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How Plaza Premium has super-charged its growth plans: I interview Mr Song, Plaza Premium CEO

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I was at the official opening of the new Plaza Premium lounge at Edinburgh recently. In addition to reviewing the lounge (click here) I had the opportunity to sit down with the CEO of Plaza Premium Group, Mr Song (as he is universally known).

If you are an American Express Platinum cardholder you’re probably familiar with Plaza Premium, which operate 280+ airport lounges worldwide. Plaza Premium also runs lounges for airlines such as Virgin Atlantic, who handed over management of their non-UK Clubhouses to Plaza Premium during covid.

Rhys Mr Song

We covered a lot of ground, including:

  • Why Plaza Premium dropped Priority Pass
  • Plaza Premium’s recent growth
  • The rollout of Aerotel airport hotels
  • …. and Plaza Premium’s next big bet

Why did Plaza Premium drop Priority Pass?

Plaza Premium caused waves last year when it announced it was blocking Priority Pass cardholders from its lounges.

For almost three decades, the companies appeared to have a symbiotic relationship. Both companies were founded in the 1990s and worked hand-in-hand to develop the independent airport lounge market. Plaza Premium claims to have opened first independent airport lounges when it opened in Hong Kong and Kuala Lumpur in 1998.

“I groomed Priority Pass. They started in the same period of time as we did. They are in the consolidator business. So I groomed them; to me they were a marketing business because they brought us new customers. It was a very good match. But the trouble with Priority Pass is they deviate from what they want. They started a lounge management operation.”

In 2006, Collinson started a new subsidiary called Airport Dimensions, which owned and operated lounges such as Club Aspire, competing directly with Plaza Premium.

Obviously, Collinson have their own right to do business.

…. but that doesn’t mean he was happy about it. Mr Song compared it to patricide: “Like a father, I feed you. I can make you grow bigger. When you grow bigger, you turn on me.”

“Another reason I dropped Priority Pass is that they always squeezed the lounge provider. If you are a single operator, you are price taker. $10, take it or leave it. You have no choice – you do not have the marketing side of the business. For us, we are different, because we have a large network and our own brand. So we ended the agreement. I think the industry was shocked when we dropped Priority Pass. I think they were shocked too!”

Fundamentally, Priority Pass is a high-volume, low-margin marketing scheme, and one that Plaza Premium felt it could ditch thanks to its growing network of lounges.

With 280 lounges worldwide, Plaza Premium still falls far short of Priority Pass’s 1,300+ network. The company now has the critical mass to go its own way, and I get the sense that Mr Song is developing Plaza Premium into a true competitor, albeit in reverse. The company is building lounges from the ground up rather than acting as a consolidator, connecting lounge operators with customers.

Plaza Premium CEO Mr Song

Plaza Premium’s big growth plans

You don’t have to search far to see how Plaza Premium is working its way up. Unlike most travel companies during covid, Plaza Premium has been expanding more rapidly than at any time in its history.

“We were expanding before covid but at a very slow place. Getting into airports is not very easy. During the good times, everyone rushes for the lounge space. During the bad times, like during covid, a lot of restaurants and retailers close down, and suddenly there’s a lot of space available.”

The biggest challenge in growing an airport lounge business is available space. Whilst other companies have effectively been frozen for the past few years, Plaza Premium has taken every opportunity to expand.

A lot of companies have restructured or closed down locations, leaving airports with plenty of empty spaces. That’s led to the opening of the new Plaza Premium at Gatwick North, formerly a Virgin Atlantic Clubhouse that was empty when Virgin consolidated at Heathrow. In Edinburgh Plaza Premium picked up the No1 Lounge space.

In addition to launching its own lounge brands, Plaza Premium has been deepening its relationships with other lounge brands, including Virgin Atlantic’s global network of Clubhouses.

“We’ve been repurposing airline lounges too, because they only operate for 2-3 hours around their flights and then they close down for 20. So now we say, let us run your lounge for you, let us repurpose your lounges so that when you’re not using them we can bring additional customers in for you. The airlines are happy because they get additional revenue.

Then we put money to renovate because some of the lounges are tired. We’re happy because it costs us less money than if we started an airport lounge from scratch. It’s a win win win situation where we are operating with the airline.”

