Private firm Encalm Hospitality is pivoting away from its heavy dependence on airport lounges to target ₹5,000 crore in revenue within five years. The company currently generates 90% of its income from airport operations and is now aggressively expanding into luxury hotels, highway motels, and airline catering to balance its business model.
Gurugram-based Encalm Hospitality is planning a major structural shift in its business operations. The company, which is currently a private entity, has set an ambitious target to reach ₹5,000 crore in revenue over the next five years. This strategy is designed to move the firm beyond its current concentration in the airport lounge sector, where it currently holds a significant market presence.
Reducing Airport Dependence
For Encalm, the primary challenge is its heavy reliance on airport hospitality, which generates approximately 90% of its total revenue. This model is sensitive to contract renewals with airport operators like GMR. Additionally, the industry is facing structural changes as some airport operators have started internalizing their lounge services, and banks have tightened eligibility criteria for complimentary lounge access. These factors create pressure on the company’s core business model, making diversification a strategic necessity rather than an optional move.
Scaling Through Hotels and Catering
To build a more resilient revenue stream, the company is investing in three main areas. First, it is entering the luxury hotel space with plans for properties in Delhi and Chennai. Unlike traditional hotel chains that manage their own properties, Encalm is adopting a partnership model where it constructs the assets but partners with established operators such as Radisson Blu or Taj Vivanta to handle daily management. This helps the company avoid the complexities of running hospitality services while still owning the real estate.
Second, the company is expanding its highway motel brand, Round D Clock. Following the launch of its initial property near Delhi Airport, the firm intends to develop a network of 100 motels along major Indian highways to capture the growing road travel segment.
Third, Encalm has entered the airline catering business through its brand, SkyPlates. With existing kitchen infrastructure in cities like Delhi, Hyderabad, and Bhogapuram, the company has ramped up production to over 67,500 meals per day. While this expands its reach, it brings the firm into direct competition with large, established players like TajSATS and Oberoi Flight Services.
Execution and Competitive Risks
While the expansion plans are ambitious, the transition involves significant execution risks. Moving from a lounge-focused service model to owning and developing luxury hotels and managing high-volume catering facilities requires substantial capital investment and operational expertise. In the catering business, Encalm must win competitive airline contracts to sustain its high-capacity kitchens. Furthermore, the success of its highway motel chain will depend on its ability to maintain consistent quality and occupancy across different locations. The company’s long-term success will likely depend on its ability to integrate these new business lines while managing the debt or capital requirements associated with such large-scale development.