Chase Beats Out Capital One For Miami Airport Lounge Space In $94 Million Deal

It looks like Chase has beaten Capital One for new lounge space in Miami, and the ‘how’ is interesting: lots and lots of money.

Last summer we learned that the Miami airport would get a new bank lounge or – less likely – a Priority Pass lounge over in the E terminal.

Signature Chase Sapphire Lounge Bar

One Mile at a Time flags that the space will be awarded on July 21 to Chase for a Sapphire Lounge. It looks like Capital One and TAV (Primeclass, Extime and Turkish lounges) were massively outbid.

• The new lounge will be a “Chase Sapphire Lounge by The Club.” The 15 year lease will be awarded to AD Partnership, which is Airport Dimensions (which operates The Club, and is owned by Collinson which is the parent of Priority Pass) and Chase. But this is really Chase’s – Chase can receive assignment of the lease, is expressly third party beneficiary of the deal, can cure defaults by Airport Dimensions and designate a successor operator, and can step in and take control of the lounge while replacing Airport Dimensions.

• The space is currently a mixture of offices and vacant rooms. It has only limited access using a small existing elevator, so the project requires a new concourse entrance and elevator. The tenant is responsible for all costs and completion of the buildout – there’s no landlord construction credit, and the design must reflect Miami, South Florida or the airport and meet LEED Silver standards.

• The lounge will offer premium seating; complimentary made-to-order food and both alcoholic and nonalcoholic beverages; business facilities; televisions, reading and quiet areas; and spa and salon services.

• The lounge must be open 365 days a year before the first E concourse departure until final departures each day and the airport can require extended operation during irregular operations.

The airport will charge ‘prevailing Class II terminal rent’ plus a “privilege fee” of $52 million over 15 years and 40% of gross revenue (e.g. day passes, advertising and promotions). Chase has to pay $100,000 to relocate an incumbent tenant in the space. Overall, the airport projects $93.8 million revenue over 15 years ($6.25 million annually). And the lease can be terminated for convenience on 90 days’ notice, with some limited protections.

There were two other bidders on the space with complete, eligible submissions:

• PPL Holdings USA, LLC That’s Plaza Premium Group. In addition to Plaza Premium lounges, they operated Capital One’s first lounge in a partnership. This bid received ‘sponsorship points’ as part of the airport’s evaluation, so this was presumably the Capital One partner.

• TAV America Operation Services, Inc. operates the Washington Dulles Capital One lounge. This bid didn’t receive sponsorship points so is less likely the Capital One bid. TAV is Turkish, and operates Extime and Primeclass lounges.

The Chase/Airport Dimensions bid beat out the Plaza Premium bid that I believe was Capital One. Reviewers liked the Chase concept and design slightly better, and the amount of money to the airport appears to have been millions more annually.

The Miami airport E concourse is connected to the American Airlines D concourse, and sees flights from American, Alaska, British Airways, Finner, Iberia, Qatar, Aer Lingus, Royal Air Maroc and others such as Gol, Avelo and Arajet. So the new 13,793 square foot Chase lounge near gate E7 will provide an alternative for American Airlines and oneworld customers mainly, though not exclusively.

Regardless it’s going to be a lot nicer than the old E concourse Admirals Club-turned-oneworld premium lounge.

It’ll be nice to have the additional space, in a terminal that can be accessed by the same passengers who use the overcrowded Amex lounge, because that’s more capacity for premium card customers. Although I suspect at under 14,000 square feet it’s going to fill up as well. That’s far more space than lounge lounges! But it’s about one-third less space than Chase has at New York LaGuardia and Philadelphia

I’ve FOIA’s the actual Chase RFP, because that may contain interesting details like I found in the Chase LAX bid such as their expectation of spending just $8.40 per lounge guest “for all food and beverage consumption.” There was a full budget for operating the lounge included.

Come to think of it, I should probably FOIA Amex and Capital One proposals across various airports, because it would be interesting if I could learn how their pro forma F&B spend per guest compares.