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What changed in Inspirato Inc's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Inspirato Inc'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.

+329 added−306 removedSource: 10-K (2025-03-26) vs 10-K (2024-03-12)

Top changes in Inspirato Inc's 2024 10-K

329 paragraphs added · 306 removed · 208 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeThe transfer agent and registrar for our common stock and the warrant agent for our warrants is Computershare Trust Company, N.A. Available Information Our website address is www.Inspirato.com. Information contained on, or that can be accessed through, our website does not constitute part of this Annual Report on Form 10-K. The U.S.
Biggest changeThe transfer agent and registrar for our common stock and the warrant agent for our warrants through December 31, 2024 was Computershare Trust Company, N.A. In 2025, the transfer agent and registrar for our common stock and the warrant agent for our warrants is Broadridge Financial Solutions Inc. Available Information Our website address is www.Inspirato.com.
We manage these rates to achieve occupancy and average daily rate goals while also delivering value to drive member satisfaction. Inspirato Pass Launched in 2019, Inspirato Pass members pay an enrollment fee and a monthly, semi-annual, annual, or multi-year subscription that is inclusive of nightly rates, taxes and fees for Pass trips.
We manage these rates to achieve occupancy and average daily rate goals while also delivering value to drive member satisfaction. Inspirato Pass Launched in 2019, Pass members pay an enrollment fee and a monthly, semi-annual, annual, or multi-year Subscription that is inclusive of nightly rates, taxes and fees for Pass trips.
Inspirato Pass members book pass trips from the Inspirato Pass trip list, which is a constantly updated selection that includes vacations at Inspirato residences and hotel partners.
Pass members book Pass trips from the Pass trip list, which is a constantly updated selection that includes vacations at Inspirato residences and hotel partners.
We believe our favorable lease agreements and partnerships with hospitality suppliers enable us to offer reduced rates versus comparable luxury vacation alternatives, while saving our members from the hassle of scouring travel websites to confirm whether they have found the best rate or value for their stay. ● Simple, transparent fee structure.
We believe our lease agreements and partnerships with hospitality suppliers enable us to offer reduced rates versus comparable luxury vacation alternatives, while saving our members from the hassle of scouring travel websites to confirm whether they have found the best rate or value for their stay. • Simple, transparent fee structure.
In addition to their monthly or annual subscription, members pay members-only nightly rates to book the trips of their choice. Inspirato Club members can book vacations up to one year in advance. Every Club trip includes personalized service, including pre-trip planning, on-site concierge, and daily housekeeping.
In addition to their monthly or annual Subscription, members pay members-only nightly rates to book the trips of their choice. Club members can book vacations up to one year in advance. Every Club trip includes personalized service, including pre-trip planning, on-site concierge, and daily housekeeping.
Inspirato Pass members have full access to all the benefits of Inspirato Club , including the ability to pay members-only nightly rates to book trips of their choice, access to our booking promotions, and personalized service on every trip.
Pass members have full access to all the benefits of Club , including the ability to pay members-only nightly rates to book trips of their choice, access to our booking promotions, and personalized service on every trip.
At the same time, we have used data-driven marketing to build a proprietary database of affluent individuals who have demonstrated interest in Inspirato. Technology Our technology platform was built for the unique needs of our members; it allows us to quickly adapt to what our members require and delivers deep business intelligence insights to help us manage our platform.
At the same time, we have used data-driven marketing to build a proprietary database of affluent individuals who have demonstrated interest in Inspirato. Technology Our technology platform was built for the unique needs of our members; it allows us to quickly adapt to what our members require and deliver deep business intelligence insights to help us manage our platform.
Seasonality Our travel revenues are seasonal, reflecting typical travel behavior patterns of travelers over the course of the calendar year. In a typical year, the first, third, and fourth quarters have higher travel revenues than the second quarter. In addition, some locations may experience a greater impact from seasonality, or different seasonality, than those in other locations.
Seasonality Our travel revenues are seasonal, reflecting typical travel behavior patterns of members over the course of the calendar year. In a typical year, the first, third, and fourth quarters have higher travel revenues than the second quarter. In addition, some locations may experience a greater impact from seasonality, or different seasonality, than those in other locations.
We maintain an expert sales and service organization, including sales professionals to welcome new members, relationship-driven member success teams to create the overall Inspirato experience, and vacation experience teams, which includes our planners and on-site concierge teams, to deliver memorable vacations.
We maintain an expert sales and service organization, including sales professionals to welcome new members, relationship-driven member care teams to create the overall Inspirato experience, and vacation experience teams, which includes our planners and on-site concierge teams, to deliver memorable vacations.
By managing and controlling these assets directly, including staffing them with Inspirato team members, we are able to deliver a consistent experience comparable to top luxury hospitality resort brands, versus a “vacation roulette” experience that is dependent on the expertise and attention of the individual homeowner or a local property management company. ● Rate and Calendar Control.
By managing and controlling these assets directly, including staffing them with Inspirato team members or vetting and relying on resort staff, we are able to deliver a consistent experience comparable to top luxury hospitality resort brands, versus a “vacation roulette” experience that is dependent on the expertise and attention of the individual homeowner or a local property management company. • Rate and Calendar Control .
We believe we compete primarily on the basis of the quality of our residences, the variety and attractiveness of our residences, and our high-quality member experience that is a result of the services provided by our member success teams and vacation experience teams, which include dedicated concierges and planners.
We believe we compete primarily on the basis of the quality of our residences, the variety and attractiveness of our residences, and our high-quality member experience that is a result of the services provided by our member care teams and vacation experience teams, which include dedicated concierges and planners.
We have a dedicated engineering team responsible for development and the creation of new features to support our products and services across a full range of devices (desktop, mobile web and native mobile applications). Our engineering teams use an agile development process that allows us to deploy frequent iterative releases for product and service features.
We have a dedicated engineering team responsible for development and the creation of new features to support our products and services across a full range of devices (desktop, mobile web and native mobile applications). Our engineering team uses an agile development process that allows us to deploy frequent iterative releases for product and service features.
For more information, see the section titled “Risk Factors – Risks Related to Intellectual Property and Data Privacy”. Regulatory Compliance Our overall business approach and strategy includes rigorous attention to regulatory compliance, as our operations are subject to regulations in the following principal areas, across a wide variety of jurisdictions.
For more information, see the section titled “Risk Factors – Risks Related to Intellectual Property and Data Privacy ”. Regulatory Compliance Our overall business approach and strategy includes rigorous attention to regulatory compliance, as our operations are subject to regulations in the following principal areas, across a wide variety of jurisdictions.
We control the booking calendar for our Inspirato residences, giving us visibility into actionable metrics such as how often and what times of year homes are typically used. This provides us greater control over proactive property management planning and coordinating repairs and upgrades.
We control the booking calendar for our Inspirato residences, giving us visibility into actionable metrics such as how often and what times of year homes are typically used. This provides us greater control over proactive property management planning and coordinating 7 Table of Contents repairs and upgrades.
As of December 31, 2023, we employed approximately 630 team members globally. These employees are highly concentrated in Operations and Sales and Marketing. Our focus on member-facing employees helps us to provide luxury service to our members that we believe is industry-leading. Importantly, our values and the culture they inspire extend to our relationships with every Inspirato member.
As of December 31, 2024 , we employed approximately 470 team members globally. These employees are highly concentrated in Operations and Sales and Marketing. Our focus on member-facing employees helps us to provide luxury service to our members that we believe is industry-leading. Importantly, our values and the culture they inspire extend to our relationships with every Inspirato member.
In addition to trademark protection, we reserve and register domain names when and where deemed appropriate and are the registered holder of approximately 180 domain names, including “www.Inspirato.com.” As of December 31, 2023, we have 2 U.S. patents issued covering our subscription-based booking and service tailoring technology.
In addition to trademark protection, we reserve and register domain names when and where deemed appropriate and are the registered holder of approximately 180 domain names, including “www.Inspirato.com.” As of December 31, 2024 , we have 10 U.S. patents issued covering our subscription-based booking and service tailoring technology.
As of December 31, 2023, our selection of Inspirato residences included approximately 450 private luxury vacation homes. These residences include leased properties where we directly manage, maintain, and operate the asset, as well as resort-based properties where we work closely with resort partners to ensure an exceptional member experience.
As of December 31, 2024, our selection of Inspirato residences included approximately 350 private luxury vacation homes. These residences include leased properties where we directly manage, maintain, and operate the asset, as well as resort-based properties where we work closely with resort partners to ensure an exceptional member experience.
These include print, digital and video to build general brand awareness; performance marketing tactics such as direct mail, paid digital media, and paid search; multiple brand urgency campaigns each year to help drive predictable results; and a highly trained team of sales and member success professionals.
These include print, digital and video to build general brand awareness; performance marketing strategies such as direct mail, paid digital media, and paid search; multiple brand urgency campaigns each year to help drive predictable results; and a highly trained team of sales and member care professionals.
Our leases and other inventory agreements, as well as our overall strategic property mix, provide us with flexibility to respond to changes in travel demand and events beyond our control. Our individual leased vacation homes, as well as our leased inventory from hotel and resort partners oftentimes include flexible termination provisions.
Our leases and other inventory agreements, as well as our overall strategic property mix, provide us with flexibility to respond to changes in travel demand and events beyond our control. Leases for our individual vacation homes, as well as our inventory from hotel and resort partners, often include flexible termination provisions.
Our subscription services are seasonal to the extent that interest from potential new member s tends to also follow travel revenue; however, predictable subscription revenues from existing member s are not impacted by seasonality. 9 Table of Contents Metrics including total revenues, Adjusted EBITDA and Free Cash Flow are also impacted by the timing of holidays and other events.
Our Subscription services are seasonal to the extent that interest from potential new member s tends to also follow travel revenue; however, predictable Subscription revenues from existing member s are not impacted by seasonality. 9 Table of Contents Metrics including, but not limited to, total revenues, net loss and comprehensive loss, Adjusted EBITDA and Free Cash Flow are also impacted by the timing of holidays and other events.
Our leases typically permit us to terminate with 180 days to one years notice, giving us the ability to remove underperforming residences as well as curate the portfolio in response to market opportunities and travel demand trends. In addition to traditional leases, we also use other flexible arrangements to secure less than 10% of our residences.
Our leases typically permit us to terminate with 180 days to one year's notice, giving us the ability to remove underperforming residences as well as curate the portfolio in response to market opportunities and travel demand trends. In addition to traditional leases, we also use other flexible arrangements to secure a small portion (less than 10%) of our residences.
Inspirato Pass members pay a monthly subscription fee in exchange for their Pass travel and are not subject to per-trip taxes, resort fees, and other add-on charges imposed by certain hotels. This provides them with predictability and certainty regarding their travel costs and spares them the frustration of encountering unclear or undisclosed fees.
Pass members pay an annual fee in exchange for their Pass travel and are not subject to per-trip taxes, resort fees, and other add-on charges imposed by certain hotels. This provides them with predictability and certainty regarding their travel costs and spares them the frustration of encountering unclear or undisclosed fees.
This allows us to revenue-manage each inventory unit to (i) help maximize occupancy by ensuring our rates are competitive with comparable accommodations in the applicable market, (ii) help reduce spoilage, and (iii) leverage availability to increase member engagement and retention. 7 Table of Contents ● Control Over Bookings and Property Management.
This allows us to revenue-manage each inventory unit to (i) help maximize occupancy and average daily rate by ensuring our rates are competitive with comparable accommodations in the applicable market, (ii) help reduce spoilage, and (iii) leverage availability to increase member engagement and retention. • Control Over Bookings and Property Management .
We rely on a mix of tactics to generate demand for each of these revenue lines, using a full-funnel approach to reach our audiences at multiples stages within each consideration process.
We rely on a mix of strategies to generate demand for each revenue line, using a full-funnel approach to reach our audiences at multiple stages within each consideration process.
All Inspirato subscriptions provide exclusive access to a portfolio of properties that we directly manage to our high standards. For example, when we onboard luxury vacation homes into our portfolio, we typically outfit them with premium linens, kitchenware, technology, and other amenities and then refresh them at regular intervals to ensure they meet our standards.
For example, when we onboard luxury vacation homes into our portfolio, we typically outfit them with premium linens, kitchenware, technology, and other amenities and then refresh them at regular intervals to ensure they meet our standards.
For travelers, we offer access to a diverse portfolio of vacation options that includes approximately 450 private luxury vacation homes available to our customers, and accommodations at over 250 luxury hotel and resort partners in over 180 destinations around the world as of December 31, 2023.
For members, we offer access to a diverse portfolio of curated luxury vacation options that include approximately 350 private luxury vacation homes and accommodations at over 220 luxury hotel and resort partners in over 180 destinations around the world as of December 31, 2024.
Additionally, our real estate owners are also responsible for their own compliance with laws, including with respect to their employees, property maintenance and operations, environmental laws and other matters. We monitor regulatory changes in each existing market on an ongoing basis.
Additionally, our landlords are also responsible for their own compliance with laws, including with respect to their employees, property maintenance and operations, environmental laws and other matters. We monitor regulatory changes in each existing market on an ongoing basis. Before signing any new leases in a new market, we engage local legal counsel to help identify relevant regulatory requirements.
Our portfolio also includes Inspirato Only experiences, featuring one-of-a-kind luxury safaris, cruises and other experiences with Inspirato-only member lists along with Bespoke trips, which offer custom-designed “bucket list” itineraries.
Our portfolio also includes Inspirato Only experiences, which are curated, one-of-a-kind member-only experiences such as luxury safaris, cruises and other experiences, as well as Bespoke trips, which offer individualized, custom-designed “bucket list” itineraries based on the exact specifications of the member.
See Note 3 – Reverse Recapitalization in the Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K for more information. 5 Table of Contents Our Luxury Travel Subscriptions and Other Offerings Luxury Travel Subscriptions Inspirato Club Launched in 2011, Inspirato Club members pay an enrollment fee and monthly, semi-annual, annual, or multi-year subscription fees for access to our portfolio of branded Inspirato luxury vacation homes, luxury hotels, and five-star resort partners, Inspirato Only experiences and custom Bespoke itineraries.
Our Luxury Travel Subscriptions Inspirato Club Launched in 2011, Club members pay an enrollment fee and monthly, semi-annual, annual, or multi-year Subscription fees for access to our portfolio of branded Inspirato luxury vacation homes, luxury hotels, and five-star resort partners, Inspirato Only experiences and custom Bespoke itineraries.
