Release Date: May 14, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Net rental revenue increased by 27.6% to $29.1 million, driven by an increase in average units available.
- LuxUrban Hotels Inc is transitioning back to operating as an independent entity, moving away from its franchise agreement with Wyndham, which is expected to better serve the company operationally and financially in the long term.
- The company is focused on enhancing guest experience and revenue management to improve RevPAR and overall profitability.
- LuxUrban Hotels Inc has a strong occupancy rate of 77% in Q1, with expectations of continued strong performance in urban markets like New York.
- The company is exploring new ancillary income opportunities such as valets, in-room dining concepts, and grab-and-go marketplaces to enhance profitability.
Negative Points
- Total RevPAR declined to 208 from 257 due to the surrender of properties and greater impact of seasonality on the portfolio.
- Reported a gross profit loss of $4.6 million as compared to a gross profit of $5.4 million in the previous year.
- Total operating expenses, including non-cash items, rose significantly to $26.2 million from $18.5 million in the previous year's first quarter.
- Net loss widened to $16.8 million from a net loss of $2.7 million in the previous year, influenced by various non-recurring costs and operational changes.
- Accounts payable and accrued expenses increased significantly, indicating potential liquidity challenges and financial strain.
Q & A Highlights
Q: What led LuxUrban Hotels Inc to decide to operate independently, moving away from the partnership with Wyndham?
A: Shanoop Kothari, President and Co-CEO, explained that the decision was mutual as the partnership financially did not make sense for both parties. Specific financial metrics and margins were considered, leading to the conclusion that operating independently would be more beneficial.
Q: Can you provide details on the significant increase in the 'other expense' line item in the income statement this quarter?
A: Shanoop Kothari noted that the increase was due to several initiatives, including property surrenders which incurred additional costs like labor, commission, and relocation expenses. He anticipates these expenses will stabilize to previous levels by Q3.
Q: What does the new partnership consideration cost of $2.7 million entail, and is it expected to be ongoing?
A: Kothari clarified that this was a non-cash, non-recurring accrual, indicating it's not expected to continue in future periods.
Q: How is the transition off the Wyndham platform expected to impact revenues?
A: Kothari and COO Robert Arigo indicated that they do not anticipate a negative impact on room rates or revenues from the transition. They are optimistic about the potential for increased demand and better performance in the upcoming months.
Q: What are the current occupancy rates and expectations following the transition from Wyndham?
A: Kothari reported a 77% occupancy rate in Q1, with expectations of strong transient demand continuing. Arigo added that despite the transition, the demand in New York remains robust, and they foresee further improvements.
Q: What new property management systems will LuxUrban Hotels use post-Wyndham?
A: Arigo mentioned that they would revert to using Cloudbeds, a platform previously used by LuxUrban. They are also developing a new IT platform to ensure a seamless transition and continued operational efficiency.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
