Q1 2024 LuxUrban Hotels Inc Earnings Call
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Ladies and gentlemen, thank you for standing by your family will begin momentarily once again, thank you for standing by.
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Okay.
Ladies and gentlemen, thank you for standing by welcome everyone to the Luxe Seven hotels, Inc. First quarter 2020 full financial results conference call. At this time all lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question answer session. If you'd like to ask a question. During this time simply press star followed by the number one on your telephone keypad, if you'd like to Australia.
Please press star followed by the one once again.
I would now like to hand, the call over to Devin Sullivan managing director of the equity group you May begin your conference.
Speaker Change #118: Thank you Bob Good morning, everyone and thank you for joining us today for Luxe Urban hotels, 2000, 22024 first quarter financial results Conference call.
Speaker Change #123: Speakers for today will be <unk>, the company's Chief Executive Officer, and Robert a Regal Chief operating officer.
Speaker Change #120: Before we begin I'd like to remind everyone that this call may contain certain forward looking statements within the meaning of private Securities Litigation Reform Act of 1995 set forth in section 27, a of the Securities Act 1933, as amended and section 21 E of the Securities Exchange Act of 1934 as amended.
Speaker Change #120: Statements that are not purely historical are forward looking statements forward. Looking statements include but are not limited to statements regarding expectations hopes beliefs intentions or strategies regarding the future.
Speaker Change #120: In addition, any statements that refer to projections or other characterizations of future events or circumstances, including any underlying assumptions. Our forward looking statements generally the words anticipates believes continues could estimates projects intends may might plans possible potential predicts projects would and should and similar expressions may identify forward looking statements.
Speaker Change #120: But the absence of those words does not mean that a statement is not forward looking.
Company Representative: Forward looking statements May include for example statements with respect to the company's ability to successfully be platform its properties.
Speaker Change #120: From its former franchise partner and operate independently its ability to improve its working capital and cash flow profiles enhances its balance sheet and deliver organic revenue growth scheduled property openings expected closings have noted certain lease transactions and the company's ability to continue closing on additional leases for properties in their pipeline as well as the company's anticipated.
Speaker Change #120: <unk> to commercialize efficiently and property profitably property leases and released in the future.
Speaker Change #120: These statements are based on current expectations and beliefs concerning future developments and their potential effect on the company and there can be no assurance that future developments will be those that had been anticipated. These forward looking statements are subject to a number of risks and uncertainties some of which are beyond our control or other assumptions that may cause actual results or performance to be met.
Speaker Change #120: Really different from those expressed or implied by these forward looking statements, including those set forth under the caption risk factors in our public filings with the SEC, including item one a of our annual report on Form 10-K for the year ended December 31 2023.
Speaker Change: Form 10-Q for the three months ended March 31, 2024 filed with the SEC on May 13th 2024, and any updates to those factors set forth in subsequent quarterly reports on Form 10-Q, or other public filings with the SEC. The forward looking information and forward looking statements are made as of today's date and the company does not undertake any update.
Speaker Change: Undertake to update any forward looking information and are forward looking statements that are contained a reference herein, except in accordance with applicable securities laws management will also be discussing non-GAAP financial metrics. A reconciliation of these non-GAAP financial measures to the most comparable GAAP measures can be found in the company's press release.
Shannon: But that said I would now like to turn the call over to Shannon. It's Ari Chinook. Please go ahead.
Speaker Change #129: Thank you Devin and thank you everyone for joining US today, we filed our 10-Q and issued our press release yesterday afternoon. Both documents contain significant details on our operating results with that in mind I'll focus.
Robert: My remarks on selected highlights and key terms after that I will turn the conversation over to our recently appointed Chief operating Officer, Robert Rob joined US in March and hit the ground running he's going to provide an update on its first 60 days and as you role, including insights on the current state of our properties and relationships as plans for enhancing certain aspects of our offer.
Robert: <unk> and progress to date.
