(New York, NY) Co-branded hotel credit cards earn consumers exclusive benefits and rewards tailored to brands they love. They function similarly to proprietary rewards cards, but there are several unique factors that inspire hotel card acquisition, usage, and loyalty. Auriemma Group’s latest issue of Cardbeat US delves into co-brand credit cards and loyalty programs, uncovering that experience-based perks and brand affinity are key to a hotel co-brand’s success.
60% of credit cardholders say experience-based benefits would make them more interested in applying for a hotel card. Room upgrades have the largest impact, followed by complimentary food and beverage, the occasional free hotel stay, early check in/check out options, and free Wi-Fi. In total, the desirability of these experience-based benefits outweighs that of spend-based rewards, which 49% of credit cardholders cite as driving factors for hotel card application.
“To cultivate guest loyalty, hotel card issuers must emphasize the unique experience their cards provide,” says Jonathan O’Connor, Senior Manager at Auriemma. “Issuers should not underestimate the value of a tangible perk, which is often more accessible to cardholders than calculating points. While rewards remain an important piece of the puzzle, experiential benefits are stronger drivers of pre-acquisition interest in hotel co-brands.”
Loyalty status also factors into hotel card acquisition and usage. Though ongoing rewards and attractive sign-up offers drive hotel co-brand applications, 31% of hotel co-brand credit cardholders say improving loyalty status also plays an important role. This is particularly pronounced for Marriott cardholders, 39% of whom say they applied to improve their loyalty status with Marriott.
Loyalty perks also have an incredible impact on off-brand spending. 83% of hotel co-brand cardholders say enhanced loyalty status upgrades motivate them to use their card for off-brand spend. Access to VIP experiences also motivates 51% of these cardholders.
“Envisioning an upgraded room, amenity, or enhanced service because of card spend is a significant motivator,” says O’Connor. “Knowing that greater card engagement can lead to an elevated hotel stay gives cardholders a north star to build towards.”
The distinguishing factor between hotel cards (and co-brand cards in general) and their proprietary rewards counterparts lies in the loyalty perks they offer. The ability to highlight experiences and a clear path to perks is what separates hotel cards from programs that have their cardholders doing the math.
“The key to unlocking a hotel card program’s full potential is the benefits that standard credit cards cannot provide,” says O’Connor. “Hotel co-brand issuers that look beyond the table stakes of a viable credit card program and emphasize experience-based perks and brand affinity will win over those that strictly focus on monetary rewards.”
Survey Methodology
Cardbeat US
This Auriemma Group study was conducted online within the US by an independent field service provider on behalf of Auriemma Group (Auriemma) in June 2023 among 1600 adult credit cardholders. The number of interviews completed for both is sufficient to allow for statistical significance testing among sub-groups at the 95% confidence level ±5%, unless otherwise noted. The purpose of the research was not disclosed, nor did respondents know the criteria for qualifying.
About Auriemma Group
For more than 35 years, Auriemma’s mission has been to empower clients with authoritative data and actionable insights. Our team comprises recognized experts in four primary areas: operational effectiveness, consumer research, co-brand partnerships, and corporate finance. Our business intelligence and advisory services give clients access to the data, expertise and tools they need to navigate an increasingly complex environment and maximize their performance. Auriemma serves the consumer financial services ecosystem from our offices in New York City and London. For more information, call Jonathan O’Connor at (+1) 1-646-437-6116.
(London, UK): Consumer expectations for future financial stability is worsening, with many looking to credit cards for support during the cost-of-living crisis. According to Auriemma Group’s latest issue of Cardbeat UK, 37% of cardholders believe their financial health will worsen in the next 6 months.
Gen Z and younger Millennials express greater optimism about their future financial health than their older counterparts despite increased levels of borrowing. Auriemma’s research found that 20% of cardholders are borrowing more to afford everything they need, rising to 32% among Gen Z and Millennials, and 33% of sub- and near-prime customers. The added strain of rising costs will likely cause these figures grow in the coming months.
“Since the start of the pandemic we have seen a resurgence in consumer spending on debit cards and a rise in transfers from savings to current accounts,” says Jaclyn Holmes, Director of Auriemma Research. “Today it appears rising inflation is furthering the strain on consumers, leading some to rely on their credit cards for essential spending.”
According to Auriemma’s latest findings, over 90% of credit cardholders anticipate rising costs of food, housing, fuel or energy bills to impact their personal finances negatively over the next 12 months. While energy prices were capped at £2,500 for 2 years beginning this month, some households may still see their bills double.
“At a time when all other costs are skyrocketing, the price cap will offer little comfort for many households,” says Holmes. “With more monthly outgoings attributed to energy bills, the pressure on credit card usage and borrowing will likely be even higher.”
