The omicron variant of COVID-19 may interrupt American Express’s recent travel spending momentum, but the card issuer expects to end the year with strong results thanks to robust purchasing by younger adults.
Spending by millennials and Gen Z adults — those between 25 and 40 years old — is up 50% in the quarter to date compared with the same period in 2019, according to Jeff Campbell, Amex’s chief financial officer. Overall sales of goods and services are soaring as the company enters the critical holiday season, he noted.
“This [young adult] demographic by far has been the quickest to rebound” from the pandemic, Campbell said Tuesday during a presentation at the Goldman Sachs 2021 U.S. Financial Services Conference in New York.
In July, American Express
For the quarter that ended Sept. 30, Amex brought in a record number of new customers signing up for gold and platinum consumer and small-business cards, and 75% of the new customers were in the millennial or Gen Z demographic groups, Campbell said.
“At the beginning of the year I thought our card-fee growth year over year would start to decline, but it has stayed in the double digits,” he said.
American Express will likely end the year having spent more than $5 billion on marketing, well above plans, according to Campbell.
“It’s because we achieved much, much stronger results than we expected,” he said.
Although millennials and Gen Z customers are traveling more than they were in 2019, total travel spending by Amex customers remains below pre-pandemic levels, Campbell said.
“You’re not going to see a full recovery in business travel next year,” he said.
So far Amex has not seen any changes in consumer spending as a result of the omicron variant, according to Campbell, but the company does expect to see a blip in travel bookings.
Amex’s total billing volume at this point in the fourth quarter is up 11% over the same period in 2019, and billings for goods and services alone are up 24% during the same period, Campbell said. Given present trends for both online and in-store sales, Amex expects current purchasing momentum to continue through the end of the year and beyond.
“Different people have different cuts that they take trying to think about how the consumer is approaching holiday spending. But from what we see, it looks very, very strong,” Campbell said.