Robert: In those areas.
Robert: We remain laser focused on rebuilding trust with our stakeholders and I'm a holder ourselves accountable and every step of the way in collaboration with our New Board. Our executive team has taken a hard look at every aspect of our business model to address weaknesses enhance efficiencies and construct a better path to deliver long term value. We're early in that process.
And while we are encouraged by what we've been able to accomplish to date, we fully acknowledge the challenges that lie ahead.
Speaker Change: The most significant of these initiatives is our mutual decision to unwind our franchise agreement with Wyndham management and the board concluded over long term Luxe Herman will be better served operationally and financially as an independent operator started this business as an independent operator and are fully prepared to go back to our origins. We're in the process of deep platform in your properties from Wyndham cyst.
Shannon: And moving each of our hotel listings back under full company control, we expect that process to be completed by the end of May 2024 with minimal operational disruption.
Shannon: Let's discuss our results for the first quarter net rental revenue rose 27, 6% to $29 1 million from $22 8 million driven by an increase in average units available to rent to 15 35 from $5 71, partially offset by lower total revpar the impact of season.
Shannon: <unk> to our current portfolio and other operational impacts mentioned above.
Shannon: Total revpar declined two eight from $2 57, due to the surrender of properties and the greater impact of seasonality on the portfolio versus the prior year.
Shannon: As a reminder, we estimate property level breakeven to be at 160 to 180 per night, So we're still well above that threshold.
Shannon: As we look out to 2024, we expect that total revpar will rise quarter over quarter for the remainder of the year.
Shannon: We reported a gross profit loss of $4 6 million as compared to the gross profit of $5 4 million.
Speaker Change: Loss in Q1 2024 included lease surrender expense of $1 2 million related to the property in Brooklyn and.
Speaker Change: And an increase of expenses that include among other items Greater commission costs relocation costs employee costs due to the surrender of certain properties.
Shannon: General and administrative expense without noncash items and charges was $3 $3 million.
Speaker Change: Compared to $2 $7 million, reflecting higher unit costs and higher unit counts and associated costs as a percentage of net rental revenues, excluding noncash charges G&A was 11%.
Speaker Change: Compared to 12% last year's first quarter G&A.
Shannon: <unk> margin for the for the 2020 for first quarter was within the range of our target for the full year 2024, total G&A expenses with noncash items rose to $7 6 million from $4 2 million due primarily to $4 3 million and noncash items, including the nonrecurring partner.
Shannon: Ship consideration costs associated with our exit from our franchise partnership.
Speaker Change: Operating expenses, including noncash items comprised of $26 2 million of net rental revenue on Q1 2024 compared to $18 five in last year's first quarter.
Speaker Change: Our operating loss for the quarter was $12 2 million net.
Speaker Change: Net loss was $16 8 million compared to net loss of $2 $7 million net clause loss for Q1 2024 included the Barbara referenced items.
Speaker Change: Plus cash interest and interest and financing costs of $2 5 million and noncash financing costs of $2 3 million, which taken together rose by approximately 950000 from last year's first quarter.
Speaker Change: Adjusted EBITDA was $2 5 million compared to $4 8 million, our EBITDA margin in the quarter has been impacted significantly by all the initiatives. We've taken recently and we expect margins to continue to rise during 2024 to our stated goal of 20% EBITDA margins.
Speaker Change: Moving to the balance sheet as compared to December 31, 2023, cash and cash equivalents rose to approximately $1.8 million compared to zero point $8 million at December 31, 2023.
Speaker Change: Total debt was approximately $6 8 million as compared to total debt of $4 3 million.
Speaker Change: Accounts payable and accrued expenses increased approximately $28 9 million from $23 2 million.
Speaker Change: The increase in accounts payable and accrued expense is primarily related to the surrender properties and the termination of the partnership agreement with.
Speaker Change: With respect to our property.
