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Selina Hospitality PLC Provides Business Update

  • Executes Financing of up to $50 million with an Initial Tranche of $10 million Expected to be Funded on or around June 27, 2023
  • Provides Update on First Quarter 2023 Financial Results, Showing Improvement in Key Operating Metrics vs First Quarter 2022
  • In Second Quarter 2023, initiated a Labor Restructuring Plan expected to generate annualized payroll savings of $5.8 million and have a one-time cost impact of approximately $1.0 million
  • Transaction and Business Update will be discussed on Conference Call Scheduled for June 29, 2023

Selina Hospitality PLC ("Selina" or the “Company”), (NASDAQ: SLNA), the fast-growing lifestyle and experiential hospitality company targeting millennial and Gen Z travelers, today announced a business update on its operational performance and capital structure initiatives.

Executes Financing of Up to $50 Million

Selina has secured agreements for a strategic investment totaling up to $50 million led by an affiliate of Global University Systems ("GUS" or the “Investor”), a leading global higher education platform. This funding is part of the Company’s plan to strengthen its balance sheet as it continues on its path to achieving profitability and cash flow positive operations. The investment by GUS will be completed in multiple tranches as follows:

  • The first tranche comprises an immediate $10.0 million in funding under a secured convertible debt instrument.
  • After securing an additional $20.0 million in PIPE equity or other funding from parties other than the Investor or any of its affiliates and satisfying other funding conditions, the Investor commits to an additional tranche of $10.0 million via a private investment in public equity (“PIPE”) and an additional $10.0 million in PIPE investment and/or convertible debt.
  • The arrangements also provide for an optional third tranche that includes $20.0 million from the Investor, consisting of PIPE investment and/or convertible debt, in each case generally on the same terms as the initial convertible debt and PIPE funding.
  • Should all investments be completed, including the additional $20.0 million in conditional funding required to unlock the second tranche of investments, Selina will have secured $50-$70 million of additional capital.

As part of its investment, the Investor will receive warrants to acquire additional shares in the Company at a premium to the current trading price, and have the ability to appoint two directors to Selina’s Board of Directors. These agreements, the details of which are included within a Report on Form 6-K filed today with the Securities and Exchange Commission, are part of the company's wider strategy to strengthen its balance sheet and continue on its path to profitability.

Rafael Museri, co-founder and Chief Executive Officer 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. Our affiliation with GUS logically extends our commitment to providing exceptional experiences to an underserved group: students who learn abroad. As we work to streamline operations, curtail expenses, and enhance unit economics, we are grateful for GUS's trust in our vision and potential. My co-founder Daniel, I, and our investment vehicle Kibbutz Holding S.a.r.l., stand firmly committed to Selina's future. As part of this strategic investment, we are personally guaranteeing Selina’s obligations under the convertible debt arrangements, reinforced by a corporate guarantee from Kibbutz. This commitment reflects our unwavering dedication to steer Selina towards profitability.”

Aaron Etingen, Chief Executive Officer of GUS, expressed his enthusiasm about the partnership, stating, "As a global leader in higher education, GUS is proud to collaborate with Selina. Their inventive approach to hospitality aligns perfectly with our mission to foster innovative learning environments. Selina's unique blend of thoughtfully designed accommodations, coworking spaces, wellness offerings, and immersive local experiences is expected to resonate with our diverse student base. This includes approximately 100,000 full-time degree students under GUS and the broader community connected to FutureLearn - Europe’s largest online education platform - encompassing 18 million students and alumni worldwide. Recognizing the growing trend of work and study nomads, we see our collaboration with Selina as a pioneering opportunity to adapt to these evolving dynamics. This new relationship is not only a strategic investment for us, but also serves as a hedge against the shifting educational landscape in face of the growing trend of digital nomads in the world of work and education. Selina’s properties, many of which already exude the vibrant atmosphere of university campuses, are extremely relevant and embody the future of lifelong learning. We 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. Our vision is to push the boundaries of conventional education by delivering accessible learning opportunities across the globe, intertwining travel, education, and the evolving demands of the modern workforce. We foresee this opportunity broadening the reach of education and revolutionizing the way people learn, work, and travel."

Beyond the notable investment, Selina’s strategic alliance with GUS will help Selina connect with another expansive, dynamic community. The collaboration between the parties is expected to help broaden and diversify the customer bases for each company. It is envisioned that Selina will become an important touchpoint for the GUS community, providing a comfortable and engaging environment for learning, work, and travel. This affiliation also opens the door for GUS to implement educational programs, accommodate students, and facilitate global study initiatives leveraging Selina's extensive network of properties.

