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AmEx Scores a Starwood Win as Marriott Opts for Dual Issuers AmEx and JPMorgan

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Old Dec 5, 17, 7:25 am
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AmEx Scores a Starwood Win as Marriott Opts for Dual Issuers AmEx and JPMorgan

AmEx Scores a Starwood Win as Marriott Opts for Duel Issuers

  • AmEx and JPMorgan will share the business, debut new products
  • For now, both companies will retain existing portfolios, cards
By Jenny Surane

(Bloomberg) -- American Express Co. inked another co-brand deal, winning dual-issuing rights with JPMorgan Chase & Co. for Marriott International Inc.’s suite of cards.

Marriott will introduce new co-branded products next year, with AmEx providing super-premium and small-business cards and JPMorgan offering mass-consumer and premium-consumer cards, the three companies said in a statement on Tuesday. In the meantime, both issuers will retain their existing portfolios and continue to offer their current products.

“We expect our loyalty program members, owners and franchisees, and our shareholders will see significant incremental benefits from these new agreements,” Arne Sorenson, Marriott’s chief executive officer, said in the statement.

The deal puts months of speculation about the fate of AmEx’s popular Starwood Preferred Guest cards to rest. Investors feared that Marriott’s acquisition of Starwood Hotels & Resorts Worldwide Inc. would put AmEx’s Starwood partnership -- which accounts for 5 percent of the company’s loans and 2 percent of total spending on the firm’s cards -- at risk. Marriott has long had its own co-brand deal with JPMorgan, the largest U.S. credit-card lender, and Visa Inc., the world’s biggest payments network.

Combining Programs
Marriott still intends to combine its loyalty programs into a single platform for its 100 million members by late next year, the company said in the statement. Merchants like Marriott have benefited from increased co-brand card competition, as issuers and networks lower their fees and offer up more perks to win the lucrative deals.

“Marriott’s co-brand credit cards have been a meaningful contributor to the success of Marriott’s loyalty programs and a sign of the extraordinary value of our portfolio of brands,” Sorenson said in the statement.

Still, co-brand credit cards are facing increasingly stiff competition from banks’ proprietary products, including the AmEx Platinum and JPMorgan’s Sapphire Reserve, which drew so many applicants during its 2016 debut that the company temporarily ran out of materials to mint the card.

The Marriott deal is another win for outgoing American Express CEO Ken Chenault, who will step down in February. In June, the company also won exclusive rights to issue credit cards for Hilton Worldwide Holdings Inc., ending an agreement in which it shared the business with Citigroup Inc. AmEx’s shares had struggled after the company lost a bidding war to Citigroup for Costco Wholesale Corp.’s card portfolio and failed to renew its partnership with JetBlue Airways Corp. in 2015.

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Old Dec 5, 17, 8:17 am
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AMEX winning the co-brand battle doesn't mean the SPG card won't see severe devaluation in the future. I guess it's good that AMEX won't lose a decent chunk of their customers.

Chenault is also not a winner... He's an embarrassment to the company. American Express has fallen a million miles under his watch... Everything to benefits, rewards, and customer service plus everything in between has either been matched or surpassed by other issuers, despite the fact that they're a closed loop network that doesn't have to share their higher than average interchange fees with banks, not to mention the major loss of a few co-brand partners. Buffett should've ran Chenault out 10 years ago. Marriott probably decided to keep AMEX as a co-brand partner because they know Chenault won't be there in the spring.
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Old Dec 5, 17, 8:35 am
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From OMAAT: Both American Express and Chase will issue credit cards for Marriott in the future. Starting in 2018, Marriott will introduce new co-branded credit card products:
  • Amex will offer super premium and small business cards
  • Chase will offer mass consumer and premium consumer cards
For the time being, both issuers will retain their existing portfolios and continue to offer their current products, and more details on the above cards will be revealed in 2018.
---------------------------------------------------------------------------------------------------------

Interesting that Amex will issue the "super premium" product. I wonder if the Ritz card will become an Amex once the integration is complete? but good to know my SPG Amex will not be axed or PC'd anytime soon. I wonder what the new offerings will be or offer?
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Old Dec 5, 17, 8:46 am
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Originally Posted by mikesyr18 View Post
Chenault is also not a winner... He's an embarrassment to the company. American Express has fallen a million miles under his watch..
Factually inaccurate. You may not like the products as well as you did in 2001, but the company outperformed competitors:

Since Chenault took charge on April 25, 2001, AmEx’s stock has soared 155.4% ...he successfully navigated the company through two tough recessions. By comparison, the Dow has rallied 118.0% and the SPDR Financial Select Sector exchange-traded fund... of which AmEx is the 10th most heavily weighted component, has gained 19.0%
https://www.marketwatch.com/story/am...ign-2017-10-19

