IHG to provide Chase credit cards to US loyalty members
By Benjamin Chiou
Date: Monday 25 Nov 2024
(Sharecast News) - Hotels group InterContinental has signed a new agreement with JPMorgan Chase Bank to launch new co-branded credit cards to its IHG One Rewards scheme members in the US.
The co-branded credit cards, which generate ancillary fee streams for IHG in exchange for giving banks access to the loyalty programme and customer base, will be available immediately and run through to 2036 under the initial term.
IHG said fees due to IHG are expected to significantly increase from the start of the new agreements and to continue growing over the term.
The hotel operator, earned $39m in profits from co-brand credit agreement fees in 2023 - a level which is expected to double in 2025 and more than triple by 2028.
IHG One Rewards members, of which there are estimated to be 145m globally by the end of the year, tend to spend around 20% more in IHG hotels than non-members and are 10 times more likely to book through IHG direct channels. Members are responsible for 60% of room nights worldwide and 70% in the Americas.
As part of the new agreements, IHG will receive upfront cash inflows if $137m over the coming months, which will be recognised within fee income over the agreement term.
"Following a detailed review of the opportunities to grow this important ancillary fee stream, the new agreements will create more opportunities for customers to engage with IHG and our award-winning loyalty programme, further strengthen IHG's enterprise and the System Fund for the benefit of our hotel owners, and will drive significant shareholder value," said chief executive of IHG Hotels and Resorts Eli Maalouf.
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