Ah, So That’s How Much Priority Pass Pays Per Restaurant Visit

This year Priority Pass has added several non-traditional establishments to their US lounge network. In the past almost all of their US lounges were actual airport lounges, while this year we’ve seen them add a handful of restaurants to the network. This is a solution they’re using at many airports where they haven’t been able to get actual lounges to join the program, so it’s a creative way for them to still give members access to something.

Currently Priority Pass has the following restaurants and bars in their US lounge network:

At all of these locations Priority Pass members get up to $28 each off the cost of what they eat & drink, except for Corona Beach House, where members get $30 each off.

My assumption has long been that Priority Pass pays lounges on a per visit basis when their members access a lounge, and that the concept is similar for their restaurant locations. If they have to pay X dollars for a member to access a lounge, they might as well make it more flexible and give members the ability to spend X dollars at a restaurant. It certainly increases customer satisfaction in the program.

However, the exact reimbursement rates are confidential, so up until now we’ve only been able to guess. My assumption is that Priority Pass isn’t reimbursing restaurants at face value for the credits. After all, Priority Pass is giving these places a huge amount of business. However, how big of a discount are restaurants giving Priority Pass?

Well, it looks like we have our answer. Reader Mike just ate at Timberline Grill at Denver International Airport with one guest, and shares the check he received:

As you can see, the check references a $4 per person discount, and then lists “Priority,” and $24 twice.

So I can’t guarantee this with 100% certainty, but it sure seems to me like Priority Pass is reimbursing this restaurant $24 for a $28 credit. We don’t know whether the amount is the same at different restaurant locations or not, though I see no reason it wouldn’t be.

Ultimately it doesn’t really impact us as consumers, but I’m sure I’m not the only one who found this interesting.

Is that more or less than you were expecting Priority Pass to be paying for this credit?

Comments

  1. I seriously don’t understand how Priority Pass makes money but I assume it’s an “economies of scales” thing

  2. I have no idea how they make money either. That’s significantly more than I expected them to be paying the restaurants.

  3. I think PP gets paid a lot more for memberships than they actually get used. For example, I have two cards – one w/ unlimited PP, and one with 4 visits, so PP gets money from me twice, and I only use the unlimited membership. My wife also has 4 visits with PP, but almost exclusively travels with me, so uses my guest pass. I also know plenty of people who get PP through cards, but fly only business, so never end up using PP lounges (they just stick to the airline ones). So I think with a combination of membership overlap and card holders that aren’t as savvy with their PP than us, they get a solid revenue stream from members who never use the service.

  4. The amount they give them is probably $4 not $24. PriorityPass can’t stay in business at the $24 rate.

  5. DEN only has Timberline steak within priority pass. All others are gone. Check your PP app or loungebuddy.

  6. @Dave I think you’re right on that, I have Amex Plat, CSR and Citi Prestige so I have 3 cards that paid (something) to PP but really I only use the CSR one since it has the best guesting privileges. Also I have to imagine that the vast majority of credit card customers that get PP don’t use the PP lounges very much yet PP gets paid for their membership and it effectively funds those of us that use it a lot.

  7. @ Jerry the Pittsburgh Club Lounge has been with PP since it opened in June. I’ve visited it several times since Prestige lost the AA lounge.

  8. It would seem odd if Priority Pass just reimbursed a flat rate per visit without a cap. I’d imagine the business would be much more thought out. I wouldn’t think they would pay the same rate to each lounge – certainly different costs of doing business if different places. I would imagine the payout rate for the restaurants to be on the higher side – as it’s good marketing for priority pass and gets them a lounge in an area where there likely isn’t a good contract they could negotiate. I would imagine that each lounge has a cap rate, or a rate at which each marginal guest gets charged less. Lounges have high fixed costs (rent) and low variable costs (Cheap drinks and cheap food). It likely is pitched as a risk sharing model where once sufficient numbers come through, Priority Pass gets the upside. That would also explain behavior of some lounges implementing capacity controls – where the likely marginal PP visitor won’t pay them very much.

