(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.
(New York, NY) Artificial intelligence (AI) continues to expand, with recent advancements in the technology being offered directly to consumers. The capabilities of AI chatbots, like ChatGPT, raise questions about the future of AI, and its integration into banking and payment experiences. Auriemma Group’s latest issue of The Payments Report reveals current usage levels of AI chatbots, comfortability with AI solutions being utilized by banks and retailers, and how likely consumers are to turn to AI chatbots for financial advice.
ChatGPT is still in its infancy, but 15% of debit cardholders have used it. Importantly, this represents a 68% take-rate among those familiar with the service. Other providers, such as Google’s Bard, DiabloGPT, and YouChat all boast similar take rates, according to Auriemma’s research.
While the casual ChatGPT user may prompt the service to help write an email or provide information on a topic, the AI language model can also provide financial support. This would be welcomed by 40% of cardholders who reported that they are likely to use an AI chatbot for financial advice, up 6-percentage points compared to Q4-2022. And this figure rises for Gen Z and Millennial cardholders, 60% of whom would be comfortable.
“Cardholders are broadly aware that AI is imbued in some of their bank’s automated offerings,” says Jonathan O’Connor, Senior Manager at Auriemma. “But the question is how banks can use AI to further support their offerings in smart ways. Some applications of the technology would be more welcome than others.”
Unsurprisingly, exposure to AI integration within certain tools appears to increase comfortability. According to Auriemma’s research, 62% of debit cardholders would be comfortable with an AI solution offered by their primary bank aimed at identifying potential fraud. Slightly fewer say the same about using AI to provide customer service (52%), assess credit worthiness (47%), or predict stock prices (45%).
Over half of consumers would also welcome AI solutions offered by retailers they shop with frequently. Cardholders are most comfortable with retailers using AI for fraud leads (64%), followed by price comparison tools (64%), customer service (53%), and personalized shopping recommendations (52%).
“For banks, the most immediate use case for AI is to support financial health initiatives,” says O’Connor. “Cardholders are already accustomed to chatting with AI to help solve straightforward issues. Utilizing the technology to connect cardholders with solutions or resources aimed at alleviating financial strain or enabling smarter spend decisions is a clear next step.”
The proliferation of AI chatbots creates an opportunity for banks and retailers to expand their offerings. Services like ChatGPT raise overall consumer awareness with AI’s capabilities and could increase comfortability with the technology being used by other providers they trust. As these services grow and increase in popularity, it will be important for banks to keep up should they want to continue to be cardholders’ primary destination for financial advice.
Survey Methodology
The Payments Report
This Auriemma Group study was conducted online within the US by an independent field service provider on behalf of Auriemma Group (Auriemma) in March 2023 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.
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.
Upbound Group, a provider of consumer leasing services, has forged an agreement with Genesis Financial Solutions, a provider of near-prime consumer financial services, to provide credit solutions to customers in its platform of brands, including Rent-A-Center and Acima.
As part of the agreement, Genesis will serve as program manager and service a general-purpose credit card for qualified Rent-A-Center and Acima customers, as well as a second-look point-of-sale private label credit card to approve initially declined applicants for Acima’s network of retail merchant partners.
This partnership showcases the enduring value of co-brand and private label credit card products and, more specifically, the potential for second-look services to approve credit applicants who were initially declined. In a recent Auriemma study, 37% of cardholders indicated they had been declined for a credit or store card application. And of the one-fifth offered a second look offer, 76% accepted the alternative card.
With credit conditions expected to tighten at lenders across the country, second look is more valuable than ever for converting more applicants to cardholders.
Cardless, an emerging co-brand credit card provider based in San Francisco, recently announced it secured a three-year, $75 million credit facility from i80 Group. The company stated that the credit facility will enable Cardless “to fund customer receivables, growth, and continue its work with large, globally recognized brands.”
Additionally, Cardless announced that Brian Kelly, founder of The Points Guy, which tracks and ranks credit card value propositions and redemption options, is an investor and advisor.