Q1 2023 Update

Rafael Museri, Co-Founder and Chief Executive Officer, shared: “Selina's first quarter performance is marked by continued operational momentum, with significant year-over-year growth in occupancy rates and considerable advancements in key financial metrics. 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. In tandem, we are committed to continuing to work on lease and loan renegotiations and the restructuring of liabilities. These strategic moves are anticipated to help improve our cash liquidity and strengthen Selina's financial position.”

Selina also continues to demonstrate its commitment to a multi-faceted optimization strategy focused on streamlining operations, reducing expenses, and improving unit economics. Selina has enacted a series of initiatives in pursuit of these objectives, including workforce and labor optimization initiatives and steps to reduce its leasehold and other liabilities. In parallel, Selina has been enhancing its food and beverage offerings, with the goal of improving the guest experience and enhancing profitability of existing venues.

Museri concluded by saying, "We are taking bold and decisive steps to position Selina for long-term success. Our commitment to our unique hospitality model remains strong. We acknowledge the challenges ahead and are committed to addressing them directly. We look forward to sharing more updates as we make progress on our transformation journey."

Q1’23 Highlights

  • Total revenue of $54.2 million, an increase of $13.0 million, or 31.6% compared to first quarter 2022, driven primarily by an increase in bedspaces from newly opened locations, higher occupancy rates, and higher total revenue per bedspace.
  • On a same-store basis (locations operating for the entire comparable periods), total revenue increased by 18.1% driven by an increase in same-store occupancy, from 46.0% to 58.8%, and a 13.3% increase in same -store TRevPABs from $6,710 to $7,602.
  • Occupancy rate was 56.9% in Q1 2023, compared to 45.2% for Q1 2022, an 11.7% increase, driven by improved brand awareness and brand loyalty, a dedicated regional sales force and commercial teams, and the continued seasoning of our recently opened properties.
  • Total annualized revenue per bed space was $7,056 in Q1 2023, compared to $6,825 in Q1 2022, a 3.4% increase, driven by the increase in occupancy and the growth coming from developed markets.
  • Unit Level Operating Loss improved to $0.9 million in Q1 2023, compared to $1.2 million loss in Q1 2022, mostly coming from improvements in Central and South America where Selina benefits from more mature locations.
  • Corporate Overhead as a percentage of revenues was 18.4% in Q1 2023, compared to 21.3% in Q1 2022, driven by a strong focus on efficiency in country, regional and global functions offset partially by the incremental costs of becoming a publicly listed company.
  • Adjusted EBITDA1 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, offset by an improvement in unit level operating loss.
 

Q1’23 Financial Summary

 

Quarter Ended

 

 

($ in millions, except properties and bedspaces data)

 

March 31,

 

 

 

2023

 

2022

 

Percent Change

Revenue

 

$54.2

 

$41.2

 

31.6%

Net Loss

 

($30.3)

 

($38.3)

 

(20.9%)

Adjusted EBITDA1

 

$0.4

 

$1.4

 

(71.4%)

Net Cash Used in Operating Activities

 

($0.7)

 

($5.3)

 

86.8%

Free Cash Flow Before Debt Service1

 

($12.6)

 

($14.3)

 

11.9%

Occupancy Rate

 

56.9%

 

45.2%

 

 

Properties, End of Period

 

118

 

103

 

14.6%

Bedspaces, end of Period

 

29,600

 

24,159

 

20.5%

Total Annualized Revenue per Bedspace

 

$7,056

 

$6,825

 

3.4%

___________________________

1 Adjusted EBITDA and Free Cash Flow Before Debt Service are non-IFRS measures. Please see Non-IFRS Financial Measures section for reconciliation.

Operational Optimization

  • During Q2 2023, the Company launched a Labor Restructuring Plan that is anticipated to impact over 350 full-time employees at the unit and corporate levels, with expected annual payroll savings of $5.8 million and a one-time restructuring cost of approximately $1.0 million. The restructuring is expected to be completed by the end of Q3 2023.

New Hotel Openings

  • Selina did not open any properties during Q1 2023, ending the period with 118 properties and 29,600 open bedspaces vs 103 properties and 24,159 open bedspaces at March 31, 2022.
  • Selina has begun the selective exit of leases of underperforming locations, a critical step towards achieving long-term financial sustainability.
  • The closure of 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, are expected to be completed by the end of Q3 2023, giving rise to one-time costs of $0.2 million in estimated early termination penalties.
  • The Company remains committed to ongoing lease negotiations, with the goal of reducing $800,000 of cash rent per month.

