DreamFolks Services Ltd., an airport services aggregator that opens its initial public offering (IPO) on August 24, plans to expand globally and focus on railways for growth in the business.
The vision is to go global, said chairperson Liberatha Peter Kallat. The international markets contribute 1 percent to overall business and Kallat said she expects a good share of revenue from overseas over the next few years.
Railway station lounges are the growth path for the company, which was started in 2013 when Kallat saw opportunity in India’s airport lounge space.
“There were lounges at Indian airports but they were only catering to business class passengers. Now, we see leisure, family travellers also using benefits as users ask for complimentary lounge service on their credit/debit cards. The penetration of cards used for airport lounge service was less than 1 percent when we started and today it has grown to 8 percent,” she told Moneycontrol.
The company expects the usage of credit/debit cards for lounge services in India to touch the global average of 12-15 percent in the next 4-5 years. Along with debit and credit cards, the company offers its DreamFolks card that can be used in over 120 countries.
India remains the company’s focus but its platform is ready to go deeper in the international markets, said chief financial officer Giya Diwaan.
The company added railways to its portfolio this year.
“Railways is also changing with private players coming in when it comes to lounges that are changing the waiting rooms in railway stations. There are nine lounges across the country with which we have tied up and started similar programmes. There are a couple of banks that have already started giving benefits to cardholders,” said Kallat.
She said the Indian Railways has higher traffic than airports and high growth potential.
“More clients are giving benefits at railways but the category will take time to grow as we have started this three months ago. So, it will take a couple of years to see good revenue,” she said.
In addition to the railways, Dreamfolks is counting on business from non-metro markets, growth in the travel sector and increased card usage.
“Right now, the trend is that volumes are more from metro cities but tier II, III cities are becoming important and banks are also focusing on these markets. The 80 percent contribution from metros and 20 percent from tier II, III cities currently should go to 60 percent and 40 percent, respectively, in the next 3-4 years,” said Kallat.
The company said additions to the lounge inventory in the past six months have been in tier II and III cities. DreamFolks currently facilitates access to all 54 airport lounges in the country.
DreamFolks is counting on a revival in travel. The Indian market is expected to grow at almost 6X from about 175 million air travellers in 2019 to 1 billion travellers in 2040, the company said in its IPO documents.
“Covid was an aberration, but if you look at FY22, the second half showed recovery with domestic travel completely starting,” said Diwaan.
The company is also eyeing growth in the usage of credit/debit cards in India.
“At 3 percent, there were 60 million cards that were available for lounge benefits in India,” said chief operating officer Anurag Jain. This number is expected to grow to 130 million by 2030.
DreamFolks expects the credit card user base to grow to 339 million by 2030 and debit card users to increase to 1.58 billion by 2030 from 939 million in 2021.
Although the bulk of airport lounge access takes place through credit/debit cards, many consumers are not aware of DreamFolks, said Kallat.
“The main reason for launching the IPO is the credibility that a listed firm gets, especially when going to newer markets. The IPO would give the right branding. In addition, we have a lean team of 60 people and the best way to incentivise employees is ESOP and listed companies get good dilution for ESOPs as well,” she added.