Travel Co-Brand Credit Cards Expand Into Everyday Spending to Win More Wallet Share

Travel co-brand credit cards are evolving beyond airline tickets and hotel bookings as issuers look for new ways to become consumers’ preferred payment choice throughout the year.

Consumers often open airline and hotel credit cards because they already have a strong connection to a particular travel brand. Positive experiences, loyalty status, exclusive rewards, and future travel ambitions can all influence the decision to apply.

However, travel co-brand cards have traditionally faced a major challenge: Cardholders may value the brand but rarely use the card for routine purchases. According to eMarketer, 17% of U.S. adults have an airline co-brand credit card, yet only 7% use one as their primary, or top-of-wallet, card.

Many consumers reserve travel cards for flights, hotel stays, and other travel-related purchases. Everyday spending often goes to cash-back or rewards cards that offer stronger benefits on categories such as groceries, dining, gas, and transportation.

That pattern is beginning to change. Travel brands are increasingly redesigning their credit card programs to encourage daily use, not just spending connected to vacations and business trips.

The Pandemic Changed Travel Credit Card Marketing

The COVID-19 pandemic created an unprecedented challenge for travel card issuers. When flights were canceled and hotel bookings dropped sharply, many of the primary benefits associated with travel cards became difficult or impossible to use.

Airlines and hotel companies had to develop new ways to retain customer engagement. Several extended elite status, rolled over qualifying activity, or created alternative ways for members to maintain their benefits through spending.

Delta extended Medallion status and carried qualifying activity forward, helping members preserve their benefits into 2021 despite the collapse in travel. United introduced similar measures for MileagePlus members, allowing people with top Premier status to retain their benefits into early 2022.

Travel loyalty programs also began rewarding activities that took place at home. Marriott Bonvoy and Hilton Honors, for example, gave members opportunities to earn points on supermarket purchases during the summer of 2020.

These changes helped travel brands demonstrate flexibility and support during a difficult period. By offering value when traditional travel benefits were unavailable, issuers may also have strengthened long-term loyalty among existing cardholders.

Reduced Business Travel Is Reshaping Loyalty Programs

Leisure travel has largely recovered, but business travel has changed significantly. The growth of remote and hybrid work has caused many companies to reassess how often employees need to travel.

Traditional road-warrior roles in industries such as sales and consulting are less common than they once were. Fewer employees are flying every week or staying in hotels regularly, which reduces the number of opportunities for airlines and hotel brands to build loyalty through travel activity alone.

As a result, co-brand card programs are shifting their focus from miles flown and hotel nights to dollars spent. Everyday purchases offer a more consistent way to engage customers, even when they are not planning a trip.

The broader lesson is clear: Loyalty cannot depend entirely on travel behavior when travel patterns are unpredictable. Airlines and hotel groups increasingly need to reward the spending habits that remain consistent between trips.

Travel Cards Target Dining, Groceries, Gas, and Transportation

Travel co-brand cards once concentrated their most valuable rewards on flights, hotels, and other travel purchases. Today, many are competing directly with mainstream rewards cards by adding bonuses and benefits tied to everyday spending.

Dining, grocery purchases, gas, electric vehicle charging, rideshare services, and other transportation expenses are becoming important parts of the travel card value proposition. While three points per dollar in selected categories is increasingly common, some issuers are adding broader lifestyle benefits to encourage more frequent use.

Wyndham Hotels & Resorts demonstrated this strategy with the launch of its first premium credit card, the Wyndham Rewards Earner Premier Card. The card carries a $395 annual fee and offers four points per dollar on eligible dining, grocery, and travel categories. Eligible spending also includes gas, electric vehicle charging, car rentals, rideshare services, tolls, and trains.

By offering elevated rewards across several common spending categories, Wyndham is positioning the card as more than a hotel payment tool. The objective is to make it a frequent choice for daily purchases and increase the likelihood that it becomes a customer’s primary card.

Rideshare Credits Make Travel Cards More Relevant

Some issuers are using lifestyle benefits rather than higher earning rates to create everyday value. Rideshare credits are one example of how travel co-brand cards are extending their relevance beyond airports and hotels.