Cash and Cash Flow Highlights

  • As of March 31, 2023, the Company had total cash and cash equivalents of $23.2 million.
  • Net cash used in operating activities totaled $0.7 million for Q1 2023, compared to $5.3 million in Q1 2022.
  • Free cash flow before debt service (FCF)1 totaled $(12.6) million for Q1 2023, compared to $(14.3) million in Q1 2022. FCF in Q1 2022 was positively impacted by an inflow from partner loans of $11.3 million. Excluding inflows from partner loans and related capex spend, FCF totaled $(8.5) million in Q1 2023 vs $(16.9) million in Q1 2022.
  • On May 31, 2023, Selina drew $10 million under its $50 million credit facility with Inter-American Investment Corporation (IDB Invest). The Company currently has $10.6 million available to draw under the credit facility, subject to compliance with the draw requirements, as of May 31, 2023.

Liability Management

On June 23, 2023 the Company, certain subsidiaries of the Company and YAM at Selina Ops, L.P. (“YAM”) entered into (i) an amendment agreement that amends and supplements the joint venture arrangements among the parties pertaining to the development of the Company’s business in Panama, Costa Rica and Nicaragua, and (ii) an equity subscription agreement in order to (among other things) equitize approximately $9.5 million owed to YAM under those joint venture arrangements and provide for the buy-out of YAM’s interest in the joint venture. Once fully completed, Selina's “current loan payables” will be reduced by $10.1 million against the amount shown on its balance sheet as of March 31, 2023. Those agreements are described in more detail as part of a separate Report on Form 6-K filed today with the Securities and Exchange Commission.

2023 Outlook

  • For the balance of 2023, Selina will continue to be guided by three strategic imperatives: driving cash flow, executing a path to profitability, and building the brand. The Company reaffirms its previously provided guidance of achieving positive Adjusted EBITDA and positive operating cash flow for the year, and will prioritize these objectives over top-line growth. The Company will reassess its previous guidance on top-line growth (previous: 30-40% revenue growth for 2023) when it announces its Q2 and H1 2023 results, after further considering the impact on the Company’s business of the fundraising transaction and related cost control requirements as well as the operational initiatives it has commenced implementing, including lease terminations and organizational restructuring.
  • Despite the Company's operating momentum and progress in achieving its core objectives, it does not yet generate sufficient revenue to cover operating expenses as noted in its Annual Report on Form 20-F for the fiscal year ended December 31, 2022. The Company's success is contingent on generating profitable operations in the future and securing additional equity or debt financing in the near term. Throughout 2023, Selina expects to complete the fundraising set out in its strategic transaction with Global University Systems BV ("GUS") and to raise additional funds as necessary and is exploring other options, including restructuring certain liabilities and/or selling non-core assets, although the success of these fundraising efforts cannot be guaranteed.

Conference Call Details

A conference call to discuss Selina’s fundraising transaction, financial results for the quarter ended March 31, 2023 as well as a general business update, is scheduled for June 29, 2023:

  • Please register for the call. You can register any time starting now through the call.
  • Link to register: https://edge.media-server.com/mmc/p/b7vg899z
  • Registration in advance is encouraged. As part of the registration process, you can choose to be provided with the dial-in and PIN or to use the automated “Call Me” feature.
  • An accompanying updated investor presentation will be available online prior to the cal on June 29, 2023 at https://investors.selina.com/
  • A recorded replay of the conference call will be available after the conclusion of the call and will be available for a period of time online at https://investors.selina.com/

About Selina Hospitality PLC.

Selina (NASDAQ: SLNA) is one of the world’s largest hospitality brands built to address the needs of millennial and Gen Z travelers, blending beautifully designed accommodation with coworking, recreation, wellness, and local experiences. Founded in 2014 and custom-built for today’s nomadic traveler, Selina provides guests with a global infrastructure to seamlessly travel and work abroad. Each Selina property is designed in partnership with local artists, creators, and tastemakers, breathing new life into existing buildings in interesting locations in 24 countries on six continents – from urban cities to remote beaches and jungles. To learn more, visit Selina.com or follow Selina on Twitter, Instagram, Facebook, Linkedin or YouTube.

