Hong Kong-based airport lounge operator Plaza Premium Group has diversified to high-speed rail lounges with the launch of its first facility in Changsha in mainland China.
The Dragon Pass x Plaza Premium Lounge at the Changsha south high-speed railway station can accommodate as many as 290 guests at a time. The 700 square metre lounge can be accessed for a walk-in fee of 68 yuan (US$10.4) for a four-hour stay. Launched in January, the lounge has high-speed internet, a nursing room and a playroom for passengers with children.
“We have been in the airport lounge business for 22 years, and the revenues we have for the rail lounge now are less than 1 or 2 per cent of our entire revenue. But with the number of people in China, it can give us quite an interesting contribution to our group revenues,” said Song Hoi See, Plaza Premium’s founder and chief executive. The company was hammered by the coronavirus pandemic, which dragged its annual revenue down by 95 per cent last year. Before the pandemic, Plaza Premium served more than 20 million passengers in 49 international airports around the world annually.
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Its diversification is significant because 3.6 billion passenger trips by train were made in mainland China in 2019. The country’s high-speed rail spans 38,000 kilometres, the world’s longest, and is set to nearly double to 70,000 kilometres by 2035. There are 1,000 high-speed rail stations throughout China currently, which gives Plaza Premium plenty of room for potential growth.
On the other hand, a recovery in air travel remains uncertain. Given the uneven roll-out of vaccines globally, air travel might recover to pre Covid-19 levels only between the end of 2022 and 2024, according to Emily Leung, senior analyst at market research provider Euromonitor International. The global airlines business declined by about half to US$390 billion in 2020.
Plaza Premium spent 3 million yuan on the construction of the lounge. It is leasing the space from the railway station. The station, which records 5.5 million passengers a month on average, is a key transit hub connecting major cities such as Guangzhou, Shenzhen, Wuhan and Shanghai.
Plaza Premium’s lounge in Changsha had more than 1,000 guests in March, with only half of its capacity met. Two more lounges, in Guangzhou and Shenzhen, two of mainland China’s key transit hubs, are under construction and will be operational in the second quarter next year, according to the company.
It is hoping that the railway lounge business will eventually contribute about half of its revenue. “Businessmen in China use high-speed trains to get from city to city, and they don’t want to be in crowded places. They want to be somewhere comfortable, they like convenience and services. We have been providing these in our airport lounges and now we want to upgrade the services in high-speed rail stations,” Song said.
India, with its huge population and a land area that is one of the largest in the world, is an ideal candidate for expansion for the company, as far as rail lounges go, he added.
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