  9. A little off topic- I have the Priorty Pass card through Chase Sapphire Reserve. My annual fee is coming up, if I cancel the Chase Sapphire Reserve card, is my PP card still active?

  10. @Amol – the location that opened today is a new location. The location used from June-October was a temporary lounge until this one opened. It’s closer to the center concourse

  11. @Ejg239 oh nice i didn’t expect the new Pittsburgh location to be opened so soon. for some reason i thought it might drag on until November or even possibly next year. can’t wait to check it out. personally i rather liked the club lounge even before they opened up the new one. yes the space is really small but i felt the drinks and food options were better than those offered at the AA lounge. it’ll be nice to see the bigger space.

  12. Well, we used the Corona Beach House at MIA twice this month.

    The waitresses did swipe the PP card at the time of taking order. However, on both visits the final bills came WITHOUT ANY PP DEDUCTION. I have to point this out to them. Each time the rerun of the bill was simply deducted $60 (this location is $30 per guest) from the bill.

    On top of that this place adds 18% gratuity to the bill automatically despite the service was very POOR. On our first visit we ordered beers and the waitress just brought 2 bottles. My husband HATES to drink out from a bottle and he asked for glass for his beer. The glasses did not come after 10 min had passed. I got up to the bar and asked about it. Then she brought 2 regular water glasses that were not chilled– and this place has a bar and high tops! In the middle of the meal we asked for some water. It took forever to come and the water was iced water. It took forever to get the check which came with full amount. I noticed the 18% gratuity on the bill and thought that was outrageous for such non-service. On the bill it says, “for your convenience we added 18% gratuity. You may make adjustment to the suggested amount.” I really wanted to adjust it but we were running out of time due to the extremely slow process of getting everything so I let it go.

    On our return trip, same sloppy service by a different waitress. Once again, the bill came with full amount. Once again we had to wait almost 10 min before the corrected bill to come, which was simply deducted $60 from the total. Again 18% “recommended amount” gratuity. This time since we were just going home, I made a point to adjust the amount down and circled the sentence on the bill so to avoid any confusion.

    Waited 10 min and then the waitress returned and handed me back the bill together with my credit card – “Your card was not charged. You did not have to pay.” It turned out that their system would NOT allow her to adjust the 18% down – it would either be 18% full, or nothing. With the 18% gratuity, the bill was just $11 above the $60 PP allowance which also covered the taxes, and the $11 was pure tips on $55 worth of foods. Given the service or rather, No service provided, I dont feel bad not to give tips especially on our first visit we were literally gauged to pay the 18% gratuity without any basic service.

    Food wise, this place is just passable. Prices are acceptable for a eatery located inside airport. However the service is nonexistent. That is the WORST part. And the management has the nerve to automatically add an 18% on the bill. No wonder they always have tables. I guess most guests would not return the next time they pass thru MIA. So PP partnership actually brings them more business and more opportunities to charge an outrageous tip.

    I would say there are better options at MIA had it not for the free foods.

  13. I’m a PP user based in the UK. I’ve found that at some of the busier airports like Gatwick and Heathrow, the PP card holders are turned away from fully booked lounges. It’s more expensive to pre book a lounge than use a card. Some of us just give up rather than wait half an hour for admission.

  14. @FLL Lol at not being able to drink beer out of a bottle. And then the waiter brought iced water? How dare he!

  15. FFL, great story, and I’m kinda happy that the grumpy waiter ended up stiffing herself out of a tip.

    Adding 18% is a bit cheeky, but it’s good to know that lowering it sends the joint into chaos.

    Perhaps they rely on people being in a rush for a flight and so not wanting to complain?

  16. I talked to the guy scanning my PP at Timberline in Denver last month, seemed like one of the managers. He told me that in the first month they had about 3000 PP visitors and were about to send the bill for $100,000 so it sounds to me like they must get close to full reimbursement.

  17. I had a chat with the owner of the distillery a PDX shortly after they started taking priority pass. They were doing quite well with it and very pleased with the reimbursement rate. So +1 on the idea that $24 is about right.