About Global University Systems

Global University Systems (GUS) is a powerhouse in the global education sector, boasting a diversified portfolio of institutions across 12 countries, including the UK, Germany, Canada, Ireland, India, Israel, and Singapore. Dedicated to providing quality education, fostering innovation, and promoting international collaboration, GUS offers an array of flexible study options that accommodate the unique personal and professional commitments of its students. These options include online and blended learning through the FutureLearn platform, Europe’s largest online education platform with a community of over 18 million students and alumni worldwide. GUS itself is home to a vibrant and diverse community of over 100,000 active degree students from 150 nationalities on average per year. Through its various educational initiatives, GUS impacts millions of lives each year, and with its extensive networks, the potential reach is even greater. Their strategic investment in Selina underscores GUS's commitment to broadening its influence, fostering environments that seamlessly blend education and travel, and enriching the lives of a globally dispersed community of learners and travelers. To learn more, visit GlobalUniversitySystems.com.

 

SELINA HOSPITALITY PLC AND ITS SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

U.S. DOLLARS IN THOUSANDS

 

 

At

March 31,

At

December 31,

2022

ASSETS

2023 (unaudited)

Current assets

 

 

Cash

23,209

 

47,689

 

Trade and other receivables, net

11,043

 

10,543

 

Inventory

2,437

 

2,286

 

Assets held for sale

2,500

 

2,500

 

Other assets

19,604

 

16,681

 

Total current assets

58,793

 

79,699

 

Non-currents assets

 

 

Property, equipment and furniture, net

112,809

 

111,330

 

Right of use assets

414,805

 

420,800

 

Intangible assets, net

6,790

 

6,424

 

Goodwill

543

 

548

 

Trade and other receivables, net

1,681

 

1,671

 

Investment in associates and joint ventures

3,398

 

3,336

 

Non-current financial assets

3,150

 

3,149

 

Security deposits

10,858

 

10,910

 

Other assets

370

 

424

 

Total non-current assets

554,404

 

558,592

 

Total assets

613,197

 

638,291

 

 

 

 

LIABILITIES AND EQUITY

 

 

Current liabilities

 

 

Trade payables and other liabilities

(84,417

)

(81,526

)

Loans payable

(36,408

)

(37,678

)

Convertible notes

(7,859

)

(7,914

)

Lease liabilities

(58,882

)

(59,115

)

Derivative financial liabilities

(1,216

)

(1,216

)

Warrants

(1,852

)

(1,481

)

Total current liabilities

(190,634

)

(188,930

)

 

 

 

Non-currents liabilities

 

 

Loans payable, net of current portion

(101,086

)

(97,996

)

Convertible notes, net of current portion

(42,706

)

(39,182

)

Lease liabilities, net of current portion

(467,062

)

(469,745

)

Deferred tax liability

(325

)

(329

)

Employee payables

(7,302

)

(6,852

)

Total non-current liabilities

(618,481

)

(614,104

)

Total liabilities

(809,115

)

(803,034

)

 

 

 

Equity

 

 

Common stock

(489

)

(488

)

Additional paid-in capital

(564,390

)

(563,210

)

Currency translation adjustment

3,226

 

1,452

 

Other reserves

799

 

552

 

Accumulated deficit

755,408

 

725,248

 

Total equity

194,554

 

163,554

 

Non-controlling interest

1,364

 

1,189

 

Total liabilities and equity

(613,197

)

(638,291

)

 

SELINA HOSPITALITY PLC AND ITS SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF PROFIT OR LOSS

U.S. DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA (UNAUDITED)

 

 

Three Months Ended

March 31

 

2023

2022

 

 

 

Revenue

 

 

Rooms

 

32,335

 

 

22,969

 

Food & beverage

 

15,047

 

 

12,288

 

Other, net

 

6,867

 

 

5,927

 

Total revenue

 

54,249

 

 

41,184

 

Costs and expenses

 

 

Cost of sales

 

(6,773

)

 

(4,267

)

Payroll and employee expenses

 

(23,409

)

 

(21,659

)

Insurance, utilities and other property maintenance costs

 

(11,724

)

 

(8,262

)

Legal, marketing, IT and other operating expenses

 

(13,890

)

 

(10,467

)

Depreciation and amortization

 

(8,982

)

 

(7,211

)

Total cost and expenses

 

(64,778

)

 

(51,866

)

Loss from operations activity before impairment and government grants

 

(10,529

)

 

(10,682

)

Impairment and write-off of non-current assets

 

 

 

(565

)

Government grants

 

 

 

1,241

 

Loss from operations activity

 

(10,529

)

 

(10,006

)

Finance income

 

2

 

 

27

 

Finance costs

 

(20,755

)

 

(28,848

)

Gain on net monetary position

 

1,252

 

 

944

 

Share of profit / (loss) in associates

 

 

 

14

 

Other non-operating income / (expense), net

 

3

 

 

(106

)

Loss before income taxes

 

(30,027

)

 

(37,975

)

Income tax expense

 

(306

)

 

