Credit card agreements can be big business for travel brands, in particular airlines and hotel groups. While most travel brands seem to optimistically hope that they continue to grow their revenue from these agreements, it’s interesting to note how one major hotel group seems to be lagging the competition.
In this post:
IHG’s underperforming credit card portfolio
Skift has an intriguing story about how InterContinental Hotels Group (IHG) CEO Elie Maalouf sees potential for the hotel group to significantly increase its revenue from co-brand credit card fees. Specifically, he believes that IHG’s current upside from these agreements is roughly one-tenth of what hotel groups like Hilton and Marriott are earning.
Here’ are some of the things that Maalouf said:
- The hotel group generates roughly $100 million per year from its credit card business, and roughly one-third of that goes to IHG’s bottom line (rather than to hotel owners), so that’s around $33 million or so; he believes that Hilton and Marriott have closer to $300-400 million in upside from these contracts
- IHG’s current agreement with Chase is up for renewal in 2025, and IHG is hoping to renegotiate the contract in a favorable way; IHG’s CEO explains that “it gives us an opportunity to renegotiate or rebid that agreement against the backdrop of a stronger brand portfolio, a higher spending customer base, a broader customer base, and a stronger loyalty plan”
While airline and hotel loyalty programs are both pretty powerful marketing tools, airline loyalty programs have historically been valued much higher, with programs like American AAdvantage, Delta SkyMiles, and United MileagePlus, each being valued in the tens of billions of dollars.
To IHG’s credit, the hotel group did a great job overhauling its loyalty program in 2022, making elite status more compelling, and making its co-brand credit cards more lucrative.
It’s hard to get excited about IHG’s loyalty program
I’m not at all surprised to see that IHG is lagging Hilton and Marriott so much when it comes to revenue from its co-brand credit card agreement. Yes, in part that could be related to IHG just needing to negotiate a better contract, but I think there’s a lot more to it than that.
IHG has a huge global portfolio, so I think a logical question is whether IHG’s much smaller credit card market share is a function of the hotel group’s portfolio, or if there’s stuff that could be done to generate more interest? A few thoughts:
- IHG has already made huge improvements to its loyalty program, introducing confirmed suite upgrades, club lounge passes, free breakfast, and more, so that’s great
- While IHG has done a great job growing its luxury and lifestyle portfolio, it still doesn’t have quite the portfolio of Hilton and Marriott in terms of aspirational hotels, and that’s something that motivates people to spend on cards
- Beyond that, IHG has done a terrible job making its luxury properties interesting to loyalty program members; many Six Senses properties still don’t participate in IHG One Rewards, and those that do have outrageously high award pricing
- Hilton and Marriott just have much more lucrative credit cards, including premium cards that offer top tier status just for being a card member, which IHG doesn’t have
- IHG’s credit card earning rates remain largely uncompetitive, so it’s hard to justify putting spending on the card, especially given the lack of ability to get outsized value with points
As much as I love the changes we saw to IHG’s loyalty program, I wish I could get more excited about the program. If there were the opportunity to get any sort of decent redemptions at Six Senses, I’d be much more engaged, for example, and I suspect I’m not alone. I think that unlike at Hilton and Marriott, IHG’s leadership just hasn’t embraced the power of aspirational properties in engaging members in a program overall.
Bottom line
IHG is hoping to greatly increase profitability related to its co-brand credit card agreement in the coming years. The hotel group currently has about $100 million in revenue from its Chase deal annually, and about one-third of that goes to the hotel group rather than hotel owners, which pales in comparison to the revenue for Hilton and Marriott.
While IHG has some fundamental disadvantages in terms of its portfolio, I also think the hotel group could leverage its luxury properties a lot better to make the hotel group more interesting.
Why do you think IHG is lagging Hilton and Marriott when it comes to credit card revenue? Are you surprised?
Business people are more than welcome to pay premium rates at Marriott and Hilton. As a leisure traveler, IHG fits my budget better anyway. And my Diamond status gets me better rooms and free breakfast. I’m okay with that.
IHG's biggest issue I think is their name. IHG blah. Initials.
They seriously need to rebrand themselves to a real name and not initials.
No IHG card in the UK.
