InnSuites Hospitality Trust (NYSE American: IHT), a leading hotel operator and real estate investment trust, has reported impressive financial results for the fiscal year ended January 31, 2023, showcasing its resilience and ability to navigate the challenging industry landscape.
Financial Highlights
For the fiscal year ended January 31, 2023, InnSuites Hospitality Trust reported annual net income of $203,880, annual revenue of $7,484,398, annual operating cash flow of $1,433,886, and annual free cash flow of $913,025. These figures demonstrate the company's strong financial performance and its ability to generate consistent profitability and cash flow.In the first fiscal quarter of 2024, ended April 30, 2023, the company reported total revenue of $2.3 million, an increase of 4% compared to the same period in the prior year. Consolidated net income for the quarter was $86,598, while consolidated net income before non-cash depreciation expense was $259,640.
Business Overview
InnSuites Hospitality Trust is a publicly traded unincorporated Ohio real estate investment trust (REIT) with a focus on hotel ownership and management. The company currently owns and operates two moderate-service hotels, one in Tucson, Arizona and one in Albuquerque, New Mexico, with a total of 270 hotel suites. Both hotels are branded through membership agreements with Best Western and also operate under the trademarked "InnSuites" brand.The company's hotel operations segment derives its revenue from the operation of these two hotel properties, while the hotel management services segment provides management and trademark licensing services for the hotels. InnSuites Hospitality Trust also holds a $1 million 6% convertible debenture in UniGen Power Inc., a privately-held company developing a patented high-profit potential efficient clean energy generation innovation, as well as approximately $668,750 in UniGen's common stock and warrants to make further investments in the future.
Operational Performance
The company's hotel operations have shown strong performance, with the Tucson, Arizona hotel experiencing its highest occupancy in the first fiscal quarter (the winter high season) and the Albuquerque, New Mexico hotel performing well during the second and third fiscal quarters (the summer high season). This seasonal pattern provides some balance to the overall seasonality of the hotel business.During the fiscal year ended January 31, 2023, the Tucson hotel achieved an occupancy rate of 87.03%, with an average daily rate (ADR) of $111.41 and revenue per available room (RevPAR) of $96.96. The Albuquerque hotel reported an occupancy rate of 86.42%, an ADR of $98.43, and a RevPAR of $85.06. The combined occupancy rate for the two hotels was 86.78%, with an ADR of $106.05 and a RevPAR of $92.02.
Liquidity and Capital Resources
As of April 30, 2023, InnSuites Hospitality Trust had approximately $437,000 in cash and the availability of $2,250,000 from combined credit facilities, including a $2,000,000 related party Demand/Revolving Line of Credit/Promissory Note and $250,000 in Revolving Lines of Credit with Republic Bank of Arizona. The company believes it has sufficient liquidity to meet its financial obligations for the next twelve months.The company's principal sources of cash to meet its cash requirements include monthly management fees from the two hotels, distributions from the Partnership's cash flow from the Tucson hotel, and quarterly distributions from the Albuquerque property. Additional sources of cash include intercompany loan repayments, potential future real estate hotel sales, and returns on the company's diversified investments, such as its stake in UniGen Power Inc.
Diversification and Strategic Initiatives
In addition to its core hotel operations, InnSuites Hospitality Trust has made a strategic investment in UniGen Power Inc., a privately-held company developing a patented high-profit potential efficient clean energy generation innovation. The company has invested $1 million in convertible debentures, common stock, and warrants, which could result in InnSuites Hospitality Trust holding up to a 20% or more ownership stake in UniGen if all convertible securities are exercised.The company's long-term strategic plan is to obtain the full benefit of its real estate equity by selling its remaining two hotel properties within the next 12-36 months. InnSuites Hospitality Trust is also actively exploring a potential merger with a larger private entity that seeks to go public and list on the NYSE American Exchange, leveraging the company's existing public listing.
Outlook and Guidance
InnSuites Hospitality Trust management is optimistic about the company's future prospects, citing the continued recovery and growth in the travel industry, stable high-level hotel occupancy, and the potential for further increases in room rates. The company expects the current fiscal year 2024 to show continued improvement in profitability, driven by cost control measures and the ongoing recovery in the hospitality sector.The company's diversification investment in UniGen Power Inc. also holds significant potential, as the clean energy innovation continues to progress, and the market demand for electricity is projected to double over the next five years due to the increasing popularity of electric vehicles and the growing needs of artificial intelligence.