LuxUrban Hotels Inc. Announces 2023 Financial Results
- Net rental revenue surged by 159% to $113.4 million in FY 2023.
- EBITDA increased by 78% to $25.3 million, while adjusted EBITDA rose by 109% to $29.8 million.
- The company reported a net loss of $78.5 million, which included non-cash charges and non-recurring cash costs.
- LuxUrban Hotels Inc. aims for measured expansion in 2024 by focusing on acquiring higher-end hotel properties and improving its financial profile.
- The company has a strong pipeline of hotel operating rights acquisition opportunities and a refreshed executive team to drive growth.
- Total debt declined to approximately $4.3 million from $14.0 million, showing improved financial management.
- LuxUrban Hotels Inc. expects to increase net rental revenue in 2024 and provide more specific guidance in the coming quarters.
- The company will host an investor call on April 16, 2024, to discuss the financial results and future outlook.
- None.
Insights
The disclosure made by LuxUrban Hotels Inc. pertaining to their 2023 financial results provides a comprehensive look at the company's recent performance, highlighting a marked increase in net rental revenue alongside a substantial net loss. While revenue growth is often seen as a positive indicator, the magnitude of the loss, driven by considerable non-cash charges and a one-time negative impact from the Wyndham transition, may raise concerns among investors. However, it's important to note that these results are partially offset by a rise in EBITDA and Adjusted EBITDA, suggesting an improvement in operational efficiency.
The company's strategy to focus on acquiring long-term operating rights to higher-end hotel properties and improve financial metrics such as working capital and cash flow paints a picture of a business aiming for quality over quantity. This strategic pivot may bode well for the company's long-term sustainability, assuming that these higher-end properties can indeed drive the expected increase in Total RevPAR. Yet it's important to maintain a cautious approach, given the low cash and cash equivalents on hand, until the company provides more specific guidance on its future financial performance.
LuxUrban's performance must be contextualized within the broader industry. The hospitality sector has been recovering unevenly from the impact of the pandemic, with premium properties generally outpacing lower-end establishments. Therefore, LuxUrban's shift towards acquiring 3.5 to 4.5-star properties could be seen as an alignment with current market trends, likely to appeal to both business and leisure travelers seeking enhanced experiences.
While LuxUrban's partnership with Wyndham provides an expansive distribution network, such relationships come with dependencies that can affect bargaining power and profitability. The mention of a 'robust pipeline' of hotel operating rights acquisitions could signal competitive strength but warrants further scrutiny in terms of the potential capital expenditures and the operational risks associated with integrating new properties into the existing portfolio.
From a legal and compliance viewpoint, LuxUrban's announcement that it filed its Form 10-K with the SEC on time is a standard procedure that evidences regulatory compliance. The referencing of non-GAAP measures such as EBITDA and Adjusted EBITDA, while customary in financial communications, necessitates an understanding of their limitations. While these measures offer valuable insights into operational performance by stripping out certain variable costs, it is essential that investors are aware that these are not standardized measures under GAAP and can vary widely between companies. The accompanying reconciliation tables are critical in providing transparency and supporting investor due diligence.
Net Rental Revenue rose
Net loss of
EBITDA rose
“Following 2023’s significant growth, 2024 will be a period of measured expansion with a focus on acquiring the long-term operating rights to higher end (3.5 star to 4.5 star) hotel properties, a commitment to improving our working capital, receivables, and cash flow profile, capturing the benefits of scale from our portfolio, enhancing the guest experience, and continuing to fortify our executive team and board,” said Brian Ferdinand, Chairman. “We believe that we are playing a critical role in the current CRE ecosystem by allowing hotel owners and landlords to utilize our Triple Net Lease option to realize a fixed, stable, and financeable cash flow while maintaining the equity value of their properties. We have a robust pipeline of hotel operating rights acquisition opportunities in our core markets to pursue as our capital resources allow, the support of Wyndham, and a refreshed executive team and board that will help us to fully capture the opportunities ahead of us.”
