Strengthening AmEx's Hold on the Hospitality Industry

American Express has made a significant move to further establish its presence in the dining and event management sector by acquiring Tock, a reservation and event management platform, from Squarespace for $400 million in cash. This acquisition aligns with AmEx's ongoing strategy to provide exclusive and high-end services to its cardmembers, following its purchase of Resy five years ago.

Key Takeaways:

  • American Express acquires Tock from Squarespace for $400 million.
  • Tock provides reservation and table management services to approximately 7,000 restaurants and venues.
  • The acquisition follows AmEx's strategy of offering exclusive dining experiences, highlighted by its purchase of Resy.
  • AmEx also announced the acquisition of Rooam, a contactless payment platform.
  • The deal underscores AmEx's commitment to enhancing its hospitality services and expanding its premium customer base.

American Express's Strategic Acquisitions

American Express has been strategically expanding its footprint in the dining and hospitality sector. The acquisition of Tock is a pivotal move that builds on the company's previous purchase of Resy, which has successfully integrated exclusive dining experiences for AmEx cardmembers.

According to AP News, "AmEx began making acquisitions in the dining and event space with its purchase of Resy five years ago, giving cardmembers access to hard-to-get restaurants and locations."

What is Tock?

Founded in 2014 in Chicago, Tock is a comprehensive reservation and event management platform that serves approximately 7,000 restaurants, wineries, and other venues. The platform offers robust capabilities for reservation, waitlist, and table management, making it a valuable addition to AmEx's portfolio.

Tock was acquired by Squarespace in 2021 for $400 million, a move that was deemed synergistic with Squarespace's website building services. However, as reported by TechCrunch, "Squarespace is divesting Tock before its own acquisition is concluded, suggesting that it sees Tock as surplus to requirements regardless of the outcome."

Enhancing Customer Experience

The acquisition of Tock is expected to significantly enhance the customer experience for AmEx cardmembers. By integrating Tock's advanced reservation system, AmEx aims to provide its premium customers with exclusive access to high-end dining experiences.

As highlighted by Yahoo Finance, "The buyout of Tock will add another 7,000 restaurants, wineries, and other hospitality businesses to AmEx's network, and allow restaurants to better target AmEx's premium customers who are typically prolific spenders."

The Role of Resy

Resy, acquired by AmEx in 2019, has already established itself as a key player in the dining reservation space. The platform has grown significantly since its acquisition, with the number of restaurants on the Resy platform increasing fivefold.

The Resy acquisition raised eyebrows in both the credit card and dining industries. However, it has proven to be a strategic move that has locked in high-end businesses to either be AmEx-exclusive merchants or offer preferential treatment to AmEx cardmembers.

Expanding Technological Capabilities

In addition to acquiring Tock, AmEx also announced the purchase of Rooam, a contactless payment platform heavily used in stadiums and other entertainment venues. This acquisition is part of AmEx's broader strategy to enhance its technological capabilities and provide seamless payment solutions for its customers.

According to Morningstar, "American Express also said it was buying Rooam for an undisclosed amount. Rooam is a technology company used by restaurants and entertainment venues which use it to process mobile payments, ordering and integrations with point of sale, marketing and loyalty systems."

The Financial Implications

The acquisition of Tock and Rooam is expected to bolster AmEx's position in the dining and event management space, a category that accounted for $100 billion in spending on its cards last year. By providing exclusive access to premium dining experiences and leveraging advanced technology for seamless payments, AmEx aims to attract and retain high-spending customers.

As reported by CNBC, "The buyout of Tock will add another 7,000 restaurants, wineries, and other hospitality businesses to AmEx's network. It will also allow restaurants to better target AmEx's premium customers, who are typically prolific spenders."

Broader Impact on the Industry

The acquisition of Tock by AmEx is part of a broader trend of credit card companies expanding into the lifestyle and hospitality sectors. Other credit card issuers, such as JPMorgan, have also made similar moves. In 2021, JPMorgan acquired The Infatuation, a lifestyle brand that provides dining recommendations.

These strategic acquisitions highlight the growing importance of exclusive dining and lifestyle experiences in attracting and retaining high-net-worth customers. By offering unique and premium services, credit card companies can differentiate themselves in a highly competitive market.

Future Prospects

The acquisition of Tock is expected to have a significant impact on AmEx's growth strategy. By enhancing its dining and event management capabilities, AmEx aims to provide its cardmembers with exclusive and high-end experiences that are not readily available to the general public.

The integration of Tock's advanced reservation system with AmEx's existing services is likely to attract more premium customers and increase customer engagement. Additionally, the acquisition of Rooam will further enhance AmEx's technological capabilities, providing seamless payment solutions for its customers.

As stated by Anthony Casalena, Founder and CEO of Squarespace, in a PR Newswire release, "We are thankful for Matt's leadership and the team's emphasis on innovative products and world-class customer care. Our shared commitment to help small businesses grow has been core to our partnership."

Embracing Innovation and Exclusivity

American Express's acquisition of Tock underscores the company's commitment to innovation and exclusivity. By continuously expanding its portfolio of high-end services and integrating advanced technologies, AmEx aims to provide its cardmembers with unparalleled experiences.

The acquisition also highlights the importance of strategic partnerships and acquisitions in achieving long-term growth. By leveraging the strengths of acquired companies like Tock and Rooam, AmEx can enhance its value proposition and differentiate itself in the competitive credit card market.

As noted by ABC News, "AmEx's purchase of Resy five years ago raised a lot of eyebrows in both the credit card and dining industries, but it's become a key part of how the company locks in high-end businesses to be either AmEx-exclusive merchants, or ones that give preferential treatment to AmEx cardmembers."

Conclusion: A Strategic Move Towards Long-Term Growth

The acquisition of Tock for $400 million is a strategic move that aligns with American Express's long-term growth strategy. By enhancing its dining and event management capabilities, AmEx aims to provide its cardmembers with exclusive and high-end experiences that set it apart from competitors.

The integration of Tock's advanced reservation system and the acquisition of Rooam will further bolster AmEx's technological capabilities, providing seamless and innovative solutions for its customers. This move underscores AmEx's commitment to innovation, exclusivity, and long-term growth.

As American Express continues to expand its footprint in the hospitality industry, it is well-positioned to attract and retain high-net-worth customers who value exclusive and premium experiences. The acquisition of Tock is a testament to AmEx's proactive approach to staying ahead in a competitive market and delivering unparalleled value to its cardmembers.