Credit card members are flying and eating out like never before, driven by Millennial and Gen Z's propensity to travel. Hotels are lagging airlines in terms of growth.
March was a record month for American Express, with the credit card company recording its highest ever spending volume following a surge in people booking flights and eating out.
Travel and entertainment as a spend category increased 39 percent in the first quarter of this year, compared to the previous year’s quarter, which was impacted by the Omicron variant.
That card spending, which includes restaurants, outside of the U.S. increased by 59 percent.
Its Resy restaurant booking platform saw a record level of reservations for March. Resy has 40 million users globally, which is an increase of five million in the last six months.
American Express said spending at restaurants accelerated by 28 percent overall, year-on-year.
However, some of the spending surge was attributed to an overlap with the Omicron variant in last year’s first quarter.
Stephen Squeri, chairman and CEO, said that further ahead he expects more growth in lodging spend, which grew at half the rate compares to airlines.
” … We still think we have more room to grow,” Squeri said during an earnings call. ” … Airlines will also expand their capacity. And as they expand their capacity, we’ll continue to grow with them. So I think there’s still more upside in airlines. And when there’s more upside in airlines, it becomes more upside in lodging.”
Demand from Millennial and Gen Z consumers has played a part too in the record numbers. These two demographics accounted for more than 60 percent of American Express’ new consumer account acquisitions in the quarter.
It acquired 3.4 million new cards during the quarter, with U.S. Consumer Platinum and Gold, U.S. Business Platinum, and Delta co-brand account acquisitions reaching record levels.
They continue to be the credit card giant’s fastest growing U.S. cohort in terms of spending, growing 28 percent from a year earlier. According to Hopper, which is popular with Millennial and Gen Z travelers, 84 percent of users said they planned to spend more on travel this year.
Squeri also noted that stronger spending and in travel and entertainment, and growth outside the U.S., was offsetting “some softness” in U.S. small business spending.
Overall, its total first-quarter revenue was $14.3 billion for the quarter, up 22 percent on the 2022 first quarter. It made a profit for three months of $1.8 billion, compared with $2.1 billion the year before.
American Express’ operating expenses also increased, reflecting higher compensation costs and a loss on Amex Ventures investments of $95 million.
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Photo credit: Travel and entertainment spending increased 39 percent in the first quarter of this year. Pictured are Delta Air Lines and Latam Airlines tails at New York's JFK airport. Source: Latam Airlines Group Latam Airlines Group