The rise and growth of airport lounges

posted on 12th March 2019

Hong Kong based Plaza Premium Group intends to remain at the front of the ever-growing sector

As passenger traffic continues to grow at pace across the globe, more and more airport lounges are opening and the marketplace presents a wealth of opportunities.
The world’s biggest independent airport lounge operator is Hong Kong headquartered Plaza Premium Group and since its first two were opened in Hong Kong International Airport and Kuala Lumpur International Airport in 1998, it has now grown to 70 lounge locations in 30 countries.
Last year, saw the opening of lounges in Rome, Jakarta, Dammam, Melbourne and Ahmedabad and the launch of a new brand Plaza Premium First with two locations, Hong Kong and Kuala Lumpur to meet a new demand for more refined, elevated and personalised lounge experiences while it was named Skytrax’s World Best Independent Airport Lounge for the 3rd year in a row.

2019 is set to be another year of expansion and growth, according to Jonathan Song, business development director for the Plaza Premium Group. “We have been working hard on rolling out some new locations and while 2019 has only just begun, I am excited to share that we will soon be opening Plaza Premium Lounge in Helsinki (Finland), Dubai (U.A.E) and Langkawi (Malaysia) within the first half of 2019. And there are still more in the pipeline,” he says.
“We also worked towards expanding our capacity on partner lounge management with two new additions – China Southern Airline lounge in Guangzhou and American Express lounge in Melbourne. We will continue our conversation and discussion with both potential and existing airlines, alliances and financial institution partners to explore opportunities.”

The years’ ahead look set to see continued growth at Plaza and the operator it seems is particularly targeting growing its footprint into the world’s biggest aviation markets.
Song says the key development focuses will be mainland China, United States, and India, as well as in select airport location within its existing regional coverage.
In Greater China, Plaza operates lounges in Hong Kong, Shanghai, Beijing, Taipei, and Macao, while in India it has facilities in Ahmedabad, Bangalore, New Delhi, and Hyderabad, but as yet, it does not have any in the huge US market.

“United States, China and India are the three key markets we are working on to get more locations to expand our global airport hospitality services and facilities. In United States, there are many major airports with the top five busiest airports combined serving over 190 million passengers (enplanement) in 2017; that is no doubt a huge market for us,” Song says.
“China and India are key markets that are fuelled by the large growth in domestic and international airport passenger traffic, therefore, we are definitely looking to grow in both countries. Of course, we are not forgetting our existing markets, we will keep exploring opportunities and make sure we grow our foothold strategically.” 

Airports are destinations

Demand for airport lounges has never been higher before as passenger traffic in all sectors continues to grow every year in every region across the world.
The aviation industry has grown significantly over the past 20 years, from 1.467 billion in 1998 to 3.979 billion in 2017 according to International Civil Aviation Organisation (ICAO) while the Airports Council International predicts global passenger numbers will double to 14.6 billion by 2029 and treble to 22.3 billion per annum by 2040 so demand for services will continue on its upwards trajectory.

Song says: “With this growth, there will be more travellers, and everyone is a traveller. With such a wide age range, you can expect the needs will be different. Either you are travelling solo, for business or leisure, or with family and friends, you would want to travel in style including departing, transiting or arriving at an airport.
“One thing to bear in mind, this is an era of digital. Everyone especially when they are travelling likes to share experiences and moments on social and to be able to share an enjoyable moment at airport lounge is one of the many great memories to tell their friends. Our mission is to make travel better for the airport passengers with our suite of airport hospitality services & facilities.”
He says with that in mind, Plaza always looks to keep evolving to make sure it stays ahead of the game and at each location it assesses travellers’ habits and their purposes of travel to ensure the lounge is “tailor-made experience” for each airport.
A new trend that has emerged in recent years Song says, is that airports are no longer a place where travellers only come in and out of a destination, it is a “destination on its own”.
“We all know airport space is premium and in addition to enhancing the airport experience for travellers, we run airport lounges, effectively and efficiently, this includes managing this cost-centre for airlines where service quality is high and costs are managed well,” he says.
“We foresee the demand will be growing even more in coming years not only on airport lounges providing facilities and food services, but also health & wellness offerings, beauty services, personalised experiences and facilities that cater for families.”

The challenges of rapid expansion

Over the last two decades, the Plaza Premium Group has expanded exponentially, from one lounge to becoming a global airport hospitality services provider, but this rapid growth has presented challenges across the business.
Song says it started with a centralised system and as the company expanded, it had to decentralise its operations. “Having expanded in such a short period of time, it is always a process and a learning curve for us and our in-market teams. One of the biggest challenges is talent acquisition. We are in the people business and getting the right people with a right mindset is not easy,” he says.
Last year, Plaza appointed new executives to bolster its leadership team and the changes have boosted its global goal of improving the customer experience and service offerings across its expanding network.
Song says it also has to work closely with airport authorities across the globe by understanding their needs in order to provide tailored airport hospitality solutions specific to their airport.
“In addition, each region has different rules when it comes to legality and procedures, so it does vary, but we have overcome a lot of challenges and have come out stronger as a result of this,” he adds.

The airport lounge market is huge and growing to satisfy demand from passengers’ but Plaza has diversified what it provides and it has also rolled out other airport hospitality facilities such as transit hotels, meet and greet services and dining to its portfolio.
In addition to its own brands Plaza Premium Lounge and Plaza Premium First, it also manages partner lounges for alliances, airlines and financial institutions.
Song says airport are always looking at enhancing its offerings and lounges are still one of the key features, and the market has plenty of room for a variety of players and it welcomes the competition from other operators.
“Even though there is competition, the competition inspires us to think out of the box, and by drawing from our global experience and we persevere and will always put together a proposal – be it airports, airlines or alliances to create a unique airport travel experience with the introduction of our suite of global airport hospitality solutions,” he notes.

Space at airports a premium

Space at some airports around the world already in need of expansion can be premium but it seems lounges are high on the priority list for development.
There are many services that airports want to features, but lounge tick a crucial box as they meet the thirst from travellers’ who are increasingly wanting a better experience as soon as they pass through security or arrive.

Song says in his experience, airports are always trying to upgrade and enhance offerings within the airport eco-system, and they want to include many features, but lounges are always key as a sanctuary for travellers to recharge, relax and unwind when they depart, transit and arrive.

“Therefore, we still see the opportunities for us to further expand,” Song says. “Not to forget, we do not just offer airport lounges, we create airport experiences, whether it be in the lounges or across our airport hospitality brands to create a seamless airport journey to global travellers. This is a great differentiator for us to be able to win so many contracts in the past years and continue to grow in more markets.”
But what are Plaza’s goals and targets for 2019?
“Our goal is to make travel better by expanding our global airport hospitality solutions across all our business lines with both existing and new airport partners,” Song says. “Particularly in 2019, we will be exploring development opportunities especially in the United States, China and India. The group is already off to a strong start with new contracts granted. Once information is available, we will surely be announcing more news so watch this space.”
The Hong Kong based lounge operator is a firm bet to open more lounges in 2019 and announced a string of new locations across the globe.