Plaza Premium Group (PPG), a Hong Kong-based airport services provider, is looking to double the size in two years by riding on the soaring growth in air travel across the Asia-Pacific region, its founder says.
Mainland China will be front and centre of the expansion, Song Hoi-see, the founder and chief executive of PPG, told the Post in a wide-ranging interview.
The airport lounges-to-aero hotels firm has earmarked half of a HK$784 million (US$100 million) investment plan for growing PPG’s presence on the mainland, which is set to become the world’s biggest air travel market in the next decade.
The other half of the investment, according to Song, would be spent on fast-growing targets like India and Indonesia, and established markets such as the United States.
PPG was founded more than 20 years ago and employs more than 5,000 workers. Song is bullish on the company’s accomplishments.
“[We now serve] 15 million people from zero. We are less than 5 per cent of the market. We are only in 42 airports out of thousands, so this is a huge opportunity,” he said.
“If I can add an extra 3 per cent, I will be very happy. How can I double it? I need another 5,000 people. The size of [aviation] growth is tremendous. It creates a lot of opportunities, especially for our business.”
PPG runs its own lounges and manages others for specific airlines. It also operates hotels, spa and beauty facilities and eateries – 168 outlets in airports around the world.
The company has seen limited growth on the mainland, despite the billions being spent on new and upgraded airports. As it stands, PPG has a presence in only four cities, including Beijing and Shanghai, but plans to soon be in 10 mainland cities.
PPG also plans on opening 40 new facilities on the mainland – including lounges and aero-hotels – with the new round of investment. A PPG hotel is expected to open this summer in Beijing’s new Daxing International Airport.
It was no easy task to expand operations to the mainland. In the early years, Song admitted: “I couldn’t penetrate the market.”
“When you do business in China, you need to be patient. It’s a long game,” he said. “It is such a huge market and considering the amount of people who travel, if I am not in China, I am not in business.”
If I am not in China, I am not in business
Song Hoi-see, founder and chief executive of Plaza Premium Group
PPG is now working with mainland airports and airlines, including China Eastern and China Southern.
“You must go into the major airports. Once you get in, the rest will fold in as well,” Song said.
There were 610 million air travellers in China last year, according to global airline industry statistics. That number is expected to reach 1.6 billion by 2038.
The mainland Chinese customer is now more demanding, Song said, reflecting rising incomes and the growing middle class.
“In 20 years, particularly the last 10 years, you could see very obvious changes. Customers are more discerning and they know what they want, particularly the passengers from China,” he said.
Even so, he said the mainland had not yet started to offer a wider array of value-added services, which is why he said the country had not been a big part of PPG’s portfolio – until now.
“Airports have become a lifestyle experience. A lot of airports don’t realise this: it’s [about] loyalty. Airports are too concerned with making money, especially now they’re privatising,” he said.
“You have to think about the long-term. Changi Airport [in Singapore] is doing very well, they buy loyalty, they have created a lot of value-added services.”
Song said he was regularly reminded that PPG must “maintain a consistent quality of service and sustain it” – especially in the face of frequent complaints about overcrowded PPG lounges.
Song also raised concerns about ongoing labour shortages. He said it was tough to find good quality employees, a challenge that has hindered expansion.
He warned of airport expansion costs not being passed on to service providers like PPG, saying this was another factor that could restrict growth.
The company is private, and according to its founder, profitable.
Song said he had no intention of selling PPG shares to the public, merging or acquiring a rival. However, the company was structured in a way that it would allow it to be listed on the stock market in the future.
“After 20 years, especially the last five years, a lot of companies come to us, and want to buy us. To be frank, I am not young any more. I developed this business as more of a legacy,” Song said.
He said he had considered offers, but still had no intention of selling PPG.
“Not at any price,” he said.
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This article Hong Kong airport services firm Plaza Premium Group plans to double global presence with US$100 million expansion, founder says, starting in mainland China first appeared on South China Morning Post