“Our results for 2023 reflect the actions necessary to address various legacy issues, decrease financial and operating risk, and mitigate the effects of future headwinds,” said Shanoop Kothari, Co-CEO and Chief Financial Officer. “The majority of the cash and non-cash costs and expenses we recorded in 2023 to address these matters are not expected to recur, nor should they mask the underlying strength of our business and promising outlook. We believe that we have properly aligned our operations to the market, stripped away operational drags to our financial performance, fortified our fiscal foundation, and put ourselves on the path to generate improving results in 2024 and make ourselves more attractive to potential sources of capital.”
Select Full Year 2023 Financial Results
All comparisons are to the full year ended December 31, 2022 (“FY 2022”) as audited, unless otherwise stated.
Results for 2023 reflected a one-time negative impact from the onboarding of the Company’s initial hotels to the Wyndham platform (“Wyndham transition”) in Q3 and Q4 2023, during which time these hotel rooms were not available for rent. This was a one-time occurrence and not expected to be repeated in 2024.
-
Net rental revenue rose
159% to$113.4 million $43.8 million -
TRevPAR improved to
$249 $247 -
Property-level breakeven for TRevPAR across the Company’s portfolio at December 31, 2023 was an estimated
$160 $180 -
Gross profit was
$8.9 million 7.9% of net rental revenue, compared to$12.4 million 28.2% of net rental revenue, reflecting an increase in the average units available to rent and better TRevPAR per unit, offset by$3.0 million -
Total operating expenses rose to
$39.5 million $15.8 million -
General and administrative expense of
$15.6 million $6.8 million -
Non-cash expenses of
$11.6 million $2.5 million -
Non-recurring cash costs of
$12.2 million $4.1 million
-
General and administrative expense of
-
Net loss was
$78.5 million $9.4 million -
$41.2 million $2.0 million -
$28.2 million $87.5 million -
$12.5 million
-
-
-
EBITDA increased to
$25.3 million $14.3 million $29.8 million $14.3 million -
Cash and cash equivalents were approximately
$0.8 million $1.1 million -
Total debt declined to approximately
$4.3 million $14.0 million
Select Q4 2023 Financial Results
All comparisons are to the fourth quarter ended December 31, 2022 (“Q4 2022”) unless otherwise stated.
-
Net rental revenue was
$27.5 million $12.9 million
Surety Agreement
As previously disclosed, the Company entered into a master collateral trust agreement that provides up to an aggregate of
Property Summary
As previously disclosed, the Company surrendered four properties representing less than 200 keys in total that had created a consistent drag on its operating results and decided to not move forward on a previously agreed to Master Lease Agreement due to repairs not being completed by the landlord. Given the pro forma effect of these actions, as of December 31, 2023 the Company leased 14 properties with 1,406 units available for rent with an average weighted lease term of 14.2 years and 19.0 years, including extension options.
2024 Outlook and Guidance
For the first quarter ended March 31, 2024:
-
net rental revenue is expected to be in the range of
$27 $30 million $22.8 million
For full year 2024, the Company reiterated its commitment to the following priorities:
- increase its portfolio of hotels under long term Master Lease Agreement with a focus on higher-quality 3.5 star to 4.5-star properties
- generate increased TRevPAR compared to 2023, driven by portfolio expansion, the addition of 3.5 star to 4.5-star properties to the portfolio, and an increase in ancillary revenues
- generate increased EBITDA compared to 2023
- improve its working capital profile, receivables, and cash flow profile by adopting a slower pace of acquisitions, increasing Total RevPAR, focusing on higher end properties, and realizing the benefits of the above referenced surrender of certain underperforming leases
The Company expects to increase net rental revenue in 2024 and will provide more specific guidance over the coming quarters.
Investor Call
The Company will host a conference call on Tuesday, April 16, 2024 at 9:00 am Eastern Time to discuss the results.
