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What changed in INNSUITES HOSPITALITY TRUST's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of INNSUITES HOSPITALITY TRUST's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+107 added−123 removedSource: 10-K (2024-04-08) vs 10-K (2023-05-02)

Top changes in INNSUITES HOSPITALITY TRUST's 2024 10-K

107 paragraphs added · 123 removed · 99 edited across 4 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeThe Tucson, Arizona Hotel typically experiences its highest occupancy in the first Fiscal quarter and, to a lesser extent, the fourth Fiscal quarter (the winter high season). The second Fiscal quarter (summer), tends to be the lowest occupancy period at the Tucson Hotel.
Biggest changeThe Tucson Arizona Hotel historically experiences the highest occupancy in the first Fiscal Quarter (the winter high season) and, to a lesser extent, the fourth Fiscal Quarter. The second Fiscal Quarter (summer low season) historically tends to be the lowest occupancy period at this Arizona Hotel. This seasonality pattern can be expected to cause fluctuations in the Trust’s quarterly revenues.
While none of the Hotels’ competitors dominate any of their geographic markets, some of those competitors may have greater marketing and financial resources than the Trust. Certain additional hotel property refurbishments have been completed by competitors in both Hotels’ markets, and additional hotel property developments may be built in the future.
While none of the Hotels’ competitors dominate any of their geographic markets, some of those competitors may have greater marketing and/or financial resources than the Trust. Certain hotel property refurbishments have been completed by competitors in both Hotels’ markets, and additional hotel property developments may be built in the future.
For the Fiscal Year 2024 ahead, February 1, 2023 through January 31, 2024, the Trust’s operations are focused on the Trust’s primary business objective which is to maximize returns to its shareholders through increases in asset value and long-term total returns to shareholders, including profitable hotel operations and sale of assets, along with growth of investments.
For the Fiscal Year 2025 ahead, February 1, 2024 through January 31, 2025, the Trust’s operations are focused on the Trust’s primary business objective which is to maximize returns to its shareholders through increases in asset value and long-term total returns to shareholders, including profitable hotel operations and sale of assets, along with growth of investments.
We anticipate selling one or both Hotels in the next twelve to thirty-six (12-36) months. RRF Limited Partnership, a 75.98% majority-owned subsidiary of the Trust, provides management services for the two Trust Hotels. The Trust has approximately 52 full-time employees and approximately 27 part-time employees.
We anticipate selling one or both Hotels in the next twelve to thirty-six (12-36) months. RRF Limited Partnership, a 75.89% majority-owned subsidiary of the Trust, provides management services for the two Trust Hotels. The Trust has approximately 52 full-time employees and approximately 27 part-time employees.
The agreements with Best Western are year-to-year. Best Western requires that the Hotels meet certain requirements for room quality, and the two Hotels are subject to removal from the Best Western reservation system if these requirements are not met. During the past year, the two Hotels received significant reservations through the Best Western reservation system.
The agreements with Best Western are year-to-year. Best Western requires that the Hotels meet or exceed certain minimum requirements for room quality, and the two Hotels are subject to removal from the Best Western reservation system if these requirements are not met. During the past year, the two Hotels received significant reservations through the Best Western reservation system.
The hotel located in Albuquerque, New Mexico historically experiences their most profitable periods during the second and third Fiscal quarters (the summer high season), providing balance to the general seasonality of the Trust’s hotel business. The seasonal nature of the Trust’s business increases its vulnerability to risks such as labor force shortages and cash flow issues.
The Hotel located in Albuquerque, New Mexico historically experiences its most profitable periods during the second and third Fiscal Quarters (the summer high season), providing some balance to the general seasonality of the Trust’s hotel business. The seasonal nature of the Trust’s business increases its vulnerability to risks such as travel disruptions, labor force shortages and cash flow issues.
Under these arrangements, fees paid for membership fees and reservations were approximately $173,000 and $160,000, recorded in on the Consolidated Statement of Operations, for Fiscal Years ended January 31, 2023, and 2022, respectively. COMPETITION IN THE HOTEL INDUSTRY The hotel industry is highly competitive.
Under these arrangements, fees paid for membership fees and reservations were approximately $201,000 and $173,000, recorded in on the Consolidated Statement of Operations, for Fiscal Years ended January 31, 2024, and 2023, respectively. COMPETITION IN THE HOTEL INDUSTRY The hotel industry is highly competitive.
The Trust seeks to achieve this objective through intensive management and marketing of the InnSuites© hotels, by selling hotel real estate at market prices well above book values and benefitting from diversified investments, including UniGen Power, Inc. (UniGen).
The Trust seeks to achieve this objective through intensive management and marketing of the InnSuites© Suite hotels, by even more profitable hotel operations, selling hotel real estate at market prices well above book values and benefitting from diversified investments, including UniGen Power, Inc. (UniGen).
Either an increase in supply, or a decline in demand could result in increased competition, which could have an adverse effect on occupancy, room rates and revenues of our Hotels in their respective markets.
Supply has been relatively steady in those respective markets. Either an increase in supply or a decline in demand could result in increased competition, which could have an adverse effect on occupancy, room rates and revenues of our Hotels in their respective markets.
At January 31, 2023, and currently, the Trust owns a 75.98% sole general partner interest in the Partnership, which controls a 51.01% interest in the InnSuites hotel located in Tucson, Arizona, and a direct 21.50% interest in the InnSuites hotel located in Albuquerque, New Mexico. The Tucson and Albuquerque hotels are sometimes referred to as the “ Hotels ”.
At January 31, 2024, and currently, the Trust owns a 75.89% sole general partner interest in the Partnership, which controls a 51.62% interest in the InnSuites hotel located in Tucson, Arizona, and a direct 21.90% interest in the InnSuites hotel located in Albuquerque, New Mexico. The Tucson and Albuquerque hotels are sometimes referred to as the “ Hotels ”.
Information on our Internet website shall not be deemed incorporated into, or be part of, this report.
Information on our Internet website shall not be deemed incorporated into, or be part of, this report. This information is also available at SEC.gov.
Both the Tucson and Albuquerque hotels experienced record high GOP Profits in the most recent 12 months, substantially higher than both Covid and Pre-Covid GOP Profits. This gross operating profit is growing even more due to stringent cost control measures.
Both the Tucson and Albuquerque hotels experienced record high Gross Operating Profit (GOP Profits), in Fiscal Year 2024 (February 1, 2023 to January 31, 2024), substantially higher than both Covid and Pre-Covid GOP Profits. This gross operating profit is growing even more due to stringent cost control measures.
The Trust may continue to seek further diversification through a reverse merger with a larger non-public entity.
The Trust may continue to seek further diversification through a merger or reverse merger with a larger non-public entity seeking an NYSE-American public stock market listing.
The Trust may not invest further in hotels, but rather diversify into investments such as the investment made by the Trust in December 2019 in the innovative UniGen Power, Inc. (UniGen), efficient clean energy power generation company. This investment is expected to expand over the next 36 months, as the Trust exercises warrants and convertible bonds into UniGen equity.
The Trust may not invest further in hotels, but rather diversify into investments such as the investment made by the Trust in December 2019 in the innovative UniGen Power, Inc. (UniGen), efficient clean energy power generation company.
Further, if an adverse event such as an actual or threatened terrorist attack, viral outbreak or pandemic, international conflict, data breach, regional economic downturn or poor weather conditions should occur during the high season, the adverse impact to the Trust’s revenues could likely be greater as a result of its seasonal business.
Further, if an adverse event such as an actual or threatened virus pandemic, terrorist attack, international conflict, data breach, regional economic downturn or poor weather should occur at either of its two hotels, the adverse impact to the Trust’s revenues and profit could be significant.
Such hotel developments could have an adverse effect on the revenue of our Hotels in their respective markets. The Trust’s hotel investments are located in Arizona and New Mexico.
Such hotel developments could have an adverse effect on the revenue of our Hotels in their respective markets. The Trust’s hotel investments are located in Arizona and New Mexico. With the completed renovations meeting Best Western standards at our Tucson, Arizona and Albuquerque, New Mexico hotel properties, those hotels are expected to see incremental demand during the next 18 months.
Removed
With the completed renovations meeting Best Western standards at our Tucson, Arizona and Albuquerque, New Mexico hotel properties, those hotels are expected to see incremental demand during the next 24 months, as supply had been steady in those respective markets, and demand is expected to increase as the economy and travel industry grow.
