US-based LuxUrban Hotels has unveiled plans to expand its business using non-dilutive funding options.
The company's growth strategy is backed by various factors, including the completion of its balance sheet initiatives that have improved its financial position and liquidity.
The factors also include the company’s recent partnership with Wyndham Hotels & Resorts as well as its ability to use its growing asset base to obtain non-dilutive funding.
LuxUrban Hotels president and chief financial officer Shanoop Kothari said: "We believe that we have created a model that offers a clear path to funding our growth through at least the end of 2024 via non-dilutive financing options and significant flexibility with respect to capital allocation.
"The cash generative profile we have created for the company is expected to result in sustainable, free cash flow beginning over the next few quarters, driven by our improving business operations, benefits of scale and the elimination of long-term debt and future payment obligations."
The company reached an agreement with Wyndham Hotels & Resorts to include the company’s current and future hotels under the Trademark Collection by Wyndham brand.
As LuxUrban opens new hotels under the Wyndham brand, Wyndham will reimburse the company about 50% of the security deposit, which will serve as "key money" for ongoing working capital, capital improvements and new hotel acquisitions.
This deal will give LuxUrban a buying power of 150% or more for new hotel openings and inject capital back into the business as it expands.
The company plans to convert 60% of its current hotels to the Trademark Collection brand by September 30 2023 and the rest by the end of Q4 FY23.
This schedule is expected to bring in an additional $7.1m in non-dilutive growth and working capital throughout 2023.
The company plans to add more hotels to its portfolio through long-term master lease agreements and aims to have 2,500-3,000 short-term stay hotel units by December 31 2023.
