Yes, you are essentially correct. Priority Pass doesn't actually own or operate any lounges, nor is PP a bank....rather, it is an intermediary between the banks and hundreds of lounge operators (airlines, airport authorities, and third-party hospitality companies) around the world. Together, the banks, Priority Pass, and the lounge operators share the revenues when members enter the lounges. The lounge operators benefit from increased usage (i.e. revenue from entries), PP benefits by selling more memberships (i.e. greater footprint globally), and the banks benefit from more premium customers.

Here's how it works:
1) the operator of the lounge sets policy about how many guests are permitted, whether PP members can be admitted at certain times of the day, etc.
2) Priority Pass is the intermediary/network for admitting members - doesn't care how many guests are admitted....just records and tracks however many the lounge operator allows to enter
3) Chase (or whatever bank sponsored the PP Select membership) decides how many guests are included for free with the membership, and how many need to be charged to the associated credit card account


This type of lounge model, while a bit unwieldy to contemplate, is actually quite successful around the world. It has led to the proliferation of lounges in airports where no single airline or operator could justify operating costs alone. Juliaca, Peru, and Oaxaca, Mexico come to mind as examples. Some airlines that offer a branded lounge actually use a third-party hospitality company to operate the lounge and allow Priority Pass members to use the lounge at off-peak hours (when the primary sponsoring airline does not have a flight departing within three hours). More revenue leads to the longevity of the lounge.