Accor and Visa are to launch a new payment card as part of the relaunch of the ALL loyalty programme.
Accor said that it expected the partnership to be a “huge boost” to the group, in addition to driving membership growth and engagement.
The pair said that the card would offer members “tailored rewards based on customer preferences and the ability to earn more loyalty points when staying at an Accor property or when making purchases”.
Sébastien Bazin, chairman & CEO, Accor, said: “Partnering with Visa will be a huge boost to Accor as we embark on the shared journey to develop an innovative co-branded payment card. This new initiative will provide unmatched benefits to our members and reinforce the success of our ALL loyalty programme by increasing our member base driving additional engagement and giving each member incentives to stay with us more frequently and easily. The development of ALL is a major milestone for us, and in Visa we are very pleased to have found a partner which shares our passion for delivering everyday rewards and recognition.”
The group previously had a co-branded credit card in Indonesia with CIMB Niaga Bank,
The announcement came one year after Accor announced plans to invest €225m over two years on loyalty, partnerships and brand marketing. The group forecast a 10 percentage point increase in contribution to turnover from the loyalty programme increase, €100m in partnership revenue (from €6m) and three point revpar increase. The company said that it planned to increase its number of partnerships, after Bazin described such programmes as “about half what other competitors have”.
He said: “I want to have tens of millions coming from partnership, but partners only come if they see your brand. No partners from credit cards, from car rentals, from aviation will connect with you, with Le Club Accorhotels because you never see Le Club Accorhotels, only those who have the card.”
Last year saw Marriott International launch its Marriott Bonvoy credit cards with Chase and American Express, which it described as being designed with the premium and the luxury segment in mind, along with small business. Later in the year it launched a no-fee Marriott Bonvoy credit card for members.
Stephanie Linnartz, EVP & global chief commercial officer, told attendees of its security analyst meeting: “Nearly half our members reside in North America, where we also have the vast majority of our co-brand credit card holders and spend.”
The group said that, in 2018, with the benefit of renegotiated terms with its financial partners, credit card branding fees delivered $380m, a figure which was expected to reach between $410m and $420m in 2019. Linnartz said: “Not only have these renegotiated terms delivered higher branding fees but they have significantly lowered credit card processing costs at our hotels, to the benefit of our owners.
“Card holders are more engaged, and they are more loyal, and they are more likely to book direct. In fact, last year co-brand cardholders booked approximately three times more room nights at Marriott International than non-cardholders. In 2019, we expect to market the Marriott Bonvoy co-brand card more aggressively than in the past, both on-property and through our various distribution channels.”
CFO Leeny Oberg said that franchise fees earned from the co-branded credit card programme represented over 10% of total gross fees, illustrating, she said: “the power of our loyalty programme and hotel brands”.
Oberg added that the amount received from the programme was higher than that recorded “and the vast majority of that goes to support the Marriott Bonvoy programme, including the cost of the points issued to cardholders. The total amount received from our credit card partners is directly related to the number of cardholders and their monthly spend on the credit cards and the corresponding points that they earn.”
Insight: Accor has been bubbling this partnership up for some time as part of efforts to relaunch ALL as a real-life loyalty programme with all the grown-up accoutrements that one would expect and, it hopes, the revenue to match it.
When lunched its no-fee Bonvoy card, Marriott International did so in the US and Arne Sorenson, president & CEO, said: “Not to be too much of a downer, but the interchange fees outside the US are on average dramatically lower, and so the economics associated with credit cards is quite different.” Accor, one notes, are not as massive in the US as in other geographies and this is, of course, this hack’s cue to comment about they should be merging with Marriott and be quick about it.
Times they are a changin’ in credit card land. Traditionally high charges in markets such as the US have led to consumers grinding their teeth and, with fintech smelling blood in the water, other options are available. But if it doesn’t bring in screeds of cash, will the ALL card deliver screeds of bookings from loyalty members instead? We have yet to see the terms and how much they might appeal to potential cardholders.
This is one box ticked on efforts to prove to grumbling shareholders that the company has a decent plan and that the plan doesn’t involve hiving off its luxury brands. It may have to take a more convincing step - we hear this might involve Rotana. We await Thursday’s results, hands clasped in eager anticipation.