The wildly popular Chase Sapphire Reserve® is a hit with millennials and was partially inspired by a new travel trend, Chase said in its corporate annual report, released this week.
“People are traveling differently,” the report said. “They want to feel more like locals than tourists, and the shared economy has revolutionized the travel industry. … Customers want a card that rewards them more for doing what they love to do.”
The “shared economy” refers to services such as Airbnb and Uber, which compete with traditional hotels and taxicabs by allowing people to rent out their homes or use their cars to provide rides to paying passengers.
That could help explain why Chase chose to be so flexible with the $300 annual travel credit on the Chase Sapphire Reserve®. Unlike some cards, the travel credit doesn’t require loyalty to a specific airline or hotel chain and can be used on a variety of travel-related expenses, including services such as Airbnb, Uber and Lyft.
The Chase Sapphire Reserve® has put pressure on American Express, the longtime king of luxury travel cards. It has added a slew of perks and features to The Platinum Card® from American Express, including a bigger welcome bonus, higher airline and hotel rewards and up to $200 a year in Uber credits.
Chase conceded it was taken aback by consumer response to the Chase Sapphire Reserve®, whose benefits come with a high annual fee of $550. “We exceeded our annual target of customers in less than two weeks,” it said.
The response was so heavy that the company dialed back its big sign-up bonus, which was initially worth $1,500. The bonus now: Earn 50K bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That's $750 toward travel when you redeem through Chase Ultimate Rewards® .
Those customers, the company says, have an average FICO credit score of above 785 and average assets of $800,000. They’re young, too. “The majority of our new Sapphire Reserve customers are millennials. That is significant because millennials make up the majority of our new deposit accounts today, and their wealth is expected to grow at the fastest rate of all generations over the next 15 years,” Chase said.