With the global travel industry still down in the dumps amid the raging coronavirus pandemic, it appears that one US bank is anticipating a rebound as early as next year.
According to CNBC, JPMorgan Chase on Monday agreed to buy one of the largest third-party credit card loyalty operations in a bet that leisure travel will meet a sharp recovery once the pandemic dissipates. The US bank will acquire the entirety of cxLoyalty Group, a private Connecticut-based company, including its travel agency, technology platforms, and gift card and points businesses. JPMorgan plans on creating a new business within its retail division, while also taking on half of cxLoyalty Group’s 3,100 employees in the transaction.
Although it remains unknown how much JPMorgan will pay for the credit card loyalty operator, the transaction is expected to close later this week. According to JPMorgan head of consumer business Marianne Lake, the bank is positioning itself for a rebound in vacation travel once mass vaccinations become widely available. However, the International Air Transport Association (IATA) anticipates that a strong recovery will not become evident until at least mid-2021, with passenger traffic expected to rebound from 1.8 billion in 2019 to only 2.8 billion next year.
JPMorgan has in the past partnered with cxLoyalty, but in 2018 the bank switched to Expedia. Now however, the bank will once again phase in cxLoyalty, with a focus on the utilization of the company’s tech platform, which will provide personalized recommendations to users based on their travel history.
Indeed, the main rationale behind the acquisition is that JPMorgan will own both sides of the platform: the bank’s already established partnerships with numerous airline companies and hotels, along with with its millions of credit card holders, meaning the bank will soon be able to tailor unique deals to its customer base.
Information for this briefing was found via CNBC and the IATA. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.