Dreamfolks Services Discontinues Domestic Airport Lounge Operations Amid Competitive Shifts

Key Developments in Domestic Lounge Access

Dreamfolks Services Ltd., formerly a leading aggregator in India's airport lounge market, announced the immediate cessation of its domestic airport lounge access business. This strategic pivot, disclosed on September 16, 2025, follows a period of escalating competitive pressures and client withdrawals that have significantly eroded the company's domestic network.

Prior to this comprehensive withdrawal, several key partners had terminated their contracts with Dreamfolks. Notably, Adani Digital and Semolina Kitchens concluded their service agreements effective September 15, 2025, while Encalm Hospitality is set to discontinue services from November 1, 2025. These terminations were compounded by earlier programmatic adjustments, with Dreamfolks having ceased certain programs for Axis Bank and ICICI Bank in July 2025. The company acknowledged that these collective developments were anticipated to have a "material impact" on its operations and financial performance. This is particularly significant given that, as of recent reports, approximately 93% of Dreamfolks' revenue was derived from lounge services, with domestic operations historically contributing 77% of this mix.

Market Reaction and Financial Performance

News of the discontinuation triggered a sharp negative reaction in the market. Shares of Dreamfolks Services (DFS) slipped by 5% to ₹131.07 on the National Stock Exchange following the announcement. This recent decline exacerbates an already challenging year for the stock, which has fallen approximately 65% in 2025 year-to-date. The stock now trades 68% below its 52-week high of ₹522, recorded in September 2024, and is down 49% from its initial public offering (IPO) price of ₹326. The company's market capitalization has consequently diminished to ₹895.47 crore.

Technical indicators suggest the stock is in oversold territory, with a Relative Strength Index (RSI) of 19.7. The stock also exhibits a beta of 0.87, indicating relatively low volatility. Institutional investors have also adjusted their positions, with Motilal Oswal Mutual Fund and Bajaj Finance Ltd. divesting stakes in Dreamfolks in July 2025.

Financially, the company reported a 17.09% decline in net profit for the quarter ended March 2025, falling to ₹14.94 crore from ₹18.02 crore a year prior, despite an 11.75% increase in revenue to ₹314.16 crore. For the full fiscal year 2025, net profit saw a 5.17% dip to ₹65.43 crore, even as sales grew 13.82% to ₹1,291.88 crore.

Evolving Competitive Landscape

The primary catalyst for Dreamfolks' domestic exit is a fundamental recalibration of the Indian airport lounge ecosystem. Historically, Dreamfolks thrived on an asset-light aggregation model, connecting banks, card issuers, and corporate clients with lounge operators. At its peak, the company commanded over 95% market share in card-based lounge access and approximately 68% of overall lounge access volume in India as of FY22/FY23.

However, airport operators, particularly Adani Airports, have increasingly moved to establish their own direct digital platforms for lounge access, effectively bypassing intermediaries. Arun Bansal, CEO of Adani Airport Holdings, has previously articulated a vision of "no intermediaries" in the context of India's "fintech revolution." This shift was further highlighted by a Delhi High Court ruling which refused to grant Dreamfolks an interim injunction against Encalm Hospitality, underscoring the non-exclusive nature of many of its contracts. A "temporary service disruption" in September 2024, which affected thousands of customers across various banks and card networks, further brought scrutiny upon Dreamfolks' service reliability and the broader aggregator model.

Strategic Repositioning and Future Outlook

In response to these formidable challenges, Dreamfolks is actively pursuing a strategic repositioning. The company aims to intensify its focus on its global lounge business and diversify its service offerings beyond traditional lounges. Current non-lounge services, which include highway dining, excess baggage, and golf services, currently contribute only about 6.7% to total revenue, but the company targets to increase this to 20% within the next 4-5 years. Furthermore, Dreamfolks is actively expanding its base of enterprise clients, such as MakeMyTrip and TBO, with an aim to raise their contribution to clientele from approximately 5% to 20% over the same period, thereby reducing its heavy reliance on banking clients.

The broader Indian airport lounge market remains robust, projected to exceed USD 900 million by 2029 with a compound annual growth rate (CAGR) of 5%. This growth is underpinned by India's rising middle-class population, increased penetration of credit and debit cards offering lounge access, and significant government investment in aviation infrastructure. However, the future competitive landscape will likely favor direct operators and those capable of offering more integrated and differentiated services.

Analyst Perspectives

While Dreamfolks' management had earlier in the year withdrawn its FY25 growth guidance, it has maintained its gross margin guidance of 11-13%. The sharp decline in stock price and the move into oversold territory (RSI 19.7) reflect the market's deep concern regarding the company's ability to adapt. Analysts suggest that while the strategic shift towards global operations and non-lounge services is crucial, Dreamfolks faces significant hurdles in regaining market confidence and re-establishing strong partnerships in a rapidly evolving market. The company is at a critical juncture, and the success of its diversification efforts will be key to its long-term viability and investor appeal.

source:

[1] India's Dreamfolks stops domestic airport lounge services (https://sg.finance.yahoo.com/news/indias-drea ...)[2] Dreamfolks Services slips nearly 5% after programme closures with ICICI and Axis Bank | Stock Market News - Mint (https://www.livemint.com/market/stock-market- ...)[3] Mint Explainer: Why Dreamfolks shut its airport lounge services in India and what it means for you? | Company Business News (https://vertexaisearch.cloud.google.com/groun ...)

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