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For the past 18 months, the country’s largest bank has been putting the pieces together to launch a full-service travel business where customers can plan and book trips ranging from simple domestic flights to extravagant safaris.
He bought a reservation system, a restaurant review company and a luxury travel agency. It is building its own airport terminals and thousands of travel agents. A new website will be launched in the coming months.
Travel has become one of the most important spending categories for banks and credit card issuers, and JPMorgan wants a bigger piece of it. The bank hopes to turn those traveling customers into lifelong chess fans by attracting more of their spending and other financial needs.
JPMorgan already plays a small role in the travel world. Its own credit cards, like the Sapphire Reserve, allow customers to build up travel rewards and redeem them through the bank’s Ultimate Rewards booking website. JPMorgan estimates that customers account for one in three dollars spent on leisure travel in the U.S., even though customers only book a small amount on the Ultimate Rewards website.
With the new provisions, JPMorgan executives believe the bank could hold $15 billion in bonds by 2025, five times more than it held before the recent construction. This would make it the third largest travel agency in the country based on 2021 volumes, according to industry publication Travel Weekly. That’s still far less than the parent companies of booking.com and Expedia, which each manage more than $70 billion.
The idea is for JPMorgan to control the entire buying and selling experience for customers. Cars and homes could be next, executives said.
“These are big circles of customer spending where we have a real opportunity to define what it means to use Chase products,” said Alison Brewer, the bank’s head of card and connected commerce.
‘We have a real opportunity to define what it means to use Chase products,’ said Alison Brewer, who heads what the bank calls connected commerce.
Photo:
Gabby Jones for the Wall Street Journal
The plan has risks. Travel-award gifts JPMorgan and other banks are expensive, and did not always lead to a lasting relationship that banks hope. JPMorgan has important corporate partnerships with airlines and hotels that expect the bank to send their clients. Some of those partners have complained about the success they’ve had in taking Sapphire customers off their cards.
JPMorgan isn’t alone in trying to move into travel bookings. American Express Co.
It is currently the sixth largest travel agency. Capital One Financial Corporation
Last year, he invested in a booking company to build his own travel space and opened his first airport lounge.
JPMorgan believes that it can differentiate itself in part because of the detailed understanding of its clients. Its data helps travel agents and artificial intelligence technology that can target customers with discounts and offers.
“Issuers have learned that nothing costs like award travel,” says Samuel Engel, senior vice president of aviation at ICF International Consulting..
American consumers will stop at nothing to get those magic points.
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In the year Travel has been the centerpiece of JPMorgan’s card offerings since launching Sapphire Preferred in 2009, which allows users to build travel dollars that aren’t tied to a single airline or hotel. In the year In 2016, a flashier premium version, the Sapphire Reserve, became especially popular with young millennial spenders. The bank also got a taste of being a travel agent, managing booking systems and buying trips on behalf of clients.
JPMorgan Chase says it will launch Sapphire airport lounges, like this one on display at the Artist Show.
Photo:
JPMorgan
Executives saw room for improvement. They felt that existing booking systems made it difficult to redeem awards, which they feared would drive away customers.
In the year In 2020, when the pandemic hit and hit the ground running, JPMorgan lined up for the opportunity. Discussions to transition the booking systems to cxLoyalty changed to purchasing the entire company in December 2020.
In the year In 2021, with travel costs returning, the bank announced that it will open Chase Sapphire airport lounges. The club, which owns the club lounge chain, is building nine lounges, each with local design and cuisine, including Boston, Hong Kong and Phoenix.
In September last year, JPMorgan announced that it was buying restaurant review site The Infatuation, which includes the Zagat brand. Chase wanted to better advise customers on where to spend rewards. The business had significant customer overlap with Sapphire, said Chris Stang, co-founder and CEO of Infatuation. Now he has started reviewing hotels and compiling complete city guides.
Chris Stang, co-founder of the restaurant review site, said JPMorgan’s acquisition of Love had significant overlap with the Chase Sapphire credit card.
Photo:
Gabby Jones for the Wall Street Journal
JPMorgan added luxury travel shop Frosh International Travel, more than 1,000 agents, this year. The bank is now building the new Chase Travel website, which will open to credit card customers by the end of the year and to all bank customers by 2023, officials said.
The bank did not disclose how much it paid for any of the purchases. The new travel business is expected to eventually post an annual profit of $750 million, down from $48 billion last year.
JPMorgan executives say they want to dominate luxury itineraries by helping clients book spas, dinners and experiences.
Jason Wynn, head of the new travel division, said: “I want to have one of those social media-type moments where people say, ‘Tell me where I’m going.’
‘Clients want to do something they’ve never done before,’ says Jason Wynn, who heads JPMorgan’s new travel division.
Photo:
Gabby Jones for the Wall Street Journal
The bank is already seeing the first signs of demand for that luxury. The average price Chase customers pay for hotels is twice the industry average, the bank said. A customer recently took home a seven-night stay in Maui for over $48,000.
The bank offers buy-now, pay-later travel plans, and executives said they want to cater to more affluent customers as well.
“Sometimes you have a whole clientele that wants these amazing experiences, but they don’t always walk away,” Ms Beer said.
Write David Benoit at david.benoit@wsj.com
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