Chase launches consumer travel portal; Claims the 5 largest US travel companies with sales of $ 8 billion

take the change

Chase doubles down on travel as an ambitious business class for its clients, in huge numbers to support its ambitions. Expect more travel mergers and acquisitions by these banks.

Raafat Ali

Chase is planning to launch later this year as a consumer gateway to its cardholders and bank customers, a total of 66 million American families, in a major upgrade of its travel business ambitions.

It also reveals details about the scale of its travel business for the first time: It expects to reach about $8 billion in sales this year and targets $15 billion by 2025. She also said that for leisure travel in the United States, $1 for every $4 spent on a Chase card, and $1 for every $3 spent by a Chase customer. It also revealed that it has now identified and plans to launch eight Chase Sapphire airport lounges, up from four previously disclosed.

All of these details were revealed at parent company JP Morgan Chase’s 2022 annual Investor Day earlier in May, and were buried inside hundreds of slide presentations given by Marian Lake, JPMC’s co-CEO of consumer and community banking, on Investor Day.

According to Lake: “We have seen an opportunity during the pandemic to own our own destiny in travel, and have acquired cxLoyalty, a two-sided travel platform, and Frosch, itself a top ten leisure travel agency, Now provide us with your booking engine, content, service excellence and concierge capabilities that our customers should expect. and today, We estimate that we are the top five US consumer travel service provider. “

The move to maximize its travel ambitions and control its own destiny — versus banks and credit card companies that typically work with third-party travel agencies — comes on the back of the acquisitions of pandemic travel provider cxLoyalty, corporate and luxury travel agency Frosch. Chase has already moved cardholders using its Ultimate Rewards platform to cxLoyalty and as a result has abandoned Expedia as its sole travel provider.

It also comes at a time when financial rival Capital One has taken a hard sell during the pandemic by acquiring companies like Freebird and Lola, investing in Hopper, and recently relaunching its travel website with the support of Hopper. Another US competitor, Bancorp, bought travel platform Will Smith-Backed TravelBank for $200 million in November last year.

From the JPMC Investor Day presentation, these three slides below illustrate the current state of its travel business, along with its expansion plans.

From the text of the presentation, the description as given on Investor Day, it is worth extracting in full:

“Travel has been the center of gravity for our Ultimate Rewards program for a decade, and continues to be the most ambitious lifestyle category for many of our customers. We partner with some of the most admired brands in the travel industry. Travel is the center of our cards business.

For leisure travel in the United States, $1 out of every $4 spent on a Chase Card, and $1 out of every $3 spent on a Chase customer. And the food intake stats are quite similar. But only a small percentage of this spending was allocated across our platform because our assets were undifferentiated. But even so, in 2019, we were already a top 15 travel provider.

We saw an opportunity during the pandemic to own our own destiny in travel, acquired cxLoyalty, a two-sidedly owned travel platform, and Frosch, itself a top ten leisure travel agency, now providing us with the booking engine, content, service excellence and concierge capabilities our customers should expect. and today, We estimate that we are the top five US consumer travel service provider.

So, a moment in the feasibility study. Besides controlling the customer experience, which is everything, we now have the complete economics of ownership. We all have travel commissions. We will operate at scale and cross $10 billion in travel volume on the platform next year, with strong underlying growth. And as a reference point, the final rewards growth rate before the pandemic was 26% at a two-year compound annual growth rate (CAGR). Assuming the benign environment continues, we expect to reach $15 billion in size by 2025 if not sooner.

Our travel business is cash flow positive today. Acquisitions return within six years on strong revenue margins. And for context here, industry commissions are based on a mix of about 10%. And now we get all of that, while we never had it before. The business will require little marketing expense as we leverage our existing customers and the channels that the Ultimate Rewards loyalty program enhances. Thus, we expect a net profit margin of about 5% plus or minus.

and strategy, We will launch with card customers later this year and then open it to all Chase customers. We will deliver premium content and experiences and become a full-service travel agency for small business and discerning leisure travelers. And we’ll introduce these important clients to our strategic partners, and that’s how the flywheel begins. So, let me bring this to life with our cutting edge superhero app and

So, here we’re looking at 66 million American households, including 5 million small business customers. And now we have 4 million enthusiasts to eat. We have industry-leading products, unparalleled first-party data, and a two-sided commerce platform. Our strategy is to offer premium content to our broad customer base, making Chase the best way to shop, pay and borrow. Starting, as I said, with traveling and introducing our customers to the main merchants within our platform extensively. “

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