Hilton Aspire Card, Moneymaker?

Old Nov 2, 2020, 11:47 am
  #1  
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Hilton Aspire Card, Moneymaker?

(Sorry about a new thread. The [ARCHIVE to 2018] American Express Announces Two New Hilton Credit Cards (Hilton forum) thread is closed and the link in the last post of the thread is invalid. I couldn’t find another thread for general discussion of AmEx Hilton Aspire card.)

I admit it, even with a high annual fee, I don’t see how AmEx makes any money off this card. Every year, I pay a $450 annual fee and get a $250 Airline Fee credit and a $250 Hilton Resort credit (for staying at the same places I stayed before I had the card) and a free weekend night (which going forward will be good for any night). I don’t stay at high end luxury properties, I’ve used the free night each time for 1 night of a multiple night stay and saved about $300-$350. In 3 years I’ve paid $1350 total fees and received $1500 in direct credits plus about $1000 saved (3 free nights) plus about 400,000-500,000 Honors points without doing anything differently or staying anywhere I wouldn’t stay without the card. (I did shift one ski trip earlier this year from Big Sky to Park City but that’s about it for changes to generate use of this card and I did that mainly because I also got an Epic Pass.) I’ve stopped into a few Priority Club lounges along the way, and I’ve even left the Waldorf/Conrad credit “on the table” so to speak. For me, with about $10,000 in annual charges and estimated 3%, it’s only $300 in swipe fees, AmEx still seems to lose money or at best break even, worse if I had used the free weekend night at expensive properties.

I don’t see the card as a loss leader and it would seem that savvy credit card users would only put Hilton, maybe some other travel and dining, charges on this card. Even if AmEx has negotiated HHonors (points and nights) and Priority Club at infinitesimal rates, just on a cash basis they seem to lose on this card. Is AmEx getting HHonors points and nights and Priority Club access for nothing so they don’t lose any money on those things? Are there that many people who pay the annual fee and then do NOT take advantage of all the benefits so that AmEx comes out ahead? Are there that many people who are charging large amounts annually so they make money on this card overall on swipe fees? Is AmEx making money off this card in some other way? Thank you.
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Old Nov 2, 2020, 12:07 pm
  #2  
mia
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Originally Posted by Dr Jabadski
....$450 annual fee and get a $250 Airline Fee credit and a $250 Hilton Resort credit... Is AmEx making money off this card in some other way? Thank you.
1) Consider the possibility that Hilton is bearing a portion of the cost of the credits, perhaps the entire cost of the Resort credit.
2) Bear in mind that a high fraction of credit card holders carry a balance, and pay finance charges at a handsomely profitable rate.
3) American Express sells access to cardholders through many programs, including Amex Offers. When you login and see ~100 coupons attached to your account, you can be confident that someone paid to place most of them.
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Old Nov 2, 2020, 12:56 pm
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I agree, the card is almost too good to not have (for a lot of us). The product has to be mutually beneficial to both parties though. All of these travel companies want to capture some upscale clientele, and this is a great avenue to do so. I would assume that some of the perks aren't billing AMEX at the "full" amount. I would venture to say that the marketing department of Hilton is very interested in getting people to try out their resorts as that can lead into longer stays, expensive oceanfronts, etc. AMEX probably just didn't pick that category by chance and without benefit to them too. I also doubt AMEX is being billed the "full value" of the free night.
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Old Nov 2, 2020, 2:27 pm
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Originally Posted by Dr Jabadski
I admit it, even with a high annual fee, I don’t see how AmEx makes any money off this card.
Like the other posters above have stated, I don't think AMEX is fully absorbing the costs of some the benefits. For instance the free night cert might be primarily a Hilton burden. Afterall, Hilton controls where and when you can use it. AMEX might control who they issue them to, but ultimately Hilton is obligated to provide capacity as part of their partnership. Maybe Hilton charges back AMEX a certain amount(fee) after a free night cert is used. Regardless I think that Hilton is picking up the majority if not all of the tab on these "free nights.", because Hilton knows that an empty room generates 0 revenue.