But consumers aren’t the only ones bracing for impact. Issuers are also trying to assess how the cost-of-living crisis is currently impacting their cardholders and anticipate the enduring impact moving forward.
“Lenders have already begun seeing the operational impact of this change in customer behaviour,” says Louis Stevens, Director of Auriemma’s Industry Roundtables. “This comes at a time where regulatory initiatives, such as The Consumer Duty Act, are already taking up considerable time and resources.”
As issuers likely tighten risk criteria for customers seeking credit, some may turn to Prime and affluent customers for lower-risk lending opportunities. Auriemma Group will continue to monitor this space closely in upcoming Cardbeat studies and within its Customer Service Roundtable groups.
Survey Methodology
This Auriemma Research study was conducted online within the UK by an independent field service provider on behalf of Auriemma from April-May 2022, among 80o+ adult credit cardholders. The number of interviews completed on a monthly basis is sufficient to allow for statistical significance testing between sub-groups at the 95% confidence level ± 5%, unless otherwise noted. The purpose of the research was not disclosed nor did the respondents know the criteria for qualification.
About Auriemma Group
For more than 35 years, Auriemma’s mission has been to empower clients with authoritative data and actionable insights. Our team comprises recognised experts in four primary areas: operational effectiveness, consumer research, co-brand partnerships and corporate finance. Our business intelligence and advisory services give clients access to the data, expertise and tools they need to navigate an increasingly complex environment and maximise their performance. Auriemma serves the consumer financial services ecosystem from our offices in London and New York City. For more information, visit us at www.auriemma.group or call Jaclyn Holmes at +44 (0) 207 629 0075.
(London, UK): Rising costs for fuel, energy, food shops and housing are already impacting consumers around the UK, but many believe this is only the beginning. According to Auriemma Group’s latest issue of Cardbeat UK, 73% of credit cardholders expect the rising cost of living to have a negative impact on their personal finances over the next 12 months.
Others factors will further impact consumers, including the Bank of England’s forthcoming increased interest rates. Coupled with rises in the cost of living, these elements are set to put considerable strain on some UK cardholders.
“Rate increases will create added pressure on homeowners across the UK at a time of significant financial uncertainty,” says Jaclyn Holmes, Director of Research at Auriemma. “Meanwhile the volatility of the rental market is already putting a strain on those who do not own their own home.”
The rising costs of food, energy and fuel have impacted over eight-in-ten credit cardholders, and rising housing costs have impacted about six-in-ten. Auriemma’s research found that rising housing costs were of particular impact to Millennials, who more commonly rent—a cost that has increased 9.5% on average since 2021 according to the latest HomeLet Rental Index.
“These indicators are a sign that banks and lenders must ready themselves to provide additional support to struggling customers,” says Holmes. “When rising costs become insurmountable it often leads to cardholders making spending cuts, missing payments or even becoming delinquent.”
In fact, 67% of credit cardholders agree that they are already spending less on non-essential or luxury items due to the state of their finances. And four-in-ten say they are unable to afford a holiday, a figure that increases to 57% among sub-prime and near-prime customers.
“These changes in spending habits could have an impact on the retail, entertainment and travel sectors,” says Holmes. “This could be a considerable blow after such a short period of recovery following the start of the pandemic.”
Looking ahead, the cost of living crisis will have a notable impact on consumers. Auriemma’s research shows one-fifth of cardholders are already borrowing more to afford everything they need, and as prices increase Auriemma anticipates this figure to rise. Auriemma Group will continue to monitor this space closely in upcoming Cardbeat studies and within its Card Customer Service and Complaints roundtable.
Survey Methodology
This Auriemma Research study was conducted online within the UK by an independent field service provider on behalf of Auriemma in April 2022, among 80o+ adult credit cardholders. The number of interviews completed on a monthly basis is sufficient to allow for statistical significance testing between sub-groups at the 95% confidence level ± 5%, unless otherwise noted. The purpose of the research was not disclosed nor did the respondents know the criteria for qualification.
About Auriemma Group
For more than 35 years, Auriemma’s mission has been to empower clients with authoritative data and actionable insights. Our team comprises recognised experts in four primary areas: operational effectiveness, consumer research, co-brand partnerships and corporate finance. Our business intelligence and advisory services give clients access to the data, expertise and tools they need to navigate an increasingly complex environment and maximise their performance. Auriemma serves the consumer financial services ecosystem from our offices in London and New York City. For more information, visit us at www.auriemma.group or call Jaclyn Holmes at +44 (0) 207 629 0075.
