Go Back  FlyerTalk Forums > Travel&Dining > Airport Lounges
Reload this Page >

How does Priority Pass stay profitable?

How does Priority Pass stay profitable?

Reply

Old Jan 6, 19, 3:06 pm
  #16  
Four Seasons 5+ BadgeSPG 5+ Badge 2019 FlyerTalk Awards
 
Join Date: Mar 2006
Location: Germany
Programs: Some
Posts: 6,966
I have a PP via my Amex. I use it in average perhaps 4 times a year as I mostly fly premium. Last year I only used it 2 times. So Im one of these customers who are quite good value for them.
offerendum is offline  
Reply With Quote
Old Jan 7, 19, 12:54 pm
  #17  
 
Join Date: Dec 2000
Location: Philadelphia
Posts: 1,357
Agreed with most of what is on here, but I believe it does come down to how PP separates out costs. From what I've seen and heard:
  • They pay $20-$25 per person to lounges/restaurants, depending on what is negotiated with the restaurant.
  • The credit card companies pay for each guest visit, but I'm not sure if the CC companies pay for unlimited visits for the cardholder, a limited number and then the guest price above that, or a hybrid model of $x/year for the membership and then a discounted rate on that.
If they get some fee per card carrying member of PP, that would likely be their source of profit. Many members would use it more but don't for various reasons, either having elite status with an airline, flying in J/F internationally, or having an airline club membership as well. Example: I'm flying to Asia this month and even though PP has convenient lounges available for me on 6 of the 7 departing flights, I'm using the Centurion Lounge in PHL and the oneworld lounges in BOS/HKG/BKK. Only HKT will see me using a PP lounge.as I'm flying Y on that flight.

Heck, I walked into a PP lounge with my friend last year to his exclamation of 'That's what the card is for!' Turns out he has had a CSR for over a year and never realized that he could get in to lounges with it.
offerendum and Beano like this.
lowfareair is online now  
Reply With Quote
Old Feb 5, 19, 10:02 am
  #18  
FlyerTalk Evangelist
 
Join Date: Feb 2002
Location: San Francisco/Tel Aviv/YYZ
Programs: CO 1K-MM
Posts: 10,256
I expect that most of the priority pass arrangements with credit card COs merely set up the priority pass as a passthru and the credit cards get hit with the bill, probably on a per-entry basis, with PP taking a cut of each transaction.
entropy is offline  
Reply With Quote
Old Feb 6, 19, 4:53 am
  #19  
A FlyerTalk Posting Legend
 
Join Date: Jul 2001
Location: Watchlisted by the prejudiced, en route to purgatory
Programs: Just Say No to Fleecing and Blacklisting
Posts: 86,726
Originally Posted by lowfareair View Post
Agreed with most of what is on here, but I believe it does come down to how PP separates out costs. From what I've seen and heard:
  • They pay $20-$25 per person to lounges/restaurants, depending on what is negotiated with the restaurant.
  • The credit card companies pay for each guest visit, but I'm not sure if the CC companies pay for unlimited visits for the cardholder, a limited number and then the guest price above that, or a hybrid model of $x/year for the membership and then a discounted rate on that.
If they get some fee per card carrying member of PP, that would likely be their source of profit. Many members would use it more but don't for various reasons, either having elite status with an airline, flying in J/F internationally, or having an airline club membership as well. Example: I'm flying to Asia this month and even though PP has convenient lounges available for me on 6 of the 7 departing flights, I'm using the Centurion Lounge in PHL and the oneworld lounges in BOS/HKG/BKK. Only HKT will see me using a PP lounge.as I'm flying Y on that flight.

Heck, I walked into a PP lounge with my friend last year to his exclamation of 'That's what the card is for!' Turns out he has had a CSR for over a year and never realized that he could get in to lounges with it.
I wouldn't be surprised if the the proportion of Amex Plat/Centurion customers and Chase Sapphire Reserve customers who get and use Priority Pass in any given year is a minority of the total number of such cardholders. A lot of people fail to enroll for some/many/all of the eligible benefits of such cards that require a separate enrollment process. And many of the people who enroll for some of these separate enrollment benefits simply won't use some of the benefits even after they enrolled.
IndyHoosier likes this.
GUWonder is online now  
Reply With Quote
Old Feb 6, 19, 5:01 am
  #20  
SPG 5+ BadgeFour Seasons 5+ Badge 2019 FlyerTalk Awards
 
