Originally Posted by
krazykanuck
You're equating revenue with cost. Just because Amex charges $50 for a guest doesn't mean it costs them $50. My usual Centurion lounge visit probably costs Amex maybe $5 in actual consumables + whatever the pro-rata share of the fixed operating cost is (which I don't know). You should ask your kid what Amex's cost for MRs is. I would be willing to bet that their fulfillment cost is substantially under 1 cpp taking into account their bulk purchase agreements with Delta and other partners, suboptimal redemptions on the part of customers like statement credits/gift cards/etc.
How can this $50 be revenue, not a cost? After you pay AF, "road warrior" gets unlimited access to AmEx lounges. AmEx never collects anything from this "road warrior". At $50/visit cost, or AmEx opportunity cost to admit other visitors, the $50 is AmEx cost, not revenue.
Originally Posted by
sethMCOflyer
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.
What I can say is that AmEx is not as dumb as the Platinum cardholders you see who charge everything on their Platinum cards that earn 1x MR from all the purchases. AmEx is happy to make money from those cardholders and cover the costs spent on those "road warriors" to hang out in AmEx lounges. It costs a fortune to have 8 alcohol drinks in any bar. At $12 a drink, it costs $96 alone on those cocktail drinks. How many ways that AmEx can influence our "lifestyles"?? Drinking is a huge problem.