American Express expecting growth to be flat this year
AMERICAN Express Thailand is expected to experience flat growth this year, for the first time in a decade, as the gloomy economy has dampened the spending mood of wealthy clients, said Anakkawat Kowathanakul, vice president for consumer cards.
“As a credit-card operator in the upper-class consumer segment, our challenge is not household debt or the quality of spenders. Economic sentiment is important for our growth, and the [current] circumstances do not encourage the shopping mood of this segment. We have seen our customers reduce their travel abroad and also reduce spending on luxury items,” he said.
Over the past several years, Amex in Thailand experienced annual spending growth of nearly 10 per cent, he said, and even the financial crisis started in the United States six years ago had less impact than what Thailand is facing now.
The spending mood will resume if the country can attract “quality” inbound travellers and high-purchasing shoppers, he said.
Amex has a co-branded credit card with Thai Airways International, allowing it to track the behaviour of Thai travellers in overseas markets.
Anakkawat said marketing campaigns were not the way to persuade its customers to spend but their confidence in the Thai economy was. He was optimistic that the domestic economy would recover next year.
The company last week joined forces with Thai Airways to run a special three-day event to mark the ninth anniversary of the THAI American Express Platinum credit card.
Under group policy, Amex is unable to reveal the number of its credit cards in Thailand or spending volumes. However, THAI American Express Platinum accounts for one-third of Amex Thailand’s total credit-card base, he said.
All of Amex’ credit-card customers are brought in by invitation, because the company is a niche operator. Its business is divided into three segments. Holders of its Green Card have monthly incomes of around Bt30,000, Gold Card holders have monthly incomes of Bt50,000, and the Platinum Card is for those in higher brackets.
“Most Green Card holders are young executives who the company considers have healthy enough spending to be upgraded to the Gold Card in the future. We do niche marketing by offering lifestyle benefits to all customers, so we can say most cardholders are active and they are willing to pay annual fees,” he said.
Amex makes its income from fees rather than interest because most cardholders pay off their balances in full. Its customers are willing to pay an annual fee because of the benefits Amex offers, Anakkawat said.
He said other credit-card operators were expected to resume charging annual fees to premium customers because they will focus more on basic financial services. Upper-class customers are willing to pay annual fees if they see that an operator offers a valuable service.
If more card operators go this route, Amex will need to promote the services its Black Card offers to high-net-worth (HNW) customers.
“Overseas, Amex issues the Black Card to HNWs, whom Amex calls Centurion customers. In Thailand, Amex plans to issue this card, but we will need Thai business partners who can jointly offer its unique benefits to these customers,” he said.
Black Card customers are HNWs who don’t merely fly in first or business class on a commercial airliner but prefer a private jet, and they enjoy staying at small luxury hotels, not run-of-the-mill five-star hotels with more than 100 rooms. These customers don’t mind paying annual fees of not less than Bt200,000, he said.
At present, Amex Thailand’s annual fees range from Bt4,000 to Bt28,500, while other local operators do not charge their premium cardholders.
