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Dreamfolks services Ltd- Business analysis

Guest Author: Dhruv Rathod

Have you ever wondered how you get such amazing food and such a comfortable lounge at an airport for just rupees 2? Such a big setup running for rupees 2 and that’s not just in Mumbai it’s in almost every airport you go seems impossible right?

The answer to all these questions is Dream Folks Services


 Dream Folks is India’s largest airport service aggregator. It is a tech platform that connects consumers with airport service providers. They provide you with services like lounges, Food, and beverages, spas, pick-and-drop facilities etc.

So essentially it ties up with Card Issuers, Card network providers, and also Corporates (Trip planners) now these companies with whom dream folks have tie-ups will get access to the services of dream folks through their proprietary tech platform. The card issuer or network providers see this as a customer acquisition cost.

One thing which is exciting is that all these services are given by operators but the customers come through dream folks so all the capex for building a lounge will be done by the operator.

Now in overall India Dreamfolks brings 68% of people for lounge access. Based on access to domestic lounges in India they control 95% of the card-based traffic. Now as the Air passenger service will be increasing there would be an increase in people wanting to avail of these services.


Source – World Bank Data

The Indian airline industry has been growing rapidly. There were challenges that were faced by the industry and it was strongly hit by the pandemic which led to solid degrowth in the industry. The passengers traveling by airways are increasing at a very strong pace post covid and are expected to come back and also cross the pre covid levels.

The Industry will be seeing even more rapid growth because of the multiple initiatives which are being taken by the Government of India. A few of them are as follows:

  • The government of India plans to spend Rs 35,000 crore in the next 3-5 years to support the aviation sector.
  • $1.83 billion is being spent by the government on the Airport Infrastructure.
  • The Udaan scheme being launched will provide skill development, foster employability, and support entrepreneurship, the Udaan scheme creates a favorable environment for the growth and development of the aviation industry. Udaan scheme also targets to open about 100 airports in the next 10-15 years

Source – Industry report

The number of lounges is expected to grow by 7% CAGR between 2022 – 2040. This is major because of the increase in passenger traffic and growth in demand within the air travel industry. The schemes like Udaan will also lead to the opening of new airports and the privatization of airports would also lead to the opening of a lot of airline-based lounges.

The lounges are increasing in number as well as size between 2014-2021 the average lounge size grew by 35% CAGR. This is to increase more and these lounges can accommodate more people going ahead.

The increase in credit card penetration will also lead to an increase in usage of lounges. The card penetration of the USA is more than 300% and that of India is in the lower single digits so there will be a massive increase in credit card usage in India.

Business model

So, Dream Folks has tie-ups with Credit Card Issuers (Like HDFC Bank, Axis Bank, and ICICI Bank) Credit Card Providers (Like Master Card and Visa), and Travel Partners (like Make my trip and Ease my trip). About 99% of Lounge revenues in India come from Cards issuers and Providers while only 8% of card users in India avail lounge facilities.

These parties bring customers who would be using the lounges.

Now dream folks have a network of Lounge operators domestically as well as internationally. So they have done tie-ups with about 18 lounge operators including the leaders like Premium Plaza and travel club lounge. So, the banks or other parties don’t have to do tie-ups with all the lounge operators separately and the lounge operator doesn’t have to reach different banks for business.

Now once a customer is at the airport, he or she has to swipe their credit, debit card, or travel partner’s card and Dream Folk’s platform would grant access if the card is valid. Now Dream Folks would raise an invoice and collect the money from the card issuers and pay it to the operators and while doing so they will keep their commissions.


What drove growth in the past?

  • Growth in Air Traffic and faster growth in Lounge traffic – The growth is being driven majorly because of the increasing passenger growth in the Indian airline industry. In FY23 they outgrew the air traffic and this was due to an increase in the percentage of people using lounge benefits.
  • Lack of competition – Such a growing market was ignored by many big global competitors which gave them strong growth.
  • CAC for card issuers – Now majorly credit cards acquire customers based on the benefits like these lounge services.·      
  • Increasing the size of a Lounge – As discussed above the size of lounges is also increasing which leads to the accommodation of more people.

