Accor has named BNP Paribas as its bank partner for its co-branded payment card in Europe.
The card, which is due to launch in January, came as the operators have looked to their loyalty programmes to bolster their cash reserves.
Sébastien Bazin, chairman & CEO of Accor, said: “This partnership with BNP Paribas puts one of the cornerstones of our loyalty building strategy into practice. The launch of the innovative and ambitious ALL payment card is a key step in the rollout of our loyalty program, which already has almost 70 million members. We will be able to offer new and ever more generous and pioneering services, accelerating the diversification of the group’s revenue streams. By combining the complementary expertise of two European leaders, we aim to attract ever-increasing numbers of loyal customers and step up the rollout of new offers to create an ecosystem that is unique in the world of travel and leisure.”
Jean-Laurent Bonnafé, director & CEO of BNP Paribas, said: “The payment card market is undergoing a huge transformation, particularly in Europe, both functionally and technologically. Today, it is one of the major drivers enriching the customer experience and introducing higher added value services and offers. As a European banking group, we continuously innovate in terms of payment solutions to support customers with their new habits and aspirations. We are therefore delighted to be involved, alongside Accor, in this major advance for the customer experience within the international hotel industry.”
The deal follows one announced earlier this year between Accor and Visa, with the French group anticipating that it would be a “huge boost” to the group, in addition to driving membership growth and engagement.
The pair said that the card would offer members “tailored rewards based on customer preferences and the ability to earn more loyalty points when staying at an Accor property or when making purchases”.
The group previously had a co-branded credit card in Indonesia with CIMB Niaga Bank.
The announcement came one year after Accor announced plans to invest €225m over two years on loyalty, partnerships and brand marketing. The group forecast a 10 percentage point increase in contribution to turnover from the loyalty programme increase, €100m in partnership revenue (from €6m) and three point revpar increase. The company said that it planned to increase its number of partnerships, after Bazin described such programmes as “about half what other competitors have”.
He said: “I want to have tens of millions coming from partnership, but partners only come if they see your brand. No partners from credit cards, from car rentals, from aviation will connect with you, with Le Club Accorhotels because you never see Le Club Accorhotels, only those who have the card.”
Last year saw Marriott International launch its Marriott Bonvoy credit cards with Chase and American Express, which it described as being designed with the premium and the luxury segment in mind, along with small business. Later in the year it launched a no-fee Marriott Bonvoy credit card for members.
Stephanie Linnartz, EVP & global chief commercial officer, told attendees of its security analyst meeting: “Nearly half our members reside in North America, where we also have the vast majority of our co-brand credit card holders and spend.”
The group said that, in 2018, with the benefit of renegotiated terms with its financial partners, credit card branding fees delivered $380m, a figure which was expected to reach between $410m and $420m in 2019. Linnartz said: “Not only have these renegotiated terms delivered higher branding fees but they have significantly lowered credit card processing costs at our hotels, to the benefit of our owners.
“Card holders are more engaged, and they are more loyal, and they are more likely to book direct. In fact, last year co-brand cardholders booked approximately three times more room nights at Marriott International than non-cardholders. In 2019, we expect to market the Marriott Bonvoy co-brand card more aggressively than in the past, both on-property and through our various distribution channels.”
CFO Leeny Oberg said that franchise fees earned from the co-branded credit card programme represented over 10% of total gross fees, illustrating, she said: “the power of our loyalty programme and hotel brands”.
Oberg added that the amount received from the programme was higher than that recorded “and the vast majority of that goes to support the Marriott Bonvoy programme, including the cost of the points issued to cardholders. The total amount received from our credit card partners is directly related to the number of cardholders and their monthly spend on the credit cards and the corresponding points that they earn.”
Insight: When the ALL card was launched, thoughts turned to comments made by Marriott International president & CEO Arne Sorenson on the release of the group’s no-fee Bonvoy card. He said: “Not to be too much of a downer, but the interchange fees outside the US are on average dramatically lower, and so the economics associated with credit cards is quite different.” Accor, one notes, are not as massive in the US as in other geographies and this is, of course, this hack’s cue to comment about they should be merging with Marriott and be quick about it.
But that aside, loyalty programmes have become a different beast in recent months, being used by Hilton and Marriott International to raise money and keep themselves afloat, rather than lure customers away from the OTAs.
Accor, which is involved in what looks to be a rather grisly refinancing of AccorInvest, is not in a position to start turning down routes to cash. ALL may not be a cow ready to milk just yet, but it doesn’t hurt to look to a future where that might change.