Major card brands have been competing to surpass each other with rewards and premium card offerings for decades, but the salvos in these engagements may never have been more apparent than on the Marriott hotel portfolio this week.
Competition between Amex and Chase for Marriott International cardholders was a foregone conclusion when
At the same time Amex revealed a new
Chase is clearly set on winning the business of higher-end customers — its Chase Sapphire Card was the first to offer the 100,000 point threshold in the summer of 2016 and the company considers it a contributor to its $2 million fourth-quarter loss that year.
But American Express still views the premium card world as one it dominates.
"I feel very good about our value propositions and don't feel a need to do anything dramatic in response to what else is out there," Amex's chief financial officer, Jeffrey Campbell, said April 18 during the card brand's first-quarter earnings conference call.
Buoyed by solid first-quarter earnings, Amex says it's not concerned about engaging in a race with competitors to see which can produce the top rewards card for businesses or consumers.
"We feel fabulous about the progress we have made on our Platinum [card] portfolio and look at our growth rates in every consumer and geographic segment this quarter and have to conclude that we have great value propositions out there," Campbell said.
The announcements of the new premium cards came at the same time Marriott revealed it was going to unify its rewards programs in August for the cards at all resort locations in the chain.
Investors and industry analysts have taken the view that the new tax laws will generate more cash flow for the card brands, potentially manifesting itself in funds that the companies would invest in more attractive premium cards for consumers and businesses — even though they can tend to be costly launches for the issuers.
"I don't see anything related to the tax act that would change the strategies we are deploying," Campbell said. "We really focused in the last couple of years on evolving our value propositions in ways to leverage the unique differentiated assets we have."
Amex's brand, global scale, size of its premium card base and closed-loop model allow it to work with a variety of partners to bring rewards and perks that "are difficult for our competitors to match," Campbell added.
Regardless of how competition plays out in the premium card sector, Amex delivered a solid first quarter with a net income gain of 31% to $1.6 billion, up from $1.2 billion a year earlier.
Citing steady growth from higher cardholder spending and loan growth, the company reported total revenue at $9.7 billion, up 12% from $8.7 billion a year ago. Discount revenue, or the fees Amex charges merchants, climbed 9% to $5.9 billion, while cardholder spending worldwide climbed 12% to $238 billion in the quarter.
With that sort of financial report, Campbell remained confident that Amex would deliver a solid 2018 for investors after fighting through the loss of the Costco account and others the past two years. Most assuredly, he said, the roller coaster that can be premium-card competition won't affect the company.
"We don't worry too much about a couple of months in the marketplace, one way or another," Campbell said. "We have far more value propositions in the marketplace, by far, than any other competitors."
