American Express 2005 Annual Report Download - page 19

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offers, and Business Savings, which gives smaller establishments that accept our cards significant discounts
on the services of some of our largest merchant partners. In essence, as I noted earlier, we are creating a highly
efficient marketplace with our closed-loop network, and we’ve seen the results in our industry-leading growth
in cardmember spending and gains in our share of spending with many top merchants.
Prepaid Services
Sales of American Express Gift Cards more than doubled from a year ago, as demand for these products
continued to rise. We significantly expanded the number of places where consumers can purchase our gift
cards, adding about 30,000 new retail and banking locations in 2005. In the United States, we also introduced
gift cards for specific groups of recipients and occasions, such as children, teens and birthdays. Multi-purpose
gift cards, like those from American Express, offer a more convenient choice for gift-giving than cash, checks
or store-specific gift cards.
As for our original prepaid product, the American Express Travelers Cheque, sales declined slightly from a
year ago due to increased competition from other forms of payment. Average Travelers Cheques outstanding,
a key driver of profitability for this product, rose slightly. During the year, we announced an agreement with
Thomas Cook in the United Kingdom for the travel agency to sell American Express Travelers Cheques
through its branch network, in call centers and on its Web site.
Travel
American Express is the world’s premier travel management company. Our travel business supports our brand,
our global presence and our ability to serve our cardmembers’ needs around the world. In 2005, we grew
worldwide travel sales by 4 percent, while continuing to adapt to a very challenging industry environment.
Our U.S. Consumer Travel business had a particularly strong year, posting a 27 percent gain in revenue.
Online sales rose significantly, with the average transaction size increasing nearly 60 percent in 2005, our first
full year since we launched a new travel Web site. We also broadened our selection of cruise and tour pack-
ages and enabled cardmembers to redeem Membership Rewards points to pay for their trips, an option that
has proved extremely popular.
In Business Travel, average transaction revenue fell as more volume moved online, but overall operating
margins improved because of continuing progress in the ongoing transformation of our business model. In
2005, we stepped up our efforts to reduce expenses, enhance services and increase our flexibility. These
actions position us to compete more effectively — both online and offline — in an industry environment that
we expect will continue to be difficult.
American Express Bank
American Express Bank provides financial services to banks worldwide and to high-net-worth and affluent
individuals outside the United States. Commissions and fees rose on solid growth in payment volumes and
AXP / AR.2005
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