Selina Hospitality posted quarterly losses once again, this time for the first quarter of 2023, also announcing a labour restructuring plan as well as a $50 million investment into the company.
For the first quarter of 2023, the hospitality company posted a net loss of $30.3 million on revenue of $54 million compared to Q1 2022’s net loss of $38.3 million on revenue of $41.2 million. Adjusted EBITDA was $0.4 million in Q1 2023, compared to $1.4 million in Q1 2022, driven by an increase in corporate overhead due to incremental public company costs, pre-opening expenses, and a reduction in government grant income.
Occupancy rate was 56.9 per cent in in the first quarter, up 11.7 percentage points year-on-year from 45.2 per cent.
In an effort to improve profitability, Selina stated that during Q2 2023, it launched a labour restructuring plan which it expects to be completed by the end of the third quarter. The restructuring will impact over 350 full-time employees and is expected to result in annual payroll savings of $5.8 million and a one-time restructuring cost of approximately $1.0 million.
Selina has closed five properties in Mexico, US, Greece, Austria, and Costa Rica, which contributed $2.8 million of the $6.7 million unit-level operating loss in 2022. The company has also begun the selective exit of leases of underperforming locations.
Separately, Selina has secured agreements for a strategic investment of up to $50 million led by an affiliate of higher education platform Global University Systems (GUS). The investment by GUS will be completed in multiple tranches.
Why it matters
Selina Hospitality went public in 2022. However, it has to contend with a hostile environment due to rising interest rates, reduced investor interest and a squeeze on consumer spending. Rafael Museri, co-founder & CEO of Selina has previously blamed the rapid rise in interest rates for shortening the time in which the company was expected to become profitable.
What they said
Rafael Museri, co-founder & CEO of Selina said: “Securing this strategic investment from GUS marks a significant milestone for Selina. This transaction, a result of an exhaustive review of various alternatives, not only fortifies our financial standing as we work towards cash flow positivity and profitability, but also endorses our strategic goals and potential to create value for our shareholders.
As we progress through 2023, Selina continues to focus on three strategic imperatives: enhancing cash flow, making progress on our path to profitability, and building our brand. Our approach includes a focused effort to reduce costs at both the corporate and unit levels, bolster operational efficiency, and accelerate achieving our financial goals.”
Aaron Etingen, CEO of Global University Systems added: “As a global leader in higher education, GUS is proud to collaborate with Selina. This new relationship serves as a hedge against the shifting educational landscape in face of the growing trend of digital nomads in the world of work and educationWe are excited to utilize our expertise to guide Selina's venture into the fast-growing education and student infrastructure sector, creating a unique ecosystem for modern learners.”