Training centre in India to groom staff for foreign opportunities: Song Hoi See, founder and Chief Executive, Plaza Premium

Of the 15.9 crore people who pass through Indian airports every year, around 15 lakh use airport lounges and transit hotels. One of the biggest players in the business, Hong Kongbased Plaza Premium that has 13 lounges in the three Indian cities it operates, plans to expand in the country by setting up airport transit hotels as well. In an interview with Varuni Khosla, founder and Chief Executive Song Hoi See says he will open more lounges in cities like Chennai and Kolkata (it is currently in Hyderabad, Delhi and Bangalore) and a transit hotel at Bangalore’s airport. Edited excerpts:

With the growth of low-cost airlines and the airport retail segment seeing year-on-year growth of about 15%, what does it mean for the business of airport lounges?

There are over 2,000 airports in the world and with so many low-cost airlines being the first choice of passengers, opportunities are abundant. Only 10% of air traffic passengers fly business and first class while 90% takes low-cost airlines. That’s why there is an opportunity in setting up lounges for public with pay-as-you-go models. Our airport lounges in India get close to 3,500-4,000 people a day.

Does a large part of revenue in airports come from retail and hospitality?

Typically, revenue at new airports is close to 70 per cent from primary sources (like airport fee, landing charges and parking). Over a period of a few years, as much as 50% of revenue comes from shopping, advertisements, cargo handling, food and beverage sales and more. This presents a growth opportunity. For us, the major growth has been in Delhi, followed by Hyderabad. We launched in Bangalore just last month, but in time we expect that lounge to do a lot better than that in Hyderabad.

Most Indian airports are high security zones. What challenges does this pose to the hospitality and lounge industry?

We have not been able to set up fullservice kitchens inside airports here. Even knives are not allowed in for security reasons and setting up a kitchen facility outside airports in India means a huge challenge and close to a 20% cost increase. Another challenge today is that a bulk of the business comes through brand tie-ups, like with credit card companies (15% of our business), while only a third of daily business is from walk-ins. Banks such as HSBC, Citibank, Axis, HDFC and Standard Chartered offer free lounge services to top customer. That makes up amajority of the business for most lounge companies. So the consumer doesn’t pay anything for the use.

What is your take on the hospitality sector in India?

The Indian hospitality sector is going to grow at 12 per cent over the next 10 years and will be creating four crore more jobs. Increasing disposable income and growing middle class have encouraged domestic trips, a huge contributing factor to the industr