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LUXURBAN HOTELS INC. (LUXH)·Q2 2024 Earnings Summary

Executive Summary

  • Q2 2024 revenue fell sharply to $18.2M from $31.9M YoY, with gross loss of $(22.2)M and net loss of $(26.6)M as portfolio downsizing, presold rooms at below-market ADRs, and lease exit costs weighed on results .
  • No Wall Street consensus estimates were available via S&P Global (CIQ mapping missing); beat/miss cannot be assessed for Q2 2024. Values retrieved from S&P Global were unavailable.
  • Liquidity deteriorated materially: cash was $61 at quarter-end and working capital deficit widened to ~$62.6M, necessitating capital raises and debt placements; Nasdaq non-compliance added pressure with reverse split plans under consideration .
  • Management expects ADR uplift as presold room agreements burn off (approx. $2M/month) and anticipates Q4 seasonal strength in NYC with potential ADR up 15–18%; 2025 ADR targeted to “low 300s” at market rates .

What Went Well and What Went Wrong

  • What Went Well

    • “LuxUrban 2.0” restructuring advanced: strategic elimination of non-performing properties, cost realignment, and leadership upgrades (new CFO, refreshed board) to stabilize operations and position for future growth .
    • Portfolio focus on NYC; management targets revenue optimization and ancillary income initiatives to improve TRevPAR and cash flow as presold bookings expire .
    • Management affirmed ADR normalization: “These advanced sales will expire at the end of 2024… enter 2025 with average room rates projected… $252.11,” with further commentary aiming for “low 3s” ADR at market rates .

  • What Went Wrong

    • Revenue decline and margin compression: net rental revenue down 43% YoY; gross loss of $(22.2)M driven by surrendered deposits, lease exit costs, commissions, utilities, and relocation expenses .
    • TRevPAR fell to $188 (from $257 YoY), primarily due to preselling 40% of inventory at discounted rates, and average units available dropped to 1,056 (from 1,625) as the portfolio shrank .
    • Liquidity crisis: cash dropped to $61; working capital deficit widened to ~$62.6M; delisting risk flagged by Nasdaq; dependence on dilutive financings and high-cost debt (18% notes) increased financial risk .

Financial Results

MetricQ2 2023Q1 2024Q2 2024
Net Rental Revenue ($USD)$31.861M $29.101M $18.186M
Diluted EPS ($)$(0.78) $(0.35) $(0.41)
Gross Profit (Loss) ($USD)$10.179M $(4.595)M $(22.232)M
Total Operating Expenses ($USD)$5.406M $7.617M $4.167M
Net Loss ($USD)$(26.775)M $(16.786)M $(26.585)M
Working Capital (Deficit) ($USD)N/A$(31.566)M $(62.590)M

Estimates vs Actual (S&P Global):

  • S&P Global consensus estimates were unavailable for LUXH due to missing CIQ mapping; therefore, beats/misses cannot be assessed. Values retrieved from S&P Global were unavailable.

KPIs and Operating Metrics

KPIQ2 2023Q1 2024Q2 2024
Avg Units Available to Rent (#)1,625 1,535 1,056
TRevPAR ($USD)$257 $208 $188
Bookings Received in Advance ($USD)N/A$6.576M $11.265M
Cash & Equivalents ($USD)N/A$0.995M $61
Occupancy (%)N/A77% N/A

Segment Breakdown: Not applicable; company reports a single hotel leasing and management model .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
ADR (NYC)Q4 2024None providedManagement expects ADR growth of ~15–18% New qualitative guidance
ADR (Market Level)FY 2025None provided“Low 3s” (low $300s) at market rates, if conditions hold New qualitative guidance
Avg Room Rate (post-presell)2025 entryNone provided~$252.11 projected as presells expire New qualitative guidance
Revenue/Margins/OpEx2H 2024None providedNo formal quantitative guidance provided Maintained (no formal guidance)

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2 and Q-1)Current Period (Q2 2024)Trend
Portfolio rationalizationQ1: 13 properties; surrenders to exit weak assets Focus on NYC; operating 9 properties, ~1,056 rooms Continued downsizing and concentration
Revenue management/ADRQ1: RM initiatives to lift TRevPAR; presell discounts weighed on Q1 Presold ~40% inventory at discounted ADR; ADR seen rising in Q4 and into 2025 Improving normalization post-presell
Liquidity & capitalQ1: working capital deficit ~$31.6M; cash ~$1.0M Cash $61; deficit ~$62.6M; new 18% secured notes Deteriorated; reliance on financings
Nasdaq complianceNot highlighted in Q1Delisting notice; reverse split under consideration Escalated compliance risk
Technology initiativesQ1: evaluating Alexa/Amazon guest tech Not highlighted in Q2 remarksUnclear progression

Management Commentary

  • CEO (press release): “In 2024, we launched a comprehensive initiative… ‘LuxUrban 2.0’… strategic elimination of non-performing hotel properties, and targeted efforts to reduce operating overhead… transformative changes within LuxUrban that will enhance our financial stability and provide a solid foundation for future growth.”
  • CFO (call): “Net rental revenue… $18.2 million, vs. $31.9 million… decrease… from average units available to rent… 1,625 to 1,056… TRevPAR… $257 vs $188… attributable to the preselling of the rooms at lower rates…” .
  • CEO (call): “These advanced sales will expire at the end of 2024, allowing us to enter 2025 with average room rates projected… $252.11… We anticipate that the fourth quarter will yield a positive impact… New York hotel market typically performs at its strongest during this period.” .

Q&A Highlights

  • ADR trajectory and margins: Management suggested ADR can be in the “low 3s” (low $300s) at market rates; EBITDA margin aspirations discussed qualitatively; presold inventory exits by year-end .
  • Deferred revenue burn-off: ~$11.264M bookings received in advance to be recognized as guests stay; ~ $2M/month run-off expected into year-end .
  • Portfolio stance: Company operating 9 properties; no near-term further property exits planned .
  • One-time costs: CFO acknowledged onetime items across Q1 and Q2; overhead reduced “by a few million dollars” via labor cuts .
  • Nasdaq compliance: Reverse split likely to regain compliance; hearing scheduled in October; 30–45 day proxy timeline discussed .

Estimates Context

  • S&P Global consensus estimates for Q2 2024 were unavailable (vendor mapping missing); as a result, we cannot assess beats/misses or quantify estimate revisions. Values retrieved from S&P Global were unavailable.
  • Implication: Sell-side coverage appears limited and data gaps increase uncertainty; near-term modeling likely relies on company-reported KPIs (TRevPAR, units, deferred revenue burn-off) rather than formal consensus.

Key Takeaways for Investors

  • Liquidity risk is acute: cash of $61 and a ~$62.6M working capital deficit highlight urgency for capital solutions; expect continued financings (potentially dilutive) and tight cash management .
  • Rate normalization is a key upside lever: presold discounted ADRs expire by year-end; management sees ADR rising in Q4 and into 2025, potentially lifting TRevPAR and margins .
  • Portfolio focus may improve unit economics: downsizing to core NYC assets should reduce volatility and support revenue management; watch TRevPAR relative to property-level breakeven ($160–$180) .
  • Regulatory/listing overhang: Nasdaq non-compliance and reverse split plans are stock overhangs; a successful compliance path is a catalyst; failure risks delisting .
  • Balance sheet complexity and legal exposures: lease exits, Wyndham disputes, and litigation accruals increase execution risk; monitor cash interest burden and 18% secured notes .
  • Near-term trading: Momentum could improve with Q4 seasonal strength and ADR uplift; stock likely remains highly sensitive to liquidity updates, compliance outcomes, and any evidence of RM-driven RevPAR gains .
  • Medium-term thesis: If LuxUrban 2.0 drives sustainable positive cash flow in core markets with normalized ADRs and stabilized cost base, equity upside exists; execution and capital access are gating factors .
Sources:
- Q2 2024 8-K with Exhibits (press release, call script): **[1893311_0001829126-24-006497_luxurban_8k.htm:1]** **[1893311_0001829126-24-006497_luxurban_ex99-1.htm:0]** **[1893311_0001829126-24-006497_luxurban_ex99-2.htm:0]** **[1893311_0001829126-24-006497_luxurban_ex99-2.htm:1]** **[1893311_0001829126-24-006497_luxurban_ex99-3.htm:0]**
- Q2 2024 earnings call transcript: **[1893311_LUXH_3402212_1]** **[1893311_LUXH_3402212_2]** **[1893311_LUXH_3402212_6]** **[1893311_LUXH_3402212_8]** **[1893311_LUXH_3402212_9]** **[1893311_LUXH_3402212_11]**
- Q2 2024 10-Q: **[1893311_0001829126-24-006460_luxurbanhotels_10q.htm:2]** **[1893311_0001829126-24-006460_luxurbanhotels_10q.htm:3]** **[1893311_0001829126-24-006460_luxurbanhotels_10q.htm:10]** **[1893311_0001829126-24-006460_luxurbanhotels_10q.htm:11]** **[1893311_0001829126-24-006460_luxurbanhotels_10q.htm:20]** **[1893311_0001829126-24-006460_luxurbanhotels_10q.htm:24]** **[1893311_0001829126-24-006460_luxurbanhotels_10q.htm:39]**
- Q1 2024 press release and 10-Q: **[1893311_0001829126-24-003301_luxurban_ex99-1.htm:0]** **[1893311_0001829126-24-003281_luxurbanhotels_10q.htm:2]** **[1893311_0001829126-24-003281_luxurbanhotels_10q.htm:3]** **[1893311_0001829126-24-003281_luxurbanhotels_10q.htm:22]** **[1893311_0001829126-24-003281_luxurbanhotels_10q.htm:30]** **[1893311_0001829126-24-003281_luxurbanhotels_10q.htm:32]**
- Nasdaq notices & financing updates: **[1893311_0001829126-24-005806_luxurban_8k.htm:1]** **[1893311_0001829126-24-005528_luxurban_8k.htm:1]**