What is the value and cost of a lounge visit?
Feb 9, 2018, 12:42 pm
#31
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Feb 9, 2018, 12:54 pm
#32
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What would be interesting is the deadweight loss associated with the actual cost vs the value customers put in the lounge.
If the actual cost is £25 and the average customer is only willing to pay £20 for this level of lounge then BA is destroying value, I suspect though the Lounges do create value for BA otherwise why operate them,
If the actual cost is £25 and the average customer is only willing to pay £20 for this level of lounge then BA is destroying value, I suspect though the Lounges do create value for BA otherwise why operate them,
Feb 9, 2018, 1:07 pm
#36
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There's a lot of difference between a bit of 'free food' an being able to relax in a decent environment between sectors, though. I value armchairs highly at my age.
Feb 9, 2018, 1:25 pm
#37
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An interesting thread but doesn't BA (for its internal accounting) include an element into its F and J ticket pricing to recover some of its costs as those ticket holders are the ones who predominately use those lounge facilities?
Feb 9, 2018, 1:48 pm
#38
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Perhaps an arbitrary amount per guest has to be entered into the accounts for lounge guests pilfering, especially when it sometimes doesn't stop at cans of drink and bags of snacks, but more substantial losses, as reported in another thread
Feb 9, 2018, 1:55 pm
#39
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But there is a marginal cost anyway. if only because it is actual consumption that will determine the orders that you talk about. The situation is not dissimilar to a commercial F&B establishment. A customer has a marginal cost. Yes, of course, the food is bought - by definition - before the customer arrives, but the customer has consumed a specific value of food which constitutes his/her marginal cost even though in practice that marginal cost will have been anticipated, and exactly the same in a supermarket where the food is sourced and paid for by the shop in advance based on expected sales but those sales are still the notional marginal cost of each customer. The fact that spending and consumption are diachronic in many trades does not mean that no customer has a marginal cost, just that the marginal cost is anticipated by the supplier and associated with a risk factor for good measure.
Feb 9, 2018, 2:19 pm
#40
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Sweet Chili are going? Darn! My fav. . . .
Feb 9, 2018, 2:36 pm
#42
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The true marginal cost of my visit is what I directly consume. Fixed costs like electricity do not change regardless of whether I am there, but the consumables do. If I didn't consume the gin then it would still be there for another customer.
BA's ordering methodology is a completely different issue. They may negotiate prices based on expected volumes but you can be sure they only pay for what they use.
Feb 9, 2018, 6:09 pm
#43
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Flew back from MSY in CW a couple weeks ago. There's no lounge of any kind so BA gave $28 per pax to spend in the terminal (at food based establishments, newsagents wouldn't accept them for snacks and drinks). So that's what BA costs a lounge visit at there. Between 2 of us $56 paid for two excessively large smoothies, two bottles of water and 4 beers, with surplus coins plugging the shortfall. In a lounge we would have consumed more value than that. Granted prices are inflated in an airport, but the value of F&B in a lounge can also be measured against what it would cost to buy refreshments outside, even if the bulk procurement cost is much less. It's a bit like comparing a visit to a restaurant to a shopping trip to ASDA.
Feb 9, 2018, 8:10 pm
#44
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What is the cost per visitor?
Total cost of running the lounge: rent, employee wages and benefits, food, drink, insurance, furnishings, utilities, laundry, dishes and dishwashing, computers, advertising, employee uniforms, etc. Minus: Any revenue such as rental of vendor booths, advertising, etc.
divided by
Total visitors
One might also calculate cost per visitor-hour, figuring in how long different visitors stay in the lounge, or costs as a function of day of the week or week of the year.
In AA-world, an Admirals Club day pass goes for $59 (£42.52).
Total cost of running the lounge: rent, employee wages and benefits, food, drink, insurance, furnishings, utilities, laundry, dishes and dishwashing, computers, advertising, employee uniforms, etc. Minus: Any revenue such as rental of vendor booths, advertising, etc.
divided by
Total visitors
One might also calculate cost per visitor-hour, figuring in how long different visitors stay in the lounge, or costs as a function of day of the week or week of the year.
In AA-world, an Admirals Club day pass goes for $59 (£42.52).
Feb 9, 2018, 8:50 pm
#45
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I aint the cost of the food and drink that I relate, but the ease of service at the front desk , so I guess one has to factor tha labour costs in as well. Perhaps like average time waiting at a concourse service desk versus the time to resolve a question in the lounge.