Speaker Change: <unk> property portfolio as of March 31, 2024, the company leased 13 properties with $13 41 units available for rent with an average weighted lease terms of $15 two years and $19 five years in Q, including extension options were down one property from December 31, 2023, due to reevaluation of our Brooklyn Opera.
Speaker Change: <unk> at this point, we do not expect to reduce our current portfolio any further.
Speaker Change: We welcomed approximately 120000 guests in the first quarter.
Robert <unk>: We continue to believe that there are opportunities for us to raise capital in a strategic and efficient manner and we will be pursuing these opportunities with the best long term interest of our shareholders in mind now I will turn things over to Robert <unk>, Our Chief operating officer, who will provide an overview of our properties and operations Rob.
Speaker Change: Thank you should hope and good morning to all on March 6th I joined <unk> to help transform a successful real estate organization into a new World Class Hotel management companies.
Robert <unk>: Finally opportunity to deploy the master lease agreement and a new and a very different manner intriguing me to say the least.
Robert <unk>: We are providing landlords owners and landlords many of whom are faced with harsh economic and financial realities in a post COVID-19 economies with an alternative solution to selling their assets at depressed values.
Lucky <unk>: He was impressed with Lucky <unk> approach and saw an opportunity to join an outstanding group of real estate professionals to build a company using the master lease agreements longer term provide options of a more traditional third party management solution as a complement to the MLP structure.
Speaker Change: And a career spanning 35 years I've spent the last 15 years developing designing and implementing flat highly successful management teams in New York City.
Speaker Change: I'm looking forward to continue that with less urban.
Speaker Change: So Tom management companies operating urban markets have become very large organizations with high cost platforms and I know one that in today's economy owners are looking for something different.
Speaker Change: On a highly motivated business partner that is aligned with maximizing operational and financial results.
Speaker Change: Honesty transparency engagement energy and enthusiasm to deliver a success story.
Speaker Change: And then my past, we've been able to deliver.
Speaker Change: That.
Speaker Change: Relationships with owners and talking to them not at them and we're going to show that in the coming future. We are building a future profile water management company will look like by endeavoring to create a new organizational structure with industry experts working alongside with the team to help refine the hotel management.
Speaker Change: We redefined hotel mandates, we intend to create a flatter organization with the best systems and tools, because we are developing from the ground up and with input from our owners and landlords, both current and potential our systems will be easy to use easy to operate but most importantly, our management approach allows our.
Speaker Change: General managers and our leaders to be close to the guests generating a memorable experience we will be spending the next three to five months developing the luxe urban culture and.
Speaker Change: And platform for the new ancillary income opportunities such as valet interim dining concepts grab and go marketplaces, bringing life back to the assets that we have today, even more lives once the oil in place expected by Q3, we expect to give guidance on impact to revenues.
Speaker Change: We are early in this process and it will take time, our progress will depend on a number of factors, including our ability to strengthen our financial profile, but our goal and what we believe is the key to <unk> future is a revamped approach to revenue management that is designed.
Speaker Change: That is designed to take advantage of the ever changing market dynamics to realize our revpar potential.
Speaker Change: As it revert back to origins as an independent operator, we're going to be looking at an independent brand and style something that we believe will allow us to be more competitive in the urban markets that do that and we are in the process of developing our own unique style guide slp's percents of arrival, new amenity lines, new uniforms new style.
Speaker Change: Our new <unk> that are going to set us apart.
Speaker Change: Allow us to drive our growth and evolution as an organization.
Speaker Change: The future is bright.
Speaker Change: And I wouldn't be here, if I didn't.
Speaker Change: Otherwise we are striving to be one of the only companies that offers both a master lease agreement options and a tailored next generation third party management solution.
Speaker Change: Our culture is very simple, we want to be blue collar in action and white collar in mind.
Speaker Change: We want to build a platform that allows us to be the vessel values within our markets and bring a refreshing sense of arrival to our engagements are supported by a proud energized and excited group of employees that are dedicated to delivering exceptional service.