But Mr Song still has a long way to go to reach his target of opening in the top 100 busiest airports.

“Altogether right now we are at 70-odd airports right now. But our 70 airports are not necessarily in the 100 busiest. Right now I think we take care of around 60% of our target, so roughly another 40 airports to go. That’s our target because the network is very important. You need to develop a strong network.

Customers know we provide consistent quality of service. Especially for the airlines, they know us already, they don’t have to do due diligence with us again to send us their passengers to us. We can provide global locations too – that is very important too. That’s the reason Visa, Mastercard, American Express, and Capital One sign with us. They know we provide consistent quality of service and we have the network.”

Just this year, Plaza Premium has opened five new lounges in Europe, including at Edinburgh, Gatwick North, Helsinki, Budapest and Frankfurt.

Rhys interviews Mr Song

Rolling out Aerotel

Aerotel, Plaza Premium’s in-terminal hotel business, has also been expanding, albeit at a slightly steadier pace.

“Aerotel is a totally new concept. Remember we are not a conventional hotel – our hotel is designed for travellers.

At Heathrow for example, right now there’s plenty of hotels on Bath Road. But that’s not convenient enough. You have to pay £5, take a bus with all your bags, then do it all again in the morning before your flight.

We charge by the hour, rather than a full day, that’s the attraction. If your flight is at 5, 6am, think about what time you have to wake up – probabyl 2 or 3am. That’s the whole day gone.

So we say, hey look, we’re not charging you for 24 hours – just for the time you need a room. You can check in at 11pm or midnight, sleep for four or five hours, wake up, have a shower and check in straight for your flight. You save paying for a hotel for a whole day.

The first Aerotel in the UK opened at Heathrow Terminal 3 (we reviewed it here), where Plaza Premium was lucky that a former office block connected to the terminal became available.

“If T5 have space for me I would immediately build an Aerotel.”  

Plaza Premium’s next big thing – services

Fundamentally, however, Plaza Premium’s growth remains restricted by airport availability. Most airports are limited by how much space they can offer to lounge or hotel operators. You can’t just build an extra wing at Heathrow T5, for example, to open an airport hotel.

In many ways Plaza Premium was lucky at Terminal 3 that they could repurpose a former office building that was integrated into the terminal. This is not true at most other airports.

But Mr Song is already looking for the next big thing, and privately admits it could become a unicorn.

Over the pandemic, Plaza Premium has spent over $10 million creating a new platform that integrates airport services such as meet and greet, fast track, porter, buggy transfers and baggage wrapping. Right now, these functions are operated by a variety of different third party companies, none of which really communicate with each other. Mr Song wants to connect them all under one roof.

In some ways it’s the opposite of how he developed the core part of the business. With the new travel services platform, Plaza Premium becomes a consolidator itself, working with third parties to deliver joined-up services.

“It creates inconvenience to passengers, so we created a platform where we can consolidate them all.

You can book your services anytime, whenever you want on the app. Everything will be done by the time you reach the airport. Everything will be ready for you, rather than you having to call every company to arrange their service.”

The platform is also meant to make life easier for the service providers themselves, with dispatch and resource management, which should lead to greater efficiency.

Like almost all developments, it comes down to data.

“Right now, the airport doesn’t really know about what their customers are doing. Who are they? What do they do? They know they have a 5,10, 20 million people going through their airport, but that’s it. With the platform we have developed, I know that Mr Song loves whisky – he bought whisky before. So if I have a whisky distiller who wants to promote a new product – I say fine, I have members here that like whisky and I can reach them.”

In other words, it’s a marketing solution.

It’s also vastly more scalable than a lounge or hotel operation, where you’re dependent on space being available. Plaza Premium’s new technology platform can be white-labelled to countless airports worldwide, for whom developing something like this would be far too expensive by themselves. Instead of a lounge company, Plaza Premium is looking to become a tech company.

Thank you to Mr Song and the Plaza Premium for their time – and for taking the photographs! – and for the invitation to Edinburgh.

Comments (146)

This article is closed to new comments. Feel free to ask your question in the HfP forums.

