An $895 annual fee buys a lot of points. It does not buy a place to sit down at Coachella, which is where American Express has decided to make its pitch.
American Express and Chase are taking the airport lounge to concerts, sporting events and entertainment venues. Rewards on premium cards look more alike every year, and issuers want something cardholders can feel, not just count in points and credits.
The fee problem
Both companies have recently raised fees on their flagship premium cards. The American Express Platinum Card now charges $895 a year, and the Chase Sapphire Reserve $795. Numbers like that make cardholders ask whether the card is worth keeping, and a lounge gives the issuer another answer.
CNBC reported that American Express has put lounges at major US music festivals, including Austin City Limits and Coachella. Sponsors once settled for a logo on a backdrop behind the stage. Brand visibility alone may no longer pay back the sponsorship money, and a cool, quiet place to rest away from the crowd is harder to forget. Anyone who has stood through a hot, humid festival afternoon knows what comfortable seating and private bathrooms are worth.
Chenzi Xu, an assistant professor of economics at UC Berkeley, told CNBC the pop-ups are built to win new customers. “They are meant to draw in the person who, perhaps beforehand, didn’t see the benefit of this particular card network,” she said. “All it takes is for one element of this bundle of rewards or perks or whatnot to swing a customer.”
Temporary and permanent
Chase has recently offered lounge access at Lollapalooza, the PGA Tour and the Sundance Film Festival. Permanent spaces are spreading too. American Express has moved into select venues such as London’s O2 Arena and plans a new lounge at Barclays Center in New York City. Chase gives cardholders access at Madison Square Garden. Arenas put the lounge in front of far more people than a terminal does.
Building a lounge at a festival or stadium costs real money. For an issuer trying to grow its card base, the report says, that may be a small price if it helps keep and attract customers.
How it started
The first airport lounge opened in 1939, when C.R. Smith, chairman of American Airlines, invited select customers into one at what is now LaGuardia Airport, according to Business Traveller. American Express says it opened the first airport lounge run by a card issuer in 2013, at Harry Reid International Airport in Las Vegas. That turned the lounge from an airline loyalty perk into a credit card selling point.
Airport lounges have since grown more crowded, which is part of why issuers are looking for new formats to keep cardholders attached to their brands.