Speaker Change: Now I'll turn things back to Shannon.
Shannon Chinook: Thanks, Rob I'll now ask the operator to open the call to questions from our analysts.
Speaker Change: Thank you we will now begin the question and answer session. If you have dialed in I would like to ask a question. Please press star one on your telephone keypad ratio Hammond join the queue, if you'd like to withdraw your question simply press Star one again, if you're a COO.
Speaker Change: Called upon to ask your question and our listing by loud speak on your device. Please pickup your handset and ensure that <unk> is not on mute when asking your question, we will pause for just a moment to compile the Q&A roster.
Speaker Change: Our first question comes from the line of Derek Quinn of <unk>.
Speaker Change: Please go ahead.
Derek Quinn: Hey, guys. Thanks for taking my question I guess, just starting with the unwinding of the Wyndham partnership could you provide a little more color in terms of what led you to decide that you'd be better off operating as an independent operator, considering the benefits that were previously stated with the partnership with higher <unk>.
Speaker Change: Margin and funding I believe 50% of new deposits.
Speaker Change: Yes, so so got it got to be careful.
Speaker Change: What what said just based on our agreements with them.
Speaker Change: It's disclosed in our filings, but look financially I don't think I think mutually both parties just looked at it. It didn't didn't makes sense financially. There are some metrics that were laid out as to what how that impacts margins and I don't I don't think we got to that point, so with that I'll, let's let's move on to <unk>.
Speaker Change: Follow up question, if there is one.
Speaker Change: Okay.
Speaker Change: Just the other expense.
Speaker Change: <unk> line item.
Speaker Change: Income statement that rose.
Speaker Change: Over $12 million in the quarter I was wondering if you could kind of just provide a little more detail in terms of what's included in that.
Speaker Change: <unk> will increase and how you expect that to <unk>.
Speaker Change: <unk> throughout the year.
Speaker Change: Yes, so so <unk>.
Speaker Change: Significant amount of initiatives were taken in the first quarter.
Speaker Change:
Speaker Change: You've mentioned the unwind as well as <unk>.
Speaker Change: Surrender of certain properties. There is there is a significant impact to the cerner in properties with regard to.
Speaker Change: Additional costs labor costs commission costs relocation costs, otas costs et cetera, so so the impact.
Speaker Change: He is in that line.
Speaker Change: And as we navigate through that Youll see that return back to where it was call. It Q3 of last year.
Speaker Change: In terms of the overall metrics look I've spent.
Speaker Change: At a time sort of sort of dig in through.
Speaker Change: The impacts and look from.
Speaker Change: From an overall profitability and EBITDA perspective.
Speaker Change: Once we are done with some of this volatility.
Speaker Change: Wholeheartedly.
Speaker Change: Feel like we'll get back to the EBITDA margins potentially even higher with some of the initiatives Rob laid out there is.
Speaker Change: A couple a couple of things I'd like to highlight one is revenue management two is.
Speaker Change: Sure.
Speaker Change: Obviously ancillary revenue both of which.
Speaker Change: We kicked off a little bit of that rate the impacts of that.
Speaker Change: Our our starting in Q2 not in Q1.
Speaker Change: And then and then overall just.
Speaker Change: Being able to support a different revenue management strategy with DSO PC laid out in terms of guest experience.
Speaker Change: Okay. Thank you.
Speaker Change: And then also on the income statement that the new partnership considerations $2 7 million.
Speaker Change: Could you just explain a little more with this relates to if that's expected to be ongoing and I think I would say that it is non cash and I was just wondering the nature of.
Speaker Change: What this line item there.
Speaker Change: Yes.
Speaker Change: It's the accruals associated to how we look at it so such accruals to noncash.
Speaker Change: Nonrecurring.
Speaker Change: Okay got it and then just for my last question.
Speaker Change: Calculation of adjusted EBIT.
Speaker Change: At around $2 7 million $2 8 million add back.