  • TerryTierPoints says:

    I’ve never really understood the appeal of an airport lounge. I like to spend as little time as possible in an airport… OLCI -> security-> gate -> plane. I certainly wouldn’t pay to go early and eat at a buffet. Such a big deal is always made of the drinks in lounge reviews, why the obsession with getting drunk while travelling? Sounds awful to me.
    Even for connecting flights there’s usually so much faffing about waiting for airbridge, scanning boarding passes and walking miles of corridors there isn’t much time for a lounge.
    Although clearly I’m in the minority!

    • Save East Coast Rewards says:

      A few reasons:
      – some connections can be very long
      – getting to the airport has risks of delays whether it’s by car or public transport something can go wrong. If I have somewhere to relax in the airport I don’t mind getting there a bit earlier so if there’s a delay getting there I still make my flight
      – somewhere to work, if the lounge has a decent area to work then it might just be easier to start your working day in the lounge rather than the office

      • Blair Waldorf Salad says:

        A shower when flying after a full day at work. Or when connecting. Though who am I kidding, if I’m connecting I’m flying J.

        • Save East Coast Rewards says:

          I didn’t think of showers too much as a lot of lounges don’t offer this outside of airline lounges at their hubs and major outstations. Bologna Airport has recently increased the number of cycle parking and I’d love when travelling light to cycle to the airport but as there’s no showers in the lounge it’s not happening!

    • Peter K says:

      As above, it’s the uncertainly of his long I’ll be at the airport after getting through security. Baggage check-in of 1hr, plus security queue of 45 minutes, at some airports meant I had to run to catch the plane. I now give myself leeway to avoid that, but a fast check-in and security then gives too long before the flight to be sitting on a hard chair or looking at oversized M&Ms packets.

    • TimM says:

      The main attractions of an airport lounge are:

      1) as a timing safety buffer – the journey to the airport and transit through security now carry significant timing risks;
      2) to escape the bunfight of the main airport concourse; and because
      3) airport and airline food and drink prices are extortionate.

      In essence, paid-for airport lounges exist because everything else about air travel is so bad. If we could return to the days when security took seconds to pass through, airports were not over-sized shopping malls, food was included on board and the drinks dirt-cheap, then there would be no business case for airport lounges.

      Dedicated airline lounges however are pure vanity. Access to a third-party lounge is the direction of travel.

    • numpty says:

      In certain airports, such as DXB, the lounge offers a bit of peace from the chaos of the shopping mall that is the terminal building, even at 2 am in the morning.

      In the UK its a good place to sit and eat a Boots meal deal.

    • Johnny5a says:

      I use to travel to my Mrs in West Africa the BA flight was at 2pm.

      So I had a choice of working in the office until 11am and dash over to LHR hoping the motorway will be clear.

      Or drive over at 7am, check-in bags, lounge for a shower and breakfast, then work right up to boarding time, no hassle no stress.

  • alex says:

    I do find the coverage of Plaza Premium on here weirdly uncritical at times. Their Heathrow T5 lounge is dismal and their LGW North one is no better. The main issue is that their lounges look really nice when they open but are dreadfully maintained so within a few years look worse than lounges from other providers. The staff rarely seem happy either.

    On the Priority Pass / Amex Platinum point I get the commercial dynamics but the product is not working. There needs to be a reservation system and perhaps a credit arrangement where Amex refund a certain amount spent on reservation fees over the course of a year. It is bonkers when cardholders are actually less likely to get into the lounge than the general public because they’ve no option other than waiting to see if they can get in at the airport (even when they’d have been happy to pay to reserve a space).

    • Rob says:

      T2 has won the Skytrax ‘Best Independent Airport Lounge In The World’ for 6 years now I think – and it doesn’t even have any windows.

      We haven’t properly looked at Gatwick North yet. Last time I was in T5 it was pretty empty but I know it appears to have got busier at travel has picked up. I’d be surprised if it wasn’t still better than the British Airways lounges though.

      The issue with reservations is what happens if you don’t turn up? They’ve got your £5 fee but they’ve lost the £15 or so that Amex would have paid. Reservations will only become more popular if the lounge can charge you for a no-show.