Is there even one outside the USA at all?
Clearly happy just handing it all to Amex.
The problem with IHG's credit cards is that the legacy credit card holders want more than 0 to 10,000 points to upgrade to the $99 card.
"IHG’s credit card earning rates remain largely uncompetitive"
I can't relate to this comment. IHG Premier and Business cards earn 10x at IHG; 5x dining, airline, hotel, and gas; and 3x unbonused. That's as good or better than any Marriott card last I checked, even valuing Marriott pts a bit higher. It's also better than any Hilton card based on my valuation.
You may not relate, but other can because 10x IHG is less valuable than 3x MR on Amex Green, 3x TY on Citi Premier, and 3X UR in CIP, just to name a few.
Doing just a random check on rates, I found IHG points in Columbus, Ohio for NYE to be equal to about 0.78 cents. That makes 10 IHG points worth 7.8 cents. The flexible rate is somewhat higher at 0.87/8.7 cents. Why Columbus, OH? My niece lives there.
That is without having the Select card, which we do for 10% back or booking four nights for three. And of course you get Platinum Status so your...
Doing just a random check on rates, I found IHG points in Columbus, Ohio for NYE to be equal to about 0.78 cents. That makes 10 IHG points worth 7.8 cents. The flexible rate is somewhat higher at 0.87/8.7 cents. Why Columbus, OH? My niece lives there.
That is without having the Select card, which we do for 10% back or booking four nights for three. And of course you get Platinum Status so your earn more for other reasons.
Travel/gas/restaurants earn 5 points per dollar and three points on everything else.
I looked at a couple of properties with Amex Travel and the return was about 0.7 cents per point, meaning 3/points per dollar nets 2.1 cents.
Chase was exactly 1 cent per dollar but of course Sapphire members get a higher rate.
If you can show me real world examples of three MR or UR points being worth more than 8.7 cents I would love to see that because I earn those too!
@ Jules - the quote was taken from a section comparing IHG with Marriott and Hilton...
Gotta actually read the article. If you do, it will make sense.
I agree. The 3x points per dollar unbonesed spend combined with the boosts(10k pts and $100 SC) at $20k spend, diamond at $40k, and for biz only a second free night at $60k make the cards competitive for unfocused spend. Not the best at all, but competitive in the marketplace. I do wish you could combine card spend and nights stayed/money spent on stays toward milestone rewards.
IHG was my go to CC until earlier this year they split with the provider Creation. Creation automatically sent me a new credit card, which I cancelled, but IHG have not announced a replacement credit card alliance. So the potential of an upside May well be understated, as they lack any urgency in this area.
Why is there no IHG credit card in Canada?
Love IHG. Been to IC in Cozumel and Kimpton in Shinjuku and Dwitt Amsterdam this year, all properties were fantastic, Tokyo was especially great. Got free upgrades, late check out and other amenities at all. Staying at IC in Phu Quoc and Singapore over the next week. Their properties and rewards program doesn’t have the same “feel” at Marriot or Hyatt, feels a bit more leisurely, but for us it works very well. Have paid...
Love IHG. Been to IC in Cozumel and Kimpton in Shinjuku and Dwitt Amsterdam this year, all properties were fantastic, Tokyo was especially great. Got free upgrades, late check out and other amenities at all. Staying at IC in Phu Quoc and Singapore over the next week. Their properties and rewards program doesn’t have the same “feel” at Marriot or Hyatt, feels a bit more leisurely, but for us it works very well. Have paid ambassador, plus the Chase card for Platinum and last year got a promo free upgrade to Diamond from a targeted offer through ‘24. Buying points during promos has also been a fab deal when coupled with 4th night free. Nothing to complain about over here!
I find the IHG credit card an exceptional value. Perhaps your view is clouded by your concept that loyalty programs are aimed at "aspirational" rewards. Why would I spend points at the Madrid intercontinental when I could spend the same number of points at the Indigo Princesa and have a superb stay? I jump at buyng IHG points because, largely due to 4 nights for the price of 3, I get 0.7 cents or more...
