Chase and Hyatt, which is releasing its first affinity card, are collaborating to enhance their revenues from business travelers. The recession witnessed Chase cutting down on the number of partnerships it was part of, to half, even as credit dried up. Chase has been seeking more lucrative deals for the longer term according to the chief executive of Chase Card Services, Gordon Smith. However, Smith refused to discuss financial terms of the partnership of Chase, which he joined after 25 years, with Hyatt.
It has been observed over the past that credit card issuers make a lot of revenue and earn their biggest profits through partnerships with hotels and airlines. This is because there are many consumers who are more than happy to pay the credit card lenders high annual fee in order to earn rewards such as discounts on airline tickets and hotel stays. These airline tickets and hotel stays also attract business travelers with high expenses who enhance the profits of the credit card issuers through processing of credit card transactions of these high expenditure individuals.
There are many hotel companies which have tie-ups with the lenders in US already. These include American Express which has tie ups with Hilton Worldwide and Starwood Hotels and Resorts. Chase cards have tie ups on the other hand with Marriott International. These tie-ups are greatly boosting the profits of the credit card companies. This is because they earn a lot of revenue while processing the expenditure of individuals who seek these cards to get discounts on hotel stays and airline tickets. According to John Wallis who is the Global Head of Marketing and Brand Strategy for Hyatt, credit card issuers do not always have to win to rake in big profits. According to him, credit card issuers only need to scale up to the demands of the industry to get those big profits and revenues.
However, this particular partnership between Chase and Hyatt is less likely to get huge profits for Chase as some of its other tie-ups have been able to do. The simple reason for this concern is that Hyatt is only the 10th largest hotel chain in the world which makes it smaller than many of the other hotel chains that have entered into tie ups. Hyatt has 445 hotels which is much less than Starwood`s 1000. Marriott International too has a similar number. The capacity of Hyatt too is less than half of Starwood.