Speaker Change: <unk>.
Speaker Change: Income taxes and other taxes.
Speaker Change: Provided there is no income taxes in the quarter as well as in the.
Speaker Change: Income taxes payable located on the balance sheet I was just wondering what taxes.
Speaker Change: Relating to specific later, yes. So typically these are property taxes that aren't due until late in the year that we paid in advance so so.
Speaker Change: It's it's expense upon payment as opposed to the amortization over the period covers.
Speaker Change: Okay got it thank you that makes sense.
Speaker Change: Okay.
Speaker Change: Thank you. Our next question comes from the line of Mcneish Matthew of Jones trading. Please go ahead.
Speaker Change: Hey, good morning, guys. Thanks for taking the question are there any insights that you can provide quarter to date on occupancy.
Matthew Erdner: What you guys are seeing there and then in addition to that the transition off of the Wyndham platform do you expect that to affect revenues at all.
Matthew Erdner: So the first part of the question I'll take both parts and then I'll have Rob talked about occupancy as well, so so 77% occupancy for Q1.
Matthew Erdner: That's.
Speaker Change: That's a combination of couple of things right. So so January was was.
Speaker Change: Was pretty heavily seasonally impacted.
Mcneish Matthew: It's typical but I think based on our mix this year versus last year was a little bit more of an impact.
Mcneish Matthew: But as we as we got to the February period.
Mcneish Matthew: Things drastically changed so overall 77, which is taking consideration surrender underperforming properties.
Mcneish Matthew: Overall mix wise extremely high in core core core areas and properties in New York based.
Mcneish Matthew: With.
Mcneish Matthew: Softness in the more seasonal seasonal markets with regard to.
Mcneish Matthew:
Mcneish Matthew: Impacting revenues with regard to partnerships I would say I would say no to that.
Speaker Change: There is no impact to room rates revenues.
Speaker Change: And then Rob if you don't mind just talking about.
Speaker Change: What the.
Speaker Change: Currently in New York portfolio, what Youre seeing in terms of occupancy and so forth.
Rob: Yes, Im actually very.
Rob: With the transition of Wyndham Wyndham was.
Rob: Strong partner of ours, but from a brand perspective theres other opportunities May may and June traditionally, we all know a very strong in New York. So some of the business that we may have lost with the transition.
Rob: We all know that the most valuable key in New York as the last key, especially in these high demand markets.
Speaker Change: So we think the upside potential is much stronger than the loss.
Speaker Change: So I think overall transient demand we see.
Speaker Change: To continue on through the summer everything we are seeing right now we do not see any one pushing the foot off the pedal for New York and early on looking at into September October things, even look better than year over year, probably by plus three or 4%. So.
Speaker Change: We feel very confident that this was the right decision at the right time.
Speaker Change: Okay.
Speaker Change: That's great. Thanks for the color there and then can you talk about the current pipeline and any new agreement should we expect those to kind of be back half loaded or just how are you what are your thoughts around timing on signing new agreements.
Speaker Change: Yeah. So so so.
Speaker Change: So for one we changed our approach to announcing right, we're going to announce that opening not not not before that right. So I think we were pretty clear about that.
Speaker Change: Sort of couple of months ago.
Speaker Change: Just overall.
Speaker Change: Pipeline, there, obviously Rob mentioned.
Speaker Change: The opportunity set is quite there.
Speaker Change: We've got to get through some of the initiatives that we've laid out we've communicated.
Speaker Change: I think we're almost done with the full communication of sort of where we're looking at it.
Speaker Change: So look I would say back half loaded, but we're just not ready to give specific guidance on there I think I think the view here is.
Speaker Change: When it happens it won't be pleasantly surprised to the positive, but I don't think there is there.
Speaker Change: There is incremental.
Speaker Change: Benefit for us to lead with our churn at this point.
Speaker Change: We'll leavers with results.
Speaker Change: Great. Thank you guys.
