Dive Brief:
- American Express reported earnings of $2.40 a share in the first quarter of 2023 — down from $2.73 a year ago — on record quarterly revenue of $14.28 billion, up 22% from the first quarter of 2022; the increase was primarily driven by increased spending, as well as higher net interest income.
- Millennial and Gen Z customers continued to be the company's fastest-growing U.S. group in terms of spending, accounting for more than 60% of all new consumer account acquisitions in the quarter.
- Travel and entertainment spending in Q1 2023 increased 39% year over year, further showing consumers are prioritizing travel over other discretionary spending categories.
Dive Insight:
American Express credit card members appear to be ramping up their travel spending after being grounded due to the pandemic, with millennial and Gen Z consumers driving the growth, according to the company’s first-quarter results.
While the increase in travel spending might be attributed to a pandemic-related travel rebound as well as rising airline prices, it also supports recent research findings that show consumers are prioritizing travel, including booking more hotel stays as opposed to short-term rentals.
In January, Tripadvisor reported that leisure travel accounted for the largest share of global consumers’ annual discretionary budget, matched only by dining. Plus, new figures released by the U.S. Travel Association show that direct spending on travel reached $1.2 trillion in 2022, which is considered on par with pre-pandemic levels.
American Express Chairman and CEO Stephen Squeri said during an earnings call that he expects more growth in lodging spend tied to airline expansion. “I talked about bookings with airlines, and 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.”
