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.
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.
Advertiser Disclosure: Some of the card links and products that appear on this website are from companies which RJ Financial/Profitable Content may receive compensation when you click on links to those products.Terms apply to the offers listed on this page. The content on this page is accurate as of the posting date; however, some of our partner offers may have expired. See our Advertising Policy here.
Editorial Note:
Opinions expressed here are the author’s alone, not those of any bank, credit card issuer, airlines or hotel chain, vendors or companies, and have not been reviewed, approved, or otherwise endorsed by any of these entities.