds on its apparent success with one-on-one marketing at its combination locations built with Peet's Coffee locations, creating a casual branch atmosphere. Since opening the first such concept in 2017, there are now 40 Capital One Cafes, the spokesperson said. Capital One cardholders get 50% off beverages in the cobranded cafes.
The concept appears to be successful — even though Capital One has more than 700 U.S. branches, its footprint isn’t as large as credit card rivals like Bank of America and JPMorgan Chase — and bringing its banking and credit card services directly into the airport makes sense, said one observer.
“Credit card issuers are rethinking the cobrand card proposition, and as travelers are thinking about airlines and hotels, it is not a surprise to see some developments,” said Brian Riley, director of Mercator Advisory Group’s credit advisory service.
Capital One’s total credit card loan balances during the fourth quarter of 2020 fell 17% over the previous year, and the company now faces pressure to recapture travel spending as soon as consumers begin packing again for trips.
The timing is key, as Capital One will be in fierce competition with other mainstream credit card issuers and travel rewards card issuers that are all trying to revitalize purchasing volume when travel resumes.
Capital One CEO Richard Fairbank told analysts in February that when consumer spending slowed last year, the company also reined in marketing. Total marketing spending for the fourth quarter of 2020 was down 21% year over year, and the company was considering ways to regain momentum this year.
“This move reinforces the fact that we will soon be traveling again, which bodes well for airline cobrands and high point-yielding payment cards,” Riley said.
