I found six things interesting in the second quarter American Express earnings call that should be interesting for travelers and Amex rewards card customers. Here are takeaways from CEO Steve Squeri about lounges, how they bump up your fees, and who is spending on travel:

1. The American Express lounge strategy is (1) coordination with Delta (2) expand lounges (3) add satellite second lounges like their just-announced Sidecar spaces.

   The other thing is we’re built we’re trying to make the lounges bigger. I think this whole lounge game has been a boon for airport authorities in terms of how many lounges they can put in. And the other thing we get innovative, look, in Vegas, we just did what we call sidecar, right, which is a more of a small kind of, I don’t know, maybe call it a speakeasy kind of of lounge where if you just want to go in for a quick drink or grab something quickly, you you can you can do that. And I think we work really, really closely with our partner Delta, in in those airports where we have, you know, either we don’t have a lounge or we do have, lounges together to try and to try and move move traffic around a little bit.

   But I think you’ll continue to see more innovation here. You’ll look at more expansion of existing lounges where we can get space, and you’ll look at a strategy that looks at satellite locations so that we can handle the demand that we get.

   Of course when Amex started opening lounges they focused on locations where Delta didn’t have lounges, since Delta’s lounges provided them with a base of a lounge network. But then they were really filling Delta lounges, and my impression is that Delta sort of made them open lounges in Delta terminals. Getting more continguous space with existing lounges is really tough, so offering more than one lounge is smart and offering a concept that lets them take advantage of smaller spaces that open up is, too.

   

2. When Amex raises annual fees, it generates more revenue. They acquire more customers (they have been aggressive with this, so it’s likely unrelated to the product changes) and only lose a small amount of spend from customer attrition. In other words, they haven’t yet hit that part of the curve where higher fees chase away customers and depress spend volume.

   [I]n each of the recent refreshes we’ve done for our U.S. Consumer Gold, Delta and Hilton cards over the last two years, customer demand has increased, driving double digit account growth. Revenue growth in each of the three portfolios is up over 30% with card fee revenues up at least 60%. And spend retention remains very high at 98% and we’ve seen no meaningful change after the refreshes. Additionally, the high credit quality of the new customers we’re bringing in has helped us widen the gap between our credit metrics and the rest of the industry.

   

3. Amex Platinum is going to see a higher annual fee, along with more coupons (benefits from “world class partners” i.e. more merchant-funded offers) and the increase top-line benefit value will be greater than the fee increase.

   As we look ahead to our U. S. Platinum launches, you can expect to see the same formula, providing the best premium experience to card members with more differentiated benefits and more world class partners joining us to offer card members more value that substantially exceeds the annual fee.

   I’ll tell you what, if you don’t tell anybody, I’ll give you the preview. The look, I think that yes, look, I’m not going to get into ratios here, but what I would say is our strategy has always been to if we do raise the fee, it has always been to add incrementally a lot more value. In terms of so yes, that’s the same playbook.

   

4. He admits they used to come up with benefits that were almost unusable, in order to contain cost. Now they have offerings that many consumers won’t want to use, but that picking and choosing benefits cardmembers see themselves getting enough value to justify the price.

   In terms of as you think about the consumer, years ago when we used to do these things, we used to try and figure out how consumer couldn’t use the products and services. But what we find is we make these things really easy for consumers to use now.

   And we make it such that it’s a wide range of value. And so while not every consumer will use 100% of the value, Getting back to your second point, we have enough disparity in the price and the value that you don’t need to use all the value to get the value out of the product. …not every card member uses uses every benefit. But but that’s okay because it gives people the opportunity to pick and choose, but they do use enough of the of the services and the benefits that it more than outweighs whatever fee they’re gonna pay.

5. Airline ticket purchases are slowing, but mostly for coach. Hotel spend is slowing down, but not at the highest-end.

   [W]hat we’re seeing right now is, very consistent spending. You’re seeing a little bit of a slowdown in airline, not necessarily front of the cabin. You’re seeing a little bit of a slowdown in lodging, but again, not necessarily on the high transactions, which which are up. But goods and services continue to be resilient and, you know, our our Gen Zs and our millennials continue to be, consistent.

   

6. New cardmember acquisition is where they get their growth, since there’s only so much more spend they can drive from existing customers. American Express opened 1.5 million cards in the second quarter.

   One of the things that provides support to our billing growth is the strength of our new account origination. And you certainly saw that we added a little bit more disclosures and details on our new cars acquired and 3,100,000 new cards this quarter and 1,500,000 in The U. S. Consumer.

American Express still sees headroom to charge customers more, and make them feel o.k. with it by selling access to their cardmembers to adjacent brands in exchange for coupons and discounts. That strategy will work until they reach some theoretical limit – but they haven’t found it yet. As long as they keep promising you a somewhat better experience in aspirational portions of your life like travel, you will keep paying and keep spending on their cards.