Some Interesting Priority Pass Insights

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The Chase Sapphire Reserve® Card was introduced in August 2016, and has quickly become one of the most popular premium credit cards on the market. Chase reached their 12 month sales goal on the card within two weeks, which shows how unbelievably popular the card has been.

I think the key to success for this $450 annual fee card is that they managed to reach a new demographic that hadn’t previously been interested in premium cards. While the card has a “premium” annual fee, it’s not costing members that much, given the $300 annual travel credit, triple points on dining and travel, Priority Pass membership, and more.

Several other premium credit cards offer Priority Pass memberships, including The Platinum Card® from American Express and The Business Platinum® Card from American Express OPEN. However, it only seems to be in the past couple of years that there have been serious complaints about crowding in many Priority Pass lounges.

This was even the subject of a recent Wall Street Journal story, which I personally think isn’t very accurate, and rewrites history using irrelevant anecdotes:

  • The story talks about how “gourmet meals once on offer are now finger foods;” that’s certainly not the case, and most definitely not reflective of any impact by Priority Pass
  • If anything, more Priority Pass memberships means that airlines and independent lounge companies are more incentivized to invest in new lounges
  • We’ve seen Priority Pass add restaurants to their network, which has been great for members
  • Fewer premium credit cards offer airline lounge access than before (in the past both the Amex Platinum Card and Citi Prestige Card offered Admirals Club access, though that’s not the case anymore), so it’s great that we have new options

While it’s true that some Priority Pass lounges are fuller than before, I think collectively we’re better off as consumers due to that.

Anyway, View from the Wing points to a City of Phoenix Aviation Department filing regarding the lounge situation at Phoenix Airport, which has some interesting statistics. Specifically, the filing is about The Club at PHX, which is the Priority Pass lounge at the airport (at least until 3:30PM — at that point it closes to Priority Pass members and becomes the British Airways lounge).

Specifically, the document shows data about the club between mid-2016 and the end of 2017, including how many visitors the lounge had, and also their gross sales:

Let’s take a closer look at this:

There’s a huge spike in visitors

To me this makes it pretty clear that the Chase Sapphire Reserve® Card is indeed leading to a great increase in terms of the number of visitors to Priority Pass lounges, at least at major US airports. While there’s a mild upward trend in August and September, presumably most people who got the Sapphire Reserve didn’t immediately get a Priority Pass membership, so it’s no surprise that there’s a lag in terms of visitor increases. As you can see, starting in October we see a huge increase in visitor numbers.

Between July 2016 and December 2017, the number of visitors to this lounge more than doubled. While we can’t solely attribute that to the Sapphire Reserve, I suspect that’s a major factor.

In reality I think the number of Priority Pass visitors may have significantly more than doubled. Keep in mind that the above visitor numbers includes the British Airways passengers who are visiting, as that’s the official British Airways lounge at the airport. Let’s assume that an average of 50 British Airways passengers per day use the lounge (I’m making up that number, but I would assume it’s on the low side). If that were the case, and if you subtract the 1,500 visitors per month from British Airways, the increase in Priority Pass visitors is from 2,358 to 6,339, which means Priority Pass visits almost tripled. I suspect the number of British Airways guests per day may be even higher than that, meaning the increase may be even more significant.

The lounge is getting an average of $25 per visitor

This is about in line with what I expected. I’m sure a lot of us are curious about the Priority Pass business model, and just how much is being paid with each lounge visitor. When you crunch the above numbers, it would appear that The Club at PHX is earning an average of about $25 of revenue per visit, and I’d assume that’s roughly equal regardless of whether visitors are from British Airways or Priority Pass.

This also further explains how Priority Pass restaurants make sense. I’ve received so many comments from people saying “it’s unsustainable for Priority Pass to pay for meals at restaurants.” The reality is that they’re probably paying restaurants the same as they pay lounges for a visit. We just get a lot more value out of it.

Priority Pass lounges make bank!

The Club at PHX is a pretty no frills lounge that’s just under 3,000 square feet, and it’s about $2 million in sales per year. I imagine it’s even higher now. Wow. Sure, there are costs — they’re paying rent, they have to pay staff, and chips and raw veggies aren’t free. But still, I imagine those are some really good margins.

Bottom line

None of this information comes as a much surprise, though I find it interesting nonetheless. Yes, the number of Priority Pass visitors has increased greatly the past couple of years, presumably largely diue to the Chase Sapphire Reserve® Card. It looks like lounges are getting paid an average of about $25 per visit for these.

However, unlike some others, I don’t think the increase in Priority Pass members has “ruined” lounges, but rather it has given Priority Pass, airlines, and independent lounge operators an incentive to add more lounge space, and even to add new concepts to the network, like restaurants. The occasional crowded Priority Pass lounge is a small price to pay for the democratization of airport lounges.

How do the above statistics compare to what you were expecting?

(Tip of the hat to View from the Wing)

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Comments

  1. @Lucky: “it’s grossing over $2.6 million in sales per year.” You make an error in your calculations there as the data table provides 18-months of sales. For the 12-month period through to Dec-2017, the actual sales were $1,940,948. So annual sales according to the data is actually just less than $2mn.

  2. It’s not about money, it’s about crowding. People go to lounges to escape the crowds, not be eating finger food in a cafeteria hall with every Priority Pass user and their dog with access.

    The airlines are just as complicit for selling memberships: Qantas Pubs and so forth. The US3 lounges are total zoos.

  3. The CLUB at PHX is my least favorite lounge in the US. Small, overcrowded and bathrooms aren’t connected to the lounge. After 1 visit I do not plan on going back. Thank goodness for the Admrils Club.