(New York, NY) COVID-19 changed consumer purchasing behavior in the short-term, but will changes be long-lasting or temporary? It is a question often asked within the payments industry, and one that Auriemma Group’s research has been asking consumers for months. Auriemma’s latest Mobile Pay Tracker study (fielded April-May 2020) uncovered that the answer may be a little bit of both—purchase frequency could level, but preferred methods, channels, and services may shift to create a new normal going forward.
1. Shopping habits will likely level out, but methods may change
In the early days of COVID-19 consumer spend was reoriented to household purchases (e.g., food, cleaning supplies). While specific categories of purchases saw notable spikes, spend overall declined. Auriemma’s research found that in April and May two-thirds (65%) of cardholders said they were spending less over the past 30 days than they would have before COVID-19. When asked about the next 30 days, however, this figure drops to 44%, and a similar proportion (42%) expect their spend to return to pre-COVID-19 levels by that point.
Although spend may return to normal, there may be a new normal for how consumers make payments. More consumers are trialing contactless and mobile payments than ever before, and some are shifting their purchase channel preferences. For example, consumers have historically preferred in-store shopping for groceries, and while most still do, a notable 31% now say they prefer using digital channels (i.e., websites, mobile apps) to make grocery purchases.
“COVID-19 has given consumers strong incentive to try new payment methods and purchase channels,” says Jaclyn Holmes, Director of Research at Auriemma Group. “The disruption it has caused may be the catalyst that propels more innovative shopping and payment experiences moving forward.”
2. COVID-19 has not only changed how consumers shop, but also where
Staple household items were in high-demand at the start of COVID-19, and the need for those items trumped merchant and brand loyalty. Many consumers said stores they regularly shop at were out of many items (76%), that they needed to switch from their preferred brand to purchase an item they needed (67%), and that they have visited stores they don’t normally shop at to find what they need (35%).
This sentiment extends to the online shopping experience, with 40% of those shoppers saying they have tried shopping with new merchants or websites since the COVID-19 outbreak. Overall, COVID-19 has motivated consumers to try different merchants, items, and experiences. Nearly two-thirds (64%) of consumers say they are willing to try new ways to shop, including using apps and curbside pick-up.
“Brand loyalty is often a strong purchase motivator, both when purchasing products and selecting a merchant,” says Holmes. “In recent months, many consumers have tried new merchants and products out of necessity. While some will understandably revert back to their preferred brands, some have expressed they’ve been pleasantly surprised by these alternatives and will continue to utilize or purchase from them looking ahead..”
3. Some industries and products will thrive, while others will struggle
With consumers staying and/or working from home, there were many services that gained popularity. Unsurprisingly, consumers reported increased usage of video chat platforms, online food delivery, and online workouts. At the same time, however, cardholders report a notable decrease in usage of deal/discount services or apps.
Groupon has been hit particularly hard—in February, the company announced they were shifting their focus away from products and back to experiences. The timing was unfortunate, given that just a month later consumer spend shifted away from in-person experiences because of COVID-19. By March, the company reported decreased demand for their offerings and significant increases in refund levels.
4. Consumers aiming to support local businesses may skip third-party apps
Third-party apps like Groupon and Seamless may also see decreases in usage among those aiming to support local businesses. 31% of consumers have donated money to local businesses and 24% have purchased gift cards to support their local businesses during this time.
Additionally, consumer awareness for hidden fees and commissions are driving some to purchase directly from the end merchant. Auriemma’s research identified that some consumers avoid using food ordering or delivery apps to better support local businesses. One 33-year-old male said:
“We’ve been bothered by the commission the food delivery apps are making so we are making a conscious effort to order directly from the restaurant. It had crossed my mind prior to the outbreak but now, it is more top of mind.”
COVID-19’s Overall Impact
COVID-19 will create some long-lasting impacts on consumer behavior, but some behaviors will return to normal. While overall spending is expected to lift as people get back to work and regain confidence in the economy, where they spend their money, what they spend money on, and the methods they use to make purchases may change. Issuers may see further increases in contactless payments and digital spend, as in-person purchasing (particularly via swiping or dipping) remains low.
“Now more than ever consumer behaviors and attitudes are in a state of flux,” says Holmes. “Our continued research into the impact of COVID-19 will give us a forward look into these shifts and provide a roadmap for future expectations.”
Survey Methodology
This Auriemma Group study was conducted online within the US by an independent field service provider on behalf of Auriemma Group (Auriemma) in April/May 2020 among 2,022 adult Apple, Google, or Samsung Pay eligible credit cardholders. The number of interviews completed for both is sufficient to allow for statistical significance testing among sub-groups at the 95% confidence level ±5%, unless otherwise noted. The purpose of the research was not disclosed, nor did respondents know the criteria for qualifying. The average interview length was 27 minutes.
