MIAMI - LuxUrban Hotels Inc. (NASDAQ:LUXH), a company specializing in long-term hotel leases, reported an increase in net rental revenue for the first quarter ended March 31, 2024. The company announced a 27.6% rise in net rental revenue, reaching $29.1 million, up from $22.8 million in the previous year. Still, LuxUrban also reported a net loss of $16.8 million for the quarter, compared to a net loss of $2.8 million in the same period last year.
The growth in revenue was attributed to an expansion in the number of units available for rent, which climbed to 1,535 from 571. Despite this increase, the company's Total RevPAR (Total Revenue per Available Room) faced a decline due to a change in unit mix and the termination of franchise agreements with Wyndham Hotels & Resorts.
LuxUrban's gross profit turned into a loss of $4.6 million, influenced by a $12.1 million rise in other expenses, including higher commission costs, relocation, employee costs, and property surrenders. Operating expenses also escalated to $7.6 million or 26.2% of net rental revenue, partially due to $2.7 million in non-cash, non-recurring costs associated with the end of the Wyndham partnership.
The company also reported adjusted EBITDA of $2.5 million, a decrease from $4.0 million in the first quarter of the previous year. Cash and cash equivalents stood at $1.0 million, slightly up from $0.8 million at the end of 2023.
On May 6, 2024, LuxUrban terminated its franchise agreements with Wyndham, taking back control of its hotel listings. The process, expected to be completed by the end of May 2024, aims to minimize operational disruptions.
LuxUrban's CEO, Shanoop Kothari, expressed confidence in the company's strategic actions, including the Wyndham separation, to stabilize operations and align with market opportunities. The company's priorities for 2024 are to improve working capital resources, enhance cash flow, and deliver organic revenue growth.
The company will discuss the results in more detail during a conference call on Tuesday, May 14, 2024.
This news is based on a press release statement from LuxUrban Hotels Inc.
InvestingPro Insights
LuxUrban Hotels Inc. (NASDAQ:LUXH) has been navigating through a transformative period, as evidenced by the recent financial figures and strategic decisions. The company's drive towards improving its operational efficiency and revenue growth is reflected in the increase in net rental revenue for Q1 2024. Still, the company's financial health and market performance present a mixed picture that investors should carefully consider.
With a market capitalization of $26.07 million, LuxUrban's size in the market is relatively small, which often comes with higher volatility in stock performance. This is underscored by the stock's recent performance, which has seen a significant decline, with the price total return over the last three months plummeting by -79.35%. This volatility is further highlighted by an InvestingPro Tip indicating that the stock generally trades with high price volatility.
The company's financial challenges are evident, with a negative P/E ratio of -0.4 for the last twelve months as of Q4 2023, suggesting that it is not currently profitable. This is in line with the reported net loss for Q1 2024, which has widened compared to the same period last year.
Moreover, LuxUrban operates with a significant debt burden and may have trouble making interest payments on its debt, as pointed out by another InvestingPro Tip. These factors are crucial for investors to watch, especially those looking for stable returns or companies with strong balance sheets.
Despite these challenges, analysts anticipate sales growth in the current year, and net income is expected to grow this year as well. This potential for growth, coupled with the company's strategic actions such as the termination of franchise agreements with Wyndham, could offer a turnaround opportunity for LuxUrban.
For investors seeking a deeper analysis and additional insights, there are 21 more InvestingPro Tips available on LuxUrban's profile at InvestingPro. For those interested in taking advantage of these expert insights, use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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