  4. I’ve had priority pass for many years, and used it exactly once. Ironically, for this very lounge some time in 2016. However, I used my Citi Prestige for access at the time since I had no CSR yet.

    As someone who only flies premium internationally and rarely connects for domestic, priority pass is basically useless. The only time I see using it is during delays when they get super crowded anyway.

  5. @keitherson “People go to lounges to escape the crowds, not be eating finger food”.

    This isn’t really true anymore – if you want to escape the crowds, it is very easy to find an empty gate area with charging ports and airport wifi (or browse your phone with data).

    It might have been true in the days of business folks visiting lounges, but now people want to “maximize” the $450 sapphire or $550 amex fees, and the way to maximize it is to make sure you have a light meal at the lounge in lieu of airport/airline food. My typical visits to the lounges are for a quick bite before going to the gate area to sit in peace.

  6. My primary airport is PDX. PP is an absolute no-brainer there given the options that you get. Only one true “lounge”, but the food choices at the restaurants are an amazing value.

  7. Club at PHX is a great case study because it is, um, extremely average. I am among those numbers in the chart. I trekked across PHX from my gate to check it out, last year sometime, and the long walk to get to elbow people for a free yogurt just wasn’t worth it.

  8. While I agree with the general sentiment of the article, several of your arguments are not supported by the data on close inspection. For example, you stated that the large increase in Oct 2016 must be due to the Sapphire Reserve card.

    Notice that October 2017 also had a large jump in the number of customers. And that most of the large increase is only offsetting the *decrease* in visitors during the summer of 2017. The Sapphire Reserve card cannot explain this. I’m more inclined to think that the large month-to-month changes are mainly the result of cyclical seasonal variation, above a more slowly increasing long-term trend.

    For the same reason, it’s misleading to point out the doubling in visitors between July 2016 and Dec 2017. July seems to be a low season summer month, and December is a peak winter month. A more meaningful comparison would be between Dec 2016 and Dec 2017, which show a much smaller 49% increase (smaller, but still significant).

    My hypothesis may be strengthened if the total passenger numbers for each of those months also show these seasonal ups and downs. This can probably be found online somewhere

  9. I agree with other with not so good experiences with The Club at PHX. We used The Club at PHX twice last year while flying Southwest from So Cal to Texas. The lounge was very crowded, very limited snacks (pretzel bar mix, veges sticks and etc.) both time. Still better options than sitting by the gate and paying $7 for a bottled water. Priority Pass through CSR will limit the number of guest per member to two guests starting in late August, I hope the lounge will be less crowded.

  10. Increasingly to some degree lounges are being outpaced by restaurants and areas in the general airport. With the increase in local and more innovative options and concepts at many airports, and newer, refurbished terminals, it is debatable how long lounges make much sense. The exception I see to this is First Class lounges, such as the Admiral Dining, or the Concorde Room, where there is actual sit down dining and in many cases faster security and premium access to your plane.

  11. Keep in mind that BA added an additional flight around mid 2017 departing from the gate next to the lounge. I am sure that contributed to an increase in usage as well.

  12. I have definitely noticed an uptick in lounges that take PP. As an relatively “early” adopter of first Lounge Club, and then Priority Pass, the lounges I frequented use to be mostly business/first class users. Now it seems vast majority of visitors in a lounge are utilizing PP. One example is KAL lounge at LAX. There’s a line 30-50 deep waiting for Priority Pass access which starts at noon.

  13. My last flight through Phoenix departed right next to this club, at an outdoor gate where you walk to your plane. So that was nice.

  14. “Lounge whiners” (my term) seem to argue from a position that “specialness” always cuts off just behind them. Thus, lounges now suck, not because they were allowed in, but because “everybody else” is. Of course, the people before them who saw the whiners arrive also probably thought the proletariat was coming in and ruining the exclusiveness of lounges too.

    If exclusivity or the need for an empty table are your requirements, simply pay for a membership to the US3 lounges (which do not allow PP members), get a co-branded CC for access, or fly enough for that access. If that’s beyond your ability or your preference, then maybe you aren’t as “special” as the lounges require.

  15. Lucky, if the number of BA passengers is greater than 50 then the number of PP customers DECREASES; it does NOT increase.

  16. Chase Saphire Reserve PP limit to only 2 guests starting August, no more unlimited guests . 2 is quite low, I think 4 is perfect.

  17. I may have elite status that gets me access to alliance or airline lounges, but it’s a great deal using PP in Asia when you can book LCC tickets and *still* get access. Priority Pass is such a blessing, it gives me more choices.

  18. @Lucky

    I’m sure I’m behind the curve than most on this site and you’ve probably posted before, your thoughts about getting either the AMEX Platinum or the Chase Sapphire Reserve. Is one better than the other? Thanks!!

  19. Never mind a priority pass lounge. If you want overcrowded and a fight for a seat / drink & food then by pass PP all together and go directly to the Amex lounge in SYD. OMG, what an ‘ experience ‘

  20. I like the PP perk that comes with my Citi Prestige, but I don’t think I would pay for it on my own if I didn’t have the credit card. I travel about 4-5 times per year on leisure but roughly half of the flights will be in business class and half in economy. So, I probably use the PP card for my partner and I maybe half a dozen times/year.

  21. You should see the club in Las Vegas. Smaller than my apt and fewer snacks than a homeless shelter.

  22. PP access is being limited more and more. It is not unusual to be refused entry. Limiting number of guests is also now being an issue. What happened to unlimited with this card? The PP site has aIot of clubs with limitations. I too would not personally pay for a PP card.

  23. Just read that come August only 2 guests allowed. Each additional is $27. They giveth then taketh!

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