Join Date: Mar 2006
Location: Germany
Programs: Some
Posts: 6,966
Originally Posted by GUWonder View Post
I wouldn't be surprised if the the proportion of Amex Plat/Centurion customers and Chase Sapphire Reserve customers who get and use Priority Pass in any given year is a minority of the total number of such cardholders. A lot of people fail to enroll for some/many/all of the eligible benefits of such cards that require a separate enrollment process. And many of the people who enroll for some of these separate enrollment benefits simply won't use some of the benefits even after they enrolled.
My Ex-wife had a PP over her Amex. She used it when she flew inside Europe with me, when she flew alone she never used it even when she was alone. So I think the number of non-users is quite high. Otherwise there are people like me who have access to a Lounge because of their F/J ticket but visit a PP-lounge out of curiosity
GUWonder likes this.
offerendum is offline  
Reply With Quote
Old Feb 6, 19, 5:06 am
  #21  
A FlyerTalk Posting Legend
 
Join Date: Jul 2001
Location: Watchlisted by the prejudiced, en route to purgatory
Programs: Just Say No to Fleecing and Blacklisting
Posts: 86,726
Originally Posted by offerendum View Post
My Ex-wife had a PP over her Amex. She used it when she flew inside Europe with me, when she flew alone she never used it even when she was alone. So I think the number of non-users is quite high. Otherwise there are people like me who have access to a Lounge because of their F/J ticket but visit a PP-lounge out of curiosity
I now enter Priority Pass lounges more than the lounges I can access as a result of just airline elite status and/or airline class of service -- and some of it is indeed just a matter of being curious. But I suspect I'm the exception in that way. However, some of the PP lounges are better than the options that I get as a result of elite status and/or airline class of service at some airports and thus use the benefit more than I would have if PP lounges hadn't improved over time.
GUWonder is online now  
Reply With Quote
Old Feb 6, 19, 5:19 am
  #22  
SPG 5+ BadgeFour Seasons 5+ Badge 2019 FlyerTalk Awards
 
Join Date: Mar 2006
Location: Germany
Programs: Some
Posts: 6,966
Originally Posted by GUWonder View Post
IBut I suspect I'm the exception in that way.
Not sure. When I travel with my GF she has no intention to change lounges. She is glad to stay were she is.
offerendum is offline  
Reply With Quote
Old Feb 11, 19, 3:18 pm
  #23  
 
Join Date: Jan 2019
Programs: AA, Marriott Platinum, Hilton Diamond, Wyndham Diamond
Posts: 27
I recently got the PP benefit on a new CC I have. It is unlimited. i am planing in using the LHR Terminal 3 lounge in may. Anyone have experience with that lounge? Also, I didn't see anything in my welcome packet about using it in restaurants. Where can that be done?
Smrtmom1 is offline  
Reply With Quote
Old Feb 11, 19, 4:29 pm
  #24  
mia
FlyerTalk Evangelist, Moderator: American Express, Citi, Diners Club, Signatures
 
Join Date: Jun 2003
Location: Miami & London
Programs: AA & Marriott Perpetual Platinum; HH Gold
Posts: 36,905
Originally Posted by Smrtmom1 View Post
.... welcome packet....
Spend some time on the Priority Pass website. Restaurants and lounges are all listed.
https://www.prioritypass.com/


Note that there are two lounges at LHR 3:

https://www.prioritypass.com/en/loun...ondon-heathrow

Read more here:

LHR London Heathrow lounges
mia is online now  
Reply With Quote
Old Feb 12, 19, 1:55 pm
  #25  
 
Join Date: Jan 2019
Programs: AA, Marriott Platinum, Hilton Diamond, Wyndham Diamond
Posts: 27
Thank you!
Smrtmom1 is offline  
Reply With Quote
Old Feb 15, 19, 12:20 am
  #26  
 
Join Date: Dec 2012
Posts: 1,100
I have PP from my credit card. When I first got my credit card it only included 2 visits a year. This could be to tempt me to upgrade my cc when I go more earnings. I was able to waive the fee on 2 ccs and got 4 visits a year.
The sign on/renewal bonus from Citi Prestige seemed a good offer so I signed up to that as well which gave me unlimited PP access.

