Selina Hospitality PLC Announces Q2 and H1 2023 Results

Selina Hospitality PLC ("Selina" or the “Company”), (NASDAQ: SLNA), the fast-growing lifestyle and experiential hospitality company targeting millennial and Gen Z travelers, announced today unaudited financial results for the second quarter and the first half of 2023.

Rafael Museri, Co-Founder and Chief Executive Officer of Selina, said, "Selina continues to focus on three key strategic areas: improving cash flow, advancing toward profitability, and building our brand. During the second quarter, we made progress in our core operating metrics, which reflects these strategic objectives. Through targeted cost-cutting and operational improvements, we continue to make strides in our Adjusted EBITDA and Operating Cash Flow. Our recently announced partnership with Global University Systems (GUS) strengthens our financial standing and extends our reach to new audiences.”

Q2’23 Highlights

• Total second quarter 2023 revenue of $52.5 million, an increase of $7.2 million, or 15.9% compared to second quarter 2022, driven primarily by an increase in bedspaces from newly opened locations, higher occupancy rates, and higher total revenue per bedspace.
• Occupancy rate was 51.4% in Q2 2023, compared to 45.9% for Q2 2022, a 12.0% 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 bedspace was $6,931 in Q2 2023, compared to $6,448 in Q2 2022, a 7.5% increase, driven by the increase in occupancy and the growth coming from developed markets.
• On a same-store basis (locations operating for the entire comparable periods), total revenue increased by 6%, driven by an increase in same-store occupancy and TRevPABs.
• Adjusted EBITDA¹ improved to a $0.7 million loss in Q2 2023, compared to $5.8 million loss in Q2 2022, driven by an increase in Unit Level EBITDA before Rent (Unit Level EBITDAR²), an improvement in Content Brands, and a decrease in Corporate Overhead, offset by an increase in pre-opening expenses.
• Unit Level EBITDAR for Operative Locations increased from $7.4 million in Q2 2022 to $10.0 million in Q2 2023, driven by the increase in revenues and Gross Operating Profit. Unit level rent, on the other hand, increased from $9.2 million in Q2 2022 to $13.4 million in Q2 2023.
• Corporate Overhead, as a percentage of revenues, was 17.8% in Q2 2023, compared to 24.2% in Q2 2022, driven by efficiency in country, regional and global functions offset partially by the incremental costs of becoming a publicly listed company.

H1'23 Highlights

• Total H1 2023 revenue of $106.7 million, an increase of $20.3 million, or 23.4% compared to the first half of 2022, driven primarily by an increase in bedspaces from newly opened locations, higher occupancy rates, and higher total revenue per bedspace.
• Occupancy rate was 54.1% in H1 2023, compared to 45.5% for H1 2022, a 19.0% 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 bedspace was $7,039 in H1 2023, compared to $6,466 in H1 2022, a 8.9% increase, driven by the increase in occupancy and the growth coming from developed markets.
• On a same-store basis (locations operating for the entire comparable periods), total revenue increased by 10% driven by an increase in same-store occupancy and increase in same-store TRevPABs.
• Adjusted EBITDA¹ improved to a $0.3 million loss in H1’23, compared to $4.4 million loss in H1’22, driven by a significant increase in Unit Level EBITDA before Rent (Unit Level EBITDAR²) and an improvement in Content Brands operating performance, offset by an increase in pre-opening expenses.
• Unit Level EBITDAR for Operative Locations increased from $14.9 million in H1’22 to $21.3 million in H1’23, driven by the increase in revenues and Gross Operating Profit. Unit level Rent increased from $17.9 million in H1’22 to $25.5 million in H1’23.
• Corporate Overhead, as a percentage of revenues, was 18.1% in H1’23, compared to 22.8% in H1’22, driven by efficiency in country, regional and global functions offset partially by the incremental costs of becoming a publicly listed company.

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1}Adjusted EBITDA and Free Cash Flow Before Debt Service are non-IFRS measures. Please see Non-IFRS Financial Measures section for reconciliation.
²Unit Level EBITDAR is a segment performance measure reviewed by the Chief Operating Decision Maker ("CODM") to make decisions about resources to be allocated and assess segment performance. Unit Level EBITDAR is defined as Unit Level earnings before interest, income taxes, depreciation and amortization and before rent.

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.

Hotel Portfolio Activity

• Selina has been actively and aggressively executing a comprehensive real estate portfolio optimization plan. This ongoing strategy includes renegotiating all leases through abatements, deferrals, and terminations to significantly reduce rent and operational costs. The closure of five properties in Mexico, U.S., Greece, Austria, and Costa Rica, which contributed $1.2 million of the $3.3 million unit-level operating loss in Q2’23, 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.
• During Q2, Selina opened Dakhla, Morocco. Selina ended the period with 114 properties and 28,825 open bedspaces versus 111 properties and 27,415 open bedspaces at June 30, 2022.

Cash and Cash Flow Highlights

• As of June 30, 2023, the Company had total cash and cash equivalents of $24.6 million.
• Net cash provided by operating activities totaled $3.4 million for Q2 2023, compared to negative $5.2 million in Q2 2022.
• Free cash flow before debt service (FCF)¹ totaled $(13.6) million for Q2 2023, compared to $(20.1) million in Q2 2022.
• On May 31, 2023, Selina drew $10.0 million under its $50.0 million credit facility with Inter-American Investment Corporation (IDB). As of August 31, 2023, the Company had $10.6 million remaining available to draw under the credit facility, subject to customary draw requirements.
• In June 2023, Selina completed and received the first tranche of $10.0 million under its strategic investment from GUS, which totals up to $50.0 million. The second tranche of $20.0 million from GUS is contingent on the Company raising $20.0 million through a PIPE capital raise or other equity funding from parties unrelated to GUS.

Liability Management

• As disclosed in our last Business Update on June 27, 2023, Selina converted approximately $9.5 million owed to a third party under various joint venture arrangements to equity to buy out the third party’s interest in the joint venture. Once fully completed, Selina’s “loan payables” will be reduced by $10.1 million against the amount shown on its balance sheet as of June 30, 2023.

2023 Outlook

• For the second half of 2023, Selina will continue to be guided by the three strategic imperatives we started the year with: improving cash flow, advancing toward profitability, and building the brand.
• On June 27, 2023, the Company suspended its revenue guidance for the year as it reassesses its hotel opening plan for 2023 and 2024, as well as the impact of closed locations in 2023 and organizational restructuring.
• The Company reaffirms its previously provided guidance of achieving positive Adjusted EBITDA and positive Operating Cash Flow for the year. It is noted that the Company's long-term success is contingent on generating profitable operations in the future and securing additional equity or debt financing in the near term. Throughout the second half of 2023, Selina expects to complete the fundraising set out in its strategic transaction with GUS and to raise additional funds, although the success of these fundraising efforts cannot be guaranteed.
• As noted in its Annual Report on Form 20-F for the fiscal year ended December 31, 2022, despite the Company's operating momentum and progress in achieving its core objectives, it does not yet generate sufficient revenue to cover operating expenses.

Investor Presentation

• An accompanying updated investor presentation is available 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.