Chase will be launching a new travel portal, first for all credit card customers and then for all of its bank customers. And they have eight airport lounges in the pipeline, whereas we previously only knew about six (and they’d only confirmed four). That and more according to an investor presentation.
As noted by Skift Chase revealed at its investor day that they’re going to launch ChaseTravel.com this year.
- They expect $8 billion in travel sales in 2022, $10 billion next year, and $15 billion by 2025
- 25% of leisure travel spend is on a Chase credit card (and 33% by Chase customers)
[In] US leisure travel, $1 in every $4 spent is on a Chase Card, and $1 in every $3 spent is by a Chase customer. And the stats for dining are quite similar. But only a small percentage of this spend went through our platform because our assets were not differentiated.
- They are already a “top five US consumer travel provider.”
I was (the only one that was) highly critical of their move to outsource their rewards booking portal to Expedia of all companies. They ultimately acquired cxLoyalty, which they used prior to Expedia and which I found to offer better service. Now, investing in that platform, they intent to benefit fully from their customers’ travel spend in terms of experience, commissions, and data marketing their customers to other firms.
Our travel business is cash flow positive today. The acquisitions pay back within six years on strong revenue margins. And for context here, industry commissions mix dependent are about 10%. And now we’re getting all of that, whereas previously we were not. The business will require little marketing expense as we leverage our existing customers and channels reinforced by our loyalty program Ultimate Rewards. And so, the net of all of that, we expect a net margin of about 5% plus or minus.
ChaseTravel.com Portal Brings Together Numerous Investments
Capital One quickly moved from $170 million investment in Hopper to launch of its new travel portal, with differentiated features like price prediction and rich travel protections. The opportunity in travel and experiences for high-end customers is one that’s shared broadly in the industry.
Chase has had numerous assets but they’ve been little marketed to customers so far. The new ChaseTravel.com is supposed to solve this. For instance, beyond cxLoyalty and a premium leisure travel agency they launched a dining hub including a Tock reservations platform integration and acquired The Infatuation and Zagat for rich content.
Eight Airport Lounges Are Coming
Last year we learned that Chase would launch its own lounge network in conjunction with Airport Dimensions, which runs The Club lounges and shares a parent company with Priority Pass.
Known planned lounges include:
- New York LaGuardia Airport Terminal B
- Boston Terminal B-C Connector
- San Diego Terminal 2 West
- Hong Kong Gate 40
- Phoenix Terminal 4 South
- Las Vegas Terminal C
They’ve contracted for eight lounges in total so far, joining both American Express and Capital One in offering lounges to cardmembers.
Offering Travel To Existing Customers Isn’t Enough
Capital One has aspirations to do travel better. We don’t yet know what Chase will deliver beyond an integrated marketing of the assets it has acquired.
Online travel had been well-consolidated in the U.S. between Expedia and Booking.com. There hasn’t even been an independent Orbitz for years. And online travel has largely stagnated.
Sites like Expedia advertise to gain consumer eyeballs, and then sell those eyeballs to travel providers (mostly hotels). They don’t help customers do travel better, and haven’t meaningfully improved their experiences whether it’s customer service when things go wrong or proactive, customized guidance on making the best travel purchase decisions, in the past 15 years.
When travel booking went mostly online that was lower transaction cost, but something was lost compared to the best agencies. Travel is complicated and advice is missing. You go online and see schedules and price, or location and property features, but little to tell you whether to take that 45 minute connection in Chicago in winter, whether for your trip you should go out the night before or take the first flight rather than last flight of the day, and what kind of backup options you may have. RouteHappy (acquired by ATPCO) at least began the process of offering richer features of flights, to differentiate beyond merely price and schedule.
The potential in online travel, as a tool both to support the financial businesses and to market revenue accretive products to affluent customers, puts banks squarely in the space as competitors in an otherwise-moribund industry. Google was supposed to disrupt travel search and booking but that’s been the next big thing in the space for over a decade. Whether or not banks deliver, having more competitors can only benefit consumers.