FlyerTalk Forums - View Single Post - Centurion Lounge crowding: Platinum cardholders may pay $50/guest effective 2.1.2023
Old Apr 13, 2021 | 6:55 am
  #375  
sethMCOflyer
10 Countries Visited
20 Countries Visited
30 Countries Visited
5 Years on Site
 
Join Date: Jan 2017
Posts: 820
Originally Posted by RedSun
The only reason that we are talking about AmEx Platinum card spending and swipe fee is because of post #207 Otherwise it would be out of topics to talk about AmEx spending with a AmEx lounge discussion.

The statement "Amex makes way more money on the road warrior frequent traveler who is in the lounge weekly (or more) because that cardmember puts tens of thousands in airline spend on their card every year on close-in business travel bookings and F/J fares, unlike the family that travels together once or twice a year on Southwest." is certainly wrong. I do not know how anyone can defend.

Say a "road warrior" goes to use the lounge once a week, or 50 times a year. At $50, it costs AmEx $2,500 per year. So AmEx is out of $2,500 - $550 = $1,950 alone, not counting other benefits or costs.

Then at $1,500 RT on those F/J fares, it is 50x $1,500 = $75,000 air tickets charged on AmEx Platinum card. AmEx gives out 5x $75,000 = 375,000 MR points. At 1cpp, it is $$3,750 cost to AmEx. If AmEx collects 2.9% from airline or $2,175 merchant fee. AmEx total loss on those F/J fares is $1,575.

In total AmEx loses $1,950 + $1,575 = $3,525 from this "road warrior"

The same logics. A family of 3 that travels twice a year. The cost to AmEx is 3 x 2 x $50 = $300. AmEx collects $550 and AmEx is making $250 from AF alone.

Of course, AmEx is not a charity and it has to recover the cost. Most of US airports do not even have a Centurion lounge. So a lot of cardholders do not use any airport lounges at all. Some do not use Uber, no Saks Fifth. Some people, like you said, charge everything on the Platinum card (pretty dumb). So to the end AmEx still make money since the cost operating the lounges still much less than the total AF revenue collected from all cardholders.

I know AmEx is doing the math since I have a "kid" who works for AmEx. This discussion will get communicated to AmEx and the boss. The "buffet" style lounge access may have to go. Could be replaced with "per diem" or lounge passes given to cardholders each year.
After reading this I’ve concluded that Amex is the single dumbest company in the world.

Although I also have some top tips for your kid to send to the boss to lower their losses. Based on your assumptions, if every time a road warrior turns up to a lounge, Amex simply gives them $40 to go pound sand they will have cut their losses by 20%. Based on your hypothetical example this would save Amex $500 from this one customer alone.
sethMCOflyer is offline