(300

)

Net loss

 

(30,333

)

 

(38,275

)

Loss attributable to:

 

 

Equity holders of the parent

 

(30,159

)

 

(37,886

)

Non-controlling interest

 

(174

)

 

(389

)

Earnings per share

 

 

Basic and diluted, loss for the year attributable to equity holders of the parent

$

(0.31

)

$

(0.87

)

 

SELINA HOSPITALITY PLC AND ITS SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

U.S. DOLLARS IN THOUSANDS (UNAUDITED)

 

 

Three Months Ended

March 31

 

2023

2022

Cash flow from operating activities:

 

 

Loss for the year

(30,333

)

(38,275

)

Adjustments to reconcile net loss to operating cash flows:

 

 

Depreciation and amortization expense

8,982

 

7,211

 

Share-based compensation expense

521

 

2,234

 

Share of loss in associates

 

(14

)

Impairment and write off of non-current assets

 

565

 

Gain on net monetary position

(1,252

)

(944

)

Finance costs

20,755

 

28,847

 

Finance income

(2

)

(27

)

Income tax expense charged

306

 

300

 

 

 

 

Changes in working capital

372

 

(5,202

)

 

 

 

Net cash used in operating activities

(651

)

(5,305

)

Cash flow from investing activities:

 

 

Investments in financial assets

 

 

Purchases of property, equipment and furniture

(4,053

)

(8,056

)

Security deposits (paid) / returned

51

 

(172

)

Purchases of intangible assets

(540

)

(452

)

Proceeds from sales of property, equipment and furniture

 

 

Acquisition of business, net of cash acquired

 

 

Net cash used in investing activities

(4,542

)

(8,680

)

Cash flow from financing activities:

 

 

Proceeds from loans

2,698

 

23,184

 

Convertible note proceeds

 

 

Repayment of loans

(2,514

)

(2,060

)

Interest paid

(2,869

)

(2,549

)

Repayment of lease liabilities

(13,775

)

(12,051

)

Exercises of share options

 

 

Costs of equity raise

(200

)

 

Capital contributions

 

 

Net cash provided by financing activities

(16,660

)

6,524

 

Effect of changes in exchange rates on cash & cash equivalents

(2,627

)

 

Change in cash and cash equivalents during the period

(24,480

)

(7,461

)

Cash and cash equivalents at start of period

47,689

 

21,943

 

Cash and cash equivalents at end of period

23,209

 

14,482

 
 

 

Segment Reporting for the quarter ended March 31, 2023 (unaudited)

 

(In thousands of US$)

 

Mexico

 

South

America

 

North

America

 

Central

America

 

Europe &

Africa

 

Israel

 

APAC

 

Operative

Locations

 

Content

Brands

 

Adjustments

 

Total

Consolidated

Rooms

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

4,740

 

 

8,240

 

 

3,811

 

 

6,400

 

 

3,793

 

 

3,780

 

 

1,973

 

 

32,737

 

 

 

 

(402

)

 

32,335

 

Gross Operating Profit / (Loss)

2,053

 

 

3,728

 

 

1,344

 

 

3,009

 

 

404

 

 

207

 

 

912

 

 

11,657

 

 

 

 

(163

)

 

11,494

 

Food & Beverage

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

3,350

 

 

3,563

 

 

834

 

 

3,955

 

 

1,645

 

 

1,579

 

 

581

 

 

15,507

 

 

 

 

(460

)

 

15,047

 

Gross Operating Profit / (Loss)

(319

)

 

82

 

 

(337

)

 

350

 

 

(427

)

 

(246

)

 

(5

)

 

(903

)

 

 

 

(67

)

 

(969

)

Other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

866

 

 

957

 

 

166

 

 

1,916

 

 

366

 

 

311

 

 

290

 

 

4,872

 

 

2,746

 

 

(751

)

 

6,867

 

Gross Operating Profit / (Loss)

531

 

 

365

 

 

148

 

 

672

 

 

178

 

 

207

 

 

197

 

 

2,299

 

 

(310

)

 

(129

)

 

1,859

 

All Selina products

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

8,956

 

 

12,760

 

 

4,811

 

 

12,271

 

 

5,804

 

 

5,671

 

 

2,844

 

 

53,115

 

 

2,746

 

 

(1,612

)

 

54,249

 

Gross Operating Profit / (Loss)

2,265

 

 

4,176

 

 

1,155

 

 

4,031

 

 

155

 

 

167

 

 

1,104

 

 

13,053

 

 

(310

)

 

(359

)

 

12,384

 

Unit Level EBITDAR

1,988

 