Added
The continued recovery has and is benefiting our hotels in the First Fiscal Quarter of 2025, (February 1, 2024 to April 30, 2024). This improvement and continued upward trend is expected to continue for the balance of Fiscal Year 2025, through January 31, 2025.
Removed
The hotels experienced a decrease in demand due to impact of the COVID-19 virus and the related restrictions and reduction of travel after February 1, 2020 through March 31, 2021, with increased demand thereafter.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeThe Hotels operate in the following locations: ● Best Western InnSuites Tucson Foothills Hotel & Suites. 6201 N Oracle Rd., Tucson, AZ 85704 ● Best Western InnSuites Albuquerque Airport Hotel & Suites. 2400 Yale Boulevard SE, Albuquerque, NM 87106 In the Fiscal Years ended January 31, 2019, and January 31, 2020, we remodeled 100% of each property’s available suites and public areas.
Biggest changeThe Hotels operate in the following locations: ● Best Western InnSuites Tucson Foothills Hotel & Suites. 6201 N Oracle Rd., Tucson, AZ 85704 ● Best Western InnSuites Albuquerque Airport Hotel & Suites. 2400 Yale Boulevard SE, Albuquerque, NM 87106 In the last four years, we have we remodeled 100% of each property’s available suites and public areas.
The Trust owns a direct 21.05% interest in the InnSuites Hotel and Suites Albuquerque Airport Best Western Hotel. The Partnership owns a 51.01% interest in the InnSuites Hotel and Suites Tucson Oracle Best Western Hotel. The Trust owns a 75.98% general partner interest in the Partnership.
The Trust owns a direct 21.90% interest in the InnSuites Hotel and Suites Albuquerque Airport Best Western Hotel. The Partnership owns a 51.62% interest in the InnSuites Hotel and Suites Tucson Oracle Best Western Hotel. The Trust owns a 75.98% general partner interest in the Partnership.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeAs of May 1, 2023, there were approximately 329 holders of record of our Shares of Beneficial Interest, not including holders who hold their asset positions with banks and brokers. 5 The following table sets forth, for the periods indicated, the high and low sales prices of the Trust’s Shares of Beneficial Interest, as reported on the NYSE American, as well as dividends declared thereon: Fiscal Year 2023 High Low Dividends First Quarter $ 4.34 $ 3.77 - Second Quarter $ 3.77 $ 2.99 $ 0.01 Third Quarter $ 3.74 $ 2.84 - Fourth Quarter $ 3.71 $ 2.96 $ 0.01 Fiscal Year 2022 High Low Dividends First Quarter $ 3.95 $ 1.96 - Second Quarter $ 14.77 $ 1.90 $ 0.01 Third Quarter $ 5.35 $ 3.15 - Fourth Quarter $ 5.00 $ 2.15 $ 0.01 The Trust has declared uninterrupted annual dividends for 53 years, since 1971, when the Trust was founded and first listed on the NYSE.
Biggest changeAs of April 8, 2024, there were approximately 328 holders of record of our Shares of Beneficial Interest, not including holders who hold their asset positions with banks and brokers. 5 The following table sets forth, for the periods indicated, the high and low sales prices of the Trust’s Shares of Beneficial Interest, as reported on the NYSE American, as well as dividends declared thereon: Fiscal Year 2024 High Low Dividends First Quarter $ 1.83 $ 1.80 - Second Quarter $ 3.82 $ 3.08 $ 0.01 Third Quarter $ 2.33 $ 1.98 - Fourth Quarter $ 1.92 $ 1.69 $ 0.01 Fiscal Year 2023 High Low Dividends First Quarter $ 4.34 $ 3.77 - Second Quarter $ 3.77 $ 2.99 $ 0.01 Third Quarter $ 3.74 $ 2.84 - Fourth Quarter $ 3.71 $ 2.96 $ 0.01 The Trust has declared uninterrupted annual dividends for 54 years, since 1971, when the Trust was founded and first listed on the NYSE.
These grants were made in reliance upon the exemption from the registration requirements of the Securities Act of 1933, as amended (the “ Securities Act ”), pursuant to Section 4(a)(2). No stock option grants were made in Fiscal 2022 or 2023.
These grants were made in reliance upon the exemption from the registration requirements of the Securities Act of 1933, as amended (the “ Securities Act ”), pursuant to Section 4(a)(2). No stock option grants were made in Fiscal 2023 or 2024.
See Note 2 to our Consolidated Financial Statements – “Summary of Significant Accounting Policies” for information related to grants of restricted shares made to members of our Board of Trustees during Fiscal Year 2022.
See Note 2 to our Consolidated Financial Statements – “Summary of Significant Accounting Policies” for information related to grants of restricted shares made to members of our Board of Trustees during Fiscal Year 2023.
The Trust intends to maintain the current conservative dividend policy. The Trust currently is, and has, been paying two semiannual dividends each Fiscal Year totaling $0.02 per share per Fiscal Year. In the Fiscal Years ended January 31, 2023 and 2022, the Trust paid dividends of $0.01 per share per share in each of the second and the fourth quarters.
The Trust intends to maintain the current steady conservative dividend policy. The Trust currently is, and has, been paying two semiannual dividends each Fiscal Year totaling $0.02 per share per Fiscal Year. In the Fiscal Years ended January 31, 2024 and 2023, the Trust paid dividends of $0.01 per share per share in each of the first and second quarters.
The Trust has paid uninterrupted annual dividends each Fiscal Year since its inception in 1971. The Trust currently intends to pay the scheduled semiannual $0.01 dividend payable on July 31, 2023 at NYSE American. 6 See Part III, Item 12 for information about our equity compensation plans.
The Trust has paid uninterrupted annual dividends each Fiscal Year since its inception in 1971. The Trust paid the semiannual dividend of $0.01 on February 5, 2024, and currently intends to pay the scheduled semiannual $0.01 dividend payable on July 31, 2024 at NYSE American. 6 See Part III, Item 12 for information about our equity compensation plans.
Item 5. MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES The Trust’s Shares of Beneficial Interest are traded on the NYSE American under the symbol “IHT.” On January 31, 2023, the Trust had approximately 9,160,991 shares outstanding.
Item 5. MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES The Trust’s Shares of Beneficial Interest are traded on the NYSE American under the symbol “IHT.” On January 31, 2024, the Trust had approximately 8,988,804 shares outstanding.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeExamples of such uncertainties include, but are not limited to: ● Virus Pandemic and its effect on the Travel Industry; ● potential risk of investments, including the investment in UniGen; ● inflation and economic recession; ● terrorist attacks or other acts of war; ● local, national or international, political economic and business conditions, including, without limitation, conditions that may, or may continue to, affect public securities markets generally, the hospitality industry or the markets in which we operate or will operate; ● available cash, supply chain issues, and increased labor costs for diversified clean energy development and production; ● fluctuations in hotel occupancy rates; ● changes in room rental rates that may be charged by InnSuites Hotels in response to market rental rate changes or otherwise; ● seasonality of our hotel operations business; ● our ability to sell any of our Hotels at market value, or at all; ● interest rate fluctuations; ● changes in, or reinterpretations of, governmental regulations, including, but not limited to, environmental and other regulations, the Americans with Disability Act, Covid-19 restrictions, and federal income tax laws and regulations; ● competition including supply and demand for hotel rooms and hotel properties; ● availability of credit or other financing; ● our ability to meet present and future debt service obligations; ● our ability to refinance or extend the maturity of indebtedness at, prior to, or after the time it matures; ● any changes in our financial condition or operating results due to acquisitions or dispositions of hotel properties; ● concentration of our investments in the InnSuites Hotels® brand; ● loss of membership contracts; ● the financial condition of franchises, brand membership companies, travel related companies, and receivables from travel related companies; ● ability to develop and maintain positive relations with “Best Western” and potential future franchises or brands; ● real estate and hospitality market conditions; ● hospitality industry factors; ● our ability to carry out our strategy, including our strategy regarding diversification and investments; ● the Trust’s ability to remain listed on the NYSE American; ● effectiveness of the Trust’s software and cyber security; 17 ● the need to periodically repair and renovate our Hotels at a cost at or in excess of our standard 4% reserve; ● tariffs and health travel restrictions may affect trade and travel; ● our ability to cost effectively integrate any acquisitions with the Trust in a timely manner; ● increases in the cost and availability of labor, energy, healthcare, insurance and other operating expenses as a result of inflation, or changed or increased regulation, or otherwise; ● terrorist attacks or other acts of war; ● outbreaks of communicable diseases attributed to our hotels or impacting the hotel industry in general; ● natural disasters, including adverse climate changes in the areas where we have or serve hotels; ● airline strikes; ● transportation and fuel price increases; ● adequacy of insurance coverage and increases in cost for health care coverage for employees and potential government regulation with respect to health care coverage; ● data breaches or cybersecurity attacks, including breaches impacting the integrity and security of employee and guest data; and ● loss of key personnel and uncertainties in the interpretation and application of ever-changing tax laws.