Our Value Proposition We provide exceptional vacations with outstanding value for luxury travelers (who drive demand) and attractive economics and certainty for hospitality suppliers including hotels, resorts and luxury vacation rental property owners (who we work with to provide supply). Our subscription offerings are intended to solve travel pain points by offering the following benefits: ● Certainty of accommodations.
The member is also entitled to other benefits similar to those of Club. Our Value Proposition We provide exceptional vacations with outstanding value for luxury travelers (who drive demand) and attractive economics and certainty for hospitality suppliers including hotels, resorts and luxury vacation rental property owners (who we work with to provide supply).
Inventory Management and Expansion Overall Approach ● We choose destinations, accommodations, and experiences based on market trends, booking results, member feedback, and other factors to align our additions with demand. ● We only seek to partner with hotels and resorts that align well with the Inspirato luxury hospitality brand and offer service commensurate with our own, to ensure that every trip booked through our platform meets or exceeds our members’ expectations.
We only seek to partner with hotels and resorts that align well with the Inspirato luxury hospitality brand and offer service commensurate with our own, to ensure that every trip booked through our platform meets or exceeds our members’ expectations.
Our portfolio of luxury vacation options is accessed through our subscription platform in which we currently offer two paid subscription models for members to choose from, Inspirato Club and Inspirato Pass .
Our portfolio of luxury vacation options is accessed through our Subscription platform through which we currently offer three paid Subscription models for members to choose from, Inspirato Club (" Club "), Inspirato Pass (" Pass ") and Inspirato Invited (" Invited "). See the ‘Our Luxury Travel Subscriptions’ section below for additional information on each product offering.
We also have arrangements with hotels and resort partners to lease rooms under long-term agreements, providing them with fixed income for inventory versus uncertain occupancy-based income. For luxury vacation homeowners we offer fixed monthly lease payment, expert property management services, and flexible usage benefits in exchange for leasing their home to us for inclusion within our portfolio.
For luxury vacation homeowners we offer a fixed monthly lease payment, expert property management services, and flexible usage benefits in exchange for leasing their home to us for inclusion within our portfolio.
For example, Inspirato provides an opaque distribution channel through which luxury hotels, resorts, and vacation homeowners can generate revenue from their unoccupied hotel rooms and suites or vacation rentals without undercutting rates on their own.
For example, Inspirato provides an opaque distribution channel through which luxury hotels, resorts, and vacation homeowners can generate revenue from their unoccupied hotel rooms and suites or vacation rentals without undercutting their own rates. We also have arrangements with hotels and resort partners to lease rooms under long-term agreements, providing them with fixed income for inventory versus uncertain occupancy-based income.
As a result, we closely engage with our members throughout the entire process for every trip they take e.g., selection to booking, planning, trip duration, checkout and post-trip feedback.
In addition, our member care teams and vacation experience teams, which include our on-site concierge staff, assist with trip planning, which is a service many hotel companies do not offer. As a result, we closely engage with our members throughout the entire process for every trip they take e.g., selection to booking, planning, trip duration, checkout and post-trip feedback.
Before signing any new leases in a new market, we engage local legal counsel to help identify relevant regulatory requirements. This research includes analysis on licensing and zoning, building code, accessibility and operations requirements, fire and life safety regulations, tax compliance, and local employment laws.
This research includes analysis on licensing and zoning, building code, accessibility and operations requirements, fire and life safety regulations, tax compliance, and local employment laws.
Securities and Exchange Commission (“SEC”) maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC at www.sec.gov.
Information contained on, or that can be accessed through, our website does not constitute part of this Annual Report on Form 10-K. The U.S. Securities and Exchange Commission (“SEC”) maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC at www.sec.gov.
Our member base provides predictable, consistent cash flow and stability relative to many traditional hospitality and revenue models. Subscription fees generate recurring revenue.
Our member base provides predictable, consistent cash flow and stability relative to many traditional hospitality and revenue models. Initiation fees and annual dues generate recurring revenue. • Multiple Member Journeys . Inspirato trips can only be booked through our website, iOS application, or member care teams.
Item 1. Business Inspirato Incorporated and its subsidiaries (collectively the “Company”, “Inspirato”, “we”, or “our”) is a subscription-based luxury travel company that provides exclusive access to a managed and controlled portfolio of curated vacation options, delivered through an innovative model designed to ensure the service, certainty and value that discerning customers demand.
Item 1. Business Inspirato Incorporated and its subsidiaries (collectively, the "Company", “Inspirato”, “we”, or “our” ) is a private, luxury hospitality club that provides its members with access to an exclusive portfolio of high-end vacation homes, luxury hotels, and curated travel experiences worldwide.
Inspirato Club members are charged a flat rate for taxes and fees for trips purchased a la carte.
Club members are charged a flat rate for taxes and fees for trips purchased a la carte. Inventory Management and Expansion Overall Approach We choose destinations, accommodations, and experiences based on market trends, booking results, member feedback, and other factors to align our additions with demand.
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The Inspirato portfolio includes branded luxury vacation homes, accommodations at five-star hotel and resort partners and custom travel experiences.
Added
The club offers personalized service, dedicated trip planning, and seamless access to exceptional properties through its innovative model designed to ensure the service, certainty and value that discerning customers demand.
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Additionally, our luxury vacation options can also be accessed through our two newer product offerings: Inspirato for Good (“ IFG ”) and Inspirato for Business (“ IFB ”), which allow customer trial membership through nonprofit or business to business sales channels. See the ‘Our Luxury Travel Subscriptions and Other Offerings’ section below for additional information on each product offering.
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See Note 3 – Reverse Recapitalization in the Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K for more information. 5 Table of Contents On August 12, 2024, the Company entered into an investment agreement (the “Investment Agreement”) with One Planet Group LLC (“One Planet Group”), a Delaware limited liability company (the “Purchaser”), to sell 2.9 million shares of Class A Common Stock at $3.43 per share, and 2.9 million warrants (the “Investment Warrants”) each redeemable for a share of Class A Common Stock, for an aggregate purchase price of $10.0 million (the “One Planet Group Financing”).
Removed
Our Loyalty Program In August of 2023, we launched Inspirato Rewards (“ Rewards ”), our member loyalty program that supports our diverse portfolio of curated luxury vacation options for members with at least one active paid member subscription (“Subscription”). Rewards is designed to incentivize repeat business by rewarding members with exclusive discounts and benefits based on their activity with us.
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At the initial closing on August 13, 2024, the Purchaser acquired the first tranche of 1,335,271 shares for $4.6 million. At the second closing on September 13, 2024, the Purchaser acquired the remaining 1,580,180 shares and the 2.9 million Investment Warrants for $5.4 million.
Removed
Members who earn one of the three Rewards statuses may earn, depending on their status, extra savings on Club bookings, early access to new property releases, new Experiences and year-end festive dates and complementary nights, among other benefits. Other Offerings Inspirato for Good Launched in 2022, Inspirato for Good is a platform designed to help nonprofit organizations accelerate funding results.
Added
In addition, pursuant to the Investment Agreement, on December 9, 2024, the Purchaser exercised an additional option to acquire 728,863 additional shares of Class A Common Stock and 728,863 warrants each redeemable for a share of Class A Common Stock for $3.43 per share for an aggregate purchase price of $2.5 million.
Removed
Through this platform, we work with nonprofit organizations to sell travel packages (consisting of an Inspirato Club subscription and luxury vacation) at live and silent auctions, paddle raises, and other giving channels.
Added
In connection with the exercise of the Purchaser's option, the Investment Warrant Agreement was amended to increase the number of Investment Warrants issuable up to 3.6 million. Each Investment Warrant can be exercised in exchange for a share of Class A Common Stock at $3.43 per share and is exercisable for 5 years from issuance.
Removed
Inspirato for Business Launched in 2022, Inspirato for Business is a business-to-business channel through which we sell subscription and travel products directly to businesses seeking to leverage luxury accommodations to recruit, retain, and reward their employees.
Added
The Purchaser named four new directors to the Inspirato Board of Directors pursuant to the Investment Agreement, and the size of our Board of Directors remains at seven directors. As contemplated by the Investment Agreement, Payam Zamani was appointed as our Chief Executive Officer ("CEO") and our Executive Chairman.
Removed
Incentives for upfront prepayment of monthly subscription fees, typically in the form of a waived enrollment fee, travel perks or a free trip, ensure that new members remain paid-members for a minimum period of time, and enhance retention. ● Multiple Member Journeys. Inspirato trips can only be booked through our website, iOS application, or member success teams.
Added
Inspirato Invited Launched in 2024, Invited members pay a substantial upfront enrollment fee for access to our portfolio of luxury vacation homes, luxury hotels and five-star resort partners at a fixed nightly rate for a period of ten years. Invited members can book vacations up to two years in advance.
Removed
They cannot be booked through online travel agencies or other third-party channels. In addition, our member success teams and vacation experience teams, which include our on-site concierge staff, assist with trip planning, which is a service many hotel companies do not offer.
Added
Our Subscription offerings are intended to solve travel pain points by offering the following benefits: • Certainty of accommodations. All Inspirato Subscriptions provide exclusive access to a portfolio of properties that we directly manage to our high standards.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeThere are a number of factors that could lead to a decline in member s or that could prevent us from increasing our member s, including: ● our failure to deliver offerings that member s find attractive; ● our ability to achieve and sustain market acceptance, particularly with respect to Inspirato Pass ; ● harm to our brand and reputation; ● pricing and perceived value of our offerings; ● member s engaging with competitive products and services; ● problems affecting member s’ experiences; ● a decline in the public’s interest in luxury travel; ● deteriorating general economic conditions or a change in consumer discretionary spending preferences or trends, including inflation and increases to federal interest rates; ● political, social or economic instability, such as the ongoing geopolitical tensions related to conflicts in the Middle East, Russia’s actions in Ukraine, and other geopolitical events; and ● events beyond our control such as global or regional pandemics and health concerns, increased or continuing restrictions on travel, immigration restrictions, trade disputes and the impact of climate change on travel, including fires, floods, severe weather and other natural disasters and the impact of climate change. 13 Table of Contents In addition, if our platform is not easy to navigate; member s have unsatisfactory sign-up, search, booking or payment experiences on our platform; the content on our platform is not displayed engagingly to member s; we are not effective in engaging member s across our various offerings and tiers; or we fail to provide an experience in a manner that meets rapidly changing demand, we could fail to acquire first-time member s and fail to retain our existing member s.
Biggest changeThere are a number of factors that could lead to a decline in member s or that could prevent us from increasing our member s, including: • our failure to deliver offerings that members find attractive; • harm to our brand and reputation; • our failure to deliver compelling offerings to our members; • increases in pricing and the introduction of additional costs and fees; • members engaging with competitive products and services; • problems affecting members’ experiences; • a decline in the public’s interest in luxury travel or a change in economic conditions and consumer discretionary spending preferences or trends; • an increase in inflation or to federal interest rates; and • global macroeconomic and geopolitical factors, including political, social, or economic instability—such as conflicts in the Middle East and other geopolitical tensions—changes in the political and regulatory climate, including the policies and regulatory priorities of the new presidential administration, and events beyond our control, such as pandemics, health concerns, travel restrictions, immigration policies, trade disputes, tariffs, and the effects of climate change (e.g., severe weather, fires, floods, and natural disasters), can significantly impact our operations and broader economic conditions. 13 Table of Contents In addition, if our platform is difficult to navigate, fails to deliver satisfactory user experiences or does not effectively engage members, we risk losing new and existing members.
Further, we are an “emerging growth company” with reduced public company reporting requirements; we have identified material weaknesses in our internal controls related to financial reporting; and we have restated our previously issued condensed Consolidated Financial Statements for the quarterly periods ended March 31, 2022 and June 30, 2022 due to errors in our Consolidated Financial Statements.
Further, we are an “emerging growth company” with reduced public company reporting requirements; we have identified material weaknesses in our internal controls related to financial reporting; and we have restated our previously issued Condensed Consolidated Financial Statements for the quarterly periods ended March 31, 2022 and June 30, 2022 due to errors in our Condensed Consolidated Financial Statements.
We may amend the terms of the Public Warrants in a manner adverse to a holder if holders of at least a majority of the then outstanding Public Warrants approve of such amendment.
We may amend the terms of the Public Warrants in a manner adverse to a holder if holders of at least a majority of the then outstanding Public Warrants approve such amendment.
Due to errors in our Consolidated Financial Statements related to material weaknesses in our internal control over financial reporting, we restated our previously issued condensed Consolidated Financial Statements for the quarterly periods ended March 31, 2022 and June 30, 2022, which resulted in unanticipated costs and may have adversely affected investor confidence, our stock price, our ability to raise capital in the future and our reputation, and has resulted in stockholder litigation and may result in more stockholder litigation or regulatory actions.
Due to errors in our Condensed Consolidated Financial Statements related to material weaknesses in our internal control over financial reporting, we restated our previously issued Condensed Consolidated Financial Statements for the quarterly periods ended March 31, 2022 and June 30, 2022, which resulted in unanticipated costs and may have adversely affected investor confidence, our stock price, our ability to raise capital in the future and our reputation, and has resulted in stockholder litigation and may result in more stockholder litigation or regulatory actions.
The Court of Justice of the European Union (“the CJEU”) decision to not recognize the U.S. – EU Privacy Shield and other future legal challenges also could result in Inspirato being required to implement duplicative, and potentially expensive, information technology infrastructure and business operations or could limit our ability to collect or process personal information in Europe or other regions, may necessitate additional contractual negotiations and may serve as a basis for our personal data handling practices, or those of our service providers or other third parties we work with, to be challenged.
The decision by the Court of Justice of the European Union (“the CJEU”) to not recognize the U.S. – EU Privacy Shield and other future legal challenges also could result in Inspirato being required to implement duplicative, and potentially expensive, information technology infrastructure and business operations or could limit our ability to collect or process personal information in Europe or other regions, may necessitate additional contractual negotiations and may serve as a basis for our personal data handling practices, or those of our service providers or other third parties we work with, to be challenged.
If we are unable to effectively manage our hiring needs or successfully integrate new hires, our efficiency, ability to meet forecasts, employee morale, productivity and retention could suffer, which could adversely affect our business, financial condition and results of operations. Our success depends on our ability to accurately and effectively update our member’s experience within our technology platforms.