Investors interested in participating in the live call can dial:
-
(800) 715-9871 -
U.S. - (646) 307-1963 - International
- Conference ID 3555388
A simultaneous webcast of the call may be accessed online from the Events & Presentations section of the Investor Relations page of the Company’s website at www.luxurbanhotels.com. You may pre-register for the webcast using this link: https://events.q4inc.com/attendee/690991736
LuxUrban Hotels Inc.
LuxUrban Hotels Inc. secures long-term operating rights for entire hotels through Master Lease Agreements (MLA) and rents out, on a short-term basis, hotel rooms to business and vacation travelers. The Company is strategically building a portfolio of hotel properties in destination cities by capitalizing on the dislocation in commercial real estate markets and the large amount of debt maturity obligations on those assets coming due with a lack of available options for owners of those assets. LuxUrban’s MLA allows owners to hold onto their assets and retain their equity value while LuxUrban operates and owns the cash flows of the operating business for the life of the MLA. Through its partnership with Wyndham Hotels & Resorts, the largest hotel company in the world by rooms, LuxUrban gains several competitive advantages including joint branding for marketing, sales, and distribution, capital allocation from Wyndham for each hotel it acquires, and ongoing customer support and training across its portfolio.
Non-GAAP Information
The Company defines EBITDA as net income (loss) before income taxes and other taxes, interest and financing costs, non-cash compensation expense, non-cash expenses associated with common stock issuance and stock options, non-cash rent expense amortization, depreciation, amortization, allowances, and CECL, non-cash financing costs, costs associated with its exit from SoBeNY and deposit surrender, incremental processing and channel financing fees, non-cash write offs associated with its exit from the apartment rental business, and bad debt expense. Adjusted EBITDA is defined as EBITDA less the estimated impact of the Wyndham transition.
The Company seeks to achieve profitable, long-term growth by monitoring and analyzing key operating metrics, including EBITDA and Adjusted EBITDA. The Company’s management uses these non-GAAP financial metrics and related computations to evaluate and manage the business and to plan and make near and long-term operating and strategic decisions. The management team believes these non-GAAP financial metrics are useful to investors to provide supplemental information in addition to the GAAP financial results. Management reviews the use of its primary key operating metrics from time-to-time.
EBITDA and Adjusted EBITDA are not intended to be a substitute for any GAAP financial measure and, as calculated, may not be comparable to similarly titled measures of performance of other companies in other industries or within the same industry. The Company’s management team believes it is useful to provide investors with the same financial information that it uses internally to make comparisons of historical operating results, identify trends in underlying operating results, and evaluate its business.
Attached to this release is a reconciliation of the non-GAAP measures of EBITDA and Adjusted EBITDA, which management believes are the nearest correlated GAAP measures.
Forward Looking Statements
This press release contains certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 (set forth in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended). The statements contained in this release that are not purely historical are forward-looking statements. Forward-looking statements include, but are not limited to, statements regarding expectations, hopes, beliefs, intentions or strategies regarding the future. In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. Generally, the words “anticipates,” “believes,” “continues,” “could,” “estimates,” “expects,” “intends,” “may,” “might,” “plans,” “possible,” “potential,” “predicts,” “projects,” “should,” “would” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. Forward-looking statements in this release may include, for example, statements with respect to the success of the Company’s collaboration with Wyndham Hotels & Resorts, scheduled property openings, expected closing of noted lease transactions, the Company’s ability to continue closing on additional leases for properties in the Company’s pipeline, as well the Company’s anticipated ability to commercialize efficiently and profitably the properties it leases and will lease in the future. The forward-looking statements contained in this release are based on current expectations and belief concerning future developments and their potential effect on the Company. There can be no assurance that future developments will be those that have been anticipated. These forward-looking statements are subject to a number of risks, uncertainties (some of which are beyond our control) or other assumptions that may cause actual results of performance to be materially different from those expressed or implied by these forward-looking statements, including those set forth under the caption “Risk Factors” in our public filings with the SEC, including in Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2023 filed with the SEC on April 15, 2024, and any updates to those factors as set forth in subsequent Quarterly Reports on Form 10-Q or other public filings with the SEC. The forward-looking information and forward-looking statements contained in this press release are made as of the date of this press release, and the Company does not undertake to update any forward-looking information and/or forward-looking statements that are contained or referenced herein, except in accordance with applicable securities laws.
