Co-branded credit cards add girth to issuer portfolios. In our recent report, Mercator Advisory Group estimated that the U.S. market had 225 million active co-branded general-purpose credit cards affiliated with airlines, hotels, other travel segments, plus gasoline, retailers, and automobile sales. But as COVID changed many life aspects, those cards affiliated with hospitality and travel started to lose their mojo.
Like many others, the co-branded travel cards in my wallet, including Citi/American Airlines and Barclay/Jet Blue, rarely came out since March 2020. Instead, high-yielding reward cards, such as American Express Blue Preferred, Chase Sapphire, and Discover It became the order of the day. This segment falls into two sub-categories: 175 fee-free cards and 35 million, which carry a fee. In the example above, the American Express Blue Preferred and Chase Sapphire fall into the fee group, and the Discover It falls into the fee-free category.
As travel fell, the link between hospitality and travel cards began to wane, and they will likely return as travelers passing through TSA checkpoints rebound. And, the numbers are moving up. According to the TSA checkpoint numbers, 2.2 million people passed through security on April 7, 2019. On the same day, in 2020, the number dipped to only 94,931 people, then yesterday, April 7, 2021, the number surged to 1.2 million. This increase indicates confidence and bears well for hospitality and travel affiliated cards.
In the interim, many of our habits changed. Nation’s Restaurant News, a trade journal, projects that restaurant sales will increase 10.2% in 2021, but they still will not yet recover from COVID. And as people try to satisfy their culinary itch with car-side pick-up, many never realized how good an Outback steak would taste, even when served with a plastic fork.
Chase, a top global credit card issuer, reacts to the market shift faster than many others. With a wide range of branded consumer general-purpose cards, under the Freedom and Sapphire lines, plus co-branded cards aligned with Aer Lingus, British Airways, Hyatt, Iberia, Southwest Airlines, United, and Marriott, the firm knows how to hedge its bets and maintain a strong following across many consumer-preferred categories.
Today’s news comes from the WSJ, and it shows that Chase remains on point with two upcoming card programs. Instacart, which generated $1.5 billion in revenue on $35 billion in sales, is a new win for Chase’s co-brand business. Next in the hopper for Chase is an anticipated rewards credit card with DoorDash, which went public this year, valued at $72 billion, thanks to its 18 million customers.
So as we wait for travel to rebound, here are two new options for reward-point earners!
Overview Provided by Brian Riley, Director, Credit Advisory Service at Mercator Advisory Group