      • TerryTierPoints says:

        AMEX should just scrap the lounge access false benefit and reduce the card fee slightly.
        Then those who want access can pay directly and prebook a slot and the rest save a little on card fee.

      • Flyoff says:

        When I have been in the T5 Plaza Premium lounge an£ it has been packed I have departed quickly to BA lounges as it is noisy ans quite claustrophobic.the seating is dense and not comfortable.

      • JosephH says:

        My last time in T5 Plaza Premium I’d say it was worse than the BA South Lounge. We had to wait in a queue for an hour or more before we got it, the food was worse than BA (much smaller choice – only one main hot dish and not as good quality), and BA has a better drinks range (e.g. entering on an amex you have to pay for Asahi lager in Plaza Premium, only the unappealing draft lager was free – guests paying to enter get 2 free ‘premium’ drinks but amex/etc don’t).

        Previously (before they started letting dragonpass in) I’d definitely pick plaza premium over BA, now I always go for BA when I can. I’m not sure if the downgrade to the food in plaza premium came at the same time as they started accepting dragonpass, but the food was definitely better back when it originally opened.

        (Just looked at the HFP review of Plaza Premium T5 – I’d say enough has changed with the food/drink that an updated review would be a good idea.)

      • Dylan says:

        I don’t see how the T2 Plaza Premium lounge can win vs. say the Centurion lounge at T3 (assuming this is UK only in scope). The food offering at PP is not great.

        Of course Skytrax also had Lufthansa listed as a 5 star airline for a while…

  • Save East Coast Rewards says:

    It must be about 5 years since I last used it but the Plaza Premium in T2 did seem nice despite the lack of windows. I’d be interested to see the one in T5 but I no longer have Amex Plat. The Aspire in T5 is awful though (but not as bad as the one in NCL), I popped in once to see if it was better than the BA F lounge and I only stayed there about 3 minutes.

    • Save East Coast Rewards says:

      (This was meant to be a reply to Rob above not a new thread)

  • LittleNick says:

    Has anyone ever been to the Plaza Premium First lounge in Hong Kong (currently closed still I believe) but was it a a noticeable improvement in quality? Was the food and drink offerings better or is it just marketing spin?
    Would anymore plaza premium first lounges ever open?

    • Paul says:

      Yep I used to go there quite a bit when flew with Virgin. The food was excellent – restaurant quality and decent portion sizes. Food cooked to order and a small buffer. Range of free booze was great. They also used to do free massages which were much appreciated.

    • numpty says:

      There is a PP First at KLIA in Kuala Lumpur. I was there in April, as that was where QR were sending biz passengers (MAS weren’t let them into their lounge for some reason). In 12 years of travelling to KL it was easily the worst food I have ever been served, table next to us agreed. There was no obvious difference between the PP First and PP Biz lounge, which I’ve used a few times. Hopefully with covid restrictions lifting it will get better.

  • Dubious says:

    There are a lot of drinks (I count 7) on that table for two!

  • Andrew Chalk says:

    The passenger, too, suffers from Collinson’s business practises. Despite being in the business of selling a high-service product, they provide slum-level service. Example: I walked into a club in Mexico and it turned out to be totally infested with mosquitoes. They did not tell entrants.They had not closed it. But, like almost everybody else, we walked out as soon as we discovered it. We were there under 15 minutes, most of it in the queue to enter, and did not consume any food, drink, or services. The staff explained that they could not remove the ‘visit’ and to contact C ollinson, who were totally unhelpful, obdurate, pretending tghat the customer ‘made up’ the story.

    I welcome the competition from Mr. Song in providing an alternative club with higher customer service standards.

  • Travelgirl says:

    This uncritical puff piece illustrates the problem with journalists accepting free trips. At least the writer told us that, so we can take Mr. Song’s self-aggrandizing comments with a grain of salt. If I were doing the story I would have asked tougher questions.

    • Rob says:

      What free trip? We paid for the flights to Edinburgh (and have you seen the cost of BA domestic flights recently?)

  • Anon says:

    Explain what Collinson is.

    • Rob says:

      Collinson is the company that owns Priority Pass, the Club Aspire lounge chain and 50% of the Aspire lounge chain.

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