Speaker Change #100: Thank you. Our next question comes from the line of Knowhow Doxey of Northland Capital markets. Please go ahead.
Knowhow Doxey: Thank you for taking my questions.
Speaker Change: Curious, what's going to be our new property management system, given that youre going to be going away from the Oracle opera.
Speaker Change: Rob you want to take that.
Rob: Yes, so we're actually we're going to be going back to the platform that we have in place which was cloud beds.
Speaker Change: We are also developing our entire platform right now and.
Speaker Change: So the transition was seamless to us and so it didn't cause any concern whatsoever. The team was able to make the transition happen within about four days and.
Speaker Change: So.
Speaker Change: Great question, but the good news it wasn't a major concern.
Speaker Change: Okay. Good to hear that what percent of bookings was going through Wyndham as of the December and March quarter.
Speaker Change: Otas effectively and Otas mix perspective, yes.
Speaker Change: Yes.
Speaker Change: Yes.
Speaker Change: Allowed to disclose that just.
Speaker Change: Factor, which is financially.
Speaker Change: Not not really working for us, but not not going to give that specific number now.
Speaker Change: Okay Alright.
Speaker Change: <unk>.
Speaker Change: You did say at the February 6th Investor Day, though that you guys were able remember breakeven.
Speaker Change: Break even it was about 33%.
Speaker Change: Is that correct at least.
Speaker Change: That was much more Q4 related Q.
Speaker Change #107: Q1 was a different different story.
Speaker Change: Understood. Okay. So you've got it right.
Speaker Change: Think about it though February January is not a great month rates in a lot of data there.
Speaker Change: To really sort of extrapolate, but obviously it's changed right. So.
Speaker Change: Okay.
Speaker Change: Thoughts on why that changed.
Speaker Change: Not not not not going to go through that.
Speaker Change: Limitations in what.
Speaker Change: We can we can sort of say with regard to our agreement. So we're just trying to be sensitive to that.
Speaker Change: Understood understood.
Speaker Change: What about the key cash that's been received does that need to be returned to return with the termination of the agreements.
Speaker Change: Yes, so booked as a liability obviously there is a discussion that goes on that.
Speaker Change: But.
Speaker Change: The way its accounted for.
Speaker Change: Yes.
Speaker Change: Is accurate on the balance sheet right. So so how we've got it accounted for in aggregate is.
Speaker Change: We've added to it.
Speaker Change: Internally with our accountants as accurate how it ends up sort of a TBD.
Speaker Change: Yes understood.
Speaker Change: It's going to weigh on your cash so the bottom line, though right.
Speaker Change: At the point in time, and one that you were trying to thats going to be a drain on cash yes of course, yes.
Speaker Change: Okay Alright.
Speaker Change: And.
Speaker Change: I didn't hear any June <unk> guidance can you give us any sort of color here on how to think about that.
Speaker Change: Look I mean overall.
Speaker Change: We're still still navigating through the portfolio right. So there is there is.
Speaker Change: There is still a little movement.
Speaker Change: The way were seeing things as both increase and significant increase in Revpar for the reasons I mentioned part of it was the the initiatives were taken in Q1. So there is some some lack of comparability numbers, we're seeing well above $2 50 sort of sort of sort of daily bookings.
Speaker Change: And occupancy just Rob and I were talking right before we got on this call occupancy in New York as well.
Speaker Change: Max on your Max capacity to the point, where.
Scott: Scott I've got I've got something booked and the teams asking if I'm going to show up or not so they can release the room right. So so momentum is there obviously revpar is.
Speaker Change: Improving just based on getting out of <unk>.
Speaker Change: Seasonally tough period.
Speaker Change: Guidance wise.
Speaker Change #113: We're not specific going to give specific guidance, but you've got some of the framework for thinking through that.
Speaker Change: Okay.
Speaker Change: Robert.
Robert <unk>: Kind of hinted that the life and the asset has declined can you detail what you mean by that.
