Sharing is caring: How pay-in lounges are transforming the US lounge space

September 24, 2013

Comfort

The Club at San Jose Mineta SJC Laptop Charging Bar 540x300 Sharing is caring: How pay in lounges are transforming the US lounge space

Any seasoned traveller worth their platinum tier status knows that posh, luxury airline lounges have been trying out-do one another for years. Even a passing glance inside a few of the world’s top-ranked First and Business Class lounges reveals a dazzling array of lavish perks. Qatar Airways’ First Class Lounge at Doha International Airport includes a fully immersive massage chair straight out of Darth Vader’s lair and a kids playroom with an entire wall of Sony Playstations.

Qantas’ First Class Lounge at the Sydney Airport is wallpapered with lush, hanging greenery and is so boldly futuristic you half expect to float, gravity-free, from one beautifully conceived space to the next. And at the Eithad Airways First Class Lounge at Abu Dhabhi International, someone will actually iron your clothes and polish your shoes for you while you shower, and they have a nanny service to boot!

The trend towards luxury perks isn’t just for international carriers anymore. Earlier this year, Delta’s revamped Terminal Four Sky Lounge at JFK raised the roof (literally!) with the debut of its stunning 2,000 sq ft rooftop terrace with runway views.

The so-called Delta ‘Sky Deck’ even took home the Avion Award for “Best Achievement in Passenger Experience” at the recent APEX Awards ceremony in Anaheim. And more than a year after the 5,500 sq ft Cathay Pacific Lounge at San Francisco International (SFO) opened, passengers are still raving about its slick, minimalistic look. Not to mention the noodle bar!

But as the major carriers continue to play “keeping up with the Joneses” on the First and Business Class lounge front (especially at their all-important hub locations), a few savvy, forward-thinking developers have begun to steal their thunder by launching hip, stylish, pay-in lounges of their own. Inspired by European and Asian terminals, where independent, pay-per-use airport lounge concepts have been the norm for years, this new breed of innovative lounge developers are changing the way passengers, and even some of the major US carriers, view the airport lounge experience. And the results have been stunning.

RELAX AND UNWIND…FOR A FEE

Walter Vergara is the chief operating officer of Los Angeles-based Airport Terminal Management (ATM), and the co-creator of the award winning reLAX lounge, located in the heart of the Tom Bradley International Terminal at Los Angeles International Airport (LAX).

“We were the very first company to introduce a pay-to-use public lounge at LAX in 2008, I think before that, there was maybe one in Miami and that was it,” remembers Vergara. “Nothing was really available back then. I know that Delta and United had a deal where you could pay $50 and use [their lounge] for a day … but, it was a one shot deal, and they also had a lot of restrictions. So, we really were the first one.”

And like many famous firsts, getting reLAX off the ground was no easy task. “In the past, most major carriers had their own lounges at Tom Bradley,” says Vergara. But due to issues of space, cost and the fact that some of the international lounges were only used once or twice a day, it soon became apparent that the good old days were over.

“So, in about 2008, [ATM and the airport] started building the concept of ‘share lounges’ with the carrier’s three major alliances; SkyTeam, Star Alliance and One World. And there was a fourth lounge that was not alliance. So, if you didn’t belong to any of the other three alliances, [First and Business Class passengers] could go to Los Angeles International Lounge,” says Vergara.

But even then, he says, there were times every day when several of the lounges went virtually unused. So, Vergara and ATM approached the airlines about adding a pay-to-use concept to their share lounges at Tom Bradley and were told point blank: “Absolutely not.” Vergara was disappointed, but says he completely understood their thinking at the time.

“These are First and Business Class passengers that are paying anywhere from US$5,000-$20,000.00 they don’t want just anyone to come in and pay $20.00 and sit next to passengers who paid $10,000.00.”

Undaunted, Vergara approached the airport, who liked the idea enough to help him and ATM launch what Vergara calls a “test pilot” concept called reLAX. Modelled after the innovative common-use pay-in lounge concepts he’d experienced in other countries, Vergara says he hoped to bring a similar sensibility to LAX with reLAX.

