Travel Industry

AAA may be known for its travel membership services, but it’s picking up some nice profits in the banking arena. The association announced this week that its partnership with Discover Bank (which most people recognize as the Discover credit card in their wallets) has raked in $1 billion across 25,000 accounts in the AAA Savings Program in a mere 18 months.The program exceeded $500 million from its launch in January 2008 to October.

Still profitable

Basically, 40 AAA clubs offer money market products, certificates of deposit and individual retirement account certificates of deposit at an additional 5 basis point interest rate over Discover’s competitive rates. The products are FDIC insured.

“The ongoing difficulties at some of the world’s largest financial institutions have clearly caused many consumers to re-assess their banking relationships,” said Doug Bower, AAA vice president of Travel and Financial Services. “AAA is a strong and trusted organization with a reputation for always putting its members’ interests first. The confidence consumers have in AAA, coupled with the outstanding rates of return we have been able to secure through our relationship with Discover Bank, are a winning combination in today’s unpredictable financial services environment.”

Which, of course, begs the question: Just how much clout will AAA’s 51 million members yield in the travel industry of the future if they can amass this much money from a splinter percentage? It already holds preferred relationships with 12 cruise lines, 17 tour companies and a deal with the almighty Disney amusements. AAA members spend $38 billion on 345 million U.S. room nights at hotels, which accounts for 39 percent of this country’s overnight business.

I’d say the message is that the travel industry has to ban together in similar consortiums and federations for survival — the independents Lone Rangers aren’t long for this world. And never be afraid to diversify, as you might just find an extra billion out of the deal.