I fly regionally a fair amount in economy so I am in a PP lounge usually twice a month (a round trip) and it really makes sense for me.
SQTraveller is offline  
Reply With Quote
Old Feb 15, 19, 3:06 am
  #27  
2019 FlyerTalk Awards
 
Join Date: Sep 2001
Location: UK. BAEC AAdvantage
Programs: Mucci Des Oeufs Brouilles et des Canards
Posts: 3,011
Originally Posted by Smrtmom1 View Post
I recently got the PP benefit on a new CC I have. It is unlimited. i am planing in using the LHR Terminal 3 lounge in may. Anyone have experience with that lounge? Also, I didn't see anything in my welcome packet about using it in restaurants. Where can that be done?
Try for the No 1 lounge, but depending on the time of day you go, you may need to pay 5 to guarantee your place there. There was a period when I went 5 times and only got in once!! They were acting as a lounge for some airlines who were refurbishing their lounges at the time, so that may have contributed to that.

The other lounge was the Aspire lounge which was dire. It barely had any food, just a couple of soups, long life muffins, cheese, biscuits, crackers and other high salt, high fat foods. There may have been some fresh fruit left over from breakfast. There was a group entering before me of 4 people and the lady on the door was trying to explain to the lead that she'd be charged for the other 3 and they may be better off going to the main shops if they want a wider choice of food. Unless they planned to have about 4 drinks each, they wouldn't have had value of that lounge. There seems to be more options now as it too has been refurbed, which it badly needed as the toilets were dire, worse than the public ones as T3 toilets are generally very kept. Have a look at Tripadvisor for some more recent reviews.
Smrtmom1 likes this.
dddc is offline  
Reply With Quote
Old Feb 15, 19, 8:55 am
  #28  
2019 FlyerTalk Awards
 
Join Date: Sep 2001
Location: UK. BAEC AAdvantage
Programs: Mucci Des Oeufs Brouilles et des Canards
Posts: 3,011
Originally Posted by CRAZ8 View Post
I think of it differently.

If a PP user can't get into a lounge with their card, then the utility of the card is gone - actually, it's worse because the expectation is to get access, and being denied leaves a bad taste. If that customer then cancels the credit card that provided the card, then their value proposition to credit card issuers becomes less and they will lose the issuers and their payments. There are lots of complaints of being turned away from a PP lounge on here.

Providing many chances to use PP at an airport is great for them, as it gets people using the product. As long as the average number of visits per account is below their cost, they are profitable. And if if too many people do use the card, they can re-negotiate with the banks and show that they have satisfied customers! Unlike FlyerTalk visitors, not everyone will arrive 6 hours early and visit every PP restaurant possible!

Adding more capacity for end-users makes the PP card more useful (and more reliable), and therefore more valuable for the card issuers, and thus allow PP to build their business.
That's very true, and more so when I'm actually one of the rare ones here who it seems actually purchase a Priority Pass!! As posted above, being denied entry to the No 1 lounge at T3 made me feel the pass wasn't living up to it's promise, especially as the other lounge was awful. I wish there were some restaurant options then. For 2 years I had the standard one that included 10 visits in the price. However I'd always purchased through Groupon/Cashback/Sale sites so I've never paid full price. The first year I hit the 10 visits, the 2nd I made 8. I didn't see it as losing out as if I had to pay to go to some of these lounges at their on the door or even pre-booking prices, I wouldn't have!!

This year via Groupon I got a offer of 1 free visit with the basic package. Each additional visit will cost me and my guest 20. Compared to the USD$59 to get into the lounge I'm using next week, it's a bargain. So, I think when people are working out the value of the pass, whether they pay for it or get it free, is factoring not only the base unit cost per visit (say 20 in my case) but the cost of paying for lounge access (USD$52 is around GBP41) so definitely making a saving.
Smrtmom1 likes this.
dddc is offline  
Reply With Quote
Old Feb 16, 19, 9:46 pm
  #29  
 
Join Date: Apr 2002
Location: Atlanta Metro
Programs: DL Gold Medallion, AA, UA, BA
Posts: 1,030
Why do people think that Priority Pass is charging back the credit card companies for every visit? People keep saying that, but no one has sourced it.

Sounds like an accounting nightmare to me. It seems MUCH more likely that the credit card companies pay Priority Pass an annual (discounted) membership fee for each cardholder who is a member, and PP makes money just as they do with all the people who buy a pass directly.
IndyHoosier and strickerj like this.
hotturnip is offline  
Reply With Quote
Old Feb 16, 19, 9:49 pm
  #30  
 
Join Date: Nov 2013
Location: SJC/SFO
Programs: UA Gold, Hilton Gold, National EE
Posts: 3,031
Originally Posted by hotturnip View Post
... all the people who buy a pass directly.
Very hard to see how that kind of purchase would be rational
davie355 is online now  
Reply With Quote

Thread Tools
Search this Thread