Selina the hotel operator for a young crowd will layoff 350 employees and stop expanding

Selina, the hotel operator for a young crowd, fights for her future. Only half a year after its IPO, it is laying off workers, curbing expansion, and managing emergency recruitment after only 23 million dollars remained in its coffers as of the end of March. The company announced today that it has begun a period of significant cutbacks that includes the layoff of approximately 350 employees, exiting some of the hotel leases and almost completely stopping the opening of new hotels.
The moves are aimed at stemming the cash hemorrhaging that reached a whopping loss of $200 million on revenue of $183 million in 2022. Celina, founded in 2015 by Rafi Mosari and Daniel Rodeshevsky, was issued last November at a value of 1.2 billion dollars in a merger with Spak and raised 54 million dollars. Today it trades around a value of 120 million dollars, after its share was already below the dollar and the marketability of the share is very poor.
"The market has stopped valuing growth, but only profitability, and therefore the corporate culture of Selina needs to change accordingly," says Rafi Musari, CEO of Selina. According to him, "Instead of signing a deal every ten days and opening 20 hotels a year, we are not only not opening hotels new ones, but we will also close hotels that are losing money." After the current cutbacks, approximately 2,000 employees will remain in Salina, most of the headquarters will be reduced from 8 different offices to one, and some employees will work from home. The cutback plan should result in cost savings of $5.8 million beginning in the second quarter of 2023 together with a one-time expenditure of one million dollars to pay compensation.
The first quarter of 2023 ended with revenues of $54.2 million, a 32% increase compared to the corresponding quarter and a slight increase also compared to the previous quarter. On a "same hotels" basis, meaning without the addition of the new hotels, revenues increased by 18%. The occupancy rate increased to 57% compared to 45% in the corresponding period. In the loss row, the picture continues to be difficult and it amounted to 30.3 million dollars compared to 38.3 million dollars in the corresponding quarter.
Free cash flow was negative and reached $12.6 million. During the first quarter Selina did not open any new hotels and it ended the period with 118 properties with 29,600 beds. The company updates that it has begun the process of exiting from loss-making properties and has already closed five sites in Mexico, the USA, Greece, Austria and Costa Rica. Salina also stated that it will publish an updated forecast for 2023 with a lower growth rate than the 30%-40% given in the forecast the former
At the same time as streamlining, Selina announces receiving a commitment for recruitment that may reach up to 50 million dollars. In the first phase, the company will already receive 10 million dollars from GUS, which operates a platform for distance learning and which will become a strategic investor in Salina upon receiving two seats on the board of directors. At this stage it is not known which of the 8 existing directors will retire in favor of the new representation.
If Selina manages to raise an additional 20 million dollars from other investors, GUS will pay her an additional 20 million dollars. The fundraising was done with a combination of shares, which were issued privately at a 10% discount on their market price, and convertible bonds. Around Selina, it is said that the company is already in negotiations with other investors, including its existing investors, to raise 20 million dollars. Meanwhile, Selina attracted At the end of May, 10 million dollars from a 50 million dollar line of credit and made a debt settlement concerning the loan she took for expansion in South America when she was a private company. As part of the settlement, the debt was converted into Selina shares.