 

3,782

 

 

650

 

 

3,953

 

 

(31

)

 

(158

)

 

1,122

 

 

11,305

 

 

(310

)

 

(359

)

 

10,637

 

Rent

(1,838

)

 

(2,628

)

 

(2,176

)

 

(1,270

)

 

(2,507

)

 

(1,376

)

 

(458

)

 

(12,253

)

 

 

 

 

 

(12,253

)

Unit-Level Operating Profit / (Loss)

150

 

 

1,153

 

 

(1,526

)

 

2,683

 

 

(2,538

)

 

(1,533

)

 

664

 

 

(947

)

 

(310

)

 

(359

)

 

(1,616

)

Rent add-back

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

12,253

 

Pre-opening Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(533

)

Corporate Overhead

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(9,752

)

Non-Cash compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(521

)

Non-recurring public company readiness cost

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,375

)

Depreciation and amortization

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(8,982

)

Finance income / (expense), net

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(20,753

)

Non operational income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,252

 

Income Tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(306

)

Net Operating Income/(Loss)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(30,333

)

 
 

 

Segment Reporting for the quarter ended March 31, 2022 (unaudited) - Re-casted

 

(In thousands of US$)

 

Mexico

 

South

America

 

North

America

 

Central

America

 

Europe &

Africa

 

Israel

 

APAC

 

Operative

Locations

 

Content

Brands

 

Adjustments

 

Total

Consolidated

Rooms

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

4,939

 

 

6,081

 

 

2,500

 

 

5,322

 

 

1,843

 

 

1,992

 

 

162

 

 

22,838

 

 

 

130

 

 

22,969

 

Gross Operating Profit / (Loss)

2,808

 

 

2,128

 

 

603

 

 

2,287

 

 

57

 

 

210

 

 

(123

)

 

7,970

 

 

 

 

 

7,970

 

Food & Beverage

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

4,281

 

 

2,052

 

 

1,080

 

 

3,564

 

 

746

 

 

655

 

 

16

 

 

12,394

 

 

 

(106

)

 

12,288

 

Gross Operating Profit / (Loss)

365

 

 

(187

)

 

(545

)

 

124

 

 

(258

)

 

(359

)

 

(41

)

 

(900

)

 

 

 

 

(900

)

Other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

474

 

 

812

 

 

115

 

 

1,608

 

 

247

 

 

201

 

 

3

 

 

3,460

 

 

1,160

 

1,307

 

 

5,927

 

Gross Operating Profit / (Loss)

239

 

 

463

 

 

114

 

 

501

 

 

203

 

 

17

 

 

3

 

 

1,541

 

 

569

 

765

 

 

2,875

 

All Selina products

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

9,694

 

 

8,944

 

 

3,694

 

 

10,495

 

 

2,837

 

 

2,848

 

 

180

 

 

38,692

 

 

1,160

 

1,332

 

 

41,184

 

Gross Operating Profit / (Loss)

3,412

 

 

2,405

 

 

172

 

 

2,913

 

 

3

 

 

(132

)

 

(162

)

 

8,611

 

 

569

 

765

 

 

9,945

 

Unit Level EBITDAR

3,302

 

 

2,101

 

 

(188

)

 

2,798

 

 

(61

)

 

(209

)

 

(175

)

 

7,569

 

 

569

 

765

 

 

8,903

 

Rent

(1,583

)

 

(2,414

)

 

(1,188

)

 

(993

)

 

(1,794

)

 

(767

)

 

 

 

(8,739

)

 

 

 

 

(8,739

)

Unit-Level Operating Profit / (Loss)

1,719

 

 

(312

)

 

(1,377

)

 

1,805

 

 

(1,855

)

 

(976

)

 

(175

)

 

(1,170

)

 

569

 

765

 

 

163

 

Rent add-back

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

8,739

 

Pre-opening Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(408

)

Corporate Overhead

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(8,225

)

Non-Cash compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(3,125

)

Non-recurring public company readiness cost

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(616

)

Depreciation and amortization

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(7,211

)

Impairment and write-off of non-current assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(565

)

Government grants

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,241

 

Finance income / (expense), net

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(28,821

)

Non operational income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

853

 

Income Tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(300

)

Net Operating Income/(Loss)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(38,275

)

 

KEY METRICS AND NON-IFRS FINANCIAL MEASURES

Management uses a number of operating and financial metrics, including the following key business metrics, to evaluate Selina’s business, measure Selina’s performance, identify trends affecting Selina’s business, formulate financial projections and business plans, and make strategic decisions. Management regularly reviews and may adjust Selina’s processes for calculating Selina’s internal metrics to improve their accuracy. This release includes Adjusted EBITDA and Free Cash Flow Before Debt Service, which are not prepared in accordance with the international financing reporting standards issued by IFRS. Management believes that these non-IFRS financial measures provide useful information to investors about our business and financial performance, but there are limitations related to the use of these non-IFRS financial measures and they may not be directly comparable to similar titled measures of other companies. These non-IFRS financial measures should be considered in addition to, and not as a substitute for or superior to, measures of financial performance prepared in accordance with IFRS and should not be considered as an alternative to any measures derived in accordance with IFRS.

