The Amex Rebound: Exclusive Hilton Deal & How the Company Is Making Their Way in a Costco-Less World

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American Express Exclusive Hilton Relationship
Hilton San Diego Bay

American Express Exclusive Hilton Relationship

Yesterday Hilton announced that American Express will be their exclusive co-brand credit card partner beginning in 2018. As you may know, Hilton currently partners with both American Express and Citi. While the terms of this exclusive deal remain confidential, it was described as a “competitive bidding process”.

I read this to mean that American Express spent a lot to outbid Citi and perhaps everyone else for the rights to this contract. Of course they did! Did they have any choice after the loss of Costco and JetBlue along with the seemingly imminent (although not confirmed) loss of SPG next year? American Express needed this.

Down But Not Out

Following the loss of Costco and a hit to their earnings, American Express needed to do something. This was a bank heading in the wrong direction at a time they could ill afford to, so they made some changes. Unfortunately not all of the changes were seen as positive for customers. For example they tightened their bonus rules and even began clawing back some bonuses they felt were obtained in the incorrect manner. These changes were likely fiscally positive, but left a bad taste in some customer’s mouths.

Another thing that leaves a bad taste is their poor customer service. This bank was once the shining example of how to treat customers but years of outsourcing and an eroding corporate culture have taken their toll. Perhaps this often overlooked part of doing business will be addressed before long.

A Post-Costco Comeback

With that said, they are doing some good things. While some were unimpressed with the updates to their personal Platinum card, they improved the product and gave image sensitive customers a pretty metal card to swipe. On the Business Platinum side they bonused large purchases and slightly increased the pay with points rebate. Minor changes, but ones that were welcomes by some.

We have also seen two very big improvements that are aimed at strengthening their hold on the small business space. Last year they revamped their SimplyCash Card by increasing the limit on 5% cashback in popular categories and keeping the $0 annual fee. They also just announced the Blue Business Plus Credit Card which earns 2X Membership Rewards everywhere with no annual fee. It is perhaps the best business card for earnings on non-bonused spend.

In other words, Amex is beginning to maneuver in the post-Costco world. Step one was to keep their affluent client base, step two was to strengthen their business offerings and step three appears to be to steal Hilton from the company that stole Costco from them. A good move for them I think, but one that means consumers will have less choice.

Citi A Falling Star

While I think Amex is slowly changing in the right direction, Citi continues to confuse. They spent a boatload of money for Costco, but are left largely without any strong travel brands. Sure they have American Airlines, but even that deal is no longer exclusive. Let’s not forget they also gutted their premium Prestige card at a time when Chase and others were launching robust products of their own.

As of now no announcement has been made as to what will happen to Citi Hilton cardholders in 2018, but my guess is you will see some sort of a product conversion. It is also possible that your cards will be converted over to American Express. That could mean more Amex Offers! 🙂

Conclusion

The affinity credit card market has grown into a multi-billion dollar business. With only a handful of banks and travel brands competing, it has become even more important than ever to lock in long term exclusives. American Express has taken its knocks with the loss of Costco and JetBlue along with the uncertainty around SPG, but I see this move as a step in the right direction.

You can find the full press release here. What are your thoughts? Is this a good move for Hilton & Amex or were things fine the way they were?


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6 COMMENTS

  1. I actually have both the Citi Hilton visa which I’ve had since 2012 and recently acquired the AmEx Surpass card. The AmEx card has slightly better earning potential and broader categories, but charges international fees (odd in this day and age!).

    My beef is that if Citi sells that business to AmEx, I’ll lose my history with Citi and the longevity on my credit profile. Guess I’ll have to do a product change before that. Any suggestions on what Citi card to go to?

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