If we are unable to effectively manage our hiring needs or successfully integrate new hires, our efficiency, ability to meet forecasts, employee morale, productivity and retention could suffer, which could adversely affect our business, financial condition and results of operations. Our success depends on our ability to accurately and effectively update our members' experience within our technology platforms.
In the last several years, major companies experienced high-profile security breaches that exposed their systems and information and/or their consumers’ or employees’ PII, and it is expected that these types of events will continue to occur. It is virtually impossible for us to eliminate these risks, particularly as the frequency and sophistication of cyberattacks increases.
In the last several years, major companies experienced high-profile security breaches that exposed their systems and information and/or their customers’ or employees’ PII, and it is expected that these types of events will continue to occur. It is virtually impossible for us to eliminate these risks, particularly as the frequency and sophistication of cyberattacks increases.
If any of our third-party payment processors terminates its relationship with us, refuses to renew its agreement with us on commercially reasonable terms or places additional constraints on us, such as significant cash reserves beyond our capabilities, we may be unable to accept payments from certain credit cards or would need to find a replacement payment processor and may not be able to secure similar terms or replace such payment processor in an acceptable time frame.
If any of our third-party payment processors terminates its relationship with us, refuses to renew its agreement with us on commercially reasonable terms or places additional constraints on us, such as significant cash reserves beyond our capabilities, we may be unable to accept payments from certain credit cards or would need to find a 16 Table of Contents replacement payment processor and may not be able to secure similar terms or replace such payment processor in an acceptable time frame.
The terms of any future debt could restrict, and the Note (as defined in Management’s Discussion and Analysis of Financial Condition and Results of Operations—"Overview—Capital One Ventures Strategic Partnership and Investment”) currently restricts, our operations, including our ability to pay dividends on our Class A Common Stock.
The terms of any future debt could restrict, and the Note (as defined in Management’s Discussion and Analysis of Financial Condition and Results of Operations — Overview — Capital One Ventures Investment and Strategic Partnership) currently restricts, our operations, including our ability to pay dividends on our Class A Common Stock.
Any leadership transition and organizational changes may result in loss of personnel with deep institutional or technical knowledge and has the potential to disrupt our operations and relationships with employees and customers due to added costs, operational inefficiencies, decreased employee morale and productivity, and increased turnover.
Any leadership transition and organizational changes may result in loss of personnel with deep institutional or technical knowledge and has the potential to disrupt our operations and relationships with employees and members due to added costs, operational inefficiencies, decreased employee morale and productivity, and increased turnover.
Any of these events could have a material adverse effect on our business, results of operations and financial condition. 23 Table of Contents Our technology contains third-party open-source software components, and failure to comply with the terms of the underlying open-source software licenses could restrict our ability to operate as intended or could increase our costs.
Any of these events could have a material adverse effect on our business, results of operations and financial condition. Our technology contains third-party open-source software components, and failure to comply with the terms of the underlying open-source software licenses could restrict our ability to operate as intended or could increase our costs.
The number of data protection laws globally is rising as more jurisdictions explore new or updated comprehensive data protection regimes or propose or enact other laws or regulations addressing local storage of data or other matters. 25 Table of Contents In the U.S., the California Consumer Privacy Act (the “CCPA”) went into effect on January 1, 2020.
The number of data protection laws globally is rising as more jurisdictions explore new or updated comprehensive data protection regimes or propose or enact other laws or regulations addressing local storage of data or other matters. In the U.S., the California Consumer Privacy Act (the “CCPA”) went into effect on January 1, 2020.
Examples of such amendments could be amendments to, among other things, increase the exercise price 18 Table of Contents of the Public Warrants, convert the Public Warrants into stock or cash, shorten the exercise period or decrease the number of warrant shares issuable upon exercise of a Public Warrant. Further, we may redeem outstanding Public Warrants in certain circumstances.
Examples of such amendments could be amendments to, among other things, increase the exercise price of the Public Warrants, convert the Public Warrants into stock or cash, shorten the exercise period or decrease the number of warrant shares issuable upon exercise of a Public Warrant. Further, we may redeem outstanding Public Warrants in certain circumstances.
From time to time, in the ordinary course of business, we may be subject to legal proceedings and claims relating to the intellectual property rights of others, and we expect that third parties will continue to assert intellectual property claims, in particular trademark claims, against us.
From time to time, in the ordinary course of business, we may be subject to legal proceedings and claims relating to the intellectual property rights of others, and we expect that third parties will continue to assert intellectual property claims, 22 Table of Contents in particular trademark claims, against us.
Additionally, current or new competitors may introduce new business models or services that we may need to adopt or otherwise adapt to in order to compete, which could reduce our ability to differentiate our business or services from those of our competitors.
Our competitors may adopt aspects of our business model, which could reduce our ability to differentiate our offerings. Additionally, current or new competitors may introduce new business models or services that we may need to adopt or otherwise adapt to in order to compete, which could reduce our ability to differentiate our business or services from those of our competitors.
Our member experiences sit on a technology platform that has allowed for flexibility in our product development strategy. We have invested significantly for many years in engineering, product, and design in order to build out the platform and we operate a modern technology stack that allows for rapid development and deployment as well as integrations.
Our member experience sits on a technology platform that has allowed for flexibility in our product development strategy. We have invested significantly for many years in engineering, product, and design in order to build out the platform and we operate a modern technology stack that allows for rapid development and deployment as well as integrations.
Our ability to provide high-quality support to our members is important for the growth of our business and any failure to maintain such standards of member support, or any perception that we do not provide high-quality service, could affect our ability to attract and retain members.
Our ability to provide high-quality support to our members is important for the growth of our business and any failure to maintain such standards of member care and vacation experience teams, or any perception that we do not provide high-quality service, could affect our ability to attract and retain members.
Any of these or other changes or developments impacting cross-border data transfers could disrupt our business and otherwise adversely impact our business, financial condition and operating results.
Any of these or 24 Table of Contents other changes or developments impacting cross-border data transfers could disrupt our business and otherwise adversely impact our business, financial condition and operating results.
We currently lease most of our properties. Our obligations to landlords under these agreements extend for periods that frequently significantly exceed the duration of Subscriptions, often by many years although many, but not all, of our leases provide us the ability to terminate leases with appropriate notice.
We currently lease most of our properties. Our obligations to landlords under these agreements extend for periods that occasionally exceed the duration of Subscriptions, sometimes by many years although many, but not all, of our leases provide us the ability to terminate leases with appropriate notice.
Significant judgment is required in the application of accounting guidance relating to uncertainty with respect to income taxes. If tax authorities challenge our (including Inspirato LLC’s) tax positions, any such challenges that are settled unfavorably could adversely impact our provision for income taxes.
Significant judgment is required in the application of accounting guidance relating to uncertainty with respect to income taxes. If tax authorities challenge our (including Inspirato LLC’s) tax positions, any such challenges that are settled unfavorably could adversely impact our Consolidated Financial Statements.
Any significant theft of, unauthorized access to, compromise or loss of, loss of access to, or fraudulent use of member or our data could adversely impact our reputation and could result in legal, regulatory and other consequences, including remedial and other expenses, fines, or litigation.
Any significant theft of, unauthorized access to, compromise or loss of, loss 25 Table of Contents of access to, or fraudulent use of our data or our members' data could adversely impact our reputation and could result in legal, regulatory and other consequences, including remedial and other expenses, fines, or litigation.
If Nasdaq delists the Company’s securities from trading on its exchange for failure to meet the listing standards, the Company and our stockholders could face significant negative consequences including: ● limited availability of market quotations for the Company’s securities; 19 Table of Contents ● a determination that our Class A Common Stock is a “penny stock” which will require brokers trading in our Class A Common Stock to adhere to more stringent rules, ● a possible reduction in the level of trading activity in the secondary trading market for shares of our Class A Common Stock; ● a limited amount of analyst coverage; and ● a decreased ability to issue additional securities or obtain additional financing in the future.
If Nasdaq delists the Company’s securities from trading on its exchange for failure to meet the listing standards, the Company and our stockholders could face significant negative consequences including: • limited availability of market quotations for the Company's securities; • a determination that our Class A Common Stock is a "penny stock" which will require brokers trading in our Class A Common Stock to adhere to more stringent rules, • a possible reduction in the level of trading activity in the secondary trading market for shares of our Class A Common Stock; • a limited amount of analyst coverage; and • a decreased ability to issue additional securities or obtain additional financing in the future. 19 Table of Contents Our management has identified material weaknesses in our internal control over financial reporting.
Travel is significantly dependent on discretionary spending levels. As a result, sales of travel services tend to decline during general economic downturns, recessions and times of political or economic uncertainty as consumers engage in less discretionary spending.
As a result, sales of travel services tend to decline during general economic downturns, recessions and times of political or economic uncertainty as consumers engage in less discretionary spending.
This could result in operational interruptions and/or outages and a loss of profits, as well as negative publicity and other adverse effects on our business, 26 Table of Contents including lost sales, loss of consumer confidence, boycotts, reduced enrollment and/or participation in our loyalty program, litigation, diminished satisfaction, and/or retention and recruiting difficulties, all of which could materially affect our market share, reputation, business, financial condition and operating results.
This could result in operational interruptions and/or outages and a loss of profits, as well as negative publicity and other adverse effects on our business, including lost sales, loss of consumer confidence, boycotts, loss of members, litigation, diminished satisfaction, and/or retention and recruiting difficulties, all of which could materially affect our market share, reputation, business, financial condition and operating results.
If we issue additional equity securities in the future, including pursuant to our 2021 Equity Incentive Plan (the “2021 Plan”), stockholders will experience dilution, and the new equity securities could have rights senior to those of our Class A Common Stock.
If we issue additional equity securities in the future, including pursuant to our 2021 Equity Incentive Plan (the “2021 Plan”), or our at-the-market offering program, stockholders will experience dilution, and any new class of equity securities issued could have rights senior to those of our Class A Common Stock.
We lease our properties in a relatively concentrated number of travel destinations, both in the United States and internationally. The relative concentration of our properties in certain areas may expose us to a disproportionate level of risk relating to those areas.
We lease our properties in a relatively concentrated number of travel destinations, both in the United States and internationally. The relative concentration of our properties in certain areas may expose us to a disproportionate level of risk relating to those areas. The locations of our 350 properties and 220 hotels are relatively concentrated within 180 destinations.
Risks Relating to Financial and Market Matters The price of our common stock has been and may continue to be highly volatile, which may make it difficult for stockholders to sell our common stock when desired or at attractive prices.
The price of our common stock has been and may continue to be highly volatile, which may make it difficult for stockholders to sell our common stock when desired or at attractive prices. Historically, the market price of our stock is highly volatile and it is possible for the volatility to continue.
Our storage, use, disclosure and other processing of personal data exposes us to risks of internal or external security incidents and breaches and could give rise to liabilities and/or damage to reputation. The security of data when engaging in electronic commerce is essential to maintaining consumer confidence.
Our storage, use, disclosure and other processing of personal data and other sensitive information exposes us to risks of internal or external security incidents and breaches and could give rise to liabilities and/or damage to reputation. The security of data is critical to maintaining consumer confidence.
We are also subject to a number of other laws and regulations relating to the payments we accept from our members, including with respect to money laundering, money transfers, privacy and information security, and these regulations may differ by locality and can be expected to change over time. ​ 17 Table of Contents We have a history of net losses and may not be able to achieve or sustain profitability.
We are also subject to a number of other laws and regulations relating to the payments we accept from our members, including with respect to money laundering, money transfers, privacy and information security, and these regulations may differ by locality and can be expected to change over time.
In particular, we may not have the ability to raise the funds necessary to repurchase the Note if and when required under the terms of the Note, and our future debt may contain limitations on our ability to repurchase the Note.
In particular, we may not have the ability to raise the funds necessary to repurchase the Note if and when required under the terms of the Note, and our future debt may contain limitations on our ability to repurchase the Note. The Note and related documents contain restrictions that will limit our flexibility in operating our business.
Each of these factors may cause reduced investor confidence, limit our ability to raise capital and increased volatility to the market price of our common stock. Similar factors could also affect the trading price of our Public Warrants. A small number of stockholders have substantial control over the Company.
Each 17 Table of Contents of these factors may cause reduced investor confidence, limit our ability to raise capital and increased volatility to the market price of our common stock. Similar factors could also affect the trading price of our Public Warrants.
Our success depends on our key personnel and our ability to attract, retain and motivate other highly skilled personnel. Our success depends to a significant degree on the retention of our senior management team, key technical, financial and operations employees and other highly skilled personnel.
Our success depends to a significant degree on the retention of our senior management team, key technical, financial and operations employees and other highly skilled personnel. Our success also depends on our ability to identify, hire, develop, motivate, retain and integrate highly qualified and diverse personnel for all areas of our organization.
If we are not successful in providing high-quality, luxury experiences to our members, the perceived benefits of Subscriptions may decrease and our business, financial condition and operating results may be adversely impacted. The relatively long-term and fixed-cost nature of our leases may limit our operating flexibility and could adversely affect our liquidity and results of operations.
If we are not successful in providing high-quality, luxury experiences to our members, the perceived benefits of Subscriptions may decrease and our business, financial condition and operating results may be adversely impacted. Our results of operations are subject to seasonal and other fluctuations.
In addition, the barriers to entry are low and new competitors may enter. Our current or potential competitors include global hotel brands, regional hotel chains, independent hotels, online travel agencies, home-sharing and rental services and short term/vacation rental services. Our competitors may adopt aspects of our business model, which could reduce our ability to differentiate our offerings.
The market to provide hospitality services is very competitive and highly fragmented. In addition, the barriers to entry are low and new competitors may enter. Our current or potential competitors include global hotel brands, regional hotel chains, independent hotels, online travel agencies, home-sharing and short term/vacation rental services.
We incurred net losses attributable to Inspirato Incorporated of $22.2 million, $24.1 million and $51.8 million for the years ended December 31, 2021, 2022 and 2023, respectively. As of December 31, 2023, we had an accumulated deficit of $285.8 million.
We have a history of net losses and may not be able to achieve or sustain profitability. We incurred net losses attributable to Inspirato Incorporated of $5.4 million, $51.8 million and $24.1 million for the years ended December 31, 2024, 2023 and 2022, respectively. As of December 31, 2024, we had an accumulated deficit of $291.2 million.
