Details
Written by: RJ
Interesting interview with the IHG boss on the credit card partnerships.
- Today, the hotel group generates approximately $100 million yearly in fees from its total credit card business.
- A few years ago, all the fees went to owners who provided guest benefits, such as free stays when loyalty members redeem points. (Owners of hotels separately also pay fees into a loyalty “system fund” on each paid stay, which is later shared with hotels to cover the cost of rewards stays.)
- Today, only two-thirds of the credit card fee money goes to owners. “About one-third goes to the P&L [profit and loss sheet],” Maalouf said.
- In other words, roughly a third of the fees go to the bottom line, without meaningful costs besides relatively minor marketing expenses. So they are mostly profit.
The Chase IHG deal runs through 2025. After that, IHG is aiming to negotiate (or rebid) a more profitable deal.
![icon-profitable-content Profitable Content icon](https://www.profitablecontent.com/wp-content/uploads/2022/11/icon-profitable-content.png)
Thoughts
Interesting read. I’d guess IHG can see and hear how much airline card partnerships make and want some of that. It’s harder because many of these hotel cards are best held for benefits, but don’t do much in terms of daily use.