Earlier I wrote about the big news that American Express and Hilton will be entering into an exclusive credit card agreement starting in 2018. Currently both American Express and Citi issue co-branded Hilton cards, though it seems like American Express was willing to pay a high enough price for exclusivity.
For now it’s business as usual for the Hilton cards issued by both American Express and Citi, though we’ve been told that later this year more details about this change will be announced.
One big question has been about what happens to existing Citi Hilton cardmembers. Typically in situations like this we see one of two things happen — either Citi could sell their Hilton card portfolio to American Express, or Citi could convert cardmembers to other Citi products.
View from the Wing reports that Citi will be product changing Citi Hilton cardmembers to another Citi product, rather than selling their portfolio to American Express. Generally this is the default move by issuers in such situations.
However, arguably it’s not terribly efficient, since it doesn’t get cardmembers the types of cards they were looking for when they applied. In other words, if Citi converts those with co-branded Hilton cards to cashback cards, American Airlines cards, etc., they’ll likely lose a lot of cardmembers in the process. After all, presumably there’s a reason people wanted that Hilton card to begin with.
The alternative is that Citi could decide to sell their card portfolio to American Express. Sure, Citi would lose customers, but they’d get paid a big sum of money, and it could be mutually beneficial — these are largely consumers who want a co-brand Hilton card, and there’s a decent chance they’ll be good customers for Amex’s product going forward.
For example, when American Express lost their Costco co-brand agreement to Citi, they sold Citi their cardmembers for about a billion dollars. That’s a lot of money! However, that decision was only reached about a year after the initial agreement was made.
As of now Citi is saying that they’ll convert existing cardmembers to other Citi products. However, I wouldn’t be surprised to see American Express and Citi reach a mutually beneficial deal, where we’d see Citi Hilton cardmembers converted into Amex Hilton cardmembers.