Changes in our effective tax rate could harm our future operating results. The Company is subject to federal and state income taxes in the U.S. and in various international jurisdictions.
The Company is subject to federal and state income taxes in the U.S. and in various international jurisdictions.
In addition, the hospitality industry is cyclical, and demand generally follows the general economy on a lagged basis. We rely on consumer discretionary spending and could be impacted by the broad macroeconomic environment. Our business is particularly sensitive to trends in the travel, real estate and vacation rental markets and in the general economy, all of which are unpredictable.
In addition, the hospitality industry is cyclical, and demand generally follows the general economy on a lagged basis. 15 Table of Contents We rely on consumer discretionary spending and could be impacted by the broad macroeconomic environment.
Additionally, the hospitality industry is subject to seasonal and cyclical volatility, which may contribute to fluctuations in our results of operations and financial condition. Based on historical results, we generally expect our revenues to be lower in the second quarter of each year than in each of the three other quarters.
Based on historical results, we generally expect our revenues to be lower in the second quarter of each year than in each of the three other quarters.
Although we believe these leadership changes are in the best interest of our stakeholders, these changes were significant to our business.
In August of 2024, we appointed a new Executive Chairman and CEO and in October of 2024, we appointed a new Chief Financial Officer. Although we believe these leadership changes are in the best interest of our stakeholders, these changes were significant to our business.
Legal proceedings can be time-consuming, divert management’s attention and resources and cause us to incur significant expenses or liabilities. The expense of litigation and the timing of this expense from period to period are difficult to estimate and subject to change and could adversely affect our financial condition and results of operations.
The expense of litigation and the timing of this expense from period to period are difficult to estimate and subject to change and could adversely affect our financial condition and results of operations.
For example, cybersecurity researchers have warned of potential increases in cyberattack activity in connection with Russia’s activities in Ukraine. Additionally, the security risks we and our third-party service providers face are heightened by many of our respective employees and service providers working remotely.
Additionally, the security risks we and our third-party service providers face are heightened by many of our respective employees and service providers working remotely.
The market price of our common stock is highly volatile and we expect it to continue to be volatile for the foreseeable future. Adverse events including volatility in our operating results, regulatory developments, changes in consumer discretionary spending, and changes in securities analysts’ estimates of our financial performance could negatively impact the market price of our common stock.
Adverse events including volatility in our operating results, regulatory developments, changes in consumer discretionary spending, and changes in securities analysts’ estimates of our financial performance could negatively impact the market price of our common stock. General market conditions, including the level of, and fluctuations in, the trading prices of securities generally could also have a similar negative impact.
If such a disagreement were to occur, and our position was not sustained, we could be required to pay additional taxes, interest and penalties, which could result in one-time tax charges, higher effective tax rates, reduced cash flows and lower overall profitability of our operations. 22 Table of Contents If existing tax laws, rules or regulations are amended, or if new unfavorable tax laws, rules or regulations are enacted, including with respect to occupancy, sales, value-added, excise, withholding or revenue-based taxes, unclaimed property or other tax laws applicable to multinational businesses, the results of these changes could increase our tax liabilities.
If such a disagreement were to occur, and our position was not 21 Table of Contents sustained, we could be required to pay additional taxes, interest and penalties, which could result in one-time tax charges, higher effective tax rates, reduced cash flows and lower overall profitability of our operations.
Cyberattacks and other attempts to obtain unauthorized access to systems or data by individuals, groups of hackers and state-sponsored organizations are increasing in frequency and sophistication and are constantly evolving. Because our members are generally high-income or high net-worth individuals, we may be particularly attractive as a target for cyberattacks and other attacks.
Cyberattacks and other attempts to obtain unauthorized access to systems or data by individuals, groups of hackers and state-sponsored organizations are increasing in frequency and sophistication.
Our accumulated deficit and net losses attributable to Inspirato Incorporated historically resulted in part from the substantial investments required to grow our business. We expect to continue making investments in our business in the future. These efforts may prove more expensive than currently anticipated, and we may not succeed in increasing our revenue sufficiently to offset these higher expenses.
Our accumulated deficit and net loss and comprehensive loss attributable to Inspirato Incorporated historically resulted from the substantial investments required to grow our business. We may or may not continue making investments in our business in the future.
Newly leased properties could be difficult or expensive to onboard, have undisclosed conditions that result in unanticipated expenses or claims against us for which we may have little or no effective recourse against the landlord or otherwise may not provide their anticipated benefits. 14 Table of Contents In addition to providing luxury accommodations, our business also depends on our ability to provide high-quality, personalized service including travel planning, on-site concierges, daily housekeeping and unique travel experiences.
Newly leased properties could be difficult or expensive to onboard, have undisclosed conditions that result in unanticipated expenses or claims against us for which we may have little or no effective recourse against the landlord or otherwise may not provide their anticipated benefits. 14 Table of Contents The relatively long-term and fixed-cost nature of our leases may limit our operating flexibility and could adversely affect our liquidity and results of operations.
Further, actions we are taking to review and optimize our business in alignment with our strategic priorities may not be as effective as anticipated. These or similar events may adversely affect our ability to achieve and sustain profitability.
These efforts may prove more expensive than currently anticipated, and we may not succeed in increasing our revenue sufficiently to offset these higher expenses. Further, actions we are taking to review and optimize our business in alignment with our strategic priorities may not be as effective as anticipated.
Operating as a public company requires us to incur substantial costs and substantial management attention. In addition, key members of our management team have limited experience managing a public company. Further, there can be no assurance that our securities will continue to be listed on Nasdaq or that will be able to comply with the continued listing standards of Nasdaq.
Our Class A Common Stock and Public Warrants are listed on Nasdaq under the symbols “ISPO” and “ISPOW,” respectively. Operating as a public company requires us to incur substantial costs and substantial management attention. In addition, key members of our management team have limited experience managing a public company.
There can be no assurance that our securities will continue to be listed on Nasdaq or that will be able to comply with the continued listing standards of Nasdaq. Our Class A Common Stock and Public Warrants are listed on Nasdaq under the symbols “ISPO” and “ISPOW,” respectively.
Further, there can be no assurance that our securities will continue to be listed on Nasdaq or that we will be able to comply with the continued listing standards of Nasdaq. Although we are currently in compliance with the listing standards of Nasdaq, our ability to continue to satisfy all relevant standards is uncertain.
Members of our management team or other key employees may terminate their employment with us at any time. For example, we recently experienced significant changes to our leadership team. In March of 2023 we appointed a new Chief Financial Officer and in September of 2023 we appointed a new Chief Executive Officer.
Hiring in new markets, such as Edmonton, Canada, may present challenges if there is limited availability of specialized skills or heightened competition for skilled workers in the region. Members of our management team or other key employees may terminate their employment with us at any time. For example, we recently experienced significant changes to our leadership team.
In addition, should these stockholders sell some or all of their shares, this may negatively impact the market price of Class A Common Stock. The Company has Public Warrants that it may amend or redeem. We have outstanding certain Public Warrants (as defined in Note 3 to our Consolidated Financial Statements).
The Company has Public Warrants that it may amend or redeem. We have outstanding certain Public Warrants (as defined in Note 3 – Reverse Recapitalization to our Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K).
We may become involved in claims, lawsuits and other proceedings, including those related to potential health and safety issues and hazardous substances at our properties. We are involved in various legal proceedings relating to matters incidental to the ordinary course of our business and may be subject to additional legal proceedings from time to time.
These or similar events may adversely affect our ability to achieve and sustain profitability. We may become involved in claims, lawsuits and other proceedings, including those related to potential health and safety issues and hazardous substances at our properties.
Any financial or economic crisis, or perceived threat of such a crisis, including a significant decrease in consumer confidence, could materially and adversely affect our business, financial condition and results of operations. We have limited experience with inventory pricing for new products. We generate revenue primarily from travel bookings and Subscriptions to our Inspirato Club and Inspirato Pass offerings.
Any financial or economic crisis, or perceived threat of such a crisis, including a significant decrease in consumer confidence, could materially and adversely affect our business, financial condition and results of operations. Our success depends on our key personnel and our ability to attract, retain and motivate other highly skilled personnel.
Increased competition could result in a reduction in revenue, fewer attractive properties, higher lease rates, higher costs or reduced market share. Our results of operations are subject to seasonal and other fluctuations. We have experienced and may continue to experience significant fluctuations in our results of operations, which make it difficult to forecast our future results.
We have experienced and may continue to experience significant fluctuations in our results of operations which make it difficult to forecast our future results. Additionally, the hospitality industry is subject to seasonal and cyclical volatility, which may contribute to fluctuations in our results of operations and financial condition.
This concentration of ownership could limit other stockholders’ ability to influence corporate matters and may have the effect of delaying or preventing a change in control, including a merger, consolidation or other business combination or discouraging a potential acquirer from making a tender offer or otherwise attempting to obtain control, even if that change in control would benefit the other stockholders.
Zamani's level of control could adversely affect investors' perceptions of our corporate governance, limits the ability of other stockholders to influence our Company and may have the effect of delaying or preventing a change in control of our Company even if the change in control would benefit our other stockholders.
As a result, we may be disproportionately affected by adverse developments in those areas relative to competitors with more geographically diversified operations. 15 Table of Contents The increasing complexity of the hospitality industry may have adverse effects on our business.
This exposes us to risks associated with local regulatory changes, changes in currency exchange rates and security risks. As a result, we may be disproportionately affected by adverse developments in those areas relative to competitors with more geographically diversified operations. The hospitality market is highly competitive, and we may be unable to compete successfully with our current or future competitors.
The Note and related documents contain restrictions that will limit our flexibility in operating our business and the issuance of our Common Stock upon conversion of the Note could be significantly dilutive and may depress the market price of our Class A Common Stock.
In addition, the issuance of shares of Class A Common Stock upon conversion of the Note could be significantly dilutive and may depress the market price of our Class A Common Stock. 18 Table of Contents Failure to maintain minimum liquidity requirement under the Master Services Agreement with Capital One Services LLC could adversely affect our business and financial condition.
Moreover, our leases contain a variety of contractual rights and obligations that may be subject to interpretation. Our interpretations of our leases have been, or may be, disputed by landlords, which may result in expensive and disruptive litigation in some instances. Our failure to satisfy our contractual obligations in these leases could result in defaults under the leases.
Moreover, our leases contain a variety of contractual rights and obligations that may be subject to interpretation and disputes with landlords, potentially resulting in costly and disruptive litigation. Failure to meet our obligations could lead to defaults, early lease terminations, reputational damage, operational disruptions, and adverse effects on our financial condition and results of operations.
Removed
Where we succeed in signing a lease for a new property, the landlord or developer may be unable or unwilling to deliver the property at the time provided for, or we may encounter other unforeseen delays, such as construction delays in the case of new developments or in preparing the property for initial member stays.
Added
Increased competition could result in a reduction in revenue, fewer attractive properties, higher lease rates, higher costs or reduced market share. In addition to providing luxury accommodations, our business also depends on our ability to provide high-quality, personalized service including travel planning, on-site concierges, daily housekeeping and unique travel experiences.
Removed
Any default, claim or dispute regarding our leases or our other occupancy arrangements could result in litigation, damage to our reputation, disruption of operations and our members’ experiences at the affected property, a requirement that we exit the property earlier than planned and damages or other legal remedies against us, any of which could have a material and adverse effect on our business, results of operations and financial condition.
Added
Our business is particularly sensitive to trends in the travel, real estate and vacation rental markets and in the general economy, all of which are unpredictable. Travel is significantly dependent on discretionary spending levels.
Removed
We face possible risks associated with natural disasters and the physical effects of climate change, which may include more frequent severe storms, hurricanes, flooding, rising sea levels, shortages of water, droughts and wildfires, any of which could have a material adverse effect on our business, results of operations and financial condition.
Added
We may not be successful in attracting and retaining qualified personnel to fulfill our current or future needs. We may face challenges associated with implementing return-to-office policies as it relates to our ability to attract, retain, and motivate talent, particularly in a competitive labor market where flexible work arrangements may be valued by employees.
Removed
We are subject to the risks associated with natural disasters and the physical effects of climate change, which may include more frequent severe storms, hurricanes, flooding, rising sea levels, shortages of water, droughts and wildfires, any of which could have a material adverse effect on our business, results of operations and financial condition.
Added
We are involved in various legal proceedings relating to matters incidental to the ordinary course of our business and may be subject to additional legal proceedings from time to time. Legal proceedings can be time-consuming, divert management’s attention and resources and cause us to incur significant expenses or liabilities.
Removed
To the extent climate change causes changes in weather patterns, our coastal destinations could experience increases in storm intensity and rising sea levels causing damage to our properties and result in a reduced number of properties in these areas.
Added
Risks Relating to Financial and Market Matters Sales of our Class A Common Stock in the public market may cause the trading price to fall.
Removed
Climate change may also affect our business by increasing the cost of, or making unavailable, property insurance on terms we or our landlords find acceptable in areas most vulnerable to such events, increasing operating costs, including the cost of water or energy, and requiring us or our landlords to expend funds as they seek to repair and protect their properties in connection with such events.
Added
Sales of a substantial number of shares of our Class A Common Stock, either in the form of resales by existing stockholders or sales by us pursuant to our at-the-market offering program or otherwise, could depress the trading price of our Class A Common Stock.
Removed
As a result of the foregoing and other climate-related issues, we may be unable to provide properties in certain areas due to climate change, and we may lose both landlords and members, which could have a material adverse effect on our business, results of operations and financial condition.
Added
Such sales could also result in resales of our Class A Common Stock by our other current stockholders, potentially leading to further decreases in the trading price of the Class A Common Stock.
Removed
The location of our properties is relatively concentrated in travel destinations, including areas with possible risks associated with natural disasters and the physical effects of climate change as well as risks associated with local regulatory changes, changes in currency exchange rates and security risks.
Added
We are substantially controlled by Payam Zamani, who is able to exert a significant degree of influence over our operations and the outcome of stockholder votes. This limits the ability of other stockholders to influence our management and policies.
Removed
Our business is becoming increasingly complex due in part to the continued evolution of the hospitality industry and changing local and national regulatory requirements. This increased complexity has demanded, and will continue to demand, substantial resources and attention from our management.
Added
As of December 31, 2024, Payam Zamani, our Executive Chairman and CEO, beneficially owns approximately 32% of our outstanding Class A common stock not including shares issuable upon the exercise of warrants and approximately 48% including shares issuable upon the exercise of warrants. Through this ownership and his role as officer and director, Mr.
