MIAMI - LuxUrban Hotels Inc. (NASDAQ:LUXH) has announced a partnership with HotelRez to enhance its distribution capabilities. The collaboration with the London-based firm will connect LuxUrban with four major Global Distribution Systems (GDS), extending its reach to over 500,000 travel agencies worldwide.
The CEO of LuxUrban, Rob Arigo, expressed optimism about the partnership, stating, "This new relationship increases our distribution while diversifying our booking channels." Arigo anticipates that the alliance will begin to drive sales starting from late Q3 through Q4 of 2024, helping to serve the company's global client base more effectively.
LuxUrban's business model revolves around securing long-term operating rights for hotels, allowing property owners to retain their assets and equity value while LuxUrban operates the hotels and owns the cash flows. This strategy is part of the company's efforts to build a portfolio of hotel properties in destination cities by taking advantage of the current dislocation in commercial real estate markets.
LuxUrban's partnership with HotelRez is based on expectations that it will facilitate increased sales and distribution in the markets it serves. This information is derived from a press release statement issued by LuxUrban Hotels.
LuxUrban Hotels Inc. has seen a flurry of significant developments. The company successfully closed a public stock offering, selling 30 million shares of common stock, which resulted in gross proceeds of approximately $5.1 million. The offering was managed by Alexander Capital, L.P., and the proceeds are intended for use as working capital and for other general corporate purposes.
LuxUrban Hotels also increased its authorized shares to 220 million, a move approved by stockholders representing a majority of the voting power. This decision could potentially facilitate future growth strategies or financing activities. The company has further completed a cost reduction program expected to save around $2 million annually and streamlined its property portfolio.
InvestingPro Insights
LuxUrban Hotels Inc. has been navigating through a challenging financial landscape, as reflected by the data from InvestingPro. With a market capitalization of just $17.04 million, the company is operating on a small scale relative to industry peers. InvestingPro Data indicates that LuxUrban has experienced a staggering revenue growth of 108% in the last twelve months as of Q1 2024, signaling a potential turnaround in its business operations despite the current financial difficulties.
However, this growth comes at a cost, with the company's significant debt burden and weak gross profit margins of 2.24%, which are concerning indicators for its financial health. The company's stock has also been under pressure, with a precipitous price drop of over 94% in the past year, suggesting investor skepticism about the firm's future prospects. These challenges are also echoed in the InvestingPro Tips, which highlight the company's difficulties in maintaining liquidity, as its short-term obligations currently exceed its liquid assets.
For investors considering LuxUrban as a potential investment, it's important to note that the stock's RSI suggests it is in oversold territory, which could indicate a buying opportunity for those who believe in the company's long-term strategy. Additionally, the company is trading at a low revenue valuation multiple, which might appeal to value investors looking for discounted opportunities.
To gain a more comprehensive understanding of LuxUrban's financial position and to access additional insights, consider exploring the full range of InvestingPro Tips available at https://www.investing.com/pro/LUXH. There are 20 InvestingPro Tips in total, offering a deeper dive into the company's financials and market performance. To benefit from these insights, use the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription.
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