Biggest changeExamples of such uncertainties include, but are not limited to: ● Virus Pandemic and its effect on the Travel Industry; ● potential risk of investments, including the investment in UniGen; ● inflation and economic recession; ● terrorist attacks or other acts of war; ● political instability; ● available cash, supply chain issues, and increased labor costs for diversified clean energy development and production; ● fluctuations in hotel occupancy rates; ● changes in room rental rates that may be charged by InnSuites in response to market changing demand and rental rate changes or otherwise; ● seasonality of our hotel operations business; ● collectability of all receivables ● our ability to sell any of our Hotels at market value, or at all; ● interest rate fluctuations; ● changes in, or reinterpretations of, governmental regulations, including, but not limited to, environmental and other regulations, the Americans with Disability Act, Covid-19 restrictions, and federal income tax laws and regulations; ● competition including supply and demand for hotel rooms and hotel properties; ● availability of credit or other financing; ● our ability to meet present and future debt service obligations; ● our ability to refinance or extend the maturity of indebtedness at, prior to, or after the time it matures; ● any changes in our financial condition or operating results due to acquisitions or dispositions of hotel properties; ● insufficient resources to pursue our current strategy; ● concentration of our investments in the InnSuites ® brand; ● loss of membership contracts; 17 ● the financial condition of franchises, brand membership companies, travel related companies, and receivables from travel related companies; ● ability to develop and maintain positive relations with “Best Western” and potential future franchises or brands; ● real estate and hospitality market conditions; ● hospitality industry factors; ● our ability to carry out our strategy, including our strategy regarding diversification and investments; ● the Trust’s ability to remain listed on the NYSE American; ● effectiveness and security of the Trust’s software program; ● the need to periodically repair and renovate our Hotels at a cost at or in excess of our standard 4% reserve; ● tariffs and health travel restrictions may affect trade and travel; ● our ability to cost effectively integrate any acquisitions with the Trust in a timely manner; ● increases in the cost and availability of labor, energy, healthcare, insurance and other operating expenses as a result of inflation, or changed or increased regulation, or otherwise; ● presence of drugs or outbreaks of communicable diseases attributed to our hotels or impacting the hotel industry in general; ● natural disasters, including adverse climate changes in the areas where we have or serve hotels; ● airline strikes; ● transportation and fuel price increases; ● adequacy of property and liability insurance coverage including liability coverage, and increases in cost for property, liability, and health care coverage for employees and potential government regulation with respect to health care coverage; ● data breaches or cybersecurity attacks, including breaches impacting the integrity and security of employee and guest data; and ● loss of key personnel and uncertainties in the interpretation and application of tax laws, and other legislation.
The UniGen design is to produce generators fueled not only with relatively clean natural gas but also with other even cleaner fuels such as ethanol and hydrogen (that emits only water). James Wirth (IHT President) and Marc Berg (IHT Executive Vice President) both lack significant UniGen control.
The UniGen design is to produce generators fueled not only with abundant relatively clean natural gas but also with other even cleaner fuels such as ethanol and hydrogen (that emits only water). James Wirth (IHT President) and Marc Berg (IHT Executive Vice President) both lack significant UniGen control.
We believe that we have positioned the Hotels to remain competitive through our now fully completed Tucson and Albuquerque hotel refurbishments, by offering fully refurbished studios and two-room suites at each location, and by maintaining complementary guest items, including complimentary breakfast and free Internet access.
We believe that we have positioned the Hotels to remain competitive through our now fully completed Tucson and Albuquerque hotel refurbishments, by offering fully refurbished studios and two-room suites at each location, and by maintaining complementary guest items, including complimentary hot breakfast and free Internet access.
Each room night consumed by a guest with a cancellable reservation represents a contract whereby the Trust has a performance obligation to provide the room night at an agreed upon price. For cancellable reservations, the Trust recognizes revenue as each performance obligation (i.e., each room night) is met. Such contract is renewed if the guest continues their stay.
Each room night consumed by a guest with a cancelable reservation represents a contract whereby the Trust has a performance obligation to provide the room night at an agreed upon price. For cancellable reservations, the Trust recognizes revenue as each performance obligation (i.e., each room night) is met. Such contract is renewed if the guest continues their stay.
For information relating to such related party transactions see the following: ● For a discussion of management and licensing agreements with certain related parties, see “Item 1 – Business – Management and Licensing Contracts.” ● For a discussion of guarantees of our mortgage notes payable by certain related parties, see Note 11 to our Consolidated Financial Statements – “Mortgage Notes Payable.” ● For a discussion of our equity sales and restructuring agreements involving certain related parties, see Notes 3, and 4 to our Consolidated Financial Statements – “Sale of Ownership Interests in Albuquerque Subsidiary,” and “Sale of Ownership Interests in Tucson Hospitality Properties Subsidiary,” respectively. ● For a discussion of other related party transactions, see Note 19 to our Consolidated Financial Statements – “Other Related Party Transactions.” Results of operations of the Trust for the Fiscal Year ended January 31, 2023 compared to the Fiscal Year ended January 31, 2022.
For information relating to such related party transactions see the following: ● For a discussion of management and licensing agreements with certain related parties, see “Item 1 – Business – Management and Licensing Contracts.” ● For a discussion of guarantees of our mortgage notes payable by certain related parties, see Note 11 to our Consolidated Financial Statements – “Mortgage Notes Payable.” ● For a discussion of our equity sales and restructuring agreements involving certain related parties, see Notes 3, and 4 to our Consolidated Financial Statements – “Sale of Ownership Interests in Albuquerque Subsidiary,” and “Sale of Ownership Interests in Tucson Hospitality Properties Subsidiary,” respectively. ● For a discussion of other related party transactions, see Note 19 to our Consolidated Financial Statements – “Other Related Party Transactions.” Results of operations of the Trust for the Fiscal Year ended January 31, 2024 compared to the Fiscal Year ended January 31, 2023.
Over time, we expect our UniGen diversification efficient clean energy generation investment to grow and provide a substantial source of income in the foreseeable future.
Over time, we expect our UniGen diversification efficient clean energy generation investment to grow and provide a substantial source of income in the future.
FORWARD-LOOKING STATEMENTS Certain statements in this Form 10-K, including statements containing the phrases “believes,” “intends,” “expects,” “anticipates,” “predicts,” “projects,” “will be,” “should be,” “looking ahead,” “may” or similar words, constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.
FORWARD-LOOKING STATEMENTS Certain statements in this Form 10-Q, including statements containing the phrases “believes,” “intends,” “expects,” “anticipates,” “predicts,” “projects,” “will be,” “should be,” “looking ahead,” “may” or similar words, constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.
In evaluating its performance obligation, the Trust bundles the obligation to provide the guest the room itself with other obligations (such as free Wi-Fi, grab and go breakfast, access to on-site laundry facilities and parking), as the other obligations are not distinct and separable because the guest cannot benefit from the additional amenities without the consumed room night.
In evaluating its performance obligation, the Trust bundles the obligation to provide the guest the room itself with other obligations (such as free Wi-Fi, grab and go or hot breakfast, access to on-site laundry facilities and parking), as the other obligations are not distinct and separable because the guest cannot benefit from the additional amenities without the consumed room night.
These forward-looking statements reflect our current views in respect of future events and financial performance, but are subject to many uncertainties and factors relating to the operations and business environment of the Hotels that may cause our actual results to differ materially from any future results expressed or implied by such forward-looking statements.
These forward-looking statements reflect our current views in respect of future events and financial performance, but are subject to many uncertainties and factors relating to the operations and business environment of the Hotels and our other investments, that may cause our actual results to differ materially from any future results expressed or implied by such forward-looking statements.
