DreamFolks Services, a travel and lifestyle experiences company, has been in the news in recent months. The company, which was not so long ago among the leading airport lounge operators in the country, announced last month that it would be discontinuing its domestic airport lounge services immediately. Now the company is directly tapping the retail market, with a brand new club membership product and separately a premium wallet that integrates various elite privileges based on prepaid product instruments (PPI).
BSE-listed DreamFolks shares have been on a slippery slope amid a volatile equity market and the news of it discontinuing the domestic lounge services. The stock has slumped 75 per cent over the past year. However, it hit the 5 per cent upper circuit limit over the last two sessions, with the new product launches exciting investors.
Why the shift? DreamFolks was like an lounge aggregator. It would connect lounge operators on the one hand and credit card companies and passengers on the other hand. However, over the past more than a year credit card operators have devalued several of their premium cards.
One fallout of this devaluation was lounge access, with such access in a particular quarter on several cards now depending on spending a certain amount by the card holder in the previous quarter. Banks were big client base for DreamFolks’ lounge access. Meanwhile, several lounge partners terminated their contracts, with airport operators becoming lounge aggregators themselves. The two developments hit DreamFolks hard.
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Liberatha Kallat, the chairperson and MD of DreamFolks says the change it was undergoing was inevitable.
“From the past 12-18 months, most of the banks have actually changed the model as well as the terms of giving the benefit of lounge access. Initially, it was a blanket offer, which then got reduced to one based on spends and then the value of the spends was also increased by card companies,” pointed Kallat.
Therefore, said Kallat, the company, which had just limited its services to travel and mainly airport lounges, decided to expand into other areas like railway lounges, golf and spas. With the latest set of initiatives, the company will be tapping the B2C (business-to-customer) channel, compared to its earlier B2B (business-to-business) offerings.
'Necessary transition'
Kallat admitted that domestic lounges was a big business for DreamFolks, but given the circumstances, a transition was necessary. However, instead of a speed bump, she sees this as a good opportunity to diversify and expand.
The DreamFolks Club Membership programme that the company has launched will combine anchor services like members-only social clubs, global lounges, golf games and golf lessions, and value-added services like salon and spa privileges, OTT subscriptions, visa services, movie vouchers, coffee at malls among other things. The membership is priced between Rs 10,000-50,000 and will target the large potential customer base that doesn’t have a credit card or those credit card users that don’t get access to these kind of privileges on their card.
“The membership is open to everybody and you can choose depending on your requirement, whether its golf or global lounges, in case you are travelling globally,” said Kallat.
This product will also help the company step into the corporate world where they would want to give such facilities to their employees or channel partners and DreamFolks is also open to co-branded partnerships, she noted.
Credit card partnership
DreamFolks has also partnered with The Card Company, an RBI-licensed issuer of prepaid payment instruments to launch the later’s wallet product Alpha. Wallet will be available to all users on The Card Company app and DreamFolks will offer services across travel and lifestyle segments. This partnership was also part of its plan to make world-class experiences accessible to all.
“If you look at the credit card market, the penetration is hardly 5 per cent in terms of volume, compared with other markets like US where penetration is high. Also, very few people actually get benefits, but we believe there are a large number of people there who are aspiring for such benefits,” she noted.
DreamFolks has also announced a partnership with WSFx Global Pay, a foreign exchange and travel payment platform. The GlobalPay Lounge Card enables travellers to enjoy premium airport lounges worldwide with four complimentary international lounge passes annually, along with the flexibility to access additional lounges and travel benefits as per their convenience.
It should be noted that lounges was earlier the biggest revenue generator for DreamFolks. Sandeep Sonawane, the chief business officer at DreamFolks had said in the latest quarterly earnings call that lounge services had been close to 93 per cent of its revenues.
Kallat hopes the club membership programme will contribute to at least 10 per cent of its overall top line in a couple of years.
The company will also continue to focus on global markets, especially Southeast Asian countries and the Middle East. The major focus in global markets will be largely for now around travel related services like global airport lounges, meet-and-assist and airport transfers, said Kallat.
