Just came out of a lecture with Alfred Kelly, one of the group presidents of AMEX. I have to say, the marketing materials for the card are pretty sweet...
We mostly talked about the history of centurion, but he alluded to changes coming in the spring. I hope they aren't downgrading the benefits again...

Sounds great, we are in dire need of positive changes. Any more details you can discuss? What kind of lecture was this, college class or something?

a top 4 guy at AMEX would not be doing university lectures

Ya never know...you would be surprised how many execs do lectures/guest presentations for college classes. Even at my school, not an Ivy or anything, we have had John Morgridge (former CEO of cisco) present for leadership classes , Leon Panetta (Chief of Staff under Clinton) holds a public policy class every quarter, etc... I can only imagine what schools such as Harvard can bring in as speakers/lecturers/professors

Often times powerful execs have connections to the school through alumni, children attending the school, other powerful friends, donors, etc... I myself have had the former CFO of 3Com as an accounting professor and a VP of Sun as a Intl Biz professor

Such lectures are great for filling out the resume. And, if things don't work out in the business world, maybe there will be an entree to academia. @:-)

AMEX's CENTURION perks, at least for the US, are such a paper tiger, already diluted to what they rolled out with, that there is really not much lower it can go. The PLAT card now is functionally equivalent to the CENT card in terms of bundled perks, which begs the question of "why bother to pay more for the CENT card ??

AMEX has, IMO, performed the perfect margin optimization scheme on this CENT card perk package to where they get benefits of the "buzz" at little to no incremental cost or overhead to support the CENT card over the PLAT card (or if they do spend more supporting CENT, then they're inefficient or lazy, because its not very apparent to this CENT cardholder these days). If I were studying the CENT product from a business-only perspective, I would have to say "WELL DONE" AMEX. Roll out a strong program of affinity perks to bring in the value-buyers...emplace a very tough set of criteria to get into the program...to bring in the elite "cost doesn't matter" snobs that won't and have no intention of really examining the core value of the card's perks and just want the black card in their Gucci pocketbook...be secretive and get some targeted product placements in celebrities' hands visible in the national media...to bring in the celebrity bunch...and then raise the annual fee from $1000 to $2500. "NAIL THE FOOLS", I am guessing senior AMEX managers chuckle at the highest levels of AMEX managers' meetings.

Did Mr. Kelly's presentation go over this sort of strategy ?

As a several-years' running CENT cardholder, though, holding the card FOR PERKS VALUE ALONG has become a major disappointment for me. Literally, the only reason I continue to hold the card is because I am grandfathered at the $1000 annual rate, thus my incremental cost vs holding the PLAT card is negligible AND because I hold out hope AMEX will somehow and someday lasso another major hotel program's top-tier elite perk. That AMEX CENT has offered, AND NOW LOST, top-tiers in Hyatt and Sheraton...says a lot about the failures of the AMEX CENT program to provide value in these hotel's eyes. I am very surprised AMEX did not step in to prop up the Starwood PLAT-level perk, as losing it really diminished the core value of the overall CENT program to a large and vocal group of decision-makers and influential people in the affinity world...never looks good when high-end affinity partners bail out on one's flagship affinity program.

Shame someone wasn't there to challenge Mr. Kelly on this issue of major affinity partner abandonment (both in the core CENT perk package, AS WELL AS IN AMEX's MEMBERSHIP REWARDS program, which has been decimated by abandonment of affinity programs since MR's inception).

Of course, back to my first comments...if Amex could get $2500 annual fees by offering Holiday Inn green tier perks (dunno if there is such a low tier) and a freebie dinner at your local diner, then they technically have optimized their return.

This is the devilish delimna and dastardly dynamic we cardholders have to suffer ===> It is only in AMEX's best interest to provide a robust affinity program DURING ROLL-OUT phase, whether it be the established Membership Rewards, or the perk package associated w/ CENT, PLAT,or even GOLD. Once announced and the fools line up to pay their annual fees...then program dilution phase begins. The classic strategy is to announce a new card w/ robust perks...induce the various groups to "buy in" (I mention three typical groups - there are undoubtably more, held as close AMEX trade secret)...and then immediately start reducing the perk and affinity overhead.

To this strategy, AMEX has performed brilliantly.

I'm in business school in new york, and we get tons of awesome speakers all of the time (CEO of Jetblue, CEO of Olgivy, etc.). Al Kelly was, however, truly great. He really ran the conversation in a fun way, as supposed to just lecturing for an hour and a half. Here's what I got out of it:

AMEX's main goal is to provide the most value it can while still making money. On average, a centurion card holder costs Amex about $2500, hence the fee. So, they are actually not covering their costs on the people who still only pay $1000.

