Table of Contents
Introduction
Innsuites Hospitality Trust (IHT), a hotel investment company, has released its quarterly report for the three months ended April 30, 2023. The report reveals that IHT anticipates no additional new-build hotel supply in its markets for the remaining fiscal year 2024, which it believes will result in a continued rebound of revenues and operating margins. The company acknowledges challenges in the upcoming fiscal year, including inflation, cost control, and competition in the hotel industry.
Financial Highlights
- Cash provided by operating activities from continuing operations: Approximately $37,000 during the three months ended April 30, 2023, compared to approximately $92,000 during the same period in 2022.
- Consolidated net income: Approximately $465,000 for the three months ended April 30, 2023, compared to approximately $376,000 for the three months ended April 30, 2022.
- Changes in assets and liabilities: Approximately $265,000 for the three months ended April 30, 2023, compared to $105,000 for the three months ended April 30, 2022.
- Net cash used in investing activities: Approximately $123,000 for the three months ended April 30, 2023, compared to approximately $160,000 for the same period in 2022.
- Net cash used in financing activities: Approximately ($321,000) for the three months ended April 30, 2023, compared to $2,697,000 for the three months ended April 30, 2022.
Capital Expenditures and Repairs
As of April 30, 2023, the company’s capital expenditures fund, intended for capital improvements to the hotels and refurbishment and replacement of furniture, fixtures, and equipment, had no restricted cash. During the three months ended April 30, 2023, the hotel spent approximately $108,000 on capital expenditures and approximately $116,000 on repairs and maintenance.
Debt and Financing
IHT has minimum debt payments, net of debt discounts, of approximately $693,000 and approximately $234,000 due during fiscal years 2024 and 2025, respectively. These payments include mortgage notes payable and other notes payable. The company may seek additional credit facilities or issue debt instruments in the future.
Competition and Market Impact
While competition remains a challenge for IHT in the hotel industry, the company’s competitors do not dominate any of its geographic markets. However, some competitors may have greater marketing and financial resources. Certain hotels in IHT’s markets have completed property refurbishments, and there may be additional hotel developments in the future, which could impact the revenue of IHT’s hotels.
Hotel Properties for Sale
The company’s management believes that its hotel properties are priced reasonably in relation to their current fair market value. However, IHT is actively seeking buyers for its two remaining hotel properties, the Albuquerque Hotel and the Tucson Oracle Hotel.
Conclusion
In conclusion, IHT expects a continued rebound of revenues and operating margins for fiscal year 2024. The company anticipates challenges including inflation, cost control, and competition in the hotel industry. IHT is actively seeking to sell its remaining hotel properties while considering diversification into other investments.
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