“So many countries are so above us, in terms of lounge concepts, it’s incredible,” says Vergara. “South Africa has beautiful airport lounges, even Heathrow, it sounds crazy, but, you can literally get a haircut, get a meal, go shopping and all of it at the airport. Japan has the pods everywhere [and] those relaxation igloos so you can have music and sounds and stuff. I mean, look, they had free Wi-Fi almost before Wi-Fi was invented. We’re way behind on the pay-in-lounge front.”

And so, equipped with fast, reliable Wi-Fi, a top-notch business centre and a first-rate staff, reLAX opened on 4 December 2008 and continues to offer great service. But because reLAX was conceived as a test pilot concept for the airport, Vergara says: “We [were] excluded from the airport’s normal leasing rates – which currently is $165 a square foot and, in the next two years is going to go up to $265 a square foot.” Combine the higher leasing rates with the airport’s new Living Wage Ordinance and Vergara says continuing on with reLAX is just not feasible.

“Of course, the multi-million dollar airline lounges will still be here, and we’ll still manage quite a bit of them, but, it’s not the same as the reLAX concept,” says Vergara, who adds that although reLAX will be gone, he’s excited to see that the non-airline, independent lounge spark he and ATM lit at LAX is finally starting to catch fire at other airports across the country.

And this time around, Vergara notes, the major carriers are much more receptive to sharing.

IN THE CLUB

Graham Richards is the director of operations for the Dallas-based Airport Lounge Development (ALD), a sister company to the Priority Travel Group. ALD currently runs six lounges nationwide under the brand ‘The Club at’, including locations in Atlanta, Dallas/Fort Worth, Raleigh-Durham, San Jose, and two ‘The Club at LAS’ in Las Vegas McCarran’s bustling Terminal 1 and 3.

The Club at Atlanta ATL Bar with people 540x300 Sharing is caring: How pay in lounges are transforming the US lounge space

And though ALD has been operating lounges since 2006, Richards says the company – inspired by reLAX’s success at LAX – really began accelerating their lounge development in a big way in 2009.

“The mindset [was] beginning to change and, even now, you’re seeing more activity with the opening of lounges and I think the reason being is that both airports and airlines are seeing the efficiencies of having a shared space, particularly in international terminals when you’ve got airlines who may not have that many flights per day,” says Richards. “At the end of the day, [airlines] pay rent for 24 hours. But if you’re only using it for five or six hours a day it doesn’t make a lot of sense.”

Another huge factor in the recent growth of pay-per-use and shared-use concepts, says Richards, is the public’s changing perception of lounges in general.

“I think the travelling public has historically seen [airline lounges] as something rather exclusive, behind closed doors … only for the ‘travelling elite’ and not for me,” says Richards. But with airline loyalty on the decline, even in First and Business class circles, Richards says things are starting to change.

“[Passengers] are shopping around for the best fares so even if they’re travelling on business they can’t necessarily stick with an airline. That means that they don’t necessarily clock up the miles and get the rewards that they usually would have … [and] that means that they don’t always get access to airline lounges and would have to decide whether they wanted to fund themselves to get into a lounge because it’s no longer part of their quote unquote ‘privilege’,” says Richards.

And that’s where ALD’s stylish, affordable, common-use lounges come into play. “We wouldn’t claim to be the most visually stunning lounges,” says Richards. “I think they’re modern, they’re cutting edge in terms of design concepts, but we don’t think the recipe to success is just cutting the biggest check we can. I think some airlines tend to do that, but, we’re not in the business of winning the most expensive décor of the year award.”

That said, several of ALD’s latest ‘The Club at’ offerings are right up there with the best of them. “We built a lounge in Terminal 3 in Las Vegas which I think is very modern and distinctive in terms of its style and the furniture picks and the color palette and flooring that we used and I would say that it’s a standout lounge,” says Richards.

“I think the club at Mineta San Jose (SJC) and Atlanta (ATL) are right up there too in terms of, not only the physical aspects of the lounge, but in the service that we deliver. We’re not perfect, but, by and large, we’re getting a constant stream of people filling out surveys saying that they’re really amazed at the efficient and friendly service they’re getting at our lounges. That’s really not an exaggeration, that’s something that we get daily, feedback like that.”