Additionally, ten in-depth interviews (IDIs) were conducted in May 2020 via telephone. All were recruited from the quantitative web survey from parts of the country that had seen at least some impact (either business closures or social distancing rules). The goal was to understand the impact of the COVID-19 epidemic on shopping behaviors and attitudes.
About Auriemma Group
For more than 30 years, Auriemma’s mission has been to empower clients with authoritative data and actionable insights. Our team comprises recognized experts in four primary areas: operational effectiveness, consumer research, co-brand partnerships, and corporate finance. Our business intelligence and advisory services give clients access to the data, expertise and tools they need to navigate an increasingly complex environment and maximize their performance. Auriemma serves the consumer financial services ecosystem from our offices in New York City and London. For more information, call Jaclyn Holmes at (+1) 646-454-4200.
(New York, NY): Shoppers purchasing a new iPhone have two choices at checkout—pay up to $1,500 up front or go on a $60 per month payment plan. It is a familiar set up for anyone who has taken out a home, auto, or student loan: Buy now; pay over time.
Similar plans are emerging in several consumer categories beyond cell phones. Networks, issuers, merchants, and marketplace lenders offer plans in-store and online for consumers who want to pay in installments. Auriemma Research’s latest issue of The Payments Report asked payment cardholders about their appetite for point-of-sale installment plans and found that consumers who exclusively use or prefer debit cards are most likely to consider using them, even for everyday items.
Installment plans have historically been used for larger purchases like furniture and household appliances. However, offers for small to mid-size purchases have increased in popularity at the point-of-sale and sometimes post-purchase, making a range of purchase types possible. Providers like Affirm, American Express, and Amazon offer consumers the option to buy now but pay over a specified period (with transparent terms and pricing). While the specifics differ slightly by provider, the core offering remains the same: a consumer doesn’t need to pay for their entire purchase at once.
This product has wide appeal but resonates most strongly for debit users. Four-in-ten would consider using an installment plan for everyday purchases like groceries and household items. The option allows them to access credit in a way that provides more control, making purchases more manageable, and ultimately more affordable.
Six-in-ten debit cardholders find point-of-sale installment plans attractive, but many have never been offered one. Only 28% of debit cardholders report being offered an installment plan in-store, while more (45%) recall being offered one online. Regardless of channel, both groups that recalled offers reacted positively. Over four-in-ten debit cardholders enrolled in at least one of their in-store (48%) or online (41%) installment plan offers at the point-of-sale. Installment plans appeal to credit cardholders, as well: Although only 17% of credit cardholders received an offer to pay for purchases in installments, 51% of those offered do enroll.
“The structure of an installment plan is very attractive to debit cardholders,” says Jaclyn Holmes, Director of Auriemma Research. “And while credit cardholders have the option of paying off their card balance at their leisure, they, too, clearly have an appetite for something a bit more concrete.”
For many, borrowing via an installment plan is less intimidating than revolving on a credit card. According to a recent issue of The Payments Report, about seven-in-ten cardholders feel installment plans are helpful in budgeting expenses and that they help alleviate the stress of making large purchases. Overall, cardholders appreciate that installment plans provide a time period to pay off the balance.
Understandably, bigger ticket items like electronics, home appliances, and furniture top the list of purchases placed on point-of-sale installment plans, but nearly one-quarter used the product to purchase clothing, and 17% for a shopping cart of items.
“Whether for purchases large or small, installment plans are redefining how consumers view affordability, particularly for those without credit cards,” says Holmes. “Some cardholders find the uncertainty and responsibility of paying back money borrowed on a credit card intimidating, whereas installment plans provide a clearer path and time frame for repayment.”
Survey Methodology
This Auriemma Research study was conducted online within the US by an independent field service provider on behalf of Auriemma Group (Auriemma) in February 2019 among 800 adult debit cardholders. The number of interviews completed for both is sufficient to allow for statistical significance testing among sub-groups at the 95% confidence level ±5%, unless otherwise noted. The purpose of the research was not disclosed, nor did respondents know the criteria for qualifying. The average interview length was 25 minutes.
About Auriemma Group
For more than 30 years, Auriemma’s mission has been to empower clients with authoritative data and actionable insights. Our team comprises recognized experts in four primary areas: operational effectiveness, consumer research, co-brand partnerships, and corporate finance. Our business intelligence and advisory services give clients access to the data, expertise and tools they need to navigate an increasingly complex environment and maximize their performance. Auriemma serves the consumer financial services ecosystem from our offices in New York City and London. For more information, call Jaclyn Holmes at (212) 323-7000.