Removed
Our ability to retain existing and attract new members , obtain a sufficient supply of luxury accommodations and experiences, provide high-quality service, execute and integrate acquisitions and adapt to technological change may be impacted due to the increasing complexity of our business.
Added
Zamani is able to exercise a substantial degree of control over the composition of our Board of Directors and our management and policies. Mr.
Removed
Our business and results of operations may be negatively impacted if we are unable to effectively manage these potential changes. The hospitality market is highly competitive, and we may be unable to compete successfully with our current or future competitors. The market to provide hospitality services is very competitive and highly fragmented.
Added
Our Master Services Agreement with Capital One requires us to maintain a minimum liquidity balance of $10 million. On March 21, 2025, the Company entered into a twelve month Forbearance and Amendment Agreement with Oakstone Ventures, Inc. (an affiliate of Capital One), the holder of the Company’s 8% Senior Secured Convertible Note due 2028.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeWe have a cross-functional management team to participate in our “Cybersecurity Risk Committee” (the “Committee”), comprised of Legal, Cybersecurity Operations, Risk Management, Finance and Accounting and Information Technology.
Biggest changeWe have a cross-functional management team that participates in our “Cybersecurity Risk Committee” (the “Committee”), comprised of Legal, Cybersecurity Operations, Risk Management, Finance and Accounting and Information Technology, which together have over 15 years of cybersecurity technology leadership experience and have the expertise to be able to assess and manage any material risks from cybersecurity threats.
The Committee reports regularly to the Audit Committee of the Board, covering current and future planned processes in place to prevent, detect, mitigate and remediate any cybersecurity incidents.
The Committee reports regularly to the Audit Committee of the Board, covering current and future planned processes in place to prevent, detect, mitigate and remediate any cybersecurity incidents. 27 Table of Contents
We describe whether and how risks from identified cybersecurity threats have or that are reasonably likely to affect our financial position, results of operations and cash flows, included as part of our Item 1A. Risk Factors of this Annual Report on Form 10-K, which disclosures are incorporated by reference herein.
We describe whether and how risks from identified cybersecurity threats have affected or are reasonably likely to affect our financial position, results of operations and cash flows in Item 1A. Risk Factors of this Annual Report on Form 10-K, which disclosures are incorporated by reference herein.
The Committee is responsible for assessing and managing all aspects of our Cybersecurity Program, including the evaluation of various cybersecurity risks and the continued enhancement of our processes and procedures to manage these risks and respond to any confirmed cyberattacks. The Committee also works with various third-party cybersecurity experts to ensure industry best practices.
The Committee is responsible for assessing and managing all aspects of our Cybersecurity Program, including the evaluation of various cybersecurity risks and the continued enhancement of our processes and procedures to manage these risks and respond to any confirmed cyberattacks. The Committee also works with various third-party cybersecurity experts in an effort to ensure that we follow industry best practices.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeDistrict Court in the District of Colorado captioned Keith Koch, Individually and on behalf of all others similarly situated v. Inspirato Incorporated, Brent Handler, and R. Webster Neighbor. The complaint alleges violations of Section 10(b) of the Exchange Act and Rule 10b-5 promulgated thereunder against all defendants, and Section 20(a) of the Exchange Act against the individual defendants.
Biggest changeThe complaint alleged violations of Section 10(b) of the Exchange Act and Rule 10b-5 promulgated thereunder against all defendants and Section 20(a) of the Exchange Act against the individual defendants.
The complaint generally alleges that certain of our prior public statements about our results of operations and financial condition were materially false and misleading because they misrepresented and failed to disclose adverse facts pertaining to the restatement of our unaudited Consolidated Financial Statements as of and for the three months ended March 31, 2022 and June 30, 2022. Item 4.
The complaint generally alleged that certain of our prior public statements about our results of operations and financial condition were materially false and misleading because they misrepresented and failed to disclose adverse facts pertaining to the restatement of our Condensed Consolidated Financial Statements as of and for the three months ended March 31, 2022 and June 30, 2022.
Mine Safety Disclosures Not applicable. ​ 28 Table of Contents PART II
Item 4. Mine Safety Disclosures Not applicable. 28 Table of Contents PART II
Regardless of outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources, negative publicity, reputational harm and other factors. Class Action Complaint Relating to Restatement On February 16, 2023, a class action lawsuit was filed in the U.S.
Regardless of outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources, negative publicity, reputational harm and other factors.
Removed
The complaint seeks certification as a class action and an unspecified amount of damages, attorneys' fees, expenses, and other costs.
Added
Legal Dispute with Former CEO and Board Member We are currently involved in a legal dispute with a former Chief Executive Officer, who currently owns more than 5% of the Company's Class A Common Stock, and a former Chairman of the Board of Directors of Inspirato. The parties filed suit in November of 2024 in Colorado State Court.
Added
They have made claims asserting a continuing right to a purported lifetime Founders’ Travel Benefit, for which the Plaintiffs are seeking unspecified damages. We dispute the claims and do not expect this litigation to have a material impact on our financial position or results of operations.
Added
Class Action Complaint Relating to Restatement On February 16, 2023, a class action lawsuit was filed in the U.S. District Court in the District of Colorado (the "Court") captioned Keith Koch, Individually and on behalf of all others similarly situated v. Inspirato Incorporated, Brent Handler, and R. Webster Neighbor, with Ilan Bouzaglo later appointed as the lead and named plaintiff.
Added
On July 16, 2024, the magistrate recommended the case be dismissed and the plaintiff filed a motion objecting to these recommendations on July 30, 2024. We responded to these objections and on September 23, 2024, the Court granted our motion to dismiss the lawsuit without prejudice.
Added
On October 23, 2024, plaintiff filed an amended motion for the Court’s review and on November 6, 2024, the plaintiff filed a second amended complaint. The Company then filed a motion to dismiss the second amended complaint on December 11, 2024. The motion is still in the briefing stage but once complete, the Court will rule on the motion.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThese numbers do not include "street name" or beneficial holders, whose shares are held of record by banks, brokers, financial institutions, and other nominees. Dividend Policy We have not paid any cash dividends on our shares of common stock to date.
Biggest changeHolders of Record As of March 17, 2025, there were approximately 34 holders of record of our Class A Common Stock, not including "street name" or beneficial holders, whose shares are held of record by banks, brokers, financial institutions, and other nominees. As of that date, there were no holders of our Class B or Class V Common Stock.
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our Class A Common Stock has been listed on the NASDAQ Global Select Market under the symbol “ISPO”. There is no public market for our Class B or Class V Common Stock.
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our Class A Common Stock is listed on the NASDAQ Global Select Market under the symbol “ISPO”. No shares of Class B Common Stock or Class V Common Stock are currently outstanding.
The payment of cash dividends in the future will be dependent upon our revenue and earnings, if any, capital requirements and general financial condition. The payment of any dividends will be within the discretion of our then board of directors.
Dividend Policy We have not paid any cash dividends on our shares of common stock to date. The payment of cash dividends in the future will be dependent upon our revenue and earnings, if any, capital requirements and general financial condition. The payment of any dividends will be within the discretion of our then Board of Directors.
Removed
Holders of Record As of March 8, 2024, there were approximately 35 holders of record of our Class A Common Stock, par value $0.0001 per share, 35 holders of record of our Class V common stock, par value $0.0001 per share (“Class V Common Stock”), 1 holder of record of our Warrants and no holders of record of our Class B Non-Voting common stock, par value $0.0001 per share (“Class B Non-Voting Common Stock”).
Removed
Performance Graph This performance graph shall not be deemed “soliciting material” or to be “filed” with the SEC for purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities under that Section and shall not be deemed to be incorporated by reference into any of our filings under the Securities Act. 29 Table of Contents The graph below compares the cumulative total stockholder return on our Class A Common Stock with the cumulative total return on the S&P 500 Index (S&P 500) and the S&P 500 Information Technology Index (S&P 500 IT).
Removed
The graph assumes $100 was invested at the market close on February 11, 2022, which was the first day our Class A Common Stock began trading (which, prior to the Closing were shares of Class A common stock of Thayer). Data for the S&P 500 Index and S&P 500 Information Technology Index assume reinvestment of dividends.
Removed
The graph uses the closing market price on February 11, 2022 of $191.00 per share as the initial value of our Class A Common Stock. The comparisons in the graph below are based upon historical data and are not indicative of, nor intended to forecast, future performance of our Class A Common Stock. ​ Item 6. [Reserved]

Item 7. Management's Discussion & Analysis

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

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Biggest changeThe majority of our costs are relatively fixed across quarters. ​ 34 Table of Contents Results of operations The following table sets forth our Consolidated Statements of Operations for the years ended December 31, 2022 and 2023 (in thousands, other than percentages): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Percent ​ ​ ​ ​ ​ ​ ​ ​ ​ Amount of ​ change ​ ​ ​ Year ended December 31, ​ increase ​ favorable ​ ​ ​ 2022 2023 (decrease) (unfavorable) ​ Revenue ​ $ 345,530 ​ $ 329,100 ​ $ (16,430) ​ (5) % Cost of revenue ​ ​ 228,401 ​ ​ 233,942 ​ ​ 5,541 ​ (2) % Asset impairments ​ ​ 925 ​ ​ 40,844 ​ ​ 39,919 ​ n/m ​ Gross margin ​ $ 116,204 ​ $ 54,314 ​ $ (61,890) ​ (53) % Gross margin percent ​ ​ 34% ​ ​ 17% ​ ​ (17) pp (51) % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ General and administrative (1) ​ $ 65,807 ​ $ 72,117 ​ $ 6,310 ​ (10) % Sales and marketing (1) ​ ​ 39,368 ​ ​ 32,884 ​ ​ (6,484) ​ 16 % Operations (1) ​ ​ 42,372 ​ ​ 28,125 ​ ​ (14,247) ​ 34 % Technology and development (1) ​ ​ 14,219 ​ ​ 11,330 ​ ​ (2,889) ​ 20 % Depreciation and amortization ​ ​ 3,191 ​ ​ 3,773 ​ ​ 582 ​ (18) % Interest, net ​ ​ 188 ​ ​ 1,133 ​ ​ 945 ​ (503) % (Gain) loss on fair value instruments ​ ​ 1,696 ​ ​ (2,368) ​ ​ (4,064) ​ 240 % Other (income) expense, net ​ ​ (355) ​ ​ 457 ​ ​ 812 ​ (229) % Loss and comprehensive loss before income taxes ​ ​ (50,282) ​ ​ (93,138) ​ ​ (42,856) ​ (85) % Income tax expense ​ ​ 799 ​ ​ 721 ​ ​ (78) ​ 10 % Net loss and comprehensive loss ​ $ (51,081) ​ $ (93,859) ​ $ (42,778) ​ (84) % ​ n/m - non-meaningful pp – percentage point (1) Note the balances presented for cost of revenue, general and administrative, sales and marketing, operations and technology and development for the year ended December 31, 2022 have been adjusted to reflect the current year’s presentation of the allocation of stock-based compensation.
Biggest changeThe majority of our costs are relatively fixed across quarters. 35 Table of Contents Results of Operations The following table sets forth our Consolidated Statements of Operations and Comprehensive Loss for the years ended December 31, 2024 and 2023 (in thousands, other than percentages): Year ended December 31, Amount of increase (decrease) Percent change favorable (unfavorable) 2024 2023 Revenue $ 279,855 $ 329,100 $ (49,245) (15) % Cost of revenue 190,528 233,942 (43,414) 19 % (Gain) on lease termination and loss on asset impairments (29,895) 40,844 (70,739) n/m Gross margin $ 119,222 $ 54,314 $ 64,908 120 % Gross margin percent 43% 17% 26 pp General and administrative $ 59,216 $ 72,117 $ (12,901) 18 % Sales and marketing 30,373 32,884 (2,511) 8% Operations 22,204 28,125 (5,921) 21% Technology and development 7,397 11,330 (3,933) 35% Depreciation and amortization 4,036 3,773 263 (7) % Interest, net 1,615 1,133 482 (43) % (Gain) on fair value instruments (3,583) (2,368) (1,215) 51% Restructuring charges 6,418 — 6,418 n/m Other (income) expense, net (245) 457 (702) n/m Loss and comprehensive loss before income taxes (8,209) (93,138) 84,929 91 % Income tax expense 595 721 (126) 17% Net loss and comprehensive loss $ (8,804) $ (93,859) $ 85,055 91 % n/m – non-meaningful pp – percentage point Comparison of the years ended December 31, 2024 and 2023 : Revenue.
We believe that of our significant accounting policies, which are described in Note 2 to our Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K, the following accounting estimates involve a greater degree of judgment and complexity.
We believe that of our significant accounting policies, which are described in Note 2 – Significant Accounting Policies to our Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K, the following accounting estimates involve a greater degree of judgment and complexity.
However, revenues from existing members are not impacted by seasonality. Our results, including total revenues, Adjusted EBITDA and Free Cash Flow (as defined below), are impacted by the timing of holidays and other events. Holidays and other events generally increase the rates we are able to charge for travel which results in higher gross margin.
However, Subscription revenues from existing members are not impacted by seasonality. Our results, including total revenues, Adjusted EBITDA and Free Cash Flow (as defined below), are impacted by the timing of holidays and other events. Holidays and other events generally increase the rates we are able to charge for travel which results in higher gross margin.
Active Subscriptions We define Active Subscriptions as Subscriptions that are paid in full, as well as those for which we expect payment for renewal. We use Active Subscriptions to assess the adoption of our subscription offerings, which is a key factor in assessing our penetration of the market in which we operate and a key driver of revenue.
Active Subscriptions We define Active Subscriptions as Subscriptions that are paid in full and those for which we expect payment for renewal. We use Active Subscriptions to assess the adoption of our Subscription offerings, which is a key factor in assessing our penetration of the market in which we operate and a key driver of revenue.
Other Factors Affecting Our Performance and Trends and Uncertainties We believe that the growth and future success of our business depend on many factors, including those from the Key Business Factors discussed above.
Other Factors Affecting Our Performance and Trends and Uncertainties We believe that the growth and future success of our business depend on many factors, including those from the Key Business Metrics discussed above.
Member s who earn one of the three Rewards statuses may be entitled to, depending on their status, extra savings on Club bookings; early access to new property releases, new Experiences and year-end festive dates; and complementary nights, among other benefits, which provide them with a material right to free or discounted goods or services in the future.