These forward-looking statements include statements regarding our intent, belief or current expectations in respect of (i) the declaration or payment of dividends; (ii) the leasing, management or operation of the Hotels; (iii) the adequacy of reserves for renovation and refurbishment; (iv) our financing plans; (v) our position regarding investments, acquisitions, developments, financings, conflicts of interest and other matters; (vi) our plans and expectations regarding future sales of hotel properties; and (vii) trends affecting our or any Hotel’s financial condition or results of operations.
These forward-looking statements include statements regarding our intent, belief or current expectations in respect of (i) the declaration or payment of dividends; (ii) the leasing, management or operation of the Hotels; (iii) the adequacy of reserves for renovation and refurbishment; (iv) our financing plans; (v) our position regarding investments, acquisitions, developments, financings, conflicts of interest and other matters; (vi) expansion of UniGen; (vii) our plans and expectations regarding future sales of hotel properties; and (viii) trends affecting our or any Hotel’s financial condition or results of operations.
Our strategic plan is to continue to obtain the full benefit of our real estate equity, by ultimately obtaining full market value for our two Hotels at market value which is believed by management to be substantially higher than lower book values, over the next 24-36 months.
Our strategic plan is to continue to obtain the full benefit of our real estate equity, by ultimately obtaining full market value for our two Hotels at market value, which is believed by management to be substantially higher than lower book values, over the next 12-36 months.
At January 31, 2023, the Trust had two moderate-service hotels, one in Tucson, Arizona and one in Albuquerque, New Mexico with 270 hotel suites. Both of our Trust Hotels are branded through membership agreements with Best Western, and both are also trademarked as InnSuites Hotels and Suites.
At January 31, 2024, the Trust had two moderate-service hotels, one in Tucson, Arizona and one in Albuquerque, New Mexico with 270 hotel suites. Both of our Trust Hotels are branded through membership agreements with Best Western, and both are also trademarked as InnSuites Hotels and Suites.
Our liquidity, including our ability to make distributions to our shareholders, will depend upon our ability, and the Partnership’s ability, to generate sufficient cash flow from hotel operations, from management fees, and from the potential sale and/or refinance of the hotel, and to service our debt and the source of repayment of intercompany loan from Tucson and Albuquerque.
Our liquidity, including our ability to make distributions to our shareholders, will depend upon our ability, and the Partnership’s ability, to generate sufficient cash flow from hotel operations, from management fees, and from the potential sale and/or refinance of the hotel, and to service our debt including repayment of intercompany loan from Tucson.
Based on a 96 core “super computer “ simulated test together with advanced software, UniGen has confirmed that the UPI 1000 NG engine with the addition of recent technological advancements, is approximately 33% more fuel efficient than first estimated and will emit only approximately 25% of the maximum admissions allowed by CARB, the strictest of the regulatory standards issued by the state of California.
Based on a 96 core “super computer “ simulated test together with advanced software, UniGen has confirmed that the UPI 1000TA engine with the addition of recent potential technological advancements, is approximately 33% more fuel efficient than first estimated and will emit only approximately 25% of the maximum admissions allowed by CARB, the strictest of the regulatory standards issued by the state of California.
SHARE REPURCHASE PROGRAM For information on the Trust’s Share Repurchase Program, see Part II, Item 5. “Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.” We plan to continue the stock and unit buy backs in the current Fiscal Year 2023.
SHARE REPURCHASE PROGRAM For information on the Trust’s Share Repurchase Program, see Part II, Item 5. “Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.” We plan to continue the stock and partnership unit buy backs in the current Fiscal Year 2025.
With approximately $2,111,000 of cash as of January 31, 2023 and the availability of a $250,000 bank lines of credit, an up to $2,000,000 related party Demand/Revolving Line of Credit/Promissory Note, and the availability of repayment of Advances to Affiliate credit facilities and available Bank line of Credit, we believe that we will have enough cash on hand to meet all of our financial obligations as they become due for at least the next twelve months from the issuance date of the these consolidated financial statements.
With approximately $1,325,000 of cash as of January 31, 2024 and the availability of a $250,000 bank lines of credit, an up to $2,000,000 related party Demand/Revolving Line of Credit/Promissory Note, and the availability of repayment of Advances to Affiliate credit facilities and available Bank line of Credit, we believe that we will have enough cash on hand to meet all of our financial obligations as they become due for at least the next twelve months and beyond, from the issuance date of the these consolidated financial statements.
In cases where we do not expect to recover the carrying cost of hotel properties held for use, we will reduce the carrying value to the fair value of the hotel, as determined by a current appraisal or other acceptable valuation methods. We did not recognize a hotel properties impairment loss in Fiscal Years 2022 or 2021.
In cases where we do not expect to recover the carrying cost of hotel properties held for use, we will reduce the carrying value to the fair value of the hotel, as determined by a current appraisal or other acceptable valuation methods. We did not recognize a hotel properties impairment loss in Fiscal Years 2024 or 2023.
At this time, the Trust is unable to predict when, and if, either of its Hotel properties will be sold. The Trust seeks to sell one hotel per year or both over the next 12-36 months. We believe that each of the assets is available at a price that is reasonable in relation to its current fair market value.
At this time, the Trust is unable to predict when, and if, either of its Hotel properties will be sold. The Trust seeks to sell both hotels over the next 12-36 months. We believe that each of the assets is available at a price that is reasonable in relation to its current fair market value.
The plan is to work to sell the remaining two hotel properties over the next 12-36 months, and if needed beyond. Revenue Recognition Revenues are primarily derived from the following sources and are recognized as services are rendered and when collectability is reasonably assured. Amounts received in advance of revenue recognition are considered deferred liabilities.
The plan is to work to sell the remaining two hotel properties over the next 12-36 months, and if needed beyond. Revenue Recognition Revenues are primarily derived from the sources below and are recognized as services are rendered and when collectability is reasonably assured. Amounts received in advance of revenue recognition are considered deferred liabilities and are generally not significant.
LIQUIDITY AND CAPITAL RESOURCES Overview – Hotel Operations & Hotel Management Services Two principal sources of cash to meet our cash requirements, include monthly management fees from our two hotels and distributions to our investors of our share of the Partnership’s cash flow of the Tucson hotel, and quarterly distributions from the Albuquerque, New Mexico properties.
LIQUIDITY AND CAPITAL RESOURCES Overview – Hotel Operations & Corporate Overhead Two principal sources of cash to meet our cash requirements, include monthly management fees from our two hotels and distributions of our share of the Partnership’s cash flow of the Tucson hotel and quarterly distributions from the Albuquerque, New Mexico properties.
On the Trust’s balance sheet, the investment of the $1,588,750 consists of approximately $700,000 in note receivables, approximately $300,000 as the fair value of the warrants issued with the Trust’s investment in UniGen, and $588,750 of UniGen Common Stock (495,000 shares), at cost.
On the Trust’s balance sheet, the investment of the $1,633,750 consists of approximately $700,000 in note receivables, approximately $300,000 as the fair value of the warrants issued with the Trust’s investment in UniGen, and $633,750 of UniGen Common Stock (540,000 shares), at cost.
They have two of the six UniGen Board of Directors seats or 33% and were elected in December 2019 to serve on the board of UniGen to closely monitor and assist in the success of this potentially power industry disruptive relatively clean energy generation innovation.
They have two of the seven UniGen Board of Directors seats or 28% and were elected in December 2019 to serve on the board of UniGen to monitor and assist in the success of this potentially power industry disruptive relatively clean energy generation innovation.
The Trust has invested $1 million debentures convertible into 1 million shares of UniGen Power Inc., has purchased approximately 495,000 UniGen shares, and in addition has acquired warrants to purchase approximately an additional 2 million UniGen shares over the next three years, which could result up to 25% ownership in UniGen.
The Trust has invested $1 million debentures convertible into 1 million shares of UniGen Power Inc., has purchased approximately 540,000 UniGen shares, and in addition has acquired warrants to purchase approximately an additional 2 million UniGen shares over the next three years, which could result up to 20% or more ownership in UniGen.
General and administrative expenses of approximately $2,227,000 for the twelve months ended January 31, 2023, increased approximately $395,000 from approximately $1,832,000 for the twelve months ended January 31, 2022 primarily due to increases in minimum wage laws affecting a majority of our employees, creating higher personnel costs along with increased employment taxes, accordingly.
General and administrative expenses of approximately $2,470,000 for the twelve months ended January 31, 2024, increased approximately $244,000 from approximately $2,227,000 for the twelve months ended January 31, 2023 primarily due to increases in minimum wage laws affecting a majority of our employees, creating higher personnel costs along with increased employment taxes, accordingly.
