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?