COMMISSION
AGENDA MEMORANDUM
Item No.
ACTION ITEM
Date of Meeting
DATE:
April 1, 2025
TO:
Stephen P. Metruck, Executive Director
FROM:
Rick Duncan, Director, AV Business & Properties
Eileen Francisco, Director, Aviation Project Management Group
10b
April 8, 2025
SUBJECT: Concourse A Shared-Use Lounge (CIP #C801207)
Amount of this request:
Total estimated project cost:
$24,360,000
$30,500,000
ACTION REQUESTED
Request Commission authorization for the Executive Director to take all steps necessary to
complete the Concourse A Shared-Use Lounge Project (Club SEA) at the Seattle-Tacoma
International Airport (SEA). This request is to fully authorize the project and execute the
construction contract, for a total project authorization of $30,500,000.
EXECUTIVE SUMMARY
Today, the Port controls two Common-Use Lounges (operated by Airport Dimensions) located in
Concourse S and Concourse A. We partner with 16 international airlines and three membergroup organizations to provide access to our lounge on a per-use basis. Together, the lounges
bring in $17M in non-aero revenues per year, representing $9.8M Net Operating Income (NOI).
The growth of international service, as well as demand from domestic passengers looking for an
escape from the crowded holdrooms, has increased exponentially the demand for our lounges.
This increased demand has led to our lounges being overcrowded and even forcing denial of
service to willing customers due to capacity constraints. Additionally, the lounge business has
evolved over the years, and consumers now expect full-service amenities, including showers,
separated space for work, and a kitchen that can satisfy demand for a wider variety of regional
tastes than can be accommodated within the existing facility.
This project will expand into the shell space created by the Concourse A Building Expansion for
Lounges Project and fully develop a new full-service shared-use lounge (Club SEA). Increasing its
size from 4,800 square feet to 13,875 square feet. The project is currently under permit review.
Template revised January 10, 2019.
COMMISSION AGENDA - Action Item No. 10b
Meeting Date: April 8, 2025
Page 2 of 6
Upon Commission's approval for the full project authorization, the project will execute a
Maximum Allowable Construction Cost contract with the selected Contractor, complete both the
permitting and pre-construction stages, and issue Notice-to-Proceed with construction.
Substantial completion is anticipated Q2 2026.
JUSTIFICATION
With the completion of SEA's international Arrivals Facility, gates on A Concourse are now
internationally capable. The demand for lounge experiences have increased by approximately
100,000 visits annually, over the last three years; reaching 303,000 guest visits in 2024. The
existing small footprint for common-use lounges is inadequate to meet this increased passenger
demand and lacks the ability to provide a full-service lounge experience for those passengers
lacking direct access to either a cardholder or airline lounge. Due to the size limitations and
capacity restrictions, over 2,600 guests were denied access in 2024.
Diversity in Contracting
The project has established a women-and-minority-owned business enterprise goal of 12%.
DETAILS
Prior to this project and capital investment, the Port's model for establishing "Club SEA" lounges
consisted of inheriting vacated airline lounges, at the terminus of their specified leased term. The
Port would make use of any previously used but functional cooking equipment, furniture, etc.,
only investing in slight aesthetic modifications such as patching/painting, and signage
replacements.
During the initial project planning and Notebook phases of this project, the Port used the four
previously inherited lounges as inspiration to generate a like-for-like model for the overall
amenities and aesthetics for the new A Concourse Club SEA. Unfortunately, this model was
determined to be inadequate to improve upon the customer experience and strengthen the
Port's ability to attract guests similar to cardholder or airline lounges. These inherited lounges
lacked adequately sized footprints and/or were significantly outdated. Considering this, the Port
elected to upgrade the outdated like-for-like model and replace it with full-service model, to
expand upon both the amenities and overall lounge aesthetics.
During design development, the Port completed numerous value engineering (VE) exercises to
realign design costs within the original project budget and include the desired full-service
amenities such as: upgrading the partial kitchen to a full-service kitchen, upgrading the partial
bar to a full-service bar, and upgrade the lighting in the entire footprint to modern LED lighting.
Throughout design, significant constructability challenges were raised over the project's ability
to keep the current Club SEA operational while the new expansion was under construction. Any
closure, even those in support of the new lounge, would significantly impact airport operations,
traveling passengers, and diminish the overall passenger experience. To mitigate this the Port
Template revised June 27, 2019 (Diversity in Contracting).
COMMISSION AGENDA - Action Item No. 10b
Meeting Date: April 8, 2025
Page 3 of 6
elected to deliver the project via a General Contractor Construction Management (GC/CM)
contract. The move to GC/CM also affords the project advanced planning capabilities and
oversight on critical construction phasing and/or potential closures during construction. The
project was placed on hold from December 2023 to June of 2024 to procure a General Contractor
and initiate pre-construction activities. This included evaluating construction phasing options as
project designs progressed, providing greater design-to-construction cost certainty, and
mitigating constructability issues in advance of construction.
Scope of Work
The project consists of the design and construction of a Port-branded lounge that will:
(1) provide the necessary space to address the increased passenger demand by expanding
the existing Club to 13,875 square feet.