Speaker Change: I'm, sorry could you just repeat that one more time I'm sorry, Sir.
Speaker Change: Yes, and you didn't explicitly state that but you know at one point, you said bring back to the asset.
Speaker Change: And then later said bring more life back to the asset so implicitly in that statement is that license asset has declined.
Speaker Change: Or I don't know some bumps basically and so I was wondering if you can just give a little bit more color. So what that statements are saying here.
Speaker Change: The term you're saying is the license to assets is that what you're saying.
Speaker Change: Yes, that's what I believe.
Speaker Change #115: I heard net now.
Speaker Change: He's talking about invigorating sort of a different.
Speaker Change: Customer experience that we.
Speaker Change: We have traditionally run.
Speaker Change: Pretty lean.
Rob: And rob's initiatives as to sort of change the approach sort of welcome approach guest experience et cetera. So I don't think it was lack of life.
Rob: It's more of the amenities to bring additional life right. So so foodservice valets.
Rob: Guest experience welcome experience et cetera.
Speaker Change: <unk> Europe, probably you can expand more I think that's what you look for.
Speaker Change #103: The programs that we were on we want to look at the highest and best use of every square inch of the building works hand in hand, with the ownership, but the opportunities that we're looking at is the new sense of arrival program that will definitely set apart us from any other vendor any other hotel operator, but looking at <unk>.
Speaker Change #103: Incremental revenue opportunities that include bringing valet parking too we have some really great hotels in great locations valet parking opportunities in room dining.
Speaker Change #103: Partnerships Theres local meeting space partnerships, we're looking at.
Speaker Change #103: We're looking at utilizing our suites differently than coming into the market is catered hospitality venues.
Speaker Change #104: We're looking at Reg.
Speaker Change #104: Revenue management platforms different fee structures and really so I think there's so many and then there's another piece that we're just getting ready to implement now is adding a gourmet marketplace to each hotel the grab and go market in New York is very rich and very profitable. So it's just adding more color more profitability to a quality quality existing space.
Rob: But taking it to a new level.
Speaker Change #108: I see okay and to implement these.
Speaker Change #105: Incremental revenue opportunities I presume there is also incremental working capital necessary to implement.
Speaker Change #119: No great question.
Speaker Change: The in the in the gourmet marketplace, it's actually <unk>.
Speaker Change: They provide they do the build outs they do the complete supply material ordering and we they pay off net profit.
Speaker Change: The parking vendors, we've negotiated a pretty strong deal that again, they are paying us net profit for the use of the garage. So.
Speaker Change: A few years back parking lot vendors were not as open to conversation, but now they are getting a little bit better. So we have strong relationships there, but everything that we're looking at right now.
Speaker Change: There'll be some investments when it comes to sense of arrival, but nothing substantial.
Speaker Change: So I think that we're going to prioritize in what comes first.
Speaker Change: But a lot of the things that we're going to be doing.
Speaker Change: Strategic partnerships within the within New York that are going to help us take the hotel that next level.
Speaker Change #101: Thank you.
Speaker Change #102: Thank you. Our next question comes from the line of Daniel <unk> of Benchmark. Please go ahead.
Speaker Change #110: Yes. Thanks, Good morning quick one Rob just to follow up on that.
Speaker Change #111: As we think about.
Speaker Change #106: Some of the integration.
Speaker Change #106: Either from an automation or.
Speaker Change #109: From the hotels advancing their own tech stack in partnership with you guys I'm just curious.
Speaker Change #102: You know, how youre thinking about improving the guest experience and if there is actually any tech advancements that you would like to be making to help.
Speaker Change #102: Further your goals and initiatives at the gate.
Speaker Change #116: Actually we're just getting ready to head into Hy Tech at the end of June.
Speaker Change #102: And we were kind of focused a lot with Alexa in the Amazon platform. So we're going to be working closely with them something.