• Citi and American Airlines added up to $180 in annual Lyft credits to the Citi AAdvantage Executive World Elite Mastercard.
• American Express and Delta added a rideshare benefit worth up to $120 per year, delivered as a $10 monthly credit, for eligible Gold and Gold Business members using Delta SkyMiles American Express Cards.

Transportation benefits may be especially effective with younger consumers. Gen Z and Millennials are the age groups most likely to use ride-hailing services at least weekly, at 16% and 12%, respectively.

By linking card value to a regular transportation expense, travel brands can create engagement between trips. These benefits also provide younger cardholders with an additional reason to keep a co-brand card in their wallets.

Longer Welcome Offers Can Encourage Habit Formation

Some travel card issuers are also changing how they approach customer acquisition. Rather than relying exclusively on large introductory bonuses that can be earned and forgotten quickly, they are designing offers that encourage spending over a longer period.

IHG introduced a significant welcome offer through the IHG One Rewards Traveler Credit Card. New cardholders could earn up to 125,000 IHG One Rewards points, including 90,000 points after spending $2,000 within the first three months and an additional 35,000 points after spending $4,000 within the first six months.

The two-stage structure encourages cardholders to continue using the account well beyond the opening period. This gives customers more time to develop regular spending habits and gives the issuer more opportunities to demonstrate the card’s ongoing value.

What Travel Card Marketers Can Learn

Everyday spending can strengthen loyalty

Travel cardholders generally already have an affinity for the airline or hotel brand behind the product. Issuers should continue offering strong travel rewards, but everyday benefits can make the card more practical and accessible.

Dining, groceries, gas, and transportation are categories that can help cardholders justify reaching for a travel card more often. Marketers that clearly connect these routine purchases to future travel rewards may have a better chance of earning top-of-wallet status.

Acquisition offers should promote sustained use

Welcome bonuses can attract new customers, but the strongest offers may be those that encourage spending over several months. Tiered incentives, milestone rewards, and ongoing benefits can help turn initial interest into a lasting payment habit.

Relevance influences wallet position

A travel card that only delivers value during a trip may struggle to compete with cards designed for daily use. Bonus categories, monthly credits, and lifestyle benefits can keep a co-brand card visible during the many spending decisions that happen between vacations.

Loyalty programs must adapt to changing behavior

The pandemic showed how quickly consumer habits can change. Travel brands that adjusted their programs were better positioned to maintain engagement during a period of severe disruption.

That flexibility remains important today. Issuers should regularly reassess how customers work, travel, shop, commute, and spend. Loyalty strategies that remain static may lose relevance as consumer expectations evolve.

Travel brands still offer unique experiences

Everyday rewards are important, but airlines and hotel companies retain a major advantage: They can connect spending to aspirational experiences. Elite status, upgraded travel, exclusive access, and memorable hotel stays can offer emotional value that generic cash-back products may not match.

Younger consumers and families continue to show interest in spending on experiences. This gives travel brands an opportunity to combine practical daily rewards with benefits that help customers reach meaningful travel goals.

The Future of Travel Co-Brand Credit Cards

For card marketers, the choice is not necessarily between everyday utility and travel rewards. The strongest programs connect both sides of the value proposition.

Everyday purchases can help customers unlock future trips, elite benefits, and experiences they value. At the same time, travel-related rewards give routine spending a more aspirational purpose.

Travel co-brand cards are becoming less dependent on travel itself. The leading products will not simply offer the richest airline or hotel perks. They will remain useful during the hundreds of spending decisions consumers make between trips.

As issuers expand everyday rewards, lifestyle credits, and habit-building welcome offers, the line between a travel card and an everyday rewards card will continue to blur. The brands that successfully connect daily spending with future experiences may be best positioned to capture a greater share of consumer wallets.

Sarah Langmead is a Strategy Director at Pragmatic, where she helps banks, credit unions, and co-brand partners use customer insights and behavioral research to develop marketing strategies across the cardholder lifecycle.

Source: TheFinancialBrand.com