Adjusted EBITDA does not represent cash generated from operating activities determined in accordance with GAAP and should not be considered as an alternative to (a) GAAP net income or loss as an indication of our financial performance or (b) GAAP cash flows from operating activities as a measure of our liquidity. 12 A reconciliation of Adjusted EBITDA to net loss attributable to controlling interests for the Fiscal Years ended January 31, 2023 and 2022 approximate follows: Twelve Months Ended January 31, 2023 2022 Net income attributable to controlling interests $ 523,000 $ 254,000 Add back: Depreciation 702,000 725,000 Interest expense 530,000 367,000 Less: Interest Income (65,000 ) (1,061,000 ) Adjusted EBITDA $ 1,690,000 $ 285,000 FFO is calculated on the basis defined by the National Association of Real Estate Investment Trusts (“ NAREIT ”), which is net income (loss) attributable to common shareholders, computed in accordance with GAAP, excluding gains or losses on sales of properties, asset impairment adjustments, and extraordinary items as defined by GAAP, plus non-cash depreciation and amortization of real estate assets, and after adjustments for unconsolidated joint ventures and non-controlling interests in the operating partnership.
Adjusted EBITDA does not represent cash generated from operating activities determined in accordance with GAAP and should not be considered as an alternative to (a) GAAP net income or loss as an indication of our financial performance or (b) GAAP cash flows from operating activities as a measure of our liquidity. 12 A reconciliation of Adjusted EBITDA to net loss attributable to controlling interests for the Fiscal Years ended January 31, 2024 and 2023 approximate follows: For the Years Ended January 31, 2024 2023 Net income attributable to controlling interests $ 204,000 $ 523,000 Add back: Depreciation 679,000 702,000 Interest expense 502,000 530,000 Less: Interest Income (50,000 ) (68,000 ) Adjusted EBITDA $ 1,335,000 $ 1,687,000 FFO is calculated on the basis defined by the National Association of Real Estate Investment Trusts (“ NAREIT ”), which is net income (loss) attributable to common shareholders, computed in accordance with GAAP, excluding gains or losses on sales of properties, asset impairment adjustments, and extraordinary items as defined by GAAP, plus non-cash depreciation and amortization of real estate assets, and after adjustments for unconsolidated joint ventures and non-controlling interests in the operating partnership.
As a result, the Trust conservatively placed an amount equal to approximately 12% of this total as a Tax Credit Receivable and Tax Refund on the Balance Sheet and Income statement, respectively, for the Fiscal Years ended January 31, 2023 and 2022, respectively.
As a result, the Trust quantifiably placed an amount equal to approximately 12% per Fiscal Quarter of this total as a Tax Credit Receivable and Tax Refund on the Balance Sheet and Income statement, respectively, for the Fiscal Years ended January 31, 2024 and 2023, respectively.
Operators of hotels in general, and InnSuites in particular, can change room rates quickly, but competitive pressures may limit InnSuites ability to raise rates as fast as or faster than inflation. During Fiscal Year 2023, ended January 31, 2023, InnSuites did experience substantial increases in rates to offset the inflationary increase labor and other expenses. INVESTMENT IN UNIGEN POWER, INC.
Operators of hotels in general, and InnSuites in particular, can change and do change room rates often and quickly, but competitive pressures may limit InnSuites ability to raise rates as fast as or faster than inflation. During Fiscal Year 2024, ended January 31, 2024, InnSuites did experience substantial increases in rates to offset the inflationary increase labor and other expenses.
We believe that each of the assets have an estimated market asking price that is reasonable in relation to its current fair market value. We plan to sell our remaining two Hotel properties within 24-36 months.
We believe that each of the assets, the Tucson and Albuquerque hotels, have an estimated market asking price that is reasonable in relation to its current fair market value. We plan to sell our remaining two Hotel properties within 12-36 months.
The Debentures are convertible into 1,000,000 Class A shares of UniGen Common Stock at an initial conversion rate of $1.00 per share. UniGen issued the Trust common stock purchase warrants (the “Debenture Warrants”) including to purchase up to 1,000,000 shares of Class A Common Stock.
The Debentures are convertible into 1,000,000 Class A shares of UniGen Common Stock at an initial conversion rate of $1.00 per share. The Trust has purchased in addition approximately 540,000 shares of UniGen stock. UniGen issued the Trust common stock purchase warrants (the “Debenture Warrants”) including to purchase up to 1,000,000 shares of Class A Common Stock.
Hotel Operations derives its revenue from the operation of the Trust’s two hotel properties with an aggregate of 270 suites in Arizona and New Mexico. Hotel management services, provides management services for the Trust’s two Hotels. As part of our management services, we also provide trademark and licensing services. The Chief Operating Decision Maker (“CODM”), Mr.
Hotel Ownership Operations derives its revenue from the operation of the Trust’s two hotel properties with an aggregate of 270 hotel suites in Arizona and New Mexico. Hotel management services, provides management services for the Trust’s two Hotels. As part of our management services, we also provide trademark and licensing services.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES As a partial offset to the current hotel industry Virus induced drop in demand pressure, the Trust looks to benefit from, and expand, its UniGen clean energy operation diversification investments in the months, and years ahead. See Note 7 of the Audited Consolidated Financial Statements for discussion on UniGen.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES As a partial balance to the current hotel industry, the Trust looks to benefit from, and expand, its UniGen clean energy operation diversification investments in the years ahead. See Note 7 of the Audited Consolidated Financial Statements for discussion on UniGen.
Room expenses consisting of salaries and related employment taxes for property management, front office, housekeeping personnel, reservation fees and room supplies were approximately $2,222,000 for the Fiscal Year ended January 31, 2023 compared to approximately $2,011,000 in the prior year period for an increase of approximately $211,000, or 11%.
Room expenses consisting of salaries and related employment taxes for property management, front office, housekeeping personnel, reservation fees and room supplies were approximately $2,525,000 for the Fiscal Year ended January 31, 2024 compared to approximately $2,222,000 in the prior year period for an increase of approximately $303,000, or 14%.
Positive cash provided by operating activities totaled approximately $54,000 during the twelve months ended January 31, 2023 as compared to net cash provided of approximately $263,000 during the twelve months ended January 31, 2022.
Positive cash provided by operating activities totaled approximately $1,432,000 during the twelve months ended January 31, 2024 as compared to net cash provided of approximately $54,000 during the twelve months ended January 31, 2023.
Hospitality expense increased by approximately $135,000, or 58%, to approximately $368,000 for the twelve months ended January 31, 2023 from approximately $233,000 for the twelve months ended January 31, 2022. The increase was primarily due to the increased occupancy and increased breakfast offerings at the hotel properties due to previous pandemic restrictions no longer in effect.
Hospitality expense increased by approximately $92,000, or 25%, to approximately $459,000 for the twelve months ended January 31, 2024 from approximately $368,000 for the twelve months ended January 31, 2023. The increase was primarily due to the increased occupancy and increased breakfast offerings at the hotel properties due to previous pandemic restrictions no longer in effect.
Either a further increase in area hotel supply, hourly labor cost, or a decline in demand could result in increased competition, which could have an adverse effect on the rates, revenue, costs, and profits of the Hotels in their respective markets.
Further increases in area hotel supply, hourly labor cost, declines in demand, or declines in room rates, could result in increased competition, which could have an adverse effect on the rates, revenue, costs, and profits of the Hotels in their respective markets.
We believe that we have positioned the Hotels to remain competitive through our now completed refurbishment(s), by offering a relatively large number of fully refurbished two-room suites at each location, and by maintaining robust complementary guest items, including complimentary breakfast and free Internet access. 7 Our strategic plan is to continue to obtain the full benefit from hotel operations, and from our real estate equity, by marketing the remaining two Hotels over the next 12-36 months.
We believe that we have positioned the Hotels to remain competitive through our now fully completed Tucson and Albuquerque hotel refurbishments, by offering fully refurbished studios and two-room suites at each location, and by maintaining complementary guest items, including complimentary hot breakfast and free high-speed Internet access. 7 Our strategic plan is to continue to obtain the full benefit from hotel operations, and from our real estate equity, by marketing the remaining two Hotels over the next 12-36 months.
At January 31, 2023, and currently, the Trust owns a 75.98% sole general partner interest in the Partnership, which controls a 51.01% interest in the InnSuites hotel located in Tucson, Arizona, and a direct 21.50% interest in the InnSuites hotel located in Albuquerque, New Mexico. Our operations consist of one reportable segment – Hotel Operations & Hotel Management Services.