  18. @thomas

    It is not about unable to drink beer out of a bottle. Some people prefer a more refined way of enjoying beer. Or put it this way, a beer in a tall, properly chilled glass, would keep its fresh taste longer. It is also easier to consume. May be you have never had such experience because you always drink it out from a bottle?

    Waiters at most restaurants would always bring a chilled beer glass and the bottle to you, then ask if s/he could pour the beer for you. Virtually ALL restaurants we went to during our recent month-long trip in South Africa and Hong Kong, handled the beer this way. After all, this is a sit down restaurant, not a ballpark or stadium. lol.

    As for iced water – shouldn’t this be the standard that a glass of water brought to the table at a restaurant is always iced, even it is just tap water? Again, this is a restaurant, not a fast food joint. Certain service standards are expected but are very lacking in this place.

    @Martin
    Yes, adding 18% tip automatically is quite cheeky. My experience has been in most places the 18% add-on only happens when it is a party of 6 or more, and almost ALWAYS specified on the menu somewhere about such practice. Nothing mentioned in the Corona Beach House. I would bet on that, if there is no PP discount, many customers may not even notice it especially if there 2 or 3 guests together and not remember the prices of what they have ordered.

    Yes, the management is betting on customers would not try to adjust the tips, as I didn’t on the first visit at the outbound. However I made a point to adjust it on our second visit at the inbound, especially it printed on the bill that you may adjust it. I find that language “you may” weird or even insulting with such abysmal service. As it turned out, the joint apparently never thinks it would be challenged as its POS is not even programmed to allow such adjustment. This just makes it worse – as it shows the joint intentionally scam the airport customers who are generally at a rush and would just grudgingly let it go.

    Comparing to the very transparent bill shown that is from the restaurant at PDX, the bills from the restaurant at MIA did not even show the PP reduction when it were first presented. You have to tell them they forget to apply the PP benefit. That really should NOT happen because the waitresses swiped the PP card before taking any order on both visits, yet both times the initial bills were in full amount.

  19. The waiter at Timberline Grill in Denver told us that their business was up 30% since they started taking the PP cards, so they’re thrilled!

  20. I’ll have to take my vacations to these cities so I can abuse the lounge benefits like I do at the Centurion in Vegas. I’m currently operating my 100 -man business out of the Centurion Lounge using authorized user cards.

    What’s really great is the payback to American Airlines by purchasing and refunding 100 tickets to Phoenix each day. That won’t necessarily teach them not to screw with loyalty benefits, but the payback makes me feel good .

    So, if you are wondering why Vegas is so crowded, now you know.

  21. The rate seems way too high. For example, Groupon reimburses something like 25% of the amount spent, so that’s what restaurants are willing to accept with hard bargaining. I’m sure Priority Pass could have negotiated a much better discount, especially since some people will order a $5 orange juice and then leave, with the restaurant getting paid $24 for that.

  22. AF lounge (iirc) in JFK had a poster saying that no PP access will be granted after 8 or 9AM (cant remember exactly). Thankfully i was 5 minutes early otherwise i had to pay full price or get embarrased in front of my guest

  23. @FLL . They probably have to add the gratuity because over 50% of the customers that get a discount don’t leave tip on the discounted amount. The restaurant gets paid by PP but the waiters are not.

  24. Definitely interesting. Not sure what the arrangement is between restaurants and PP vs. PP and issuers [e.g. Chase with the CSR], but we can hope this is a trend. I can corroborate the receipt – visited Timberline @ DIA for dinner recently with my son, same $56 discount broken out the same way.

    Makes the economics of a CSR for anyone going through DIA even once a year extremely attractive if it wasn’t already. Two meals for two people on a roundtrip ticket to/from DIA = $112 credit. The food and service at the Timberline the night I visited were top-notch. And with hours from 6am-9pm, breakfast / lunch / dinner are all options.

    @Kot – the receipt did not add gratuity nor did the server mention to tip on the full amount. That said, as general common sense (which you possess, as you mentioned the topic), *one should always tip on the full amount*.

  25. they are including $4 as tax upfront ..spoke to manager about it at restaurant at denver and he said it first takes of $4 (account to max tax you could have on $24) and then -$24 so yes it still pays $28 not $24

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