  • When we report figures on a same-store basis, that refers to properties operating for the entire comparable periods.
  • We define our occupancy rate as the number of beds sold divided by the total number of open beds, over any given period.
  • Open beds reflect the total number of beds in inventory at opened properties at the end of any given period. As our properties have the ability to convert rooms into different bed configurations, the total number of open beds may fluctuate at any given location over any given period.
  • Average daily open beds is calculated as the total number of beds in inventory over any given period of time on a daily basis. This metric reflects Selina’s daily accommodation capacity and is used in the calculation of occupancy rate.
  • We define TRevPOB as total revenue, excluding Remote Year revenue, for any given property, for any given period, divided by the number of beds sold in that same period. This measure removes the impact of occupancy, as it reflects total revenue on a per occupied bed basis. Changes in this metric reflect the variability in our business arising from our ability to change room and bed configurations based on demand.
  • We define TRevPOBs as total revenue, excluding Remote Year revenue, for any given property, for any given period, divided by the number of bedspaces sold in that same period. The number of bedspaces sold is determined by multiplying the occupancy rate for any given period by the average of the total number of open bedspaces at the beginning and end of that period. This measure removes the impact of occupancy, as it reflects total revenue on a per occupied bedspace basis.
  • Total revenue per bedspace is calculated as total revenue, excluding Remote Year revenue, for any given property, for any given period, divided by the average of the total number of open bedspaces at the beginning and end of that period. Management views total revenue per bedspace as a useful measure of comparing performance between locations or cohorts over time, as well as providing an indication of future revenue potential as we continue to grow total bedspaces.
  • The number of open bedspaces reflects the total number of bedspaces at opened properties at the end of any given period. Bedspaces is a metric we use to measure the potential sleeping capacity of a given property. It is a static capacity measure, and not one reflecting actual capacity in a given period. Every 5.5m2 of accommodation (sleeping room) area in a property equals one bedspace. Our rooms are designed to be convertible into different modalities and with distinct bed configurations. We offer “Standard” accommodations with one double bed, “Twins'' accommodations with two single beds, “Family” accommodations with space designed to accommodate up to four people, and “Community” accommodations with space designed to accommodate up to eight people. At the discretion of property managers, the double bed in a “Standard'' accommodation can be replaced with a bunk bed for eight guests, for example. Accordingly, management views the number of bedspaces, instead of the number of physical beds, as the static measure of property capacity because it avoids potentially misleading fluctuations that would arise from the changing room configurations in any given property.
  • EBITDA is defined as IFRS net profit (loss) excluding impact of income taxes, net interest expense (finance income and costs), and depreciation and amortization. Adjusted EBITDA is defined as EBITDA, excluding (i) non-operating income (expense), such as gain on net monetary position, share of profit/(loss) in associates, other non-operating income / (expense), and income from COVID-related concessions, (ii) impairment losses, (iii) non-cash stock-based compensation expense, (iv) non-recurring public company readiness costs, and (v) provision for tax risks that are non-income tax related.
  • Operating Cash Flow is defined as Net Cash used in Operating Activities in the IFRS Consolidated Statement of Cash Flows. Free Cash Flow Before Debt Service is defined as Operating Cash Flow, minus: (i) repayment on lease liabilities, and (ii) net cash used in investing activities; plus (iii) non-recurring SPAC transaction related payments, and (iv) proceeds from partner loans, to reflect only Selina out-of pocket capital expenditures.
 