I find the IHG credit card an exceptional value. Perhaps your view is clouded by your concept that loyalty programs are aimed at "aspirational" rewards. Why would I spend points at the Madrid intercontinental when I could spend the same number of points at the Indigo Princesa and have a superb stay? I jump at buyng IHG points because, largely due to 4 nights for the price of 3, I get 0.7 cents or more of value for a cost of 0.5 cents. Hilton points are near worthless -- generally a less than 0.4 cents, if that. The IHG cards are less than $100 and get you a free night as well as the fourth night free. There is a wide gap in life experience and perspective between valuing points for what would otherwise be a $500 a night say versus value points for a $150 stay. I suggest the latter is of greater interest since the intro points offer on credit cards can get you a vacation's worth of nights on the latter and a couple of days on the former.
Exactly, Ben's travel style isn't very representative. My favorite points to earn (mostly via churning) are IHG and Jetblue; I've earned many free vacations that way. Lots of great value (1cpp+) Holiday Inns, especially in the US.
We are currently staying at the Holiday Inn & Suites in Puerto Vallarta. It is exceptional in every way, which shocks us because we have avoided Holiday Inns for years. It is contemporary, sleek, comfortable, and the suite we have is enormous--all for $140 US a night. You can't beat that. Their new Chase card gave me a year's Platinum status, and IHG offered several overlapping bonuses that are giving me thousands more points just...
We are currently staying at the Holiday Inn & Suites in Puerto Vallarta. It is exceptional in every way, which shocks us because we have avoided Holiday Inns for years. It is contemporary, sleek, comfortable, and the suite we have is enormous--all for $140 US a night. You can't beat that. Their new Chase card gave me a year's Platinum status, and IHG offered several overlapping bonuses that are giving me thousands more points just for this one stay. I am a longtime Hilton fan with a Surpass card, but I'm currently loving everything about this IHG property. Met the GM, Karina Zuniga, who sent up a bottle of nice wine and has done everything to make our stay more comfortable, including a delicious buffet breakfast each day. Love her and the whole experience.
The Holiday Inn Express is a sleeper hit. Keep avoiding regular Holiday Inns :)
In UK the only IHG CC was with creation, and they terminated that agreement without setting up any new agreements. There is no card in UK that will let you earn points on spending
Visited Buenos Aires in February and stayed several nights on two occasions at the Intercontinental downtown.
Fantastic property in the classic style of the 80's.
Great prices and a wonderful lounge. And the prices were absolutely excellent compared to other brands (Marriott/Hilton/Holiday Inn).
Transitioned away from hotel stays and was going to cancel Marriott and IHG cards. IHG said any points from credit card will be removed from your account regardless of when they were earned with card...
So I brought my point total down to just over 1,000. Maybe the bank stooge(s) lied to me, but I called twice, I don't know. . . Didn't matter, I'm like Ancient Rome. . . History.
I don't get the Marriott lovers. I don't stay at "aspirational properties" so maybe that's the difference. But I have stayed at plenty of pretty expensive Marriotts ($ and points), and the hotels are typically old and rooms lackluster. Overall I've found most Marriott hotels to be old and tired, whereas most IHG's like HIE are newer and have a little modern style. Same with Hilton, Home2Suites for example are newer and in better shape....
I don't get the Marriott lovers. I don't stay at "aspirational properties" so maybe that's the difference. But I have stayed at plenty of pretty expensive Marriotts ($ and points), and the hotels are typically old and rooms lackluster. Overall I've found most Marriott hotels to be old and tired, whereas most IHG's like HIE are newer and have a little modern style. Same with Hilton, Home2Suites for example are newer and in better shape.
The last time I tried to stay several nights at a Marriott (Residence Inn in downtown) Boise, the room was gorgeous but I lasted about 10 seconds because the room was one of the moldiest I've ever been in.
@CSue, mold in the desert? Boise is high desert. I lived there and I've never seen mold there. They must have had a flood in the hotel and not cleaned up properly!
been platinum member for 9 years now and till date i got zero benefit of being a plat member. what they advertise on their website doesn't exist just like airlines saying redeem 12,5k miles for domestic one way coach when most one way coach on domestic cost 30k to 95000 miles.
