No 1 Lounges “to open 8 sites in 2018” – but is that the whole story?

No 1 Lounges runs an excellent network of premium, ‘pay to enter’ airport lounges across the UK see here for details.

They were the pioneers in proving that passengers would pay if the quality was high enough.  Swissport / Servisair was forced to up its game by rebranding and upgrading its lounges as Aspire, and Plaza Premium decided the demand was there to base its European launch here.

That said, growth has slowed recently.  The only opening in the last 18 months was Gatwick South, and that was an expansion / resite rather than a brand new opening.

Things seem to be changing.  Business Traveller reports that the group intends to open EIGHT new sites by the end of 2018.  This will be a mix of expansion into new terminals at existing airports and brand new locations.  By 2020, the plan is to have 24 sites.

There is no word on where the new lounges will be based, or even how many will be in the UK and how many will be abroad.  It is definitely good news for all of us if these plans come to fruition.

We have reviewed all of the UK lounges if you want to find out more:

No 1 Lounges

….. but is that the whole story?

A normal Head for Points article would have finished here.   However, when I saw this story on Business Traveller it had an odd smell to it (nothing to do with BT, for clarity!).

As I mentioned above, the No 1 Lounges opening programme has ground to a halt recently.  I know that the space which became the Club Aspire lounge in Terminal 5 was competitively tendered, and No 1 lost.  I am guessing that the new Plaza Premium lounge in Terminal 5, opening next month, was also tendered, and if it was then No 1 lost what would have presumably been just a two-horse race.

No 1 was also beaten to the punch by Plaza Premium for the Heathrow Terminal 3 and Heathrow Terminal 4 arrivals lounges this year.  The excellent new Club Aspire lounge in Terminal 3 airside will be hitting the No 1 Lounge there.

Meanwhile, Manchester Airports Group – which also owns Stansted, East Midlands and Bournemouth – is prioritising its own directly-owned premium lounges instead of leaving money on the table for others.  No 1 left Stansted, MAG is rolling out its Escape lounges and it is also trialling the adults-only super-premium ‘1903’ brand at Manchester T3 which will be rolled out if it goes well.

A company which has lost four chances recently to open in the most important airport in Britain, and which may be blocked from the four MAG airports, suddenly has eight lounges on the go for 2018?

You also need to understand the practicality of building in airports, airside.  Every worker needs full clearance.  Every hammer, every knife, every tool must be counted out and counted in every day.  Every delivery of supplies must be scanned.  This is why airport building projects always hit delays.  If No 1 has eight projects to open in 2018, work must already be underway on some of them – but I haven’t heard anything.

Most long-term HFP readers know that I worked at a major UK private equity firm for over a decade.  I know how the game works.  No 1 Lounges is owned by a private equity group, NVM.  I could smell a PR campaign to talk up the value of the business before a sale.

Sure enough … a quick search turned up a Mail on Sunday story from April by a journalist called Ben Harrington who I knew in my City days.  (If you work in M&A or trading, his Betaville blog is worth a look.)  It said that No 1 was quietly up for sale.  Nothing has been heard since which implies problems over the expected valuation.

I also found this from The Daily Telegraph in July.  It is exactly the same story as appeared in Business Traveller, talking about the major expansion.  The way it is written feels as if the story was ‘placed’ by a PR firm.  It is possible that BT copied the story from the Telegraph, but it is odd that they would wait six weeks.  I would guess that the same PR company approached BT this week.

So ….  I would take the claim of eight new sites with a pinch of salt.  The company has lost momentum.  It also has marketing problems if our odd relationship with No 1 over the last two years – including a weird non-meeting recently – is anything to go by.  Remember that HFP is, both directly and indirectly, one of their biggest UK influencers and revenue drivers.

Since both Plaza Premium and Swissport / Aspire (ultimately owned by China’s HNA Group, parent company of Hainan Airlines) have deep pockets, I think it is more likely that No 1 disappears into one of these two companies within a year.

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Comments

  1. Good article. Plausible hypothesis.

    I would think that BA continual desire to cut costs could potentially lead to farming out their lounges in the U.K. as they have in Europe!