Condensed Consolidated Balance Sheets |
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|
|
|
|
|
|
|
|
December 31, |
|
December 31, |
|
||
|
|
2023 |
|
2022 |
|
||
ASSETS |
|
|
|
|
|
|
|
Current Assets |
|
|
|
|
|
|
|
Cash and Cash Equivalents |
|
$ |
752,848 |
|
$ |
1,076,402 |
|
Treasury Bills |
|
|
- |
|
|
2,661,382 |
|
Accounts Receivable, Net |
|
|
329,887 |
|
|
- |
|
Channel Retained Funds, Net |
|
|
1,500,000 |
|
|
1,500,000 |
|
Processor Retained Funds, Net |
|
|
2,633,926 |
|
|
5,234,220 |
|
Receivables from On-Line Travel Agencies, Net |
|
|
6,936,254 |
|
|
- |
|
Receivables from |
|
|
4,585,370 |
|
|
- |
|
Prepaid Expenses and Other Current Assets |
|
|
1,959,022 |
|
|
963,300 |
|
Prepaid Guarantee Trust - Related Party |
|
|
1,023,750 |
|
|
- |
|
Security Deposits - Current |
|
|
- |
|
|
112,290 |
|
Total Current Assets |
|
|
19,721,057 |
|
|
11,547,594 |
|
Other Assets |
|
|
|
|
|
|
|
Furniture, Equipment and Leasehold Improvements, Net |
|
|
691,235 |
|
|
197,129 |
|
Restricted Cash |
|
|
- |
|
|
1,100,000 |
|
Security Deposits - Noncurrent |
|
|
20,307,413 |
|
|
11,233,385 |
|
Other Noncurrent Assets |
|
|
960,729 |
|
|
559,838 |
|
Operating Lease Right-Of-Use Assets, Net |
|
|
241,613,588 |
|
|
83,325,075 |
|
Total Other Assets |
|
|
263,572,965 |
|
|
96,415,427 |
|
Total Assets |
|
$ |
283,294,022 |
|
$ |
107,963,021 |
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
Current Liabilities |
|
|
|
|
|
|
|
Accounts Payable and Accrued Expenses |
|
$ |
23,182,305 |
|
$ |
6,252,491 |
|
Bookings Received in Advance |
|
|
4,404,216 |
|
|
2,566,504 |
|
Short Term Business Financing, Net |
|
|
1,115,120 |
|
|
2,003,015 |
|
Loans Payable - Current |
|
|
1,654,589 |
|
|
10,324,519 |
|
Initial Direct Costs Leases - Current |
|
|
486,390 |
|
|
|
|
Operating Lease Liabilities - Current |
|
|
1,982,281 |
|
|
4,293,085 |
|
Development Incentive Advances - Current |
|
|
300,840 |
|
|
- |
|
Total Current Liabilities |
|
|
33,125,741 |
|
|
25,439,614 |
|
Long-Term Liabilities |
|
|
|
|
|
|
|
Loans Payable |
|
|
1,459,172 |
|
|
1,689,193 |
|
Development Incentive Advances – Noncurrent |
|
|
5,667,857 |
|
|
- |
|
Security Deposit Letter of Credit |
|
|
- |
|
|
2,500,000 |
|
Initial Direct Costs Leases - Noncurrent |
|
|
4,050,000 |
|
|
|
|
Operating Lease Liabilities - Noncurrent |
|
|
242,488,610 |
|
|
81,626,338 |
|
Total Long-Term Liabilities |
|
|
253,665,639 |
|
|
85,815,531 |
|
Total Liabilities |
|
|
286,791,380 |
|
|
111,255,145 |
|
Mezzanine Equity |
|
|
|
|
|
|
|
|
|
|
5,775,596 |
|
|
- |
|
Commitments and Contingencies |
|
|
|
|
|
|
|
Stockholders’ Deficit |
|
|
|
|
|
|
|
Common Stock (90,000,000 shares authorized, issued, outstanding - 39,462,440, and 27,691,918, respectively) |
|
|
394 |
|
|
276 |
|
Additional Paid In Capital |
|
|
90,437,155 |