The entry of Cardless, along with Imprint, Deserve, and Tandym, in recent years is beginning to altered the co-brand and private label credit card competitive landscape, which has been historically dominated by a set of incumbent banks, many of them household names.
Research suggests that incumbents do have significant advantage, as cardholders place a premium on their preferred banks issuing their co-brand cards. Recent Auriemma data indicates that 72% of cardholders say it is somewhat or very important for their preferred issuer to issue their ideal co-brand card.
Nonetheless, co-brand and private label credit cards are in high demand, with 36% of cardholders saying they are likely to apply for one in the next 12 months. The number rises to 56% among Millennials. If new co-brand and private label providers can offer cards for previously unserved brands and deliver valuable product innovations, they should find plenty of room to grow.
Auriemma recently published the Q1-2023 Cardbeat US report. The issue examines new card acquisition, outstanding debt, store debit and credit cards, and using rewards points with partner brands. Those interested in learning more about Auriemma’s research or about this issue should contact research@auriemma.group.
Findings include:
Word of mouth, third-party comparison websites, and digital channels are paramount to marketing and customer acquisition strategies.
- Digital information sources like third-party comparison websites (91%) and social media posts (86%) are influential in deciding whether to apply for a payment card among those who used them—over half (56%-58%) ended up applying.
60% of cardholders say they spend multiple days considering a new credit card (38% for debit cards), and over half say the reason is because they want to compare the card to others on the market (54%) and/or do additional research on the card (53%).
- 16% of cardholders say sign-up offers are the primary reason they applied for a credit card and 60% say they have at least a little impact on their decision.
Cardholders with outstanding credit card debt are strategic and intentional with their repayments—84% are paying off the balance as quickly as possible.
- 59% of cardholders say they have an outstanding balance on their credit card(s), averaging $3,233.
- One-fifth are not making any payments towards the balance(s) (22%) and/or are considering filing for bankruptcy (18%).
Tax refunds will most commonly be used to fortify savings (33%) and/or pay off outstanding debts or bills (31%).
Store card ownership has a marked impact on shopping with the brand—51% of store cardholders say their shopping with the merchant has increased since acquiring the card.
- One-fifth (20%) say they have shopped at the store a lot more since getting their store card.
35% of rewards cardholders have transferred rewards to another brand at least once, and one-quarter (24%) have done so multiple times.
Expanding partnerships with brands similar to or different from the card would make over 40% of cardholders use their card more.
- Supermarkets (85%) and gas stations (84%) are the most appealing purchase categories to be partnered with a credit card.
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 February-March 2023 among 888 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.
AMC Entertainment Holdings, Inc., the world’s largest movie theatre operator, has partnered with Deserve and Visa to launch the co-branded AMC Entertainment Visa credit card. Co-branding is a well-established strategy that provides a valuable financial service, deepens customer loyalty, and drives incremental brand revenue. According to Auriemma Group’s most recent Cardbeat® study, more than 50% of branded credit cardholders shop more at the brand as a result of having the card, and nearly 40% of that population shops a lot more at the brand. This trend is more prominent among those aged 18–34 – 76% shop more at a brand with the card. Read more about the AMC Entertainment Visa credit card here.
Survey Methodology
The Auriemma Group study was conducted online in the US in Q1 2023 by an independent field service provider. A total of 888 web interviews were conducted among credit card users. The purpose of the research was not disclosed, nor did respondents know the criteria for qualifying.
(New York, NY) Mobile payments give cardholders the chance to lighten their physical wallet, but those in states like Arizona and Maryland may be able to go without a wallet altogether. In March, Apple announced that Arizona would be the first state to offer its locals the opportunity to digitally store their driver’s license or state ID in the Apple Wallet, and Maryland soon followed. But what impact, if any, will this have on mobile payment usage overall?
Auriemma Group’s latest Mobile Pay Tracker study found that ID provisioning could increase mobile payment usage notably. According to the research, 67% of mobile payment users and 20% of non-users would be interested in adding an ID to their mobile wallet. And nearly half of those interested say having an ID available in their mobile pay wallet would make them use it more. This is particularly striking among non-users, 45% of whom would begin using mobile payments as a result.
