This June it was announced that Hilton would be entering into an exclusive credit card agreement with American Express as of January 2018. Previously Hilton was in a unique position, as they had co-brand cards issued by both American Express and Citi. It seems American Express was willing to pay the price for exclusivity, meaning that Citi no longer has the right to issue Hilton cards.
The details of Amex’s new Hilton Card portfolio are impressive, as Hilton is improving the two Hilton Cards that they already issue, and is introducing two further cards.
What we also learned shortly after this announcement is that Citi plans on selling their Hilton Card portfolio to American Express. That means that as of January 30, 2018, Citi Hilton Cards will automatically be converted into American Express Hilton Cards.
I’m sure I’m not the only one who was curious how much this move cost American Express. It looks like we now have our answer. Reuters reports that Citi plans to record a $150 million pretax gain on the sale of their co-brand Hilton portfolio to American Express.
As you’d expect, Citi had two choices:
- Citi could have converted those with Citi Hilton Cards to other Citi products, though in doing so they would have probably lost a lot of cardmembers, since they’d be offering rewards that the members weren’t initially looking for; however, presumably they’d maintain some cardmembers, given that some people are opposed to change
- Citi could sell their cardmembers to American Express, as these have the potential to be good new customers of American Express, though obviously Citi is losing all the potential revenue that would come along with those cardmembers after the sale
So after all is said and done, it looks like $150 million is what Citi wanted for something like this, and what it was worth to American Express.
Is that more or less than you were expecting?
I wonder if Amex expects to lose the SPG card to Chase and is putting all its weight with Hilton?
Gain on sale and sale price are different. I get what you were trying to communicate though :)
My wife and I also cancelled our 6 (3 each) Citi HH cards. We already have both of the AMEX HH cards open, so AMEX isn't getting anything from this purchase from us. Will be happy to apply for the new AMEX HH cards though, assuming a decent sign up bonus, and their being considered new products. ;)
I have to wonder if AMEX had any way of knowing how many Citi HH cardholders already...
My wife and I also cancelled our 6 (3 each) Citi HH cards. We already have both of the AMEX HH cards open, so AMEX isn't getting anything from this purchase from us. Will be happy to apply for the new AMEX HH cards though, assuming a decent sign up bonus, and their being considered new products. ;)
I have to wonder if AMEX had any way of knowing how many Citi HH cardholders already also had AMEX HH cards when they decided to do this deal. If not, they may be getting far fewer new customers than they were hoping to get.
The meaningful number is how much they paid PER ACCOUNT. Do you have that info?
But pre-tax gains are different from gross proceeds (AMEX is paying for Citi)...
Amex wasted their money for my Citi accounts as I cancelled both of my Citi Hilton cards. I already have an Amex Hilton Surpass and having two more would be redundant as I'm only allowed four personal Amex cards.