How does Priority Pass stay profitable?
#16
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 I´m one of these customers who are quite good value for them.
#17
Join Date: Dec 2000
Location: Philadelphia
Posts: 2,506
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.
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.
#18
FlyerTalk Evangelist
Join Date: Feb 2002
Location: San Francisco/Tel Aviv/YYZ
Programs: CO 1K-MM
Posts: 10,762
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.
#19
Suspended
Join Date: Jul 2001
Location: Watchlisted by the prejudiced, en route to purgatory
Programs: Just Say No to Fleecing and Blacklisting
Posts: 102,095
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.
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.
#20
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.
#21
Suspended
Join Date: Jul 2001
Location: Watchlisted by the prejudiced, en route to purgatory
Programs: Just Say No to Fleecing and Blacklisting
Posts: 102,095
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
#22
#23
Join Date: Jan 2019
Programs: AA, Marriott Platinum, Hilton Diamond, Wyndham Diamond
Posts: 40
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?
#24
Moderator
Join Date: Jun 2003
Location: Miami, Mpls & London
Programs: AA & Marriott Perpetual Platinum; DL & HH Gold
Posts: 48,952
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
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
#26
Join Date: Dec 2012
Posts: 1,674
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.
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.
#27
Join Date: Sep 2001
Location: UK. BAEC AAdvantage
Programs: Mucci Des Oeufs Brouilles et des Canards
Posts: 3,671
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.
#28
Join Date: Sep 2001
Location: UK. BAEC AAdvantage
Programs: Mucci Des Oeufs Brouilles et des Canards
Posts: 3,671
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.
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.
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 GBP£41) so definitely making a saving.
#29
Join Date: Apr 2002
Location: Atlanta Metro
Programs: DL , AC, BA, Hhonors Diamond, IH Platinum, Bonvoy Gold, Hyatt Discoverist
Posts: 2,350
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.
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.