What will drive the growth?

There are multiple optionalities that are at the nascent stage which can drive the growth in future :

  • Railway Lounges – The government is planning to make railways more and more premium and the management seems to be doing tie-ups with those lounges as well. They have about 8-10 railway lounge tie-ups.
  • Expanding into new geographies – As of now, the company makes money only when a person uses an Indian credit card in domestic or foreign lands. They do have tie-ups with lounge operators internationally but now they are trying to tie up with different banks in the foreign market.
  • Clients apart from Card companies – The company has been doing tie-ups with Travel partners and airlines so that they can tap their customers from different sources.
  • Foray into services apart from Lounge services – As of now they have 95% of their revenues coming from Lounges but now they are trying to diversify by entering into food and beverage, Pickup drop facilities, SPA, Golf, and many more.


  • Network Effect at play – Dream Folks strongly benefit from the network effect. The network effect of Dream Folks is derived from the increasing number of participating lounges and the growing membership base. As more lounges join the program, the value of Dream Folk increases for the banks and they would use Dream Folks as their partner. The larger the network of lounges, the greater the choice and availability of lounges in different airports and destinations, providing the customers of these banks with more convenience and options during their travels.
  • Strong Foot in the Indian Market – About 95% of the lounge traffic via cards has come through dream folks in India.
  • Strong Relationships – The company has built deep relationships with a network of banks and card providers. So a new entrant will find it difficult to again integrate with banks and it will be a switching headache for the banks.·  
  • First mover advantage – As global competitors ignored the Indian market due to its small size, Dream Folks made the most of the opportunity and took a strong market share in India.


The company was founded by Libertha Peter Kallat, Mukesh Yadav, and Dinesh Nagpal. Libertha is the CEO now, and Mukesh and Dinesh are the directors of the company.

Liberatha Peter Kallat is the CEO of the Company. She has been associated with the Company since 2014 and is responsible for the strategy and overall management of our Company. She has vast experience in the hospitality sector.

Balaji Srinivasan is the Chief Technology Officer of the Company. He holds a diploma in software and systems management from NIIT, New Delhi. He has been associated with the Company since 2019.

Giya Diwaan is the Chief Financial Officer of the Company. She has studied IIM Lucknow and is a fellow member of the Institute of Chartered Accountants of India.

According to their website, they hired a CFO in 2021 when they were going for an IPO and before that, there wasn’t a CFO in the company.

There is a strong mismatch in the payroll of the key management and this can also lead to difficulties in retaining experienced management personnel in the organization.


  • Credit card companies cutting cost – As the card industry is a fairly regulated industry a change in rates by regulators will lead to card companies cutting costs to protect margins which will lead to a slowdown in revenues. 95%+ revenues come from card companies.
  • Missing Bargaining power – The business doesn’t seem to be influencing the Lounge operators or the Card issuer. That can be seen very visibly by the lounge fees line item which is about 80-85% of revenues. So they actually make about 15-20% on a gross level.
  • Increasing competitive intensity – Competitors like Priority Pass had not given that much attention to the Indian market in fact they also lost some share to Dream Folks but as the Indian aviation market grows and so does the lounge service market so it becomes lucrative for the big global players like Priority Pass to enter the Indian markets by giving discounts.
  • Negative working capital seems unsustainable – The company is facing challenges with their trade receivables increasing (67 days in 2019 went to 120 days in FY22) and according to a company disclosure it can rise further. Also, there have been instances of write-offs of bad debts also there are not enough provisions for the same.
  • Slowdown in travel – An event that leads to a slowdown in the entire travel business like the pandemic.
  • Concentration of revenues – Top 5 clients are responsible for 85% of revenues. Any situation where one of these clients terminates business with Dream Folks may lead to a direct hit on the revenues front.

Disclaimer: The views expressed by individuals are personal and do not represent the opinions or official stance of any firm, organization, or entity. The information provided here is for informational purposes only and should not be considered as investment advice.

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Hope you found the blog helpful. See you next time, until then Happy investing! 🙂

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