Speaker Change #102: Looking at Q3, Q4, but bringing some new the most contemporary technology into the guest firm.
Speaker Change #102: I am a big fan of technology that is simple that is easy for the customer to use and.
Speaker Change #102: I think sometimes people jump on technology, a little bit too early but I think using the Amazon platform. It's something we've already reviewed and it's something in the near future for us, but thats still in negotiations and the other part of it is designing and what I've been able to do in the past is designing a management company.
Speaker Change #102: That the technology that the associate is using as easily and easily executed. So the customer is feeling a good experience and is consistent.
Speaker Change #102: I think sometimes technology can be overdone, and sometimes it's not executable. So we're very sensitive to making sure whatever we do works well and consistently.
Speaker Change #112: No that makes total sense and we've seen issues in the past before and just obviously to your point on sort of back half loaded in terms of the pipeline how much do robs initiatives <unk> everything else in what we just talked about influence sort of how you think about expansion potential.
Speaker Change #113: From here does it change potential mix does it change your target just love to get a little bit more color. Thanks.
Speaker Change #130: Yes, so so look we're going to be much more guarded on sort of how we rollout.
Speaker Change #113: <unk> expansion.
Speaker Change #113: But look.
Speaker Change #126: And also actually just just just offhand, Rob wanted to kind of throw out sort of revenue numbers the potential and <unk>.
Speaker Change #121: Decided not to collectively we want to we want to really sort of digest the opportunity set is.
Speaker Change #117: Now I'll mention too.
Speaker Change #117: The impact of working capital.
Speaker Change #117: Certain things can be big impact, but that impact working capital, which we're very focused on.
Speaker Change #117: So look I mean of all the lower hanging fruit initiatives are underway.
Speaker Change #117: As it requires incremental capital.
Speaker Change #117: We're being much more methodical about it we're much more focused on second half.
Speaker Change #117: So to sort of really focusing on the second half. The first half of the year is is really sort of the initiatives. We mentioned earlier so so the combination.
Speaker Change #117: Of what we've laid out of the sort of called secondary revenue opportunities is going to be built with what our opportunities are with regard to potential growth.
Speaker Change #117: Okay.
Speaker Change #122: Okay Fair enough. Thanks, guys I appreciate it.
Speaker Change #134: Thank you and our next question comes from Zacks.
Speaker Change #125: Investment research. Please go ahead.
Speaker Change #128: Good morning, guys. Most of my questions have been answered I just wanted to if you can provide any more color on potential financing options for at least another at least deposits.
Speaker Change #133: Besides the surety bonds are solid surety bonds was up to $10 million or there are other sources now that the Wyndham development, but he is not available.
Tom: Yes, so so so so so Tom thanks for the question. So yes, there is other sources.
Tom: Surety bonds out there.
Speaker Change #127: Yes. There is there are some other things that we're looking at.
Tom: Obviously they are in the works so nothing to disclose at this point.
Tom: But yes, theres other ways of financing as well. So so look all options are on the table.
Tom: Thinking through what's the right way to do it.
Tom: What's the right timing, but look I would say that.
Tom: There is there is other stuff, it's just not at a point, where we can we can talk through it.
Tom: And announce it yet.
Speaker Change #132: Great Thats all I had thank you.
Speaker Change #131: Thank you there are no further questions at this time I will now turn the call back over to <unk>, Chief Executive Officer for closing remarks.
<unk>: Thank you. So thank you all for joining the call. We're pleased that our progress today, we understand there is still so much work to do so so as mentioned we've got.
Speaker Change #131: Yes.
Speaker Change #131: Really focused on the work in the first half of the year. The actions. We've taken have helped stabilize the business and define a new path forward.
Speaker Change #131: As we said a short time ago, we understand the proof will be in the consistency of our results and we remain committed to delivering on our objectives. Thanks again for your time and have a great rest of your day.
Speaker Change #136: Thank you. This concludes today's conference call. We thank you for participating and you may now disconnect.
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