Key Metrics

The table below sets forth our key business metrics for the periods presented:

 

 

Three Months Ended

March 31

Metric

2023

 

2022

Opened properties (at period end)

 

118

 

 

 

103

 

Open bedspaces (at period end)

 

29,600

 

 

 

24,159

 

Open beds (at period end)

 

20,217

 

 

 

18,661

 

Average daily open beds

 

19,435

 

 

 

16,347

 

Occupancy rate

 

56.9

%

 

 

45.2

%

Total daily revenue per occupied bed (TRevPOB)

$

51.8

 

 

$

53.3

 

Total daily revenue per occupied bedspace (TRevPOBs)

$

34.3

 

 

$

41.4

 

Total revenue per bedspace

$

1,740

 

 

$

1,683

 

 

Non-IFRS Financial Measures

EBITDA, Adjusted EBITDA and Free Cash Flow before Debt Service

 

 

Three Months Ended

March 31

 

(In millions of US$)

 

2023

 

2022

IFRS Net loss

$

(30.3

)

 

$

(38.3

)

Add (deduct):

 

 

 

Income taxes

$

0.3

 

 

$

0.3

 

Finance income / (expense), net

 

20.8

 

 

 

28.8

 

Share listing expense

 

 

 

 

 

Depreciation and amortization

 

9.0

 

 

 

7.2

 

EBITDA

$

(0.2

)

 

$

(2.0

)

Non-operational income, net

 

(1.3

)

 

 

(0.9

)

Impairments

 

 

 

 

0.6

 

Non-Cash compensation expense

 

0.5

 

 

 

3.1

 

Non-recurring public company readiness costs

 

1.4

 

 

 

0.6

 

Provision for tax risks (non-income tax related)

 

 

 

 

 

Adjusted EBITDA

$

0.4

 

 

$

1.4

 

 

 

 

 

 

 

 

 

 

Three Months Ended

March 31,

 

(In millions of US$)

 

2023

 

2022

Net cash used in operating activities

$

(0.7

)

 

$

(5.3

)

Add (deduct):

 

 

 

Repayment on lease liabilities

$

(13.8

)

 

$

(12.1

)

Net cash used in investing activities

 

(4.5

)

 

 

(8.7

)

Non-recurring SPAC transaction related payments

 

6.0

 

 

 

0.5

 

Proceeds from partner loans

 

0.4

 

 

 

11.3

 

Free Cash Flow before Debt Service

$

(12.6

)

 

$

(14.3

)

 

Forward-Looking Statements

This press release includes “forward-looking statements” within the meaning of the “safe harbor” provisions of the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements generally relate to future events, and include terms such as “may,” “should,” “expect,” “intend,” “will,” “estimate,” “anticipate,” “believe,” “predict,” “potential,” or “continue,” or the negatives of these terms or variations of them or similar terminology. In particular, statements in this press release regarding our beliefs regarding our goals for our performance and financial results for the fiscal year ended December 31 2023, including revenue growth, achieving and sustaining positive adjusted EBITDA and operating cash flow, the efficiency of our business model, our expansion plans, our ability to renegotiate lease terms, our path to profitability, and our ability to obtain additional funding, restructure liabilities and/or sell assets. Such forward-looking statements are subject to risks, uncertainties (some of which are beyond our control), and other factors which could cause actual results to differ materially from those expressed or implied by such forward-looking statements. These forward-looking statements are based upon estimates and assumptions that, while we consider reasonable, are inherently uncertain. Factors that may cause actual results to differ materially from current expectations include, without limitation: potential negative impacts on our financial results as a result of changes in travel, hospitality, and real estate markets, including the possibility that travel demand and pricing do not recover to the extent anticipated, particularly in the current geopolitical and macroeconomic environment; volatility in the capital markets; our ability to execute on our plans to increase occupancy and margins; the potential inability to meet our obligations under our commercial arrangements and debt instruments; delays in or cancellations of our efforts to develop, redevelop, convert or renovate the properties that we own or lease; challenges to the legal rights to use certain of our leased hotels; risks associates with operating a significant portion of our business outside of the United States; risks that information technology system failures, delays in the operation of our information technology systems, or system enhancement failures could reduce our revenues; changes in applicable laws or regulations, including legal, tax or regulatory developments, and the impact of any litigation or other legal or regulatory proceedings; possible delays in ESG and sustainability initiatives; the possibility that we may be adversely affected by other economic, business and/or competitive factors, including risks related to the impact of a world health crisis, such as the ongoing COVID-19 pandemic,; and other risks and uncertainties described under the heading “Risk Factors” contained in the Annual Report on Form 20-F for the fiscal year ended December 31, 2022. In addition, there may be additional risks that Selina does not presently know, or that Selina currently believes are immaterial, that could also cause actual results to differ from those contained in the forward-looking statements. Nothing in this press release should be regarded as a representation by any person that the forward-looking statements set forth herein will be achieved or that any of the contemplated results of such forward-looking statements will be achieved. You should not place undue reliance on forward-looking statements, which speak only as of the date they are made. Except as may be required by law, we do not undertake any duty to update these forward-looking statements.

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