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Annual Fee ($): This is the annual membership fee you pay for lounge access. In our example, it’s $200 a year.
Lounge Benefit Value (Per Visit) ($): This is the value of perks or benefits you get on each visit for being a member. Like free food, snacks, coffee, meals, drinks, etc. Compare what you’d usually pay at the airport to estimate the prices of these perks. In our example, we’ve assumed the value as $40 per visit.
Visits Per Year: The estimated total number of times you expect to visit the lounge in a year. In our example, it’s 12 visits a year.
Free Visits Per Year: The number of free visits allowed as per your membership tier and terms. Free visit means a visit for which you don’t need to pay anything for accessing lounge benefits. If it’s 0, then enter so in the input field. In our example, the allowed free visits per year are 6. Of course, make sure the free visits per year don’t exceed the visits per year.
Fee Per Paid Visit ($): Visits beyond the free ones incur a charge. This means you need to pay a fee to access lounge benefits. In our example, the number of paid visits is 6 (12-6) and the fee is $35 per visit.
ROI: This is the return (net profit) on your investment. Net profit is nothing but excess of lounge benefits over cost. If you’re spending $200 a year on membership, of course, you want the value of lounge benefits in a year to exceed $200. Any extra lounge benefit over and above $200 is the net profit. Let's say you spend $200 as annual membership fee and get a total lounge benefit of $270. What's the net profit here?. Yes, $70. This $70 is the ROI on $200. If we express this ROI value of $70 as percentage, we get ROI % as 35%. If your ROI is over 0% (this means you get a net profit of more than $0 for every $1 spent on membership), buying a membership is worth it. This means you're recovering your annual membership cost and making profit.
Airport lounge memberships are getting popular. And why not? With membership, you get year-round access to airport lounges for free and/or at a discounted price. Whether membership is beneficial depends on multiple factors. Let’s not assume and take a decision driven by emotion. Let’s calculate and find out.
The formula to calculate ROI% is: (Net lounge benefit or profit / Annual fee) x 100
The annual fee variable is known. So, the only variable we need to calculate here is the net lounge benefit or profit.
Paid visits per year = Visits per year - free visits per year
Net lounge benefit/profit = Annual membership fee - [(Lounge benefit value (per visit) x visits per year) - (Paid visits per year x fee per paid visit)]
Let’s take our example and see how this formula works.
Paid visits per year = 12 - 6 = 6 visits.
Net lounge benefit/profit = $200 - [($40 x 12) - (6 x $35)] = $70
ROI = ($70 / $200) x 100 = 35%
A ROI of 35% means you get a net profit of $0.35 on each $1 membership fee you pay. Of course, a membership is worth only when the ROI is over 0%.