The Club at Atlanta ATL Buffet with people 540x300 Sharing is caring: How pay in lounges are transforming the US lounge space

And to a former hotelier like Richards, feedback like that is better than gold. “To me a standout lounge is not one that’s just got all the gee whiz type features, it’s also one that’s got the gee whiz, that’s fabulous type service. If you spend US$10 million on a lounge, you’re likely to get one that’s more stunning than if you spent $2 million on a lounge, but, if you’re not delivering good service and the amenities of the lounge aren’t any good, it’s not worth having Italian marble and crystal chandeliers.”

The Club at San Jose Mineta SJC VIP Room 1 540x300 Sharing is caring: How pay in lounges are transforming the US lounge space

But the real keyword in the lounge space moving forward, Richards says, is sharing. “The alliance lounges, you’re seeing a lot more of those, and that’s where we come in. Because we can say to [the airlines], you know, look, your model is already out there, you are alliance lounges … you share resources, so, you understand the concept of this, and we can offer you, as ALD, a lounge premises.

“You don’t have to spend the capital to [build] it, so, you’ll save money both in capital expenditure and operational complexity, and operational costs, by working in a shared environment. So, what we’re saying to the airlines is unless it’s a hub and you know that you’re going to be filling most of the seats most of the time, why don’t you give the space over to us, and we’ll pick up some of those costs, share the space, defray the cost in that manner and everybody comes out a winner. Because our belief is that the customer doesn’t mind who’s delivering the service if the airline is basically sponsoring them to go into the lounge.

The Club at San Jose Mineta SJC East Lounge 1 540x300 Sharing is caring: How pay in lounges are transforming the US lounge space

“As soon as they get good service I don’t think they’re too worried whether it says United Club, Admiral’s Club, Delta, SkyTeam or reLAX on the wall, they’re going to come out and say: ‘Wow, I got really great service in that lounge and you know, the food and drinks were good too.”

Adds Richards: “I think that’s the story really, the airports and simultaneously the airlines thinking about how they can deliver services without necessarily having to take ownership of the whole thing. And a shared space is a great way of doing that.”

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Pictures: Images of The Club(s) at San Jose, Atlanta & Las Vegas, taken by Tomas Romero

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About Tomas Romero

Tomás Romero is an award-winning writer/producer from Los Angeles, CA. He has written dozens of screenplays, two of which were produced as feature films. Aside from screenwriting, Romero has generated original online content, articles and blog posts for over five years on topics as varied as food, movies, music, books, travel, techie gear, politics, and the gleeful insanity of stay-at-home fatherhood.

View all posts by Tomas Romero
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2 Responses to “Sharing is caring: How pay-in lounges are transforming the US lounge space”

  1. VATerp Says:

    The APEX conference last month had a panelist from Airspace Lounge. I’ve been to one of Airspace’s lounges at JetBlue’s terminal at JFK and also to those lounges mentioned in the article.

    It’s odd that Airspace or even a different company called No 1 Traveler arent explored in-depth here; not to mention what American Express has built/is building. Those seem to be carefully crafted concepts and a further departure from the lounge models of the past. “The Club” and relax are sort of re-hashes of the old Servisair approach.

    Reply

  2. Tomas Romero Says:

    Thanks for your comments, VATerp!

    There’s no denying that all of the lounges you mention are equally worth writing about — as a former “Peetnik” I especially love the fact that Airspace serves Peet’s Coffee & Tea in all their lounges! — and I agree with you that what American Express is working on rolling out right now is very interesting. But as far as leading the charge, I still give reLAX massive brownie points for being first on the scene in the states.

    What Vergara and company did (and, as of this writing, continue to do) on a budget with reLAX at one of the world’s busiest and most convoluted airports truly set the standard for what a modern airport lounge can be. And if you ask me, the fact that several independent lounge operators (including American Express) are following ATM’s lead by refining the reLAX concept on much bigger budgets only further underscores how great Vergara and company’s concept was to begin with.

    Reply

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