Originally Posted by fmisle View Post
... wonder if the Ritz card will become an Amex ...
It would make sense for American Express to issue a card targeted at Ritz-Carlton clients because many of their properties participate in FHR. However, we do not yet know how Marriott will position Ritz Carlton vs St Regis. It may no longer make sense to have a separate Ritz branded card, but rather a card with extra benefits at specific Marriott premium brands.
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Last edited by mia; Dec 5, 17 at 8:52 am
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Old Dec 5, 17, 8:47 am
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Originally Posted by mikesyr18 View Post
AMEX winning the co-brand battle doesn't mean the SPG card won't see severe devaluation in the future.
How much can you really devalue a $95 annual fee card that earns 1 point per dollar? The bigger question is what happens to the SPG program post 2018 when Marriott eventually combines the programs, and the knock on effect that has on the card

Originally Posted by fmisle View Post
  • Amex will offer super premium and small business cards
  • Chase will offer mass consumer and premium consumer cards
For the time being, both issuers will retain their existing portfolios and continue to offer their current products, and more details on the above cards will be revealed in 2018.
---------------------------------------------------------------------------------------------------------

Interesting that Amex will issue the "super premium" product. I wonder if the Ritz card will become an Amex once the integration is complete?
If I had to hazard a guess, it might resemble the forthcoming Hilton Ascend card. I also think that differentiation, looks like maybe the Marriott Biz card is the only one that doesn't fit the new split if Chase will only offer consumer products.
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Old Dec 5, 17, 9:04 am
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I speculate that this also likely means that when Marriott Rewards and SPG are finally merged, transfers will be offered from both Membership Rewards and Ultimate Rewards -or- neither.
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Old Dec 5, 17, 9:04 am
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Originally Posted by fmisle View Post
I wonder if the Ritz card will become an Amex once the integration is complete? but good to know my SPG Amex will not be axed or PC'd anytime soon. I wonder what the new offerings will be or offer?
I'm assuming that at some point (maybe late 2018 or early 2019) both Amex and Chase will stop offering their current SPG or Marriott cards. At which point there will likely be no Chase equivalent to the current Ritz Carlton Card and no Amex equivalent to the current personal SPG card. It's possible they may agree to swap portfolios and do a product change, or the issuers could retain those customers and transition them to cards with similar annual fees and benefits that aren't available to new applicants.
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Old Dec 5, 17, 9:06 am
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Originally Posted by dw View Post
... they may agree to swap portfolios and do a product change, or the issuers could retain those customers and transition them to cards with similar annual fees and benefits that aren't available to new applicants.
-OR- users could be permitted to keep their existing cards for as long as they are willing to pay the annual fee, with gradually eroding benefits and no retention offers. Aren't there still some Chase Continental Airlines cards extant?
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Old Dec 5, 17, 9:13 am
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This is not surprising news to me, as I suspected that AMEX and JPMorgan will remain dual issuers based on the fact that the Marriott CEO expressed his desire with having a dual agreement some time ago. My fantasy was that Citigroup purchase/ picked it up. Let the games with Chase and AMEX begin.
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Old Dec 5, 17, 9:14 am
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Originally Posted by mia View Post
...Aren't there still some Chase Continental Airlines cards extant?
They wear United branding now though, even though they are still their old self. The Chase Continental Presidential Plus is a good example. It's now a United card and looks it, but hasn't been available for sign ups in years and existing card members have been able to keep it. Chase could have force converted everybody to the United Club card, which is the closest thing to it, but hasn't.
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Old Dec 5, 17, 9:26 am
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Should this present new Amex possibilities for those of us that have lifetimed out of all their other products?
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Old Dec 5, 17, 9:30 am
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Originally Posted by g8trgr8t View Post
Should this present new Amex possibilities for those of us that have lifetimed out of all their other products?
It should, but a super premium card may not be attractive unless you are an enthusiastic Marriott client.
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Old Dec 5, 17, 9:31 am
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Originally Posted by g8trgr8t View Post
Should this present new Amex possibilities for those of us that have lifetimed out of all their other products?
All signs points to Yes.
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Old Dec 5, 17, 9:32 am
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Originally Posted by mia View Post
It should, but a super premium card may not be attractive unless you are an enthusiastic Marriott client.
If it's a "merger" of the current Ritz Card (benefits) with the current SPG card (3x Marriot Points/$) that will be extremely attractive.
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Old Dec 5, 17, 10:22 am
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Originally Posted by mia View Post
Factually inaccurate. You may not like the products as well as you did in 2001, but the company outperformed competitors:
.
Like I've said, they've lost ground in rewards, benefits, co-brand partners, and customer service. Even after they've recovered the #1 JD Power spot, it's still a far cry from what it used to be.
Profits are up because the DOW is at a record high and AMEX is one reason why... The cut backs have been beneficial only for the shareholders and not beneficial for customers.. Every other issuer made it through the recession.

Originally Posted by krazykanuck View Post
How much can you really devalue a $95 annual fee card that earns 1 point per dollar? ...
Points are easily devalued, unlike a cash back card. Each Starwood point is worth about 3 cents each. Marriott could easily make it 0.9.
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