Gurugram-based Encalm Hospitality is moving to "future-proof" its balance sheet.
Faced with a structural shift where airport operators are increasingly launching their own rival lounges, the firm is moving towards a diversified portfolio of hotels, in-flight catering, and international contracts.
“Any privatized airport they have themselves started having its own hospitality branch. It is a big threat,” said Vikas Sharma, group chief executive, Encalm Hospitality to Mint. “(The) idea is to diversify and create equal revenue-producing verticals for us.”
Airports operated by Adani Airports Holdings Ltd have integrated lounge operations within group entities, while Kempegowda International Airport Bengaluru runs its own ‘080 Lounges’.
According to a December 2024 note by CRISIL, Travel Food Services (TFS) Ltd, Saptagiri Restaurant Pvt. Ltd, and Encalm collectively operate 40–50 airport lounges, accounting for roughly 50% of operational airport lounges in India. Other key players include Bengaluru Airport Services Ltd, Bird Catering & Lounges Pvt. Ltd and RBA Hospitality & Hotels Pvt. Ltd.
CRISIL said in a June 2025 assessment of India’s travel QSR and global lounge industry that the Indian airport lounge market grew at a 24% CAGR between FY19 and FY25 to about ₹2,500 crore.
“Crisil Intelligence Research projects that by FY34, the number of lounges in India is expected to almost double to 155–165,” the report said.
Diversification push
The company is developing a 220-room hotel in Goa and a 160-room property in Visakhapatnam, both expected to open this calendar year.
It is also entering the in-flight catering business under the Encalm Sky Plates brand, with kitchens planned in Delhi and at Bhogapuram airport in Andhra Pradesh, which is slated for completion later this year.
Currently, about 10% of Encalm’s revenue comes from non-lounge activities, but the company expects these newer verticals to become equal revenue contributors in the medium term.
Encalm is also exploring opportunities overseas.
“We had applied for a few RFPs (Request for Proposal) in the Middle East… We are looking to go international in terms of wherever there is a possibility,” Sharma said.
He added that overseas markets could help diversify revenue streams. “Overseas markets—where revenue relies more on airline alliances and premium cabin traffic than on credit cards—could help rebalance the company’s income mix,” Sharma said.
Lounge economics
The strategic shift comes at a time when India’s airport lounge economics are under strain. India’s lounge business largely depends on two key revenue streams—airlines and banks.
“There are two basic revenue streams. One is, of course, the airlines… And second is the bank (tie-ups),” Sharma said. “It’s 60% from cards and 40% is from airlines.”
Typically, airlines pay for lounge access for premium passengers, while banks compensate operators for credit-card customers who receive complimentary entry.
Additional revenue comes from walk-in customers and ancillary services.
However, operators incur significant capital expenditure to build lounges. Fit-out costs can range from ₹8,000 to ₹10,000 per sq. ft, and operators must share revenue or pay concession fees to airport operators.
The heavy dependence on credit-card partnerships has emerged as a structural risk. Over the past year, several large banks have tightened complimentary lounge access or introduced minimum spending thresholds to manage costs amid rising travel demand.
“At the end of the day credit card companies pay us,” Sharma said. “If they find something more lucrative… that is where we are ensuring that we have stronger partnership.”
Industry economics were further unsettled by the fallout with DreamFolks after Encalm and other operators terminated certain service agreements, intensifying debate over commissions and control over card-led customer access.
For context, DreamFolks fell out with Encalm Hospitality Private Limited and Adani Airport Holdings Limited after the two bypassed the aggregator model and started dealing directly with banks for lounge access. DreamFolks went to court but didn’t get relief.
Airport control
Competitive dynamics within airports are also shifting.
As non-aeronautical revenue becomes more important, several privatized airport operators have begun internalizing hospitality operations, including lounges.
Encalm, which started operations in 2022, is 100% owned by three corporate shareholders. The company currently operates lounges at Delhi, Hyderabad and North Goa airports, all managed by the GMR Group.
According to financials filed with the ministry of corporate affairs, the company reported revenue of ₹907.14 crore and profit after tax of ₹107.6 crore last year.
The three corporate entities include 51% holding by Singapore-based Cranesbill Investments Pte Ltd, a subsidiary of Dubai-based Gateway Fund. Another 32% is held by India’s BBM Travel Retail Limited (32%)— promoted by the Guntur-based Bommidalla family, which has interests in tobacco and tobacco exports, among others. Another 17% is held by Bengaluru-based Malkhed Real Estate Pvt. Ltd, which is promoted by Dinesh Kumar Jhunjhunwala.
The broader airport hospitality and quick-service restaurant segment is dominated by Travel Food Services Ltd (TFS), a listed company.
TFS reported revenue from operations of ₹1,688 crore and net profit of ₹380 crore in FY25.