Latest news with #LiberathaPeterKallat
Economic Times
03-08-2025
- Business
- Economic Times
The airport lounge war has begun — and DreamFolks is losing
Around three years ago, as India's airlines and airports were trying hard to leave the nightmares of the Covid-19 pandemic behind, one travel-technology entrepreneur, Liberatha Peter Kallat of DreamFolks, was out selling another kind of a dream. The firm, an aggregator that acts as a go-between for airport lounge operators, payment networks like American Express, Visa, and MasterCard, and the passengers who swipe their cards for a quick bite or
Mint
10-07-2025
- Business
- Mint
All eggs in the credit-card basket, will Dreamfolks lose its near-monopoly tag?
For Dreamfolks, the last few months have been nothing short of a nightmare. Following a service disruption in September 2024 that invited a legal threat, there were reports that banks and credit-card companies could be looking to partner directly with lounge operators. In effect, they would cut out the middleman, Dreamfolks. This appears to be already playing out, based on an announcement by the company earlier this month. Dreamfolks announced the closure of programs for Axis Bank and ICICI Bank, effective 1 July. While the contracts with these banks are still valid, migration of certain card types to emerging competition stands to materially impact Dreamfolks' financials. Even institutional investors' confidence in the counter appears shaken. Industry tailwinds As Yolo-driven demand for travel and hospitality picked up post-pandemic, Dreamfolks rode the tailwinds to deliver around 170% annual revenue growth in FY22 and FY23. As the middle class expands and disposable incomes rise, the industry's prospects look promising. The government's focus on boosting tourism and the rising number of airports should help as well. The global lounge industry is slated to grow at a CAGR of 7.5% between 2023 and 2033. Dreamfolks was also positioned to benefit from the expansion of digital payments. With demonetization, affordable data services, and ubiquity of smartphones, credit cards in circulation as well as average card spend have grown over the years. As a dominant player in the Indian lounge aggregation industry with presence in 75 domestic airport lounges, 14 railway lounges, and deep-rooted relationships with marquee clients, Dreamfolks has so far been capitalizing on the industry tailwinds. It claims more than 90% share of India's card-based airport lounge access. Buoyed by the 7.5-8% growth reported in each, domestic air passenger traffic and the number of credit cards, Dreamfolks has grown at 13.5% in FY25. But the latest development threatens to upend its entire business model. On cue, large domestic institutional investors including Bajaj Finance and Motilal Oswal Mutual Fund have pared their stake in the company this week. Tech moat eroded? One of the primary moats supporting Dreamfolks' business model is its proprietary technology platform, which provides scalable and tailor-made client solutions. But this is at risk. Adani has claimed that banks and credit card companies' offers can now be directly availed of by flyers using the technology developed by Adani's in-house digital lab. If Adani's tech holds up to the hype, this could cause serious damage to Dreamfolks. Adani also has the network required to support the disruption. Dreamfolks' CEO, Liberatha Peter Kallat, has accused airport operators of pressuring their clients to end associations with the company. Adani operates seven airports in India. According to Kallat, the lounge operators, strong-arming Dreamfolks, control 35- 40% of the airport lounges in India. Dreamfolks clocked ₹1,291 crore in revenue and ₹65 crore in profits in FY25, a bulk of which came from lounge aggregation services. If some of the benefits from cutting out the intermediary are shared by the lounge operators with card issuers and networks, it would make business sense for them to make the switch. Diversification underway, but in baby steps In 2020, Dreamfolks went global by tying up with international operators. It forayed into railway lounges in 2022 and went beyond lounges in 2023. It has integrated itself across the travel chain—from visa services and airport transfers to meet and assist and transit hotels. At the airport, too, it has gone beyond lounge access with self-check-in kiosks, spa and wellness, food and beverages (F&B), and sleeping pods. It acquired Golfklik to venture into premium golf services. It has also entered beauty and grooming, gifting services, and social club access. The diversification continued in FY25 with its expansion in Malaysia, meet and assist expanded to more than 400 airports, F&B outlets added in 47 airports in India, 11 airports in South East Asia, and 18 in the Middle East. It has also started offering highway dining as a service, available at over 600 popular outlets across 60 highways in the country. In partnership with F&B brands like Costa Coffee, Barista, and Tim Hortons, it has introduced complimentary coffee at more than 200 malls in India. Other airport services added during the fiscal include a pay-and-use lounge-access model, baggage wrapping, and excess baggage services for premium customers. Silver linings Dreamfolks has taken initiatives to drive customer stickiness, such as a membership card, an in-app integrated solution for clients, and the latest – The Dreamfolks Club, an exclusive membership program launched in FY25. It will have to be seen whether these loyalty programs stick. While not all Indian airports are operated by Adani and that offers some respite, one cannot rule out other lounge operators following suit. Dreamfolks' original plan was to take the share of services other than airport lounge services from 6.7% of the topline in FY25 to 33% by FY30. This would support revenue growth as well as margins. Now would be a good time to expedite these diversification plans. The company's low debt profile and healthy cash-balance offers room for fast-tracking diversification. Until clear next steps emerge from the management, the target-prices previously quoted by brokers should be taken with a pinch (or more) of salt. For more such analyses, read Profit Pulse. Ananya Roy is the founder of Credibull Capital, a SEBI-registered investment adviser. Disclosure: The author does not hold shares of the companies discussed. The views expressed are for informational purposes only and should not be considered investment advice. Readers are encouraged to conduct their own research and consult a financial professional before making any investment decisions.