Member s who earn one of the three Rewards statuses may be entitled to, depending on their status, extra savings on Club bookings; early access to new property releases, new Experiences and year-end festive dates; and complimentary nights, among other benefits, which provide them with a material right to free or discounted goods or services in the future.
Additionally, our strategic partnership with Capital One is expected to provide us with a long-term partner with the ability to deliver increased demand for travel services as well as highly-qualified lead generation opportunities for our Club and Pass subscription offerings, while providing Capital One a highly differentiated and exclusive luxury travel benefit for its consumers.
Additionally, our strategic partnership with Capital One is expected to provide us with a long-term partner with the ability to deliver increased demand for travel services as well as highly qualified lead generation opportunities for our Inspirato Club (" Club "), Inspirato Pass (" Pass ") and Invited Subscription offerings, while providing Capital One a highly differentiated and exclusive luxury travel benefit for its consumers.
Discussions of 2021 items and year-to-year comparisons between 2021 and 2022 are not included in this Annual Report on Form 10-K, and can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2022.
Discussions of 2022 items and year-to-year comparisons between 2022 and 2023 are not included in this Annual Report on Form 10-K, and can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023.
We encourage investors and others to review our business, results of operations, and financial information in its entirety, not to rely on any single financial measure, and to view Adjusted Net Loss, Adjusted EBITDA, Adjusted EBITDA Margin and Free Cash Flow in conjunction with their respective related GAAP financial measures.
We encourage investors and others to review our business, results of operations, and financial information in its entirety, not to rely on any single financial measure, and to view Adjusted EBITDA, Adjusted EBITDA Margin and Free Cash Flow in conjunction with their respective related GAAP financial measures.
Valuation of Note As we have elected to carry our Note at fair value on a quarterly basis, we calculate the fair value of our Note, adjust its valuation on the Consolidated Balance Sheets and record the complementary fair value adjustment to (gain) loss on fair value instruments within our Consolidated Statements of Operations.
Valuation of Note We have elected to carry our Note at fair value. On a quarterly basis, we calculate the fair value of our Note, adjust its valuation on the Consolidated Balance Sheets and record the complementary fair value adjustment to (gain) loss on fair value instruments within our Consolidated Statements of Operations and Comprehensive Loss.
We derive our travel revenue by charging a nightly rate for stays at our portfolio of residence and hotels. For residence and hotel trips, a service charge is also included. Travel revenue also includes amounts collected from fees when a trip is cancelled.
We derive our travel revenue by charging a nightly rate for stays at our portfolio of residences and hotels. For residence and hotel stays, a service charge is also included. Travel revenue also includes amounts collected from fees when a trip is cancelled.
While each of these factors presents significant opportunities for our business, they also pose important challenges that we have to successfully address in order to continue to grow our business and further improve our results of operations.
While each of these factors presents significant opportunities for our business, they also pose important challenges that we have to successfully address in order to grow our business and improve our results of operations.
Based on this information, we recorded right-of-use asset impairments of $40.5 million and property plant and equipment impairments of $0.3 million for the year ended December 31, 2023. General and administrative.
Based on this information, we recorded right-of-use asset impairments of $40.5 million and property plant and equipment impairments of $0.3 million for the year ended December 31, 2023.
We also consider company-specific risk factors such as our asset risks, foreign currency risks and locational risks when assessing the IBR for one of our managed and controlled vacation homes.
We also consider company-specific risk factors such as our asset risks, foreign currency risks and locational risks when assessing the IBRs for one of our managed and controlled vacation homes.
Recently Adopted Accounting Pronouncements For further information on recently adopted accounting pronouncements, see Note 2 within our Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K.
Recently Adopted Accounting Pronouncements For further information on recently adopted accounting pronouncements, see Note 2 – Significant Accounting Policies within our Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K.
We expect to meet our long-term cash requirements with cash flows from operating and financing activities, including, but not limited to potential future issuances of debt or equity. Our primary uses of cash are for operating expenses, lease payments and capital expenditures.
We expect to meet our long-term cash requirements with cash flows 40 Table of Contents from operating and financing activities, including, but not limited to, potential future issuances of debt or equity. Our primary uses of cash are for operating expenses, lease payments and capital expenditures.
The Note is fully and unconditionally guaranteed by certain existing and future domestic subsidiaries of the Company. The Note bears interest at a fixed rate of 8% per annum.
The Note is fully and unconditionally guaranteed by certain existing and future domestic subsidiaries of Inspirato . The Note bears interest at a fixed rate of 8% per annum.
Our operating results are impacted by our ability to manage these costs and expenses and achieve a balance between making investments to retain and grow members and driving increased profitability. We are working on finding more opportunities to enhance gross margin and operate more efficiently, including reducing costs by taking additional operational and portfolio optimization 33 Table of Contents actions.
Our operating results are impacted by our ability to manage these costs and expenses and achieve a balance between making investments to retain and grow members and driving increased profitability. We are working on finding more opportunities to enhance gross margin and operate more efficiently, including reducing costs by taking additional operational and portfolio optimization actions.
Free Cash Flow We define Free Cash Flow as net cash provided by (used in) operating activities less purchases of property and equipment and development of internal-use software.
Free Cash Flow We define Free Cash Flow as net cash used in operating activities less development of internal-use software and purchases of property and equipment.
In considering the stock features of the Note, we considered the value and volatility of our own stock, in addition to considering volatility of similar instruments in the marketplace as well as the conversion feature of the Note which is discounted at the risk-free rate.
In considering the stock features of the Note, we considered the value and volatility of our own stock, in addition to considering volatility of similar instruments in the marketplace as well as the conversion 44 Table of Contents feature of the Note which is discounted at the risk-free rate.
We monitor (i) paid nights delivered as a percentage of total nights delivered, (ii) ADR and (iii) Occupancy for our residences and leased hotels as we bear the financial responsibility in these properties and can more closely control both the nightly rates and costs as compared to our net-rate hotel partners.
We monitor (i) paid nights delivered, (ii) ADR and (iii) Occupancy for our leased residences and hotels as we bear the financial responsibility in these properties and can more closely control both the nightly rates and costs as compared to our net-rate hotel partners.
This section of this Annual Report on Form 10-K generally discusses 2022 and 2023 items and year-to-year comparisons between 2022 and 2023.
This section of this Annual Report on Form 10-K generally discusses 2024 and 2023 items and year-to-year comparisons between 2024 and 2023.
Average rates at our hotel partners are typically lower than our residences, as our residences are typically larger and accommodate more guests than hotel rooms and suites. 32 Table of Contents The combination of ADR and Occupancy provides us insights regarding how effective we are utilizing our at-risk properties.
Average rates at our hotel partners are typically lower than our residences, as our residences are typically larger and accommodate more guests than hotel rooms and suites. 33 Table of Contents The combination of ADR and Occupancy provides us insights regarding how effectively we are utilizing our at-risk properties.
The impairment test requires that we first perform a qualitative assessment to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value. If it is concluded that this is the case, we then perform a quantitative impairment test. Otherwise, the quantitative impairment test is not required.
We have determined that we have one reporting unit. The impairment test requires that we first perform a qualitative assessment to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value. If it is concluded that this is the case, we then perform a quantitative impairment test.
For the year ended December 31, 2023, we 41 Table of Contents could not conclude qualitatively that the fair value of goodwill is greater than its carrying value and, as such, we utilized a quantitative test and determined that no goodwill impairment charges were necessary.
For the year ended December 31, 2024, we could not conclude qualitatively that the fair value of goodwill is greater than its carrying value and, as such, we utilized a quantitative test and determined that no goodwill impairment charges were necessary.
As of December 31, 2023, our total Rewards deferred revenue was $10.7 million. When member s spend with Inspirato, we defer a portion of the member s’ total spend to Rewards , representing the deferred revenue value of the program’s separate performance obligation.
As of December 31, 2024 and 2023, our total Rewards deferred revenue was $11.1 million and $10.7 million, respectively. When member s spend with Inspirato, we defer a portion of the member s’ total spend to Rewards , representing the deferred revenue value of the program’s separate performance obligation.
These inputs towards the Rewards deferral require us to forecast future spend for our member s, usage of each of the earned performance obligations and the standalone value of each of the identified performance obligations which, especially in the first year of the program, as there is limited historical information, require management’s estimation.
These inputs towards the Rewards deferral require us to forecast future spend for our member s, usage of each of the earned performance obligations and the standalone value of each of the identified performance obligations which are limited as there is limited historical information and require management’s estimation.
We believe that Free Cash Flow is a meaningful indicator of liquidity that provides information to our management and investors about the amount of cash generated from operations, after purchases of property and equipment and development of internal-use software, that can be used for strategic initiatives, if any. 40 Table of Contents The following table presents a reconciliation of our net cash used in operating activities, the closest GAAP measure, to Free Cash Flow (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, ​ ​ ​ ​ ​ 2022 2023 Net cash used in operating activities ​ ​ ​ ​ $ (45,689) ​ $ (51,393) Development of internal-use software ​ ​ ​ ​ ​ (5,420) ​ ​ (5,819) Purchase of property and equipment ​ ​ ​ ​ ​ (8,850) ​ ​ (6,305) Free Cash Flow ​ ​ ​ ​ $ (59,959) ​ $ (63,517) ​ Critical Accounting Policies and Estimates The discussion and analysis of our financial condition and results of operations are based upon our Consolidated Financial Statements, which have been prepared in accordance with GAAP.
We believe that Free Cash Flow is a meaningful indicator of liquidity that provides information to our management and investors about the amount of cash generated from operations, after development of internal-use software and purchases of property and equipment, that can be used for strategic initiatives, if any. 42 Table of Contents The following table presents a reconciliation of our net cash used in operating activities, the closest GAAP measure, to Free Cash Flow (in thousands): Year ended December 31, 2024 2023 Net cash used in operating activities $ (15,770) $ (51,393) Purchase of property and equipment (5,469) (6,305) Development of internal-use software (542) (5,819) Free Cash Flow $ (21,781) $ (63,517) Critical Accounting Policies and Estimates The discussion and analysis of our financial condition and results of operations are based upon our Consolidated Financial Statements, which have been prepared in accordance with GAAP.
Under the quantitative impairment test, we would compare the estimated fair value of each reporting unit to its carrying value.
Otherwise, the quantitative impairment test is not required. Under the quantitative impairment test, we would compare the estimated fair value of each reporting unit to its carrying value.
On September 29, 2023, we sold and issued the Note. The total net proceeds from this offering were approximately $23.1 million, after deducting $1.9 million of debt issuance costs. The Note is an unsubordinated secured obligation of the Company. The Note is secured by a first priority security interest in substantially all of Inspirato Incorporated’s and its domestic subsidiaries’ assets.
The total net proceeds from this offering were $23.1 million, after deducting $1.9 million of debt issuance costs. The Note is an unsubordinated secured obligation of Inspirato . The Note is secured by a first priority security interest in substantially all of Inspirato Incorporated’s and its domestic subsidiaries’ assets.
If our actual IBR varies materially from those utilized, the Company could have materially different balances for the capitalized ROU assets and complementary lease liabilities for the year ended December 31, 2023.
If our actual IBRs vary materially from those utilized, the Company could have materially different balances for the capitalized ROU assets and complementary lease liabilities for the year ended December 31, 2024.
Members who earn one of the three Rewards statuses may earn, depending on their status, extra savings on Club bookings; early access to new property releases, new Experiences and year-end festive dates; and complementary nights, among other benefits.
Members who earned one of the three Rewards statuses could be entitled to, depending on their status, extra savings on Club bookings; early access to new property releases, new Experiences and year-end festive dates; and complimentary nights, among other benefits .
We generally expect cost of revenue to vary as a percentage of revenue from period to period based on the number of properties that we have under lease, and the mix of subscription and travel revenue that we earn. We expect cost of revenue to decrease in the near-term as we reduce our portfolio of properties.
We generally expect cost of revenue to vary as a percentage of revenue from period to period based on the number of properties that we have under lease, and the mix of Subscription and travel revenue that we earn.
The following table shows our approximate total number of Active Subscriptions as of December 31, 2022 and 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ ​ ​ ​ ​ 2022 2023 Legacy ​ ​ ​ ​ ​ 9,400 ​ ​ 7,900 Pass ​ ​ ​ ​ ​ 3,600 ​ ​ 2,500 Club ​ ​ ​ ​ ​ 3,100 ​ ​ 3,400 Total Active Subscriptions ​ ​ ​ ​ ​ 16,100 ​ ​ 13,800 ​ Legacy Subscriptions, an offering we no longer sell, had substantial enrollment fees and have annual dues that are lower than annualized dues for Club Subscriptions.
The following table shows our approximate total number of Active Subscriptions as of December 31, 2024 and 2023 : December 31, 2024 2023 Legacy 6,500 7,900 Club 4,100 3,400 Pass 1,500 2,500 Invited 100 — Total Active Subscriptions 12,200 13,800 Inspirato Legacy Subscriptions, an offering we no longer sell, had substantial initiation fees and have historically had annual dues that are lower than annualized dues for Club Subscriptions.
As a result of the fair value adjustment, we recorded a gain of $1.6 million to (gain) loss on fair value instruments within our Consolidated Statements of Operations for the year ended December 31, 2023.
As of December 31, 2024, the fair value of the Note was $22.3 million. As a result of the fair value adjustment, we recorded a gain of $3.6 million to (gain) loss on fair value instruments within our Consolidated Statements of Operations and Comprehensive Loss for the year ended December 31, 2024.
Our future capital requirements will depend on many factors including our rate of member and revenue growth, travel bookings, change in the number of properties, other initiatives including the success of Rewards and overall economic conditions.
Our future capital requirements will depend on many factors including our rate of member and revenue growth, travel bookings, change in the number of properties, our ability to improve operating efficiencies and overall economic conditions.
In recent periods, we have been affected by, among other things, the Russian invasion of Ukraine, the war between Israel and Hamas, inflation, labor shortages, fluctuations in fuel prices, changes in governmental regulations, safety concerns, foreign currency fluctuations, rising interest rates and reduced consumer confidence resulting in lower consumer spending.
In recent periods, we have been affected by, among other things, inflation, labor shortages, fluctuations in fuel prices, changes in governmental regulations, safety concerns, foreign currency fluctuations, weather related incidents, rising interest rates and reduced consumer confidence resulting in lower consumer spending.