At January 31, 2024, and currently, the Trust owns a 75.89% sole general partner interest in the Partnership, which controls a 51.62% interest in the InnSuites hotel located in Tucson, Arizona, and a direct 21.90% interest in the InnSuites hotel located in Albuquerque, New Mexico. Trust operations consist of one reportable segment – Hotel Ownership & Hotel Management Services.
We realized a 12% increase in room revenues during Fiscal Year 2023 as room revenues were approximately $6,974,000 for the Fiscal Year ending January 31, 2023 as compared to approximately $6,208,000 for the Fiscal Year ending January 31, 2022.
We realized a 5% increase in room revenues during Fiscal Year 2024 as room revenues were approximately $7,292,000 for the Fiscal Year ending January 31, 2024 as compared to approximately $6,974,000 for the Fiscal Year ending January 31, 2023.
The total of all stock ownership upon conversion of the note receivable and exercise of warrants could total up to 3 million UniGen shares, which amounts to approximately 25% of fully diluted UniGen equity.
The total of all stock ownership upon conversion of the debenture and exercise of warrants could total up to 3 million UniGen shares, which amounts to approximately 20% or more of fully diluted UniGen equity.
For Fiscal 2024, (February 1, 2023 to January 31, 2024), we expect continued modest increase in occupancy, substantial further increases in rates, and continued increased record profits and revenues compared to both prior levels.
For Fiscal 2025, (February 1, 2024 to January 31, 2025), we expect continued increase in rates, and continued increased record profits and revenues compared to both prior levels.
There is no Investment Commitment to UniGen requiring any restriction of cash. The Trust purchased secured convertible debentures (“Debentures”) in the aggregate amount of $1,000,000 (the “Loan Amount”) (the “Loan”) at an annual interest rate of 6% (approximately $15,000 per quarter).
The investment is valued at fair value (level 3), as defined in Note 2 of the Consolidated Financial Statements. There is no Investment Commitment to UniGen requiring any restriction of cash. The Trust purchased secured convertible debentures (“Debentures”) in the aggregate amount of $1,000,000 (the “Loan Amount”) (the “Loan”) at an annual interest rate of 6% ($15,000 per quarter).
Hotel Property Book Value Mortgage Balance Estimated Market Asking Price Albuquerque $ 1,065,921 $ 1,261,793 9,500,000 Tucson Oracle 6,120,679 8,266,677 18,500,000 $ 7,186,600 $ 9,528,470 $ 28,000,000 The “Estimated Market Asking Price” is the amount at which we believe may sell each of the Hotels and is adjusted to reflect hotel sales in the Hotels’ areas of operation and projected upcoming 12 month earnings of each of the Hotels.
Hotel Property Book Value Mortgage Balance Estimated Market Asking Price Albuquerque $ 987,000 $ 1,204,000 9,500,000 Tucson Oracle 6,028,000 8,046,000 18,500,000 $ 7,015,000 $ 9,250,000 $ 28,000,000 The “Estimated Market Asking Price” is the amount at which we believe we may sell each of the Hotels and is adjusted to reflect hotel sales in the Hotels’ areas of operation and projected upcoming strong 12 month earnings of each of the Hotels.
On December 16, 2019, the Trust entered into a Convertible Debenture Purchase Agreement with UniGen Power Inc. (“UniGen”). InnSuites Hospitality Trust (IHT) made an initial $1 million diversification investment in late Fiscal Year 2020 and early Fiscal Year 2021. UniGen is in the process of developing a patented high profit potential new efficient clean energy generation innovation.
InnSuites Hospitality Trust (IHT) made an initial $1 million diversification investment in late Fiscal Year 2020 and early Fiscal Year 2021. UniGen is in the process of developing a patented high profit potential new efficient clean energy generation innovation.
Repairs and maintenance expense increased by approximately $20,000, or 5%, to approximately $413,000 for the twelve months ended January 31, 2023 from approximately $392,000 for the twelve months ended January 31, 2022.
Repairs and maintenance expense increased by approximately $54,000, or 13%, to approximately $466,000 for the twelve months ended January 31, 2024 from approximately $413,000 for the twelve months ended January 31, 2023.
We expect the current Fiscal Year 2024 to be continued recovery of the travel industry, continued recovery of our Hotel’s occupancy levels, continued recovery of room rates, as well as continuation of current cost control all leading to improved profitability of our hotels.
We expect the current Fiscal Year 2025 to be continued growth of the travel industry, stable high level Hotel occupancy, continued recovery and increases of room rates, as well as continuation of current cost control all leading to improved profitability of our hotels.
Fiscal Year 2023, ended January 31, 2023 continued this upward trend achieving record profits.
For the 2024 Fiscal Year ended January 31, 2024, InnSuites continued this upward trend achieving record profits.
(“UniGen”), an innovative efficient clean energy power generation company. The Trust has invested $1 million in debentures convertible into 1 million shares of UniGen Power Inc., and in addition has acquired warrants to purchase approximately an additional 2 million UniGen shares over the next approximately three years, which could result up to 25% ownership in UniGen.
The Trust has invested $1 million in debentures convertible into 1 million shares of UniGen Power Inc., the Trust has invested in 540,000 UniGen shares, and in addition has acquired warrants to purchase approximately an additional 2 million UniGen shares over the next approximately three years, which could result in 20% or more ownership in UniGen.
We can provide no assurance that we will be able to sell either or both of the Hotel properties on terms favorable to us or within our expected time frame, or at all. Although believed feasible, we may be unable to realize the asking price for the individual Hotel properties or to sell and/or refinance one or both.
We can provide no assurance that we will be able to sell either or both of the Hotel properties on terms favorable to us or within our expected time frame, or at all.
For the 2022 Fiscal Year (February 1, 2021 to January 31, 2022), which was adversely affected by the Covid pandemic, InnSuites and the entire hotel industry in general experienced strong declines and reduced travel, resulting in much lower revenues and profits. For the 2023 Fiscal Year ended January 31, 2023, InnSuites experienced substantial recovery of post Covid revenues and profits.
For the 2023 Fiscal Year (February 1, 2022 to January 31, 2023), which was a rebound from the previously adversely affected Fiscal Year 2022 (February 1, 2021 to January 31, 2022), by the Covid pandemic, InnSuites and the entire hotel industry in general experienced strong improvements and increased travel, resulting in much higher revenues and profits.
Utility expenses increased approximately $45,000, or 12%, to approximately $428,000 reported for the twelve months ended January 31, 2023 from approximately $383,000 for the twelve months ended January 31, 2022. Hotel property depreciation expenses decreased by approximately $23,000 to approximately $702,000 for the twelve months ended January 31, 2023 from approximately $725,000 for the twelve months ended January 31, 2022.
Utility expenses decreased approximately $5,000, or 1%, to approximately $423,000 reported for the twelve months ended January 31, 2024 from approximately $428,000 for the twelve months ended January 31, 2023. Hotel property depreciation expenses decreased by approximately $23,000 to approximately $679,000 for the twelve months ended January 31, 2024 from approximately $702,000 for the twelve months ended January 31, 2023.
Management fees remained unchanged year on year at 5%. 9 EXPENSES Total expenses before interest expense, employee retention credit, sales and occupancy taxes and income tax provision were approximately $7,443,000 for the twelve months ended January 31, 2023 reflecting an increase of approximately $730,000 compared to total expenses before interest expense, employee retention credit, sales and occupancy taxes and income tax provision of approximately $6,713,000 for the twelve months ended January 31, 2022.
Management fees were approximately $79,000 for the Fiscal Year ending January 31, 2024 as compared to approximately $53,000 for the Fiscal Year ending January 31, 2023. 9 EXPENSES Total expenses before interest expense, employee retention credit, sales and occupancy taxes and income tax provision were approximately $8,205,000 for the twelve months ended January 31, 2024 reflecting an increase of approximately $762,000 compared to total expenses before interest expense, employee retention credit, sales and occupancy taxes and income tax provision of approximately $7,443,000 for the twelve months ended January 31, 2023.
If we are unable to raise additional or replacement funds, we may be required to refinance or sell certain of our assets to meet our liquidity needs, which may not be on terms that are favorable. 11 We anticipate no material additional competitive new-build hotel supply during the remaining Fiscal Year 2024, and accordingly we anticipate steady hotel supply in our markets and increased travel demand as the industry rebounds with recovery of revenues and operating margins.