And remember a lot card holders do not use all of the benefits. Many only sign up for the bonus (its cheaper than buying points). So I am pretty sure AMEX knows or has some idea what percentage of cardholders will take full advantage of every benefit and what kind of revenue they can expect to generate from this credit card (considering that Hilton is sharing part of the cost burden). Some cardholders might be more cost intensive (like yourself) and will milk every ounce of the card's benefits, or AMEX's burden may amount to only the cost of the points awarded for those cardholders who strictly use it to earn points and attain a status upgrade and don't see a need or value the other benefits (like myself: have never used the resort credit and the airline credit is partially used, but do use the free night cert). And remember that AMEX probably buys Hilton points at deeply discounted rates.

So I doubt AMEX is not making money let alone losing money. Maybe the margins are lower than other credit cards but I would think that AMEX is benefitting in some way from having this card in their portfolio.
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Last edited by eknock007; Nov 2, 2020 at 2:43 pm
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Old Nov 2, 2020, 10:36 pm
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Thanks for all the replies, excellent insight. I agree, AmEx isn’t marketing this product to LOSE money. I forgot about finance charges (from carrying a balance) and I didn’t consider that Hilton and others are probably bearing the cost for some of the benefits. Agree completely the card is “too good to not have (for a lot of us).”

This is also one of very few cards that NOT being able to churn is a less annoying. The benefits one can accrue in the 3 to 6 to 12 months one would have to wait between churns (“in the olden days”) can easily offset an unobtained repeat sign-up bonus. Seems for many other cards it takes 2 or 3 years or more to accumulate benefits equivalent to another sign-up bonus.
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Old Nov 3, 2020, 10:59 am
  #6  
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From the Hilton 10-K (emphasis added):

http://www.corporatereport.com/hilto...n_2020_10k.pdf

Affiliation with our loyalty programs encourages members to allocate more of their travel spending to our hotels. The percentage of travel spending we capture from loyalty members increases as they move up the tiers of our program.
Hilton is willing to be generous with their cobrand AMEX card (contrast with the AMEX Marriott Brilliant) because awarding status to cardholders makes money for them.

Also:

We also earn licensing fees from co-brand credit card arrangements (see "Management and franchise revenues" within the "Revenue Recognition" section above). The co-brand license fee is allocated between two performance obligations based on their estimated standalone selling prices: (i) an IP license using the relief-from-royalty valuation method and (ii) substantive rights for free or discounted goods or services to the credit card customers using a cost plus method based on an evaluation of other third-party administrators.
Emphasis added. Hilton is pulling the freight on some of these costs, not AMEX, as suggested above.
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Old Nov 3, 2020, 12:21 pm
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Originally Posted by eknock007
And remember a lot card holders do not use all of the benefits.
Working in an industry where clients buy a "package of benefits," I can absolutely attest to this. The goal is to get long-term clients that will continue to use you vs what benefits they can use in a year's time. The vast majority of users will never use everything. It's usually a small percentage, like well under 5% that abuse the system and/or become highly unprofitable. Eventually a change goes through that addresses that.
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Old Nov 3, 2020, 2:39 pm
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Originally Posted by Super Mario
Working in an industry where clients buy a "package of benefits," I can absolutely attest to this. The goal is to get long-term clients that will continue to use you vs what benefits they can use in a year's time. The vast majority of users will never use everything. It's usually a small percentage, like well under 5% that abuse the system and/or become highly unprofitable. Eventually a change goes through that addresses that.
And if the AMEX Aspire is bumping some "highly unprofitable" Aspire holder from, say 5 nights at Hilton and 20 nights everywhere else to 20 nights at Hilton and 5 everywhere else (or even 5/40 to 20/25), I would say it's unlikely that this is a bad deal from Hilton's point of view, even if it's costing them some points. Hilton is providing a generous package with their card to drive room occupancy and RevPAR. If you're using the card and the benefits and staying at Hilton, even if you're using a lot of the benefits, it's a win.
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Old Nov 3, 2020, 3:29 pm
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This card is pretty beneficial to Hilton. Awarding the highest status-tier and having such a high return rate on Hilton spend means even mercenary travelers will probably check Hilton first. Plus with the carry-over nights and points bonuses every 10 nights starting at 40, there's reason to keep booking with them even if you won't organically make the next status tier. With Marriott, there's no incentive to book unless you're for sure going to hit exactly 50, 75, or 100 nights. Hilton lets you roll over unused night credits and awards you for extra nights even if you don't make the next elite level. As someone who has spent close to 150 nights in hotels between Marriott and Hilton since 2018, in my experience Hilton has better brand standards across more of their properties than Marriott. With Marriott, I've stayed at Sheratons that paled to a typical Courtyard or even Four Points. Hilton has a much more consistent experience. High-tier Bonvoy status (Titanium +) is still more valuable but Bonvoy keeps devaluing their program and making it more difficult to use benefits. Hilton is much more straightforward. Marriott also just made Platinum essentially useless with their new welcome offers, unless they go the airline route and break up their plats by prior year elite nights or spend. At the end of the day having a slightly-less lucrative Diamond status with Hilton that is accessible and usable for most customers beats out the diminishing returns of Bonvoy, even if Bonvoy is theoretically more lucrative. With the uncertainty of the global travel scene the Hilton Aspire is a lot more attractive than any Marriott co-brand card, since it's much easier to come out ahead and you're guaranteed status no matter how many nights you end up staying.

