CHICAGO - Belying predictions that it would sell or shutter its Diners Club International brand, Citigroup Inc. seems to be trying to rejuvenate the Chicago unit, which recently introduced its first revolving credit card, Montage.
The Diners Club unit, which targets affluent business travelers, periodically comes forward with an ad campaign or customer retention program, but generally lies low. Because Citibank is so intent on marketing the Citi brand name, Diners Club has looked increasingly anomalous.
Diners Club, which previously issued only charge cards, competes with American Express Co., and increasingly with Visa and MasterCard, in the business travel market. Like Amex, it is an independent brand with its own merchant network.
With the introduction of Montage, the unit seems to be taking another page from the playbook of American Express, which launched its first revolving credit card, Optima, in 1994 to expand its business. The card was later discontinued, but replaced by another revolving card, Blue, in 1999.
Creating a revolving credit card "is something we wanted to do for a while," said Holly Heckathorne, vice president of the personal card group at Diners Club. Ms. Heckathorne said she was hired two and a half years ago to enhance the Diners Club name. "There is a lot of opportunity we haven't taken advantage of."
More products are under consideration, including a cobranded card, she said. "We want to expand our relevancy in the market as a platform for growth. It has been a lot of fun to breathe new life into the business."
The Montage card lets people choose from three different levels of benefits, each with a different price. At the low end is Complimentary Benefits, with no annual fee and such minimal benefits as travel accident insurance and restaurant discounts.
For a $25 annual fee, cardholders can get Selected Benefits, which offers up to six features, including a separate account number for Internet shopping and free software for home record keeping.
For a $75 annual fee, customers get membership in the Club Rewards program, which offers all the Selected Benefits features and awards points that can be redeemed for travel and entertainment awards.
Ms. Heckathorne said her research had found that customers enjoyed being able to select their benefits. "We wanted to go with the more modern viewpoint of allowing individuals to choose what they wanted."
For now Montage is being marketed only to Diners Club cardholders, but eventually it will be advertised to a wider market. The unit will stay within its "business upper-income travel and entertainment niche," but the Montage card will be plugged as the card for weekends or personal time, she said. "The Montage will focus on their needs outside of the workplace."
Last year the company introduced the Diners Club Carte Blanche, a $300-fee charge card whose benefits mimic those of Amex's platinum card, including free cell phones for international travelers and free companion airline tickets.
To bolster the appeal of its products, Diners Club has increased its merchant base to six million worldwide, which is still well below Visa's 22 million but now includes Nordstrom's and Ann Taylor.
In its quarterly financial statements, Citibank does not break out the performance of Diners Club from the rest of its North American Cards group. However, the 2002 edition of the Card Industry Directory, a Thomson Financial publication, states that Diners Club had $35.4 billion of annual charge volume as of Jan. 1, 2001, and 8.2 million cardholders, compared with Amex's $296.7 billion of charge volume and 51.7 million cardholders.
Chris Theoharides, the president of Advantage Consulting of Massapequa, N.Y., said Diners Club is trying to stave off eroding market share, but its customers may not go for the Montage card.
"My question is how much success will they have getting these guys to revolve?" he said. "I am skeptical as to how much revenue this will generate. This is not a heavy revolving category."
Noting that Visa and MasterCard have been targeting the travel and entertainment market, Mr. Theoharides said Diners Club is "battling fierce new competition that wasn't there years ago."
