Amex cardholders are saving up rewards points, presumably to redeem toward post-pandemic travel
- Many Amex cardholders have been stockpiling rewards points, presumably to redeem toward post-pandemic travel.
- This trend provides an opportunity for the card issuer to bounce back faster once the pandemic subsides.
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Some of Amex's travel-related cobrand cardholders and proprietary cardholders have been saving up points and miles throughout the pandemic, per Bloomberg.
Despite being able to redeem points for online shopping, many cardholders are likely saving these points to use later for vacations once international travel revs up again post-pandemic, said Amex CFO Jeff Campbell at a virtual conference recently. Campbell noted that Amex won't be drastically moving away from its focus on travel, especially since pandemic-driven consumer spending habits aren't likely to be permanent.
This trend could position the issuer well once the pandemic subsides and consumer spending picks back up in the travel and entertainment (T&E) sector.
- Amex modified its rewards strategy during the pandemic to accommodate spending trends. The issuer added rewards offerings such as perks for spending on streaming and wireless services, groceries, and, most recently, it expanded its Uber Eats rewards program. These offerings helped Amex see improved results in Q3—especially in its non-T&E category, which made up a whopping 88% of total proprietary billed business in the quarter—and helped it recover from losses seen earlier in the pandemic.
- But pent-up demand for travel might help keep customers with Amex. The card issuer has recently been adding new travel perks for its Membership Rewards cards in preparation for the post-pandemic period: Some cardholders can receive increased credit toward hotel and resort bookings and can use points to pay for car rentals. Amex is also adding new resources to better assist customers in managing their bookings and travel spending. These offerings may entice customers to prepare for traveling once it's safe, and help Amex capitalize on that demand.
Amex's position as an industry leader might lead other issuers to build on travel rewards despite the ongoing crisis. Like Amex, other issuers have pivoted their rewards strategies to better fit consumer spending habits during the pandemic. In April, Capital One introduced new perks to allow cardholders to redeem points toward food delivery and takeout purchases, as well as streaming services.
Meanwhile, Chase offered points for essential purchases like groceries and gas, and enabled rewards for charitable donations made to select organizations during the pandemic. These offerings could help attract customers now, but beyond the pandemic customers may look to redeem rewards centered around travel as the sector picks back up—especially as coronavirus vaccine research continues to improve.
Promoting travel rewards again can help Amex, and other issuers that follow its footsteps, remain top of mind for when consumers start traveling again and help improve spending in the T&E category.
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