“With the addition of IDs, mobile wallets take one step closer to being a physical wallet substitute,” says Jaclyn Holmes, Director of Research at Auriemma Group. “Though we don’t anticipate mobile wallets to fully replace physical ones, this addition will make leaving home without one a greater possibility should your state provide the option.”
However, mobile payments have some work to do if they want to convert naysayers. 62% of those uninterested in adding an ID to their mobile wallet say they don’t like the idea of having all their personal information saved to one device, and 50% don’t think it would be secure. Over half of these cardholders also don’t trust mobile wallets enough to leave their physical ID at home, saying they would still carry it with them anyway.
When looking at those interested in adding their ID to a mobile wallet, however, 69% are comfortable leaving their physical ID behind. This is most prominent among younger cardholders, suggesting that over time comfort may increase.
“Mobile payments already allow consumers to add their payment cards, plane tickets, membership cards, and more,” says Holmes. “Adding IDs is the next logical step and is likely to promote mobile payment usage overall. As issuers consider their relationship to mobile payments, it would be worthwhile for them to envision a future where digital wallets are more commonplace, even if only supplemental to the physical wallet.”
Survey Methodology
Mobile Pay Tracker
This Auriemma Group study was conducted online within the US by an independent field service provider on behalf of Auriemma Group (Auriemma) in July 2022 among 2,182 adult mobile 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.
(New York, NY) Jamie Dimon, CEO of JPMorgan Chase recently cautioned that the US and the world would face a recession in the next 6-9 months. And if the UK’s cost-of-living crisis is any indicator, some consumers may soon be pinching pennies to afford everyday expenses. Auriemma Group recently conducted research in both regions and found that 55% of US credit cardholders and a staggering 83% of credit cardholders in the UK say rising costs will have a negative impact on their finances in the next 12 months.
Rising food and fuel costs are already having a significant negative impact on half of US cardholders, and these consumers anticipate costs to swell further over the next year. Looking to the UK, these impacts are even greater, with about nine-in ten (88%) reporting a negative impact from rising food costs and 81% saying the same about fuel.
“We’ve been studying changes to consumer spending and borrowing behavior throughout the cost-of-living crisis in the UK and believe those shifts may be predictive of things to come on our side of the pond,” says Jaclyn Holmes, Director of Research at Auriemma Group. “Navigating these increasing costs comes at a price for many, particularly those with heavier debt loads or fixed incomes.”
According to Auriemma’s research, US cardholders are already acting in response to rising costs. Over the past 6 months 52% curbed non-essential spending, 36% sought out more sale items than usual, and 33% switched to more affordable brands.
While often opaque to cardholders, the economic outlook due to the impacts of inflation, rising interest rates, and Russia’s war with Ukraine may cause these measures to intensify. In the UK, tensions are already hitting a fever-pitch with some activists going as far as flinging tomato soup at a Van Gough painting to draw attention to the impact of fossil fuels, but also rising costs.
“These are very, very serious things which I think are likely to push the U.S. and the world — I mean, Europe is already in recession — and they’re likely to put the U.S. in some kind of recession six to nine months from now,” Dimon said.
US cardholders agree with Dimon. Auriemma’s research found that 80% believe the US will enter a recession within the next 2 years. And this belief is changing attitudes towards spending. Over nine-in-ten of those who think it is ‘very likely’ that the US will enter a recession say they have changed their spending behavior because of rising costs.
“The UK’s cost-of-living crisis has gained media attention for the better part of the year, and the US may not be far behind,” says Holmes. “Dimon’s assertion highlights the delicate state of the economy, and US consumers have already begun to feel the effects. Looking to the UK as an example, US issuers and merchants can expect some notable changes to spending over the next year.”
Survey Methodology
Cardbeat US
This Auriemma Group study was conducted online within the US by an independent field service provider on behalf of Auriemma from August-September 2022, among 80o+ adult credit cardholders. The number of interviews completed 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.
Cardbeat UK
This Auriemma Group 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 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.