The Company considers both the risk-free rate as well as the associated debt rates for companies with a similar credit profile as ours as well as the term of the complementary note of each rate.
The IBRs are calculated for leases based on their term length and risk profile. The Company considers both the risk-free rate as well as the associated debt rates for companies with a similar credit profile as ours as well as the term of the complementary note of each rate.
The following table presents summarized information from our Consolidated Statements of Cash Flows for the years ended December 31, 2022 and 2023 (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, ​ ​ ​ ​ ​ 2022 2023 Net cash used in operating activities ​ ​ ​ ​ $ (45,689) ​ $ (51,393) Net cash used in investing activities ​ ​ ​ ​ ​ (14,270) ​ ​ (12,124) Net cash provided by financing activities ​ ​ ​ ​ ​ 58,945 ​ ​ 23,844 Net decrease in cash and cash equivalents ​ ​ ​ $ (1,014) ​ $ (39,673) ​ Cash Flows Comparison of the years ended December 31, 2022 and 2023 Cash flows used in operating activities.
The following table presents summarized information from our Consolidated Statements of Cash Flows for the years ended December 31, 2024 and 2023 (in thousands): Year ended December 31, 2024 2023 Net cash used in operating activities $ (15,770) $ (51,393) Net cash used in investing activities (6,011) (12,124) Net cash provided by financing activities 14,520 23,844 Net decrease in cash, cash equivalents and restricted cash $ (7,261) $ (39,673) Cash Flows Comparison of the years ended December 31, 2024 and 2023 Cash flows used in operating activities.
Interest on the Note is payable quarterly on the last business day of each calendar quarter following the issuance of the Note and is payable at the election of the Company in cash or in kind by increasing the outstanding principal amount of the Note by the amount of interest payable on such interest payment date.
Interest on the Note is due quarterly on the last business day of each calendar quarter following the issuance of the Note and we have elected to pay interest in kind by increasing the outstanding principal amount of the Note by the amount of interest payable on such interest payment date.
Our Loyalty Program In August of 2023, we launched Inspirato Rewards (“ Rewards ”), our member loyalty program that supports our diverse portfolio of curated luxury vacation options for members with at least one active paid member subscription (“Subscription”). Rewards is designed to incentivize repeat business by rewarding members with exclusive discounts and benefits based on their activity with us.
Sunsetting of Rewards In August of 2023, we implemented a member loyalty program called Inspirato Rewards (“ Rewards ”) for members with at least one active paid member subscription (“Subscription”). Rewards was designed to incentivize repeat business by rewarding members with exclusive discounts and benefits based on their activity with us.
For travelers, we offer access to a diverse portfolio of vacation options that includes approximately 450 private luxury vacation homes available to our customers, and accommodations at over 250 luxury hotel and resort partners in over 180 destinations around the world as of December 31, 2023.
For members, we offer access to a diverse portfolio of curated luxury vacation options that include approximately 350 private luxury vacation homes and accommodations at over 220 luxury hotel and resort partners in over 180 destinations around the world as of December 31, 2024.
These direct costs include payments for properties we lease, operating and maintenance costs of those properties, including on-site service personnel costs, costs paid to our hotel partners for member stays, and booking costs from Inspirato Only experiences and Bespoke trips.
These direct costs include payments for properties we lease, booking fees which are made up of costs paid to our hotel partners for member stays as well as costs paid to vendors to deliver Inspirato Only experiences and Bespoke trips, and fixed and variable operating and maintenance costs which are those costs to operate and maintain our properties, including on-site service personnel costs.
Below we have summarized our travel operating statistics: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, ​ ​ 2021 2022 2023 Residences ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Paid Nights Delivered ​ ​ 61,100 ​ ​ 67,800 ​ ​ 61,400 ​ Total Nights Delivered ​ ​ 94,800 ​ ​ 114,900 ​ ​ 111,600 ​ Occupancy ​ ​ 88 % ​ 81 % ​ 72 % ADR ​ $ 1,557 ​ $ 1,825 ​ $ 1,825 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Hotels ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Paid Nights Delivered (1) ​ ​ 29,300 ​ ​ 38,900 ​ ​ 41,900 ​ Total Nights Delivered (1) ​ ​ 48,200 ​ ​ 72,700 ​ ​ 73,400 ​ Occupancy (2) ​ ​ 79 % ​ 79 % ​ 72 % ADR (2) ​ $ 962 ​ $ 970 ​ $ 935 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Paid Nights Delivered (1) ​ ​ 90,500 ​ ​ 106,600 ​ ​ 103,300 ​ Total Nights Delivered (1) ​ ​ 143,000 ​ ​ 187,600 ​ ​ 185,000 ​ Occupancy (2) ​ ​ 85 % ​ 80 % ​ 72 % ADR (2) ​ $ 1,364 ​ $ 1,513 ​ $ 1,464 ​ ​ (1) ​Includes net-rate hotel nights.
Below we have summarized our travel operating statistics: Year ended December 31, 2024 2023 2022 Residences Paid Nights Delivered 58,400 61,400 67,800 Total Nights Delivered 87,800 111,600 114,900 Occupancy 71% 72% 81% ADR $ 1,721 $ 1,825 $ 1,825 Hotels Paid Nights Delivered (1) 32,700 41,900 38,900 Total Nights Delivered (1) 53,000 73,400 72,700 Occupancy (2) 76% 72% 79% ADR (1) $ 1,083 $ 935 $ 970 Total Paid Nights Delivered (1) 91,100 103,300 106,600 Total Nights Delivered (1) 140,800 185,000 187,600 Occupancy (2) 72% 72% 80% ADR (1) $ 1,494 $ 1,464 $ 1,513 (1) Includes net-rate hotel nights.
Reverse Stock Split On September 26, 2023, our stockholders approved a proposal to adopt a series of alternative amendments to our certificate of incorporation to effect the Reverse Stock Split (as defined in Note 1 to our Consolidated Financial Statements).
Reverse Stock Split On September 26, 2023, our stockholders approved a proposal to adopt a series of alternative amendments to our certificate of incorporation to effect a reverse stock split of our common stock.
Interest on the Note is payable quarterly on the last business day of each calendar quarter and is payable at the election of the Company in cash or in kind by increasing the outstanding principal amount of the Note by the amount of interest payable on such interest payment date.
Interest on the Note is due quarterly on the last business day of each calendar quarter following the issuance of the Note and we have elected to pay interest in kind by increasing the outstanding principal amount of the Note by the amount of interest payable on such interest payment date.
Club and Pass Subscriptions are available through monthly, semi-annual, annual, and multi-year contracts. The majority of our Subscriptions are annual or multi-year contracts. Subscription revenue is comprised of enrollment fees and recurring dues, net of discounts and travel incentives provided to members. We typically bill upfront for Club and Pass Subscriptions and subscription payments are non-refundable.
Club and Pass Subscriptions are available through monthly, semi-annual, annual, and multi-year contracts. Invited Subscriptions are available through ten-year contracts and were launched in June of 2024. The majority of our Subscriptions are annual or multi-year contracts. Subscription revenue is comprised of initiation fees and recurring dues, net of discounts and travel incentives provided to members.
Thus, these non-GAAP financial measures should be considered in addition to, and not as a substitute for or superior to, measures of financial performance prepared in accordance with GAAP and should not be considered as an alternative to any measures derived in accordance with GAAP. 39 Table of Contents We provide a reconciliation of Adjusted Net Loss, Adjusted EBITDA, Adjusted EBTIDA Margin and Free Cash Flow to their respective related GAAP financial measures.
Thus, these non-GAAP financial measures should be considered in addition to, and not as a substitute for or superior to, measures of 41 Table of Contents financial performance prepared in accordance with GAAP and should not be considered as an alternative to any measures derived in accordance with GAAP.
A portion of travel revenue comes from customers who do not have Subscriptions; these customers include IFG and IFB customers as well as individuals who receive trial subscriptions under promotions with partners, such as Exclusive Resorts. We also earn revenue from Inspirato Only experiences and Bespoke trips.
A portion of travel revenue comes from customers who do not have paid Subscriptions; these customers receive trial Subscriptions and are primarily from Inspirato for Good and Inspirato for Business or are customers who are under promotions with partners. We also earn revenue from Inspirato Only experiences and Bespoke trips.
Cash flows used in investing activities . Cash used in investing activities decreased from $14.3 million in 2022 to $12.1 million in 2023. The decrease was driven by lower expenditures for property and equipment of $2.5 million partially offset by higher expenditures related to ongoing internal software development projects of $0.4 million. Cash flows provided by financing activities .
The decrease was driven by lower expenditures for property and equipment of $0.8 million and lower expenditures related to ongoing internal software development projects of $5.3 million. Cash flows provided by financing activities .
Our portfolio also includes Inspirato Only experiences, featuring one-of-a-kind luxury safaris, cruises and other experiences with Inspirato-only member lists along with Bespoke trips, which offer custom-designed “bucket list” itineraries.
Our portfolio also includes Inspirato Only experiences, which are curated, one-of-a-kind member-only experiences such as luxury safaris, cruises and other experiences, as well as Bespoke trips, which offer individualized, custom-designed “bucket list” itineraries based on the exact specifications of the member.
If our calculated fair value of our note differs materially from the actual fair value, the Company could have a materially different fair value of our Note on our Consolidated Balance Sheets with an equal offset against (gain) loss on fair value instruments within the Company’s Consolidated Statements of Operations for the year ended December 31, 2023. ​ 42 Table of Contents Incremental Borrowing Rate On a quarterly basis we calculate our incremental borrowing rate (“IBR”) as none of our leases provide an implicit rate of return.
If our calculated fair value of our Note differs materially from the actual fair value, the Company could have a materially different fair value of our Note on our Consolidated Balance Sheets with an equal offset against (gain) loss on fair value instruments within the Consolidated Statements of Operations and Comprehensive Loss for the year ended December 31, 2024.
Total revenue decreased $16.4 million from $345.5 million for the year ended December 31, 2022 to $329.1 million for the year ended December 31, 2023, a decrease of 5%.
Total revenue decreased $49.2 million from $329.1 million for the year ended December 31, 2023 to $279.9 million for the year ended December 31, 2024, a decrease of 15%.
Our impairment calculations, when utilized, contain uncertainties because they require management to make assumptions and to apply judgment to estimate future cash flows and asset fair values.
There were no impairments of the Company's ROU assets during the year ended December 31, 2024. Our impairment calculations, when utilized, contain uncertainties because they require management to make assumptions and to apply judgment to estimate future cash flows and asset fair values.
The Note is currently convertible at a conversion price of $30 per share, subject to customary anti-dilution adjustments upon certain events, including any dividend of Company securities or other property, stock split, stock combination, reclassification, consolidation, merger or a sale of all or substantially all of the Company’s assets.
The current conversion price of the Note is $30 per share, which has been adjusted for the September 26, 2023 reverse stock split, and continues to be subject to customary adjustments upon additional certain extraordinary events, including any dividend of Company securities or other property, stock split, stock combination, reclassification, consolidation, merger or a sale of all or substantially all of our assets.
We conducted a 12% workforce reduction in January of 2023 and a further 6% workforce reduction in July of 2023 in order to further manage costs. Macroeconomic and Geopolitical Conditions The travel industry is affected by economic cycles and trends. Travel is typically discretionary and may be affected by negative trends in the economy.
For further discussion, see Liquidity and Capital Resources — Overview below. Further, during the year ended December 31, 2023, we conducted a 12% workforce reduction in January of 2023 and a 6% workforce reduction in July of 2023 in order to manage costs. Macroeconomic and Geopolitical Conditions The travel industry is affected by economic cycles and trends.
The Note will mature on September 29, 2028, subject to earlier conversion, redemption or repurchase. Our revolving credit facility had no amounts drawn as of December 31, 2022. The Company was not in compliance with the covenants under the facility at December 31, 2022 and had not been in compliance since May of 2022.
The Note will mature on September 29, 2028, subject to earlier conversion, redemption or repurchase. In October 2020, we obtained a revolving credit facility. The revolving credit facility had no amounts drawn as of December 31, 2022 and we terminated the facility in March of 2023.
Our subscription agreements typically auto-renew after the initial term. Our agreements are generally cancellable by providing 30 days’ notice. Amounts that have been billed are initially recorded as deferred revenue until the revenue is recognized. Revenue is recognized ratably over the related contractual term, generally beginning on the date that our platform is made available to a member.
We typically bill upfront for Subscriptions and Subscription payments are non-refundable. Our Subscription agreements typically auto-renew after the initial term. Our agreements are generally cancellable by providing 30 days’ notice. Amounts that have been billed are initially recorded as deferred revenue until the revenue is recognized.
Adverse macroeconomic and geopolitical conditions have impacted our business and may impact us in future periods.
Travel is typically discretionary and may be affected by negative trends in the economy. Adverse macroeconomic and geopolitical conditions have impacted our business and may impact us in future periods.
Our subscription revenue and operating results are impacted by our ability to attract and maintain members including through our Rewards program. Average Daily Rates and Total Occupancy Average daily rate (“ADR”) is defined as the total paid travel revenue, divided by total paid nights in leased residences or hotel rooms and suites. ADR does not include Pass nights utilized.
Average Daily Rates and Total Occupancy Average daily rate (“ADR”) is defined as the total paid travel revenue, divided by total paid nights in leased residences or hotel rooms and suites. ADR does not include Pass nights utilized. Occupancy is defined as all paid, Pass and other at-risk properties divided by the total number of at-risk nights available.
Cost of revenue increased $5.5 from $228.4 million for the year ended December 31, 2022 to $233.9 million for the year ended December 31, 2023, an increase of 2%.
Cost of revenue decreased $43.4 million from $233.9 million for the year ended December 31, 2023 to $190.5 million for the year ended December 31, 2024 , a decrease of 19% .
Technology and development expenses decreased $2.9 million from $14.2 million for the year ended December 31, 2022 to $11.3 million for the year ended December 31, 2023, a decrease of 20%, primarily due to a decrease for salaries of $1.6 million as a result of the reductions in workforce during 2023.
Technology and development . Technology and development expenses decreased $3.9 million from $11.3 million for the year ended December 31, 2023 to $7.4 million for the year ended December 31, 2024 , a decrease of 35% , primarily due to the reductions in force that took place during 2023 and in August of 2024. Depreciation and amortization .