Also you have to remember not everyone is cashing in at aspirational Conrad/WA properties. Plenty of people transfer their points to Amazon for a loss.
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Old Nov 4, 2020, 6:48 pm
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I think if Hilton had not been smart enough, this year, to allow us to use the resort credit as restaurant credit (since so many of us were not traveling) they would have had a lot of attrition on the card. Kudos to them for thinking outside the box. I hope that if next year (2021) there is still no vaccine and a raging virus they extend that restaurant option. We used our airline credits last January, but if we don't fly for a while that's another hit to the benefits.

I'm sure Hilton is smart enough to figure out what they need to do to keep us as customers.
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Old Nov 8, 2020, 5:41 pm
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Originally Posted by Eujeanie
I think if Hilton had not been smart enough, this year, to allow us to use the resort credit as restaurant credit (since so many of us were not traveling) they would have had a lot of attrition on the card. Kudos to them for thinking outside the box. I hope that if next year (2021) there is still no vaccine and a raging virus they extend that restaurant option. We used our airline credits last January, but if we don't fly for a while that's another hit to the benefits.

I'm sure Hilton is smart enough to figure out what they need to do to keep us as customers.

May I ask - is the resort credit where restaurants count only for US restaurants? I've long wanted this card but live outside US most of the time where there are few resorts that are worth staying at. If I could get the card and have non-US restaurants count then I might get it.
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Old Nov 8, 2020, 6:29 pm
  #12  
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Originally Posted by SHLTP
....resort credit where restaurants count only for US restaurants.....
I believe it was, and that the offer ended in August: [PROMO June to August 2020] Hilton Amex Aspire $250 Restaurant Credit (US only)
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Old Nov 8, 2020, 6:33 pm
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Originally Posted by SHLTP
May I ask - is the resort credit where restaurants count only for US restaurants? I've long wanted this card but live outside US most of the time where there are few resorts that are worth staying at. If I could get the card and have non-US restaurants count then I might get it.
It saved a lot of us....THIS YEAR...I doubt they would do it on a non-Covid, regular year. If you live in an area with few resorts I would not bother.
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Old Nov 8, 2020, 6:34 pm
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SHLTP, your location is not obvious. We have Hawaii, Florida, Arizona...as well as international locations as resort areas.
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Old Nov 8, 2020, 9:23 pm
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Originally Posted by Eujeanie
SHLTP, your location is not obvious. We have Hawaii, Florida, Arizona...as well as international locations as resort areas.
Thank you. I am in Asia mostly but the resorts out here are fairly subpar and not in the areas I would most likely travel to. And in the country I am in currently the resorts re just a handful and not good. I have Hyatt Globalist and Marriott Titanium and would like to add Hilton via the credit card (I probably only do 10 Hilton nights a years) but would do more Conrads for sure if I had the Aspire. I just wish the resort credit was easier to use. I know why the do resort but I wish they made it a weekend night or something but that probably wouldn't drive enough revenue for them
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