    • the real harry1 says:

      http://www.telegraph.co.uk/business/2017/07/09/no1-lounges-founder-prepares-take-off-plans-double-number-locations/

      article from the DT is straight from a press release, pretty clearly

      valuation would normally be under 10x earnings so <£30m but sounds like NVM want £50m

      • the real harry1 says:

        I cba to look further than a first google http://www.nvm.co.uk/news-and-media-centre/press-releases/no-1traveller/

        and I guess they won’t say what % they acquired, anyway

        I’m assuming NVM have 49% (just speculation, we are told Cameron has a majority stake) for an initial stake of £7m 3 years ago

        since when, No1 has expanded but now has hit a brick wall, ie further expansion in the UK is going to prove less lucrative than before thanks to the competition having deeper pockets

        no wonder the owners would like to realise the value of their investment

        you’d have thought £30 is at best fair-ish value, I guess it depends mostly how long the contracts at airports are valid – if there is (say) typically a 10 year term, £30m would be toppy IMHO

        it’s not as if you can increase prices much more – or get more people to visit without getting creative (= lower profitability) – and contract renewal must be a big black cloud on the horizon

        • trh1 – it would actually be very easy for No1 to increase turnover and customer numbers.
          Just stop turning priority pass holders away when the lounges are empty.
          Certainly in Birmingham it is the norm. I have NEVER been able to gain access using PP and always make a point of walking in and counting the numbers before making my way to Aspire, where I have never been turned away.
          There have been occasions with less than 20 people inside and its still no go.
          I’ve taken photographs, mailed Cameron (no replies) and even suggested to PP that it is damaging their brand. Quite ludicrous really.

        • the real harry1 says:

          there must be good reasons for that – I’m not saying No1 has got it exactly right but I assume it’s similar to over-booking on planes, except No1 has to be careful to under-book at most times

          the reason, presumably, being that contracts with airlines to provide x lounge passes are more valuable than the (say) £15s No1 gets from PP

          in other words, No1 guarantees (say) 20 lounge passes to eg Korean Air for flight 123, which departs 365 days a year at the same time – that’s steady income stream which is preferable to letting the likes of you in (no offence! 🙂 ) then failing to keep to the contract with Korean because of capacity constraints

        • TRH1 – there is reason, yes, but not what you suggest. In EDI they have contact to provide QR J passengers with access (possibly others too, I just know of the QR J contractual arrangement)

          Similar will be happening in BHX – thus why James sees a relatively empty lounge when being unfortunately turned away.

        • Yes I have been refused admittance to that lounge as well on 2 occasions using Lounge Card.. Both times around 6pm when the airport is dead.
          On the third occasion of being refused I got out my Lounge Buddy app and proceeded to get to the point of “purchase”, so they were accepting walk in full paying customers. I showed this to the woman on reception and she just waived me and OH in for free.

  2. Sorry OT. I know that this question is raised often, but before I cancel thought I ought to check. BAPP card has just billed my wife for the second year at £195. 2 for 1 companion voucher earned.

    She now has a platinum charge card and we use that as the main Amex. I believe that it is ok to just cancel the BAPP and get a refund of the annual charge? The voucher will remain on the BA account. No need to downgrade?

    Then apply again in 6 months?

    Thanks

    • That’s what I do. Ensure all avios that you want to keep have moved across to BAEC

      • Thanks. Card hasn’t been used for a while, so no issues there

        Of course we could make a large charge, get Avios and then refund it. Would be interested to see if they could claw the points back haha

        Will cancel today.

    • Note it’ll be a pro rata refund of the annual fee

  3. Another OT question for y’all!

    I am looking to fly 2 x family members from London to Cape Town for Christmas (around 16 Dec to 26 Dec). As you can imagine, this is a very expensive time to be doing this! Cheapest sensible fares I can find are about GBP930 per person in economy.

    I’m trying to come up with a cunning way of reducing the bill by identifying a suitable reward program, wracking up some miles and getting a redemption. Over past 12 months I have accumulated about 350,000 Avios mainly through Amex credit card churn and Tesco Clubcard offers (thanks to this site!). However, British Airways do not have much availability, so am looking to other airlines. In particular:

    Air France
    Edelweiss Air
    Ethiopian Airlines
    Eurowings / SunExpress Deutschland
    Kenya Airways
    KLM
    Lufthansa
    Qatar
    South African Airlines
    Thomas Cook
    Turkish Airlines

    Anyone have any ideas on credit cards I could direct spend through or mileage purchase offers I should look to? I already have an Amex Platinum, BA Amex and Hilton Honors VISA.

    Any advice would be much appreciated!

    Oz

    • Lufthansa MBNA card has good earning on Amex (for now) and it is doubled in the first six months – this might be a good option. M&M always seems to have reasonable availability for me.

    • What makes you think that there will be redemption seats available? Most airlines don’t look kindly with new members transferring a stash of points/miles just to try and get seats…they can easily check your profile.

      • Briandt: absolute tosh. Airlines either offer reward availability or they don’t. Oz: you’ll more than likely find that you won’t be able to obtain anywhere near the amount of miles you need in any of the programmes you mention unless you actually fly with those airlines. The exceptions are Qatar (you already have 350,000 Avios?) KLM and Air France (Virgin miles).

        • the real harry1 says:

          can you already use Virgin miles on KLM/AF? that was quick…

        • I didn’t realise either…

        • Surely that’s not the case?