Those are facts, and the rest of the time he asked us what we would do. So in the end, no true news. i just thought it was a really cool time.

LittleFlyer, with all due respect, and not casting doubt on your reporting what you heard...does anyone in the room feel AMEX's true cost is $2500/yr per cardholder...ie they are *breaking even* or even losing money, on CENTURION ?

Please. I can't imagine in my mind's eye that AMEX would intentionally offer a program which operated on a hard financial loss basis. If so, I have even less respect for them than I did.

As a merchant myself who accepts all four major ccards in the US (AMEX, V, MC, and DIS), trust me - AMEX charges the highest discount of all card issuers (as much as 2.5 to 4.5% depending on the business profile, when V charges 2% or less; thus AMEX's 3.5% (lets use the median discount in this hypothetical case) is a whopping 57% (2/3.5) more than their competitors' product). Thus, AMEX has a MUCH HIGHER profit margin to support their affinity program(s), whether CENT or PLAT or MR. This is partly ameliorated by the fact that AMEX's CHARGE products do not typically allow for balance carry-over which would generate INTEREST REVENUE, while V/MC/DIS by definition make INTEREST REVENUE (not consider AMEX's OPTIMA products; only their charge products).

Knowing this then, when they induce their highest-charging class (by definition $250K spend annual threshold = their highest-charging class) of ccardholders to upgrade to the CENT program, this same class MUST proportionately also generate the most revenue PER CAPITA of any of their card-holding classes. Thus, if they claim they are losing money on the CENT program then, IMO, its only because they play shell games with SGA, overhead and internal costs and dump them into the CENT program.

Since they have hemorrhaged affinity partners practically since the CENT perk package was released, I can't think they have increased their maintenance costs of the CENT program, per se...AMEX has only reduced, diminished, and degraded the CENT perk package since inception (or allowed it to happen - same difference to me).

I fully agree that the Cent. Card is a disgrace. No Hyatt, no *wood, no MO any more, no 4 seasons, no IC, no TWA, downgrade of US Air, possibly no more Delta if they are bought. Instead of a person to answer the phone, I am put on hold forever by the same kind of machine every other card gets. In short, Centurion is now just an expensive Plat. card.

I don't really think that Amex is doing this intentionally, though. When Centurion was launched, the travel industry was going through a downturn, and I suspect that Amex got all these perks for nearly free from providers who wanted to court affluent consumers. Now that the travel sector is doing much better, the partners are dropping out. Nobody needs Amex to get booking rates up right now.

It's just a theory, but it avoids the highly specious idea that Amex has a grand plan to screw everybody.

bxwatso, great insight...I had not considered that AMEX is getting shaken-down by their own affinity partners. Novel and probably has validity.

As for the idea that AMEX has a grand plan....they would not call it "screwing everybody"....but would probably consider it masterful business acumen and profit optimization..and even trot out their senior execs to b-schools to pontificate same.

If I were an AMEX shareholder, I would be gleeful if AMEX could get cardholders to pay $2500 for a Holiday Inn gold-tier and freebie dinner a the local diner.

As a CENT cardholder, though, no fun in mudville.

It's true that the dilution stinks for cardholders, but you can't describe it as "the same as Platinum". The gold-elite status on the airlines is something that money can't buy.

Except I live in Denver, so they are something my money wouldn't buy if it could.

aviators, mid-tier with "four major US" chain hotels or with domestic US airlines are available with minimal effort in a given year's span.

A) HHONORS GOLD obtainable w/ $20K spend w/ their HHONORS AMEX
B) starwood GOLD obtainable w/ even less spend w/ their AMEX/SPG card (I don't have the time to check but $10K comes to mind)
C) My spouse received an unsolicited offer for AA/GOLD last year, via starwood (I think was the co-sponsor of the promo), having not paid for an AA tix in years nor spent 2 paid nights w/ starwood last year in her name

THree quick off the top of my head examples.

In any given year, there are numerous ways to get mid-tier elite levels with almost any given airline or hotel, and not through massive effort...usually if not often just by watching flyertalk threads and calling in or doing some mundane task or registering for some obscure promo.

In short, mid-tiers are of little value w/ many if not the majority of hotel and airlines...and mid-tier TANGIBLE benefits (not paper tiger benefits, or benefits "subject to some cap control) are degrading more and more each year. If mid-tier is the best AMEX CENT can come up with, then they will continue to bleed off subscribers.

little do you know...President # 41 teaches Political Sicence classes at my alma mater....


CEO's of the BIG 6( big 4 now...back then it was BIG 6) used to do biannual lectures for the Business students at my alma mater....

Kelly +
i know nufink! very interesting info.