Air travelers in China hoping for a relaxing moment at an airport lounge to get online, have a free lunch, or find a quiet meeting place will soon need to look elsewhere.
China's three major telecom operators China Mobile, China Unicom and China Telecom have sent out an internal memo telling their local branches to close all VIP lounges at airports across the country by September 30, 2014.
According to reports in Chinese local media, this decision is the result of an order from the State-owned Assets Supervision and Administration Commission of the State Council, which demanded the three telecom operators cut marketing expenditures. The three companies previously received a notice from the commission to cut their marketing expenses by 20% and the expenses need to be decreased over three consecutive years. For China Mobile alone, the reduced marketing expense is approximately CNY20 billion over the three years; and the total reduced amount of the three companies is about CNY40 billion.
Among various marketing costs to be cut, airport VIP lounges are an obvious target. One VIP room at the Beijing Capital International Airport reportedly costs CNY4 million to CNY5 million every year; while one airport VIP lounge in a medium-sized Chinese city costs about CNY1 million to maintain every year.
These telecom operators' airport VIP lounges mainly serve middle- and high-end users who usually have been granted special lounge privileges through loyalty marketing promotions based on mobile phone usage, data usage, and monthly spend.