American Express And JPMorgan Ink Co-Brand Card Deal With Marriott

American Express and JPMorgan Chase have inked a deal with Marriott International for the issuance of co-branded credit cards. The deal will cover the loyalty programs of the largest hotel chain in the world. JPMorgan will offer credit cards under the Ritz-Carlton Rewards and Marriott Rewards brands while American Express will offer Starwood Preferred Guest credit cards. The cards are expected to be introduced next year. Meanwhile existing co-branded credit cards will continue to provide the same benefits and features.

Prior to the deal there had been speculation over what would happen to the Starwood Preferred Guest credit card issued by American Express. Investors had expressed fears that with Marriott having acquired Starwood Hotels & Resorts Worldwide Inc, the partnership between Starwood and American Express would be endangered. Currently the Starwood partnership accounts for approximately 5% of the loans issued by American Express and around 2% of the total spending on cards belonging to the financial services firm.

Loyalty programs

According to a statement issued by Marriott, the hotel chain still has ambitions of merging its loyalty programs into one before the end of next year. Currently Marriott boasts of 100 million members. With growing competition among networks and issuers fees have been lowered for co-branded cards and thereby benefiting merchants such as Marriott.

However co-brand credit cards have also come under increased competition from proprietary products offered by banks and this includes Sapphire Reserve offered JPMorgan Chase and Platinum offered by American Express. Following its debut last year for instance Sapphire Reserve was received with so much interest that materials for minting the card were temporarily exhausted.

Market leadership

Amex’s deal with Marriott is an additional win for Ken Chenault, the outgoing chief executive officer of American Express who is expected to step down next year in February. Earlier in the year the financial services company won an exclusive right with Hilton Worldwide Holdings for the issuance of credit cards.

According to Chenault the renewed deal came about because of the leadership of American Express in small business and travel credit cards. Though American Express previously used to earn higher returns the new deal offers returns that are still attractive and sustainable per Chenault. An analyst at RBC Capital Markets, Jason Arnold, however held an opposite view.

“We remain concerned that high competition among premium card issuers and a less compelling value proposition to both merchants and consumers will continue to challenge American Express,” Arnold wrote.

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