In a rare and quirky example of two card companies working with the same cobranding partner, Citibank U.S.A. and American Express Co. have both started issuing credit cards on behalf of Hilton Hotels, which found itself in the awkward position of having to honor two competing contracts after a corporate acquisition.
Normally, companies that cut cobranding deals with card issuers give them "category exclusivity" in the payment area, at least for marketing purposes. But Hilton Hotels, which had been working with American Express, last year bought Promus Corp., a hotel chain owner that had its own cobranding arrangement with Visa. Hilton kept both relationships, and Citibank just began issuing Hilton Visa cards this month. Citibank, which pledges primary allegiance to MasterCard, apparently found the opportunity to pick up a premier cobranding partner valuable enough to come forward with a major Visa program. Visa was eager to see its relationship with Promus continue under the stronger Hilton brand name. American Express may have wound up with the shortest end of the deal, since it no longer has exclusive rights to issue the Hilton card.