ZERO ROOM UPGRADES, ZERO and No to late check out requests. the only thing i got was 500 ihg miles which is worth $1.50...
been platinum member for 9 years now and till date i got zero benefit of being a plat member. what they advertise on their website doesn't exist just like airlines saying redeem 12,5k miles for domestic one way coach when most one way coach on domestic cost 30k to 95000 miles.
ZERO ROOM UPGRADES, ZERO and No to late check out requests. the only thing i got was 500 ihg miles which is worth $1.50 cents or one bottle water.
on top of having zero benefit of being plat member, their room rate for $100 a cash rate cost from 50000 to 95000 ihg points. horrific!
I only have Club status and got late checkout at Kimpton Amsterdam last month. Very nice hotel and the free wine/beer at 4pm each afternoon was delightful.
Platinum for 2 months from credit card. Also booked with amex FHR program, upgraded to duplex suite in Lyon IC. Depends on the hotel I guess.
If you want people to get your hotel/airline brand's credit card you have to make the underlying brand something desirable or practical.
IHG seems to be in a sort of no-man's land when it comes to the large hotel chains: no compelling reason to choose them over Hilton/Marriott, and they as a hotel conglomerate seem much smaller than they actually are vs Hilton/Marriott and have sort of gotten "crowded out." IHG's family of brands is...
If you want people to get your hotel/airline brand's credit card you have to make the underlying brand something desirable or practical.
IHG seems to be in a sort of no-man's land when it comes to the large hotel chains: no compelling reason to choose them over Hilton/Marriott, and they as a hotel conglomerate seem much smaller than they actually are vs Hilton/Marriott and have sort of gotten "crowded out." IHG's family of brands is not cohesive nor do they have strong identities except maybe Intercontinental (which is weaker than its peers) and Holiday Inn (it screams "budget"). I can barely name any of the smaller brands with more distinctive/boutiquey properties and one would struggle to know that they are in the same family as IC, Holiday Inn, Crowne Plaza (Hilton adds "_____ by Hilton" and most Hyatt brands have "Hyatt" in their name).
IHG personally does not work out for my travels and I find myself barely ever staying at their hotels. There are times where I need a hotel that is close to a specific location (like within walking distance) in a city and IHG oftentimes has no property close to said location or other properties are a lot closer.
I have two IHG cards that generate a free night that I have a hard time using, now that I’m a Hyatt Globalist. I gave up on IHG (partially) because their phone reps are so universally awful. Even with the Ambassador phone line, you get the same incompetent phone reps. I give up.
I would stay at higher end IHG properties but for their silly non-guaranteed late check out. They act like they're doing you a huge favor agreeing to noon, which is regular check-out at most hotels. And then asking for 2 PM is always a no. I always book a Hyatt whenever I might need the late checkout.
Good luck trying to book anything in Bora Bora, Maldives, or any aspirational location.
1) the Chase UR transfer ratio disincentivizes transfers because you can buy points at 0.5 cents each and then defray Chase purchases at a penny each (or 1.5 cents each with CSR). So they are off by either 100% or 200%! Even The Points Guy, which is written by airheads, says not to do it.
2) The credit card earns 1 point per dollar on base spend (or is it 2? whatever). Again, not a thing one should be doing.
The Premier and Business Premier earn 3x on base spend.
The one benefit that's kept me from acquiring any of their credit cards is the lack of free breakfast. The "you may" get breakfast at X property, but not at Y property is stupid and too difficult to keep up with. Make it simple like Hilton and Hyatt.
Simple like Hilton?
Simple like Marriott?
Are any nearby ICs and Kimptons aspirational? Nothing in Hawaii. A Kimpton in the Caribbean. IC’s in Mexico are no bueno save Cozumel. Iberostar partnership also a head scratcher as they’re a very mid-level AI offering, which Hyatt now dominates in Mexico anyways.
So make a $500 card that includes diamond and a 60-80k FNC? I’d still rather just get Ambassador if I have a planned stay and call it.
IC Mexico City is Horrible.They have tried to charge me for Breakfast multiple Times, even when it says complimentary for Diamond/Ambassadors. By the way, they are real Bad when you ask for Milk for Coffee. The Bill for Milk comes out as soon as you ask for it.
Sweet location though, and hats.
Nice window view also!
Don't they all...