(2) provide increased revenue opportunities from both the expanded Club SEA footprint and
a new 2,300 square-foot leasable business area in the former club area.
Schedule
Construction is anticipated to start Q2 2025 with a projected substantial completion in Q2 2026.
A two-phased construction plan is proposed in order to keep the current lounge operational for
the longest extent possible.
Activity
Commission design authorization
Design start
Commission construction authorization
Construction start
In-use date
2021 Quarter 4
2022 Quarter 2
2025 Quarter 2
2025 Quarter 2
2026 Quarter 2
Cost Breakdown
This Request
Total Project
Design
Construction
Total
($478,000)
$24,838,000
$24,360,000
$5,662,000
$24,838,000
$30,500,000
ALTERNATIVES AND IMPLICATIONS CONSIDERED
Alternative 1 - Do not proceed with the CLUB at SEA expansion
Cost Implications: ~$2.9M (design costs incurred to date)
Plus Sunk Costs: $25.9M (allocated base building costs)
Pros:
(1)
Lowest project cost alternative
Template revised June 27, 2019 (Diversity in Contracting).
COMMISSION AGENDA - Action Item No. 10b
Meeting Date: April 8, 2025
(2)
Cons:
(1)
(2)
(3)
(4)
(5)
Page 4 of 6
Provides opportunity to negotiate alternate non-aeronautical tenant use; financial
impact of alternate future non-aeronautical revenue generation not yet known
Existing Concourse A Lounge would need to be relocated, if an alternate compatible
space is subsequently identified.
Does not achieve the Port's goals for expansion of common use lounges.
Fails to meet the Port's anticipated lounge demand and desired level of service to
support international operations on A Concourse.
Design development incurred costs are committed and cannot be recovered.
Foregoes revenue that would be derived from expanding operations of the common
use lounge.
This is not the recommended alternative.
Alternative 2 - Proceed with the current request to advance the project to construction and build
out the full expanded Club SEA footprint provided by the Concourse A Building Expansion for
Lounges project.
Cost Implications: incremental $24,360,000
Plus Sunk Costs: $25.9M (allocated base building costs)
Pros:
(1)
(2)
(3)
(4)
Cons:
(1)
(2)
(3)
Provide capacity to serve the future growth in anticipated common use lounge demand.
Improve the Port's level of service supporting international operations on Concourse A.
Provide a significantly higher shared lounge passenger experience and would likely
improve the Skytrax common use lounge customer service ratings.
Provides additional leasable non-lounge space to increase Port revenues.
Significant capital cost incurred.
Limited impacts for existing Club SEA during construction of new Club.
Breakeven point for investment is expected to be 11 years.
This is the recommended alternative.
Template revised June 27, 2019 (Diversity in Contracting).
COMMISSION AGENDA - Action Item No. 10b
Meeting Date: April 8, 2025
Page 5 of 6
FINANCIAL IMPLICATIONS
Cost Estimate/Authorization Summary
Capital
Expense
Total
COST ESTIMATE
Original estimate
Previous changes - net
Current change
Revised estimate
$22,000,000
$1,951,000
$5,821,000
$29,772,000
$0
$775,000
$(47,000)
$728,000
$22,000,000
$2,726,000
$5,774,000
$30,500,000
AUTHORIZATION
Previous authorizations
Current request for authorization
Total authorizations, including this request
Remaining amount to be authorized
$6,140,000
$23,632,0000
$29,772,000
$0
$0
$728,000
$728,000
$0
$6,140,000
$24,360,000
$30,500,000
$0
Annual Budget Status and Source of Funds
This project, CIP C801207, was included in the 2025-2029 capital budget and plan of finance with
a budget of $23,951,000. A budget increase of $5,821,000 was transferred from the NonAeronautical Allowance CIP (C800754) resulting in zero net change to the Aviation capital budget.
The funding source would include Airport Development Fund and revenue bonds.
Financial Analysis and Summary
Project cost for analysis
Business Unit (BU)
Effect on business performance
(NOI after depreciation)
$30,500,000
Clubs and Lounges (ORG 3690)
Over the projected 20-year life of the asset, this project
will contribute $151 million to non-aeronautical NOI.
IRR/NPV (if relevant)
NPV over the projected 20-year life of the asset is $13.1
million ($2.9 million higher than the NPV of the Base Case)
N/A
CPE Impact
Future Revenues and Expenses (Total cost of ownership)
Shown in the table above.
ATTACHMENTS TO THIS REQUEST
(1)
Presentation
Template revised June 27, 2019 (Diversity in Contracting).
COMMISSION AGENDA - Action Item No. 10b
Meeting Date: April 8, 2025
Page 6 of 6
PREVIOUS COMMISSION ACTIONS OR BRIEFINGS
April 27, 2021 - Commission authorized design and a tenant reimbursement agreement for
the Concourse A Building Expansion for Lounges Project.
December 14, 2021 - Commission authorized the completion of design and the execution of
a professional design services contract.
Template revised June 27, 2019 (Diversity in Contracting).