Florida Hotel Operator Shifts Focus from Florida to New York After $69 Million Loss
28 days ago
LuxUrban Hotels, a Miami-based hospitality company, is making a big move to turn things around after a rough year. Despite losing nearly $69 million in the first half of 2024, CEO Rob Arigo says he's optimistic about the future. During a recent earnings call on September 25, he shared that the company has decided to exit the Florida hotel market and instead focus on nine hotel properties in New York City. This change is part of their “Lux 2.0” plan to cut down on expenses and boost profits.
Why the change? According to Arigo, the Florida hotels just weren't big or profitable enough to make a difference. Most of them had fewer than 75 rooms, so they didn’t quite fit the company’s vision for growth. By shifting focus to New York, where they now manage nine properties with 1,205 rooms, LuxUrban hopes to see better results.
Arigo mentioned that they’re shaking things up internally, too. LuxUrban has a brand-new board of directors, a refreshed management team, and they’re actively recruiting fresh talent to help steer the company in a new direction. “Everyone at LuxUrban is excited about the future,” he said, emphasizing that the ownership groups they’re partnering with are on board with the Lux 2.0 strategy.
One challenge they’re still working through is the issue of presale room contracts that were locked in at rates $50 to $100 below market value. However, about 40% of these contracts are expected to expire by the end of 2024, which should help improve the company’s revenue picture.
The financial report doesn’t paint a pretty picture right now, though. LuxUrban’s second-quarter net loss for 2024 was $26.59 million, and the first half of the year saw a total net loss of $68.74 million. This was a sharp increase compared to their $29.56 million net loss during the first six months of 2023. Adding to the pressure, net rental revenue took a dive, dropping 43% compared to the same period last year.
LuxUrban’s financial situation is definitely in need of improvement, with assets totaling $224.49 million but liabilities reaching $278.94 million as of June 30. They’re also facing a negative cash flow of $20.64 million from operating activities.
The company brought Arigo on board as CEO back in June after letting go of his predecessor, Shanoop Kothari. Shortly after, they delayed releasing their second-quarter financial report due to errors in their previous report, which didn't sit well with investors. This, coupled with their stock price trading below $1, led to a warning from Nasdaq about the risk of being delisted.
CFO Michael James mentioned that LuxUrban has a hearing scheduled with Nasdaq in October and plans to consolidate shares through a reverse stock split to boost their stock price. Although it’s been a challenging year, the LuxUrban team seems determined to turn things around.
Founded in 2017, LuxUrban has its corporate office on Biscayne Blvd in Miami, but it's clear they’re now focusing their energy on making New York the heart of their operations.
Who will stay in your luxury hotel rooms ???? Tourists are avoiding NYC because of safety concerns and inflation. Guess you are courting the city contract to house illegals which will destroy your hotel
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