Wyndham Removes Beleaguered LuxUrban Hotels From Its Platform

LuxUrban Hotels appears to have lost its franchise partner as the Miami-based hotel company navigates a leadership shake-up, cratering stock prices, and fending off lawsuits and a short seller.

LuxUrban entered into a franchise partnership in August that placed all of its hotels in the Wyndham Hotels & Resorts Trademark Collection. The deal was expected to provide operational and financial support from the franchise hotel giant and allowed LuxUrban's properties to be listed on Wyndham's booking platform.

But those hotels are no longer showing up on Wyndham’s website, raising doubts about the status of the partnership. It is unclear what has transpired — representatives for Wyndham and LuxUrban didn't respond to Bisnow's inquiries on Friday.

All of LuxUrban's press releases since the partnership was announced had included a reference to Wyndham, including its first-quarter earnings release, issued April 15. But its last three releases, starting April 22, no longer include the Wyndham partnership in the descriptions of its business.

The Wyndham partnership was a key pillar in LuxUrban's plans to grow its hotel business, which it launched in earnest in 2022 after pivoting from its previous business model of operating short-term rental apartments.

“We are now in the best position in our history to accelerate growth, enhance cash flow and capture the benefits of scale,” then-Chairman and CEO Brian Ferdinand said in a statement announcing the deal.

LuxUrban's sales through Wyndham's platform accounted for 22% of its revenue in the last three months of 2023, according to LuxUrban's annual report. It projected that share could reach 50% by the end of 2024.

LuxUrban paid a “one-time, initial, nonrefundable franchise fee to Wyndham” to secure the partnership, according to its regulatory filings. As part of the deal, Wyndham agreed to fund development advances to bring LuxUrban's hotels up to the brand's standards.

By the end of 2023, Wyndham advanced LuxUrban nearly $6M, according to the annual report, which says that would be carried on LuxUrban's balance sheet as a liability. 

LuxUrban reported swallowing roughly $5M in losses during the second half of 2023 due to an inability to rent out rooms while they were brought onto the Wyndham platform. 

Overall, the company posted a $65M loss in 2023 on $114M of net rental revenue. It was forced to delay the reporting of those numbers after it disclosed that it needed to audit its financials. That report sent LuxUrban's stock tumbling 30% in a single day of trading, and the price hasn't recovered.

LuxUrban is trading on the Nasdaq Stock Market at 64 cents a share, and it has been trading for less than $1 since April 29. A company that trades below $1 for a month runs the risk of being delisted. The stock has lost 89% of its value so far this year.

The firm, which went public in August 2022, has long operated with razor-thin margins — it had $556 of cash on hand after its initial public offering.

It has also come under scrutiny from investors after it became the subject of a short seller report in January this year. A Bisnow investigation also found that the hotelier had potentially misrepresented the status of at least two hotels in multiple Securities and Exchange Commission filings. It has also been battling lawsuits from landlords and vendors accusing it of not paying its bills. 

Following the publication of that article, LuxUrban disclosed that it surrendered four of its hotels, bringing its leased portfolio to 14 properties and fewer than 2,000 rooms. The reversal was swift after its executives had said in a January earnings presentation it could expand to 12,000 rooms this year. More recent company announcements have signaled a scaling back of ambitions.

LuxUrban's leadership, which featured scant hotel experience for most of the company's existence, has also turned over this year, bringing in hospitality veterans.

Ferdinand, who founded the company, relinquished his CEO title last month, promoting former Chief Financial Officer Shanoop Kothari in his place. Elan Butinger, who joined the board of directors earlier this year, replaced Ferdinand as the board's chairman April 22, while Ferdinand remains a director and the largest shareholder in the company.