Sales and marketing expenses decreased $6.5 million from $39.4 million for the year ended December 31, 2022 to $32.9 million for the year ended December 31, 2023, a decrease of 16%, primarily due to reduced spending on marketing of $8.3 million as part of our cost savings initiatives.
Sales and marketing expenses decreased $2.5 million from $32.9 million for the year ended December 31, 2023 to $30.4 million for the year ended December 31, 2024 , a decrease of 8%.
Disaggregated revenue for the years ended December 31, 2022 and 2023 is as follows (in thousands, other than percentages): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Percent ​ ​ ​ ​ ​ ​ ​ ​ ​ Amount of ​ change ​ ​ ​ Year ended December 31, ​ increase ​ favorable ​ ​ ​ 2022 2023 (decrease) (unfavorable) ​ Travel ​ $ 198,925 ​ $ 190,271 ​ $ (8,654) ​ (4) % Subscription ​ ​ 145,651 ​ ​ 137,606 ​ ​ (8,045) ​ (6) % Rewards and other revenue ​ ​ 954 ​ ​ 1,223 ​ ​ 269 ​ 28 % Total ​ $ 345,530 ​ $ 329,100 ​ $ (16,430) ​ (5) % ​ ​ ​ 35 Table of Contents Travel revenue decreased by $8.7 million from $198.9 million for the year ended December 31, 2022 to $190.3 million for the year ended December 31, 2023, a decrease of 4%, primarily as a result of a 3% decrease in paid nights delivered resulting in a $6.2 million decrease to travel revenue as well as a 1% decrease in the ADR recognized for those paid nights resulting in a $2.5 million decrease to travel revenue.
Disaggregated revenue for the years ended December 31, 2024 and 2023 is as follows (in thousands, other than percentages): Year ended December 31, Amount of increase (decrease) Percent change favorable (unfavorable) 2024 2023 Travel $ 165,822 $ 190,271 $ (24,449) (13) % Subscription 101,171 137,606 (36,435) (26) % Rewards and other revenue 12,862 1,223 11,639 952% Total $ 279,855 $ 329,100 $ (49,245) (15) % 36 Table of Contents Travel revenue decreased by $24.4 million from $190.3 million for the year ended December 31, 2023 to $165.8 million for the year ended December 31, 2024 , a decrease of 13% , primarily as a result of a 12% decrease in paid nights delivered due to fewer members resulting in a decrease of $22.5 million .
Warrant fair value loss was $1.7 million for the year ended December 31, 2022 and a $0.8 million gain for the year ended December 31, 2023, a change of $2.5 million.
Public Warrant fair value gains and losses decreased from a gain of $0.8 million for the year ended December 31, 2023 to a loss of less than $0.1 million for the year ended December 31, 2024, a decrease of $0.8 million.
Interest expense, net increased $0.9 from $0.2 million for the year ended December 31, 2022 to $1.1 million for the year ended December 31, 2023, primarily due to debt issuance costs and interest expense of $2.4 million incurred in relation to the Note.
We incurred interest expense on the Note of $2.1 million during the year ended December 31, 2024 as compared to debt issuance costs and interest expense of $2.4 million during the year ended December 31, 2023 .
Gains and losses on fair value instruments changed from losses of $1.7 million for the year ended December 31, 2022 to gains of $2.4 million for the year ended December 31, 2023, a net change of $4.1 million.
Gain on fair value instruments increased $1.2 million from $2.4 million for the year ended December 31, 2023 to $3.6 million for the year ended December 31, 2024.
The following table represents a reconciliation of our net loss and comprehensive loss, the closest GAAP measure, to Adjusted EBITDA (in thousands, other than percentages): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, ​ ​ ​ ​ ​ ​ 2022 ​ 2023 ​ Net loss and comprehensive loss ​ ​ ​ ​ $ (51,081) ​ $ (93,859) ​ Interest, net ​ ​ ​ ​ ​ 188 ​ ​ 1,133 ​ Income tax expense ​ ​ ​ ​ ​ 799 ​ ​ 721 ​ Depreciation and amortization ​ ​ ​ ​ ​ 5,436 ​ ​ 10,553 ​ Equity-based compensation ​ ​ ​ ​ ​ 8,802 ​ ​ 13,652 ​ (Gain) loss on fair value instruments ​ ​ ​ ​ ​ 1,696 ​ ​ (2,368) ​ Asset impairments ​ ​ ​ ​ ​ 925 ​ ​ 40,844 ​ Public company readiness costs ​ ​ ​ ​ ​ 1,092 ​ ​ — ​ Adjusted EBITDA ​ ​ ​ ​ $ (32,143) ​ $ (29,324) ​ Adjusted EBITDA Margin (1) ​ ​ ​ ​ ​ (9.3) % ​ (8.9) % (1) We define Adjusted EBITDA Margin as Adjusted EBITDA as a percentage of total revenue for the same period.
The following table represents a reconciliation of our net loss and comprehensive loss, the closest GAAP measure, to Adjusted EBITDA (in thousands, other than percentages): Year ended December 31, 2024 2023 Net loss and comprehensive loss $ (8,804) $ (93,859) Interest, net 1,615 1,133 Income tax expense 595 721 Depreciation and amortization (1) 11,277 10,553 Equity-based compensation (2) 14,048 13,652 (Gain) on fair value instruments (3,583) (2,368) Restructuring charges 6,418 — Other non-recurring professional fees (3) 1,828 — (Gain) on lease termination and loss on asset impairments (29,895) 40,844 Adjusted EBITDA $ (6,501) $ (29,324) Adjusted EBITDA Margin (4) (2.3) % (8.9) % _______________________________________________ (1) Depreciation and amortization is included within cost of revenue, general and administrative and depreciation and amortization within the Consolidated Statements of Operations and Comprehensive Loss.
Unless otherwise indicated or the context otherwise requires, references in this Management’s Discussion and Analysis of Financial Condition and Results of Operations section to “Inspirato,” “we,” “us,” “our” and other similar terms refer to Inspirato LLC prior to the Business Combination and to Inspirato Incorporated and its consolidated subsidiaries after giving effect to the Business Combination. ​ ​ 30 Table of Contents OVERVIEW Inspirato Incorporated and its subsidiaries (collectively the “Company”, “Inspirato”, “we”, or “our”) is a subscription-based luxury travel company that provides exclusive access to a managed and controlled portfolio of curated vacation options, delivered through an innovative model designed to ensure the service, certainty and value that discerning customers demand.
Unless otherwise indicated or the context otherwise requires, references in this Management’s Discussion and Analysis of Financial Condition and Results of Operations section to “Inspirato,” “we,” “us,” “our” and other similar terms refer to Inspirato LLC prior to the Business Combination and to Inspirato Incorporated and its consolidated subsidiaries after giving effect to the Business Combination.
Intangible and Tangible Asset Impairment Assessment Goodwill is not amortized, but rather is assessed annually for impairment in the fourth quarter and when events and circumstances indicate that the fair value of a reporting unit with goodwill has been reduced below its carrying value. We have determined that we have one reporting unit.
For the year ended December 31, 2024, holding other factors constant, a 10% change in our estimated future spend for each membe r would have resulted in a change to Rewards revenue of approximately $0.1 million, or a 0.03% percent change in revenue. 43 Table of Contents Intangible and Tangible Asset Impairment Assessment Goodwill is not amortized, but rather is assessed annually for impairment in the fourth quarter and when events and circumstances indicate that the fair value of a reporting unit with goodwill has been reduced below its carrying value.
We believe our cash and cash equivalents on hand will be sufficient to meet our projected working capital and capital expenditure requirements for a period of at least the next twelve months. Our principal sources of liquidity have historically consisted of cash flow from financing activities as well as operating activities, primarily from Subscription and travel revenue.
Together, these strategic initiatives and the new capital transactions we have completed support our belief that our cash and cash equivalents on hand will be sufficient to meet our projected working capital and capital expenditure requirements for a period of at least the next twelve months.
The decrease was primarily due to the proceeds received as a result of the one-time reverse recapitalization during 2022 and was partially offset by the proceeds from the Note in 2023. ​ 38 Table of Contents Use of Cash and Contractual Obligations We expect to meet our cash requirements for the next twelve months through use of our available cash and cash equivalents and cash flows from operating activities.
Use of Cash and Contractual Obligations We expect to meet our cash requirements for the next twelve months through use of our available cash and cash equivalents and cash flows from operating activities.
The Company’s IBR is utilized as the discount rate when calculating our initial lease liabilities, modifications to our lease liabilities and complementary right-of-use assets leases greater than one year. The IBR is calculated for leases based on their term length and risk profile.
Incremental Borrowing Rate On a quarterly basis we calculate our Incremental Borrowing Rates (“IBRs”) as none of our leases provide an implicit rate of return. The Company’s IBRs are utilized as the discount rate when calculating our initial lease liabilities, modifications to our lease liabilities and complementary right-of-use assets leases greater than one year.
General and administrative expenses increased $6.3 million from $65.8 million for the year ended December 31, 2022 to $72.1 million for the year ended December 31, 2023, an increase of 10%.
General and administrative expenses decreased $12.9 million from $72.1 million for the year ended December 31, 2023 to $59.2 million for the year ended December 31, 2024 , a decrease of 18% .
Income tax expense decreased $0.1 million from $0.8 million for the year ended December 31, 2022 to $0.7 million for the year ended December 31, 2023, primarily due to reduced foreign income tax expense of $0.1 million for the year ended December 31, 2023.
Other (income) expense, net changed from other expense, net of $0.5 million for the year ended December 31, 2023 to other income, net of $0.2 million for the year ended December 31, 2024.
Immediately after the Reverse Stock Split, each stockholder's percentage ownership interest in the Company and proportional voting power remained unchanged, except for minor changes resulting from the treatment of fractional shares. 31 Table of Contents As of the Effective Time, proportional adjustments were also made to the number of shares of Class A Common Stock issuable pursuant to the Company’s outstanding warrants, Note, and equity awards, as well as the number of shares authorized and reserved for issuance pursuant to the Company’s equity incentive and employee stock purchase plans.
The reverse stock split became effective as of October 16, 2023 and immediately after the reverse stock split, each stockholder's percentage ownership interest in us and proportional voting power remained unchanged, except for minor changes resulting from the treatment of fractional shares.
Occupancy is defined as all paid, Pass , IFG , IFB , employee and complimentary nights in all at-risk properties divided by the total number of at-risk nights available. Net-rate hotel partners are excluded from Hotel Occupancy as these are dependent on the hotel having capacity for Inspirato requests.
Net-rate hotel partners are excluded from Hotel Occupancy as these are dependent on the hotel having capacity for Inspirato requests.
Depreciation and amortization expenses increased $0.6 million from $3.2 million for the year ended December 31, 2022 to $3.8 million for the year ended December 31, 2023, an increase of 18%, due to continued investment in the upkeep of our lease portfolio. Interest, net.
Depreciation and amortization expenses increased $0.3 million from $3.8 million for the year ended December 31, 2023 to $4.0 million for the year ended December 31, 2024 , an increase of 7% , primarily due to an increase in amortization of purchased software of $1.4 million and an increase in depreciation of tenant improvement allowance of $0.3 million, partially offset by a decrease in general depreciation and amortization of $1.3 million .
Our future commitments consist of obligations under the Note (including principal and coupon interest) and operating leases, primarily for vacation properties and our corporate headquarters. The leases may require us to pay taxes, insurance, utilities and maintenance costs.
See Note 8 – Debt in our Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K. • Our operating leases liabilities, primarily for vacation properties, and our corporate headquarters. The leases may require us to pay taxes, insurance, utilities and maintenance costs.
Rewards and other revenue increased by $0.3 million. The increase was primarily the result of estimated usage and breakage related to Rewards , our member loyalty program, which was launched in August of 2023. Cost of revenue.
The increase was primarily the result of estimated usage related to our Rewards program.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

4 edited+4 added−1 removed1 unchanged
Biggest changeA hypothetical 10% increase or decrease in the value of the U.S. dollar relative to the Mexican Peso and Euro would have a $2.7 million impact to our Consolidated Financial Statements for the year ended December 31, 2023. ​ ​ ​ ​ ​ 43 Table of Contents
Biggest changeA hypothetical 10% increase or decrease in the value of the U.S. dollar relative to the Mexican Peso and Euro would have a $2.5 million impact to our Consolidated Financial Statements for the year ended December 31, 2024. 45 Table of Contents Equity Risk We are exposed to risk related to our stock price which can impact our stock based compensation expense as well as our overall market capitalization.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk Our principal market risks are our exposure to interest rates and foreign currency risks. Interest Rate Risk Changes in interest rates affect the interest earned on total cash and cash equivalents as well as interest paid on debt.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk Our principal market risks are our exposure to interest rates, foreign currency risks and equity risk. Interest Rate Risk Changes in interest rates affect the interest earned on total cash and cash equivalents as well as interest paid on debt.
As of December 31, 2023, there was $25.0 million aggregate principal amount of the Note outstanding. We have elected to carry the Note at fair value. The fair value of the Note changes when the market price of our stock fluctuates or interest rates change.
As of December 31, 2024, there was $27.6 million aggregate principal amount of the Note outstanding. We have elected to carry the Note at fair value. The fair value of the Note changes when the market price of our stock fluctuates or interest rates change.
In the year ended December 31, 2023, our operating expenditures denominated in foreign currencies were approximately $27.1 million, primarily in Mexican Pesos and Euros.
In the year ended December 31, 2024, our operating expenditures denominated in foreign currencies were approximately $25.2 million, primarily in Mexican Pesos and Euros.
Removed
We have not been exposed to, nor anticipate exposure to, material risks due to changes in interest rates. A hypothetical 100 basis point increase or decrease in interest rates would not have had a material impact on our Consolidated Financial Statements as of December 31, 2023. Our revolving credit facility was terminated in March of 2023.
Added
Additionally, interest rates are an input into the binomial lattice we use to calculate the fair vale of debt. A hypothetical 10% increase or decrease in interest rates would not have a material impact on interest expense or interest income earned during the year ended December 31, 2024.
Added
A hypothetical 10% increase or decrease in interest rates would have an $1.1 million impact on the carrying value of debt along with a complementary impact to (gain) loss on fair value instruments within the Consolidated Statements of Operations and Comprehensive Loss.
Added
The fair market value of our stock price could increase or decrease substantially in the near term and could have a material