        • Tim, may be absolute tosh to you, but I had a colleague in the US who, on immediately opening an AA account, promptly moved a stash of Citi points over to book a reward to Europe and received an email from AA saying, in effect, that he was in violation of their T’s & C’s and to explain himself in detail.His booking was declined and they threatened to remove his account,with his miles, unless he could prove that he would be flying AA in future. I guess any airline can do what they like as the miles become their property. If they were from a broker, then I would not be surprised that all airlines would reserve the right to cancel.

      • the real harry1 says:

        whilst your first point (lack of redemption opps) makes sense, your second made me snort my coffee all over the desk! 🙂

      • Availability is either there or not. Some airlines (eg AF/KLM) do restrict availability to high status members, but that is the exception. If you read any American blogs you’ll see most of them transfer in miles from Amex, Chase, etc – many of the airlines seem to even let them hold a reward as long as the miles transfer in with a day or two for ticketing!

      • Most airlines have open booking for redemptions so this isn’t an issue. The only exception I can think of (there may be more!) is SQ with their ‘waitlist’ option, which sends a message to revenue management to decide whether to open the seat. Then they will be able to check you out. But refusing a standard and open redemption to someone who has essentially ‘bought’ miles (e.g. via Amex), not gonna happen.

        • Nick..Unless you have purchased through a broker, in which case the airline could/may jump on you most definitely.

    • Consider flying points to JNB then flying JNB-CPT for cash

    • Ethiopian – if it covers Christmas – is £1050 for cash out of Brussels and Stockholm to CPT. Very good reputation. Doesn’t earn miles in any Star scheme except it’s own though.

  4. No. 1 Lounge says:

    Rob, absolutely not so. We’re going to put our next lounge at Teeside airport. Last year, only 67 people used the train station connected to Teeside airport. So we’re going to be ahead of the curve on this one as there is significant growth potential at Teeside. Next up is London: we’re going to trial a new lounge concept called “No.1 le cafe”. And we’re going to start this off at London Oxford airport. The concept will involve a coffee machine, surrounded by a wide open lounge space. And its going to be terrific. We’re then going to roll out this concept at Lands End airport, Gloucestershire airport, and Lydd airport. The remaining three locations are confidential because we don’t want our competitors to bag them first.

  5. Typical massaging of figures to get a better sale. A company I used to work for was bought out by a larger rival.
    The original company included in their list of clients 1000’s who had since died but their details were still on the system for legal reasons. That caused a LOT of trouble for the new company when they sent out letters to everyone!

  6. OT: Are all of the showers free of charge at the Premium Plaza arrivals lounges at Heathrow, if you enter with Priority Pass?

  7. I’ve warned before….but experience has shown me that the EDI lounge frequently denies access to PriorityPass holders when a QR flight is scheduled.

    • Funny that, I’ve flown four times out of EDI on the QR morning flights and my PP hasnt been refused at No1 on any occassion. Twice on EY also.

      It’s always recommended to dress smartly for ME airline flights if you are also hoping to blag an upgrade at the desks even if your rag tag kids are on tow.

    • Interesting, never had an issue with EDI lounge but may just be timing of when I visit. Also have Aspire as alternative so at least not stuck with No 1 as the only option.

  8. O/T

    Marriott to BAEC 1000 points bonus – is anyone still waiting? (and if so, is anyone pursuing?)

  9. Sorry for OT (original post might be duplicated)

    When using the Lloyds Upgrade voucher, if there is no Premium economy, can it be used to go from economy to business?

    Thanks

    • gastrocnemius says:

      Yes

    • Rob Brown says:

      Yes, Mainly because it isn’t actually an upgrade.

      The voucher allows you to get the redemption in one class for the points of another, so as long as there is availability in Club World then you can get it and you will pay the Avios of the Premium Economy seat even if this seat isn’t available. (So you don’t need availability in any class other than the one you want.)

  10. Very interesting article. Nice to read something different from the usual reviews. Yes I know that’s the purpose of HfP but I found this a nice change.

  11. rams1981 says:

    OT groupon Iberia 2,000 miles have posted. Easy

  12. The Original Nick. says:

    Anyone had any Avios post from the Avis/Iberia
    Promotion?

  13. Lady London says:

    If you’re right Rob – and I rather fear you are – I hope the very hardworking and always professional staff I have encountered in the No. 1 lounges will get treated decently on any change.

  14. Interesting timing – as last week I got chatting to a senior exec of a London airport and No1 lounges came up (mainly my rant at the lack of PP access).

    Apparently, the £5 fee to ‘guarantee’ PP entry is a very nice cash cow for them. So there’s a suggestion that staff are encouraged to push this rather than regular PP admission.