DreamFolks Services’ shares plummeted to a 5% lower circuit, settling at ₹131 on the BSE in early trade on Wednesday, September 17. The sharp decline followed a regulatory filing from the company, which announced it had discontinued its domestic airport lounge services effective immediately.
A ‘Material’ Impact on Business
The company classified the move as having a “material impact” on its business. This decision comes on the heels of major contract terminations, most notably with Travel Food Services, after unsuccessful attempts to renegotiate commercial terms. Additionally, other suppliers like Adani Digital, Semolina Kitchens, and Encalm Hospitality had also signaled their intent to discontinue certain services.
The industry is undergoing a significant shift, with major airport operators like Adani Airports and GMR Airports increasingly offering lounge access directly through their own platforms, reducing their reliance on aggregators like DreamFolks. This has already led to key financial institutions like ICICI Bank and Axis Bank reportedly ending their ties with the company for lounge access perks.
While the domestic lounge business has been halted, the company has assured that other domestic services and its global lounge operations will continue. DreamFolks stated that client contracts remain active and that discussions are underway to introduce alternative customer value propositions to mitigate the impact of these changes.
Focus on Global & Alternative Services
Despite the significant setback, DreamFolks has sought to reassure investors by confirming that its other domestic services and its international lounge business will continue to operate as usual. The company stated in its filing that its client contracts remain active and that discussions are ongoing to provide “alternate customer value propositions” to mitigate the impact of the domestic lounge exit.
The company’s management has previously highlighted its focus on diversifying its offerings beyond airport lounges, including services like airport transfers, food & beverage, and spas. The outcome of its ongoing discussions with clients and its ability to successfully pivot its strategy will be a key factor in its long-term performance.
Disclaimer: This article is for informational purposes only and does not constitute financial advice. Investors should consult with a qualified financial advisor before making any investment decisions.