Amex Buys $1 Billion Worth of Points from Hilton
We wrote previously about airlines thinking of selling discounted miles in order to raise cash during the coronavirus pandemic. But hotels are hurting just as much during the outbreak. Hilton seems to be the first chain to act on this strategy by selling $1 billion worth of points in its Hilton Honors loyalty program to American Express. Hilton said it plans to use the proceeds for working capital and general corporate purposes.
This is something that airlines and hotels do often. Their co-brand credit card issuers will buy points or miles that they need for incentives and consumer spending. But instead of issuers buying these points when they need them this sale was done in bulk and likely at a discount. Consumers can often buy Hilton points for half a cent during promotions, but we do not know what American Express pays for these points.
American Express told Bloomberg that the purchase was part of a preexisting agreement between the companies. American Express and Hilton are co-brand partners, with Amex Hilton cards representing about 2% of spending on the firm’s network and 5% of its loans.
In its first quarter report, Hilton said that currently occupancy rates are nearly 17% and 13% in Americas and EMEA (Europe, the Middle East, and Africa) regions, respectively. As of Apr 14, 2020, the company has closed operations at nearly 1,000 hotels, which is nearly 16% of its global hotel properties. In Americas, EMEA and Asia Pacific the company has suspended nearly 12%, 60% and 15% of its hotels, respectively.
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