|
|
17,726,592 |
|
Accumulated Deficit |
|
|
(99,710,503 |
) |
|
(21,018,992 |
) |
Total Stockholders’ Deficit |
|
|
(9,272,954 |
) |
|
(3,292,124 |
) |
Total Liabilities and Stockholders’ Deficit |
|
$ |
283,294,022 |
|
$ |
107,963,021 |
|
Condensed Consolidated Statement of Operations |
||||||||
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|
|
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|
|
For The
|
|
|||||
|
|
2023 |
|
|
2022 |
|
||
Net Rental Revenue |
|
$ |
113,397,012 |
|
|
$ |
43,825,424 |
|
Rent Expense |
|
|
26,779,821 |
|
|
|
10,340,188 |
|
Non-Cash Rent Expense Amortization |
|
|
8,169,833 |
|
|
|
1,894,731 |
|
Surrender of Deposits |
|
|
2,961,058 |
|
|
|
- |
|
Other Property Level Expenses |
|
|
66,553,940 |
|
|
|
19,215,156 |
|
Total Cost of Revenue |
|
|
104,464,652 |
|
|
|
31,450,075 |
|
Gross Profit |
|
|
8,932,360 |
|
|
|
12,375,349 |
|
|
|
|
|
|
|
|
|
|
General and Administrative Expenses |
|
|
15,587,297 |
|
|
|
6,794,111 |
|
Non-Cash Issuance of Common Stock for Operating Expenses |
|
|
1,664,601 |
|
|
|
- |
|
Non-Cash Stock Compensation Expense |
|
|
9,310,843 |
|
|
|
2,547,536 |
|
Non-Cash Stock Option Expense |
|
|
674,818 |
|
|
|
- |
|
Costs Associated with Apartment Rental and Hotel Exits |
|
|
12,237,728 |
|
|
|
4,103,898 |
|
Non-Cash Write-Off of Net Right-of-Use Assets Associated with Apartment Rental Exit |
|
|
- |
|
|
|
2,385,995 |
|
Total Operating Expenses |
|
|
39,474,927 |
|
|
|
15,831,540 |
|
Loss from Operations |
|
|
(30,542,567 |
) |
|
|
(3,456,191 |
) |
Other Income (Expense) |
|
|
|
|
|
|
|
|
Other Income |
|
|
1,236,690 |
|
|
|
1,584,105 |
|
Cash Interest and Financing Costs |
|
|
(7,983,134 |
) |
|
|
(5,483,891 |
) |
Non-Cash Financing Costs |
|
|
(41,234,366 |
) |
|
|
(2,034,376 |
) |
Total Other Expense |
|
|
(47,980,810 |
) |
|
|
(5,934,162 |
) |
Loss Before Provision for Income Taxes |
|
|
(78,523,377 |
) |
|
|
(9,390,353 |
) |
Provision for Income Taxes |
|
|
- |
|
|
|
- |
|
Net Loss |
|
$ |
(78,523,377 |
) |
|
$ |
(9,390,353 |
) |
Preferred Stock Dividend |
|
|
(168,134 |
) |
|
|
- |
|
Net Loss Attributable to Common Stockholders |
|
$ |
(78,691,511 |
) |
|
$ |
(9,390,353 |
) |
Basic Loss Per Common Share |
|
$ |
(2.05 |
) |
|
$ |
(0.40 |
) |
Diluted Loss Per Common Share |
|
$ |
(2.05 |
) |
|
$ |
(0.40 |
) |
Basic Weighted Average Number of Common Shares Outstanding |
|
|
38,433,422 |
|
|
|
23,432,870 |
|
Diluted Weighted Average Number of Common Shares Outstanding |
|
|
38,433,422 |
|
|
|
23,432,870 |
|
Non-GAAP Financial Measures
To supplement the condensed consolidated financial statements, which are prepared in accordance with GAAP, we use EBITDA and Adjusted EBITDA as non-GAAP financial measures. We define EBITDA and Adjusted EBITDA above in the paragraph entitled “Non-GAAP Information.”