If we are unable to raise additional or replacement funds, we may be required to sell certain of our assets to meet our liquidity needs, which may not be on terms that are favorable. 11 We anticipate limited additional new-build hotel supply in our markets during the current Fiscal Year 2025, and accordingly we anticipate a continued increase of revenues and operating margins.
Fiscal 2023 Consolidated Net Loss from continuing operations were approximately $7,146,000 as compared with Fiscal 2022 Revenues of approximately $6,410,000. 13 FUTURE POSITIONING In viewing the hotel industry cycles, recently reconfirmed by the COVID-19 disruption of travel and hospitality, the Board of Trustees determined that it was appropriate to continue to actively seek buyers for our two remaining Hotel properties.
Fiscal 2024 Consolidated Net Income from operations before non-cash depreciation was approximately $883,000 as compared to Consolidated Net Income from operations before non-cash depreciation of approximately $1,226,000 for Fiscal 2023. 13 FUTURE POSITIONING In viewing the hotel industry cycles, reconfirmed by the recent disruption of travel and hospitality, the Board of Trustees determined that it was appropriate to continue to actively seek buyers for our two remaining Hotel properties.
Sales and marketing expense increased approximately $52,000, or 13%, to approximately $451,000 for the twelve months ended January 31, 2023 from approximately $399,000 for the twelve months ended January 31, 2022. Filled positions for sales and marketing resources accounted for the increase.
Sales and marketing expense decreased approximately $43,000, or 9%, to approximately $409,000 for the twelve months ended January 31, 2024 from approximately $451,000 for the twelve months ended January 31, 2023. Vacant positions for sales and marketing resources accounted for the increase.
Potential future real estate hotel sales is another future source of cash. The Partnership’s principal source of revenue is hotel operations for the hotel property it owns in Tucson, Arizona.
Additional sources of cash include intercompany loan repayments, potential future real estate hotel sales, and potential returns on diversified investments. The Partnership’s principal source of revenue is hotel operations for the hotel property it owns in Tucson, Arizona.
Unfavorable changes in these factors, such as the virus-related travel slowdown in the Fiscal Year starting February 1, 2020, can and have negatively impacted hotel room demand and pricing, which reduces our profit margins. Additionally, our ability to manage costs could be adversely impacted by significant increases in operating expenses, resulting in lower operating margins, and higher hourly labor costs.
Unfavorable changes in these factors, such as the virus-related travel slowdown in the Fiscal Year starting February 1, 2020, can and have negatively impacted hotel room demand and pricing, which reduces our profit margins.
Management also believes that even with an additional extension repayment term due to COVID-19 that the future collectability of the current carrying value of the note is probable and not subject to further impairment, or allowance for the year ended January 31, 2023.
Management believes that with an additional extension repayment term, that the future collectability of the current carrying value of the note is probable and not subject to further impairment, or allowance for the Fiscal Year ended January 31, 2024. Refer to Note 6 – “Note Receivable” for information related to the Sale of IBC Hospitality Technologies (IBC).
The following table shows certain historical financial and other information for the periods indicated: For the Twelve Months Ended Albuquerque January 31, 2023 2022 Change %-Incr/Decr Occupancy 82.27 % 83.44 % -1.17 % -1.40 % Average Daily Rate (ADR) $ 98.90 $ 85.32 $ 13.58 15.92 % Revenue Per Available Room (REVPAR) $ 81.36 $ 71.19 $ 10.17 14.29 % For the Twelve Months Ended Tucson January 31, 2023 2022 Change %-Incr/Decr Occupancy 68.07 % 70.04 % -1.97 % -2.81 % Average Daily Rate (ADR) $ 92.88 $ 81.66 $ 11.22 13.74 % Revenue Per Available Room (REVPAR) $ 63.22 $ 57.19 $ 6.03 10.54 % For the Twelve Months Ended Combined January 31, 2023 2022 Change %-Incr/Decr Occupancy 73.96 % 75.60 % -1.64 % -2.17 % Average Daily Rate (ADR) $ 95.66 $ 83.34 $ 12.32 14.78 % Revenue Per Available Room (REVPAR) $ 70.75 $ 63.00 $ 7.75 12.30 % 8 No assurance can be given that occupancy, ADR and/or REVPAR will or will not increase or decrease as a result of changes in national or local economic or hospitality industry conditions.
The following table shows certain historical financial and other information for the periods indicated: For the Years Ended Albuquerque January 31, 2024 2023 Change %-Incr/Decr Occupancy 84.86 % 82.27 % 2.59 % 3.15 % Average Daily Rate (ADR) $ 99.97 $ 98.90 $ 1.07 1.08 % Revenue Per Available Room (REVPAR) $ 84.84 $ 81.36 $ 3.48 4.28 % For the Years Ended Tucson January 31, 2024 2023 Change %-Incr/Decr Occupancy 69.56 % 68.07 % 1.49 % 2.19 % Average Daily Rate (ADR) $ 95.29 $ 92.88 $ 2.41 2.59 % Revenue Per Available Room (REVPAR) $ 66.28 $ 63.22 $ 3.06 4.84 % For the Years Ended Combined January 31, 2024 2023 Change %-Incr/Decr Occupancy 75.91 % 73.96 % 1.95 % 2.64 % Average Daily Rate (ADR) $ 97.46 $ 95.66 $ 1.80 1.88 % Revenue Per Available Room (REVPAR) $ 73.98 $ 70.75 $ 3.23 4.57 % 8 No assurance can be given that occupancy, ADR and/or REVPAR will or will not increase or decrease as a result of changes in national or local economic travel, or hospitality industry conditions.
A reconciliation of FFO to net income (loss) attributable to controlling interests for Fiscal Year ended January 31, 2023 and 2022 are as follows: Twelve Months Ended January 31, 2023 2022 Net income attributable to controlling interests $ 523,000 $ 254,000 Add back: Depreciation 702,000 725,000 Non-controlling interest 214,000 1,286,000 FFO $ 1,439,000 $ 2,265,000 The Trust reported Consolidated Net Loss from operations of approximately $298,000 for the Fiscal Year ended January 31, 2023 compared to Consolidated Net Loss from operations of approximately $304,000 for the Fiscal Year ended January 31, 2022.
A reconciliation of FFO to net income (loss) attributable to controlling interests for Fiscal Year ended January 31, 2024 and 2023 are as follows: For the Years Ended January 31, 2024 2023 Net income attributable to controlling interests $ 204,000 $ 523,000 Add back: Depreciation 679,000 702,000 Non-controlling interest 73,000 214,000 FFO $ 956,000 $ 1,439,000 The Trust reported Consolidated Net Loss from operations of approximately $721,000 for the Fiscal Year ended January 31, 2024 compared to Consolidated Net Loss from operations before other income, interest expense, and the Employee Retention Credit of approximately $297,000 for the Fiscal Year ended January 31, 2023.
The initial investment was made December 16, 2019, with positive progress to date despite the virus, economic, travel disruptions, cost overruns, and delays. The investment includes warrants convertible to UniGen stock upon election of the Trust. The investment is valued at fair value (level 3), as defined in Note 2 of the Consolidated Financial Statements.
The initial investment was made December 16, 2019, with positive progress to date despite the virus, economic setbacks, international vendor travel disruptions, cost overruns, and delays. The investment includes convertible bonds, stocks, and warrants to purchase UniGen stock upon election of the Trust.
For more information on our strategic plan, including information on our progress in disposing of our hotel properties and expanding energy diversification, see “Future Positioning” in this Management Discussion and Analysis of Financial Condition and Results of Operations We experienced weak economic conditions during Fiscal Year 2022, ended January 31, 2022, primarily a result of the Covid-19 virus pandemic.
For more information on our strategic plan, including information on our progress in disposing of our hotel properties and expanding energy diversification, see “Future Positioning” in this Management Discussion and Analysis of Financial Condition and Results of Operations.
The increased ADR resulted in an increase in REVPAR of $7.75, or 12.30%, to $70.75 in Fiscal Year 2023 from $63.00 in Fiscal Year 2022. The increase in ADR and REVPAR reflect the Covid-19 travel lockdown easing and resulting improved economy. For the Fiscal Year 2023, ending January 31, 2023, we experienced a substantial recovery.
The increased ADR resulted in an increase in REVPAR of $3.23, or 4.57%, to $73.98 in Fiscal Year 2024 from $70.75 in Fiscal Year 2023. The increase in ADR and REVPAR reflect the increased travel and improved economy. For the Fiscal Year 2024, ending January 31, 2024, we experienced a substantial profit improvement.
