Hyatt, which says this is its first affinity card, and Chase hope to increase their revenues from business travelers.
Chase has cut its number of credit card partnerships in half during the recession as credit dried up and is focusing on more lucrative long-term deals, Chase Card Services Chief Executive Gordon Smith told Reuters in an interview on Wednesday.
Smith, who joined Chase in 2007 after more than 25 years at American Express, would not discuss the financial terms of the partnership with Hyatt.
But credit card lenders make some of their biggest profits from partnerships with airlines and hotels, because consumers are willing to pay the lenders high annual fees to earn rewards like free flights or hotel stays. Hotel and airline credit cards also attract high-spending business travelers, who boost the banks’ profits from processing credit card transactions.
Most U.S. hotel companies already have contracts with lenders; American Express issues cards for Starwood Hotels & Resorts HOT.N and Hilton Worldwide, while Chase also issues credit cards for Marriott International MAR.N.
“You don’t have to be first to win,” Hyatt’s Global Head of Marketing and Brand Strategy John Wallis said in a separate interview on Wednesday. “You just have to have to scale to be able to do it.”
But the partnership may initially be less profitable for Chase than some similar hotel deals, because Hyatt was only the 10th largest hotel chain worldwide.
It operates 445 hotels worldwide compared to the thousands under the Marriott International and Starwood Hotels & Resorts marques. At about 126,000 rooms globally, Hyatt has less than half the capacity of Starwood, and about a fifth the capacity of Marriott.
Reporting by Maria Aspan and Deepa Seetharaman, editing by Leslie Gevirtz
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