The following table provides reconciliation of our net income (loss) to EBITDA and Adjusted EBITDA.
For The Year Ended |
|||||
($ in millions) |
December 31, |
||||
|
2023 |
|
2022 |
||
|
|||||
Net Income (Loss) |
$ |
(78,523,377) |
$ |
(9,390,353) |
|
|
|
|
|
||
Provision for Income Taxes and Other Taxes |
|
8,207,385 |
|
591,968 |
|
Interest and Financing Costs |
|
7,983,134 |
|
5,483,891 |
|
Non-Cash Compensation Expense |
|
9,310,483 |
|
2,547,536 |
|
Non-Cash Issuance of Common Stock for Operating Expenses |
|
1,664,601 |
|
- |
|
Non-Cash Stock Option Expense |
|
674,818 |
|
- |
|
Non-Cash Rent Expense Amortization |
|
8,169,833 |
|
1,894,731 |
|
Depreciation, Amortization Expense, Allowances, & CECL |
|
2,012,154 |
|
2,071,054 |
|
Non-Cash Financing Costs |
|
41,234,366 |
|
2,034,376 |
|
Exit Apartment Rental and Restructuring Costs / Deposit Surrender |
|
15,198,786 |
|
4,103,898 |
|
Incremental Processing and Channel Financing Fees for Credit Risk |
|
5,555,896 |
|
2,527,543 |
|
Legacy Union Costs |
|
- |
|
- |
|
Non-Cash Write-Off of Net Right-of-Use Assets Associated with Apartment Rental Exit |
|
- |
|
2,385,995 |
|
Bad Debt Expense |
|
3,830,073 |
|
- |
|
EBITDA |
$ |
25,318,152 |
$ |
14,250,639 |
|
Estimated Net Wyndham Transition Impact |
|
4,475,000 |
|
- |
|
Adjusted EBITDA |
$ |
29,793,152 |
$ |
14,250,639 |
|
1The Company defines Total RevPAR (or TRevPAR) as total revenue received by the Company inclusive of room rental rates, ancillary fees (which include but are not limited to resort fees, late/early check-in, baggage fees, parking fees paid to us, and upgrade fees), cancellation fees, taxes (including other pass-through expenses) and other miscellaneous income received by the Company, divided by the average available rooms for rent during a given period.
View source version on businesswire.com: https://www.businesswire.com/news/home/20240414026581/en/
Shanoop Kothari
Co-Chief Executive Officer & Chief Financial Officer
LuxUrban Hotels Inc.
shanoop@luxurbanhotels.com
Devin Sullivan
Managing Director
The Equity Group Inc.
dsullivan@equityny.com
Conor Rodriguez, Analyst
crodriguez@equityny.com
Source: LuxUrban Hotels Inc.
FAQ
What was the percentage increase in net rental revenue for LuxUrban Hotels Inc. in FY 2023?
What was the percentage increase in EBITDA for LuxUrban Hotels Inc. in FY 2023?
What was the net loss reported by LuxUrban Hotels Inc. in FY 2023?
What are LuxUrban Hotels Inc.'s priorities for full year 2024?
What is the total debt amount for LuxUrban Hotels Inc. as of the latest report?
When will LuxUrban Hotels Inc. host an investor call to discuss the financial results?