Fiscal 2022 and 2021 Consolidated Net Loss from operations included non-cash depreciation of approximately $702,000 and $725,000, respectively. Fiscal 2023 Consolidated Net Loss from operations before non-cash depreciation was approximately $404,000 as compared to Consolidated Net Loss from operations before non-cash depreciation of approximately $421,000 for Fiscal 2022.
Fiscal 2024 and 2023 Consolidated Net Loss from operations included non-cash depreciation of approximately $679,000 and $702,000, respectively.
The CODM does not review assets by geographical region; therefore, no income statement or balance sheet information by geographical region is provided.
The Trust has chosen to focus its hotel investments on the southwest region of the United States. The Trust does not review assets by geographical region; therefore, no income statement or balance sheet information by geographical region is provided.
Refer to Note 6 – “Note Receivable” for information related to the Sale of IBC Hospitality Technologies (IBC). There can be no assurance that we will be successful in raising additional or replacement funds, or that these funds may be available on terms that are favorable to us.
There can be no assurance that we will be successful fully collecting receivables, in refinancing debt, or raising additional or replacement funds, or that these funds may be available on terms that are favorable to us.
In Fiscal Year 2023, as compared with Fiscal 2022, occupancy decreased approximately 2.17% to 73.96% from 75.60% in the prior Fiscal Year. ADR increased by $12.32, or 14.78%, to $95.66 in Fiscal Year 2023 from $83.34 in Fiscal Year 2022.
In Fiscal Year 2024, as compared with Fiscal 2023, occupancy increased approximately 1.95% to 75.91% from 73.96% in the prior Fiscal Year. ADR increased by $1.80, or 1.88%, to $97.46 in Fiscal Year 2024 from $95.66 in Fiscal Year 2023.
We expect the challenge for the upcoming current Fiscal Year to be the continued economic and travel recovery of leisure, corporate, group, and government business in the markets in which we operate, which may affect our ability to recover occupancy and increase room rates while maintaining and/or building market share.
We expect challenges for the remaining Fiscal Year to be the economy, inflation, and cost control. Travel, leisure, corporate, group, and government business continued to grow and further increase room rates while maintaining and/or building market share in Fiscal Year 2024.
Real estate and personal property taxes, Insurance and Ground Rent expenses decreased approximately $72,000, or 14%, to approximately $429,000 for the twelve months ended January 31, 2023 from approximately $501,000 for the twelve months ended January 31, 2022. 10 Sales and occupancy tax expenses increased approximately $798,000, or 100%, to $0 for the twelve months ended January 31, 2023 from approximately ($798,000) for the twelve months ended January 31, 2022.
Real estate and personal property taxes, Insurance and Ground Rent expenses increased approximately $124,000, or 29%, to approximately $553,000 for the twelve months ended January 31, 2024 from approximately $429,000 for the twelve months ended January 31, 2023. 10 Employment Tax Refunds and Credits, for the previously filed calendar years 2021, and 2022, respectively, resulted in the Employment Retention Tax Credit.
The Trust did take a reserve for bad debt as of January 31, 2022 reflecting its concern with the collectability of the Obasa note receivable, related to the sale of the IBC technology segment. 14 Sale of Hotel Assets Management believes that our currently owned Hotels are valued at prices that are reasonable in relation to their current fair market value.
As of January 31, 2024, our management does not believe that the carrying values of any of our hotel properties are impaired. 14 Sale of Hotel Assets Management believes that our currently owned Hotels are valued at prices that are reasonable in relation to their current fair market value.
Overview A summary of total Trust operating results for the Fiscal Years ended January 31, 2023 and 2022 is as follows: 2023 2022 Change % Change Total Revenues $ 7,145,687 $ 6,409,800 $ 735,887 11 % Operating Expenses 7,443,022 6,713,135 729,887 11 % Operating Loss (297,335 ) (303,335 ) 6,000 2 % Interest Income and Other 68,072 1,061,464 (993,392 ) (94 )% Interest Expense (530,347 ) (367,235 ) (163,112 ) (44 )% Employee Retention Benefit 1,403,164 350,791 1,052,373 300 % Sales and Occupancy Taxes - 798,000 (798,000 ) (100 )% Income Tax Benefit 93,497 50 93,447 186,894 % Consolidated Net Income 737,051 1,539,735 (802,684 ) (52 )% REVENUE For the twelve months ended January 31, 2023, we had total revenue of approximately $7,146,000 compared to approximately $6,410,000 for the twelve months ended January 31, 2022, an increase of approximately $736,000, or 53%.
Overview A summary of total Trust operating results for the Fiscal Years ended January 31, 2024 and 2023 is as follows: For Years Ended January 31, 2024 2023 Change % Change Total Revenues $ 7,484,398 $ 7,145,687 $ 338,711 5 % Operating Expenses 8,205,374 7,443,022 762,352 10 % Operating Loss (720,976 ) (297,335 ) (423,641 ) (142 %) Interest Income and Other 96,595 68,072 28,523 42 % Interest Expense (501,707 ) (530,347 ) 28,640 5 % Employee Retention Benefit 1,403,164 1,403,164 - 0 % Income Tax Benefit 100 93,497 (93,397 ) (100 %) Consolidated Net Income 277,176 737,051 (459,875 ) (62 %) REVENUE For the twelve months ended January 31, 2024, we had total revenue of approximately $7,484,000 compared to approximately $7,146,000 for the twelve months ended January 31, 2023, an increase of approximately $339,000, or 5%.
In addition, our management is analyzing other strategic options, including additional asset sales. However, such transactions may not be available on terms that are favorable to us, or at all. IHT and InnDependent Boutique Collections Hotels (IBC), agreed to extend the payment schedule on IBC’s note receivable by 18 months, extending the first payment from November 2021 to May 2023.
Our management is analyzing other strategic options available to us, including raising additional funds, asset sales, and benefiting from clean energy investment cash flow as our diversification investment matures. However, such transactions may not be available on terms that are favorable to us, or at all.
Hotel operations were significantly affected by occupancy and room rates at the Hotels in the Fiscal Year 2022.
Hotel operations were positively affected by increased room rates at the Hotels in the Fiscal Years 2023 and 2024, respectively, as the travel industry continued to rebound.
Explanation of the differences between these Fiscal Years are explained above in the results of operations of the Trust.
Consolidated net income was approximately $277,000 for the twelve months ended January 31, 2024 as compared to consolidated net income for the twelve months ended January 31, 2023 of approximately $737,000. Explanation of the differences between these Fiscal Years are explained above in the results of operations of the Trust.
Engineering work is on hold, while UniGen concentrates on its next round of capital raising. UniGen is a high risk investment offering high potential investment return when successful.
UniGen is a high risk investment offering high potential investment return if and when successful.
While room revenue increased, our food and beverage revenue remained flat for Fiscal Year 2023 at approximately $53,000 during Fiscal Years 2023 and 2022. We also realized an approximate 82% decrease in management and trademark fee revenues during Fiscal Year 2022 to approximately $21,000 as compared to approximately $115,000 during Fiscal Year 2021.
While room revenue increased, our food and beverage revenue remained flat for Fiscal Year 2024 at approximately $114,000 during Fiscal Years 2024.
Removed
Wirth, CEO of the Trust, has determined that the Trust operations are comprised of one reportable segment, Hotel Ownership Operations & Management Services (continuing operations) segment that has ownership interest in two hotel properties with an aggregate of 270 suites in Arizona and New Mexico. The Trust has its hotel investments in the southwest region of the United States.
Added
Additionally, our ability to manage costs could be adversely impacted by significant inflationary increases in operating expenses, resulting in lower operating margins, and higher hourly labor costs.
Removed
We experienced recovery from weak travel and hospitality industry for much of the current Fiscal Year 2023, ending January 31, 2023 due to the recovery of domestic travel. We expect the major challenge for Fiscal Year 2024 to be the economy, continued recovery of the travel industry, rebound of occupancy levels, continued increases in room rates, and cost control.
Added
(“UniGen”), an innovative efficient clean energy power generation company.
Removed
Management and trademark fee revenues decreased during Fiscal Year 2021 as a result of the loss of management fees due to the sale of the Tempe hotel in December, 2020. The Tempe hotel was owned outside of the Trust, and only an affiliate. It was not part of the Trust consolidation.

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