LuxUrban Hotels Inc.

Net rental revenue for the quarter ended June 30, 2024 was $18.2 million, down 43% from $31.9 million a year ago. TRevPAR was $188 versus $257 in the prior-year quarter. Cost of revenue was $40.4 million, up 86% from $21.7 million. Gross profit was negative $22.2 million versus positive $10.2 million last year. Total other expense was $185,000 versus $29.7 million in the prior-year quarter. As of June 30, 2024, cash and cash equivalents were $61, current assets were $3.316 million, and working capital was a $62.6 million deficit. Management said 40% of room inventory had been pre-sold at an average Q2 room rate of $220.96, and said the projected average room rate for the same quarter in 2025 is $252.11. Forward-looking commentary centered on stronger Q4 performance, with Rob Arigo saying he is confident Q4 ADR growth could be at least 15% and maybe 18%, and that 2025 should show substantial RevPAR growth once pre-sold rooms roll off.

Robert Arigo framed the quarter as a transition period under LuxUrban 2.0, emphasizing a new management team, a refreshed board, and a narrower focus on properties that can generate positive cash flow. He said the company has removed non-performing assets, is concentrating on New York, and believes the business is at an inflection point as legacy challenges fade. His tone was optimistic and insistent that Q4 and 2025 should show the benefits of the reset, especially as pre-sold inventory expires and the company can target higher-rate segments.

Mike James focused on the financial cleanup and the cost of exiting properties. He cited $18.2 million of net rental revenue, $40.4 million of cost of revenue, a $22.2 million gross profit, and $185,000 of other expense, while noting the quarter was distorted by write-offs and accounting adjustments tied to terminated properties. He also highlighted the weak balance sheet, including $61 of cash and a $62.6 million working capital deficit, but said overhead has been reduced by a few million dollars and that the company is exploring capital raises and strategic initiatives to improve liquidity.

Analysts pressed management on what a ‘clean slate’ year could look like, and Arigo said same-store RevPAR should see substantial growth once pre-sold rooms roll off, with ADR rising significantly and Q4 expected to show at least 15% growth, possibly 18%. On expenses, James said the company had reduced overhead by a few million dollars and intends to stay lean for some time, while Arigo said the portfolio is now at nine properties and management feels good about that number. On liquidity and liabilities, Arigo said roughly $11.2 million of unearned revenue would burn off over time as the pre-sold rooms are occupied, and on Nasdaq compliance James said the company is likely to pursue a reverse stock split, with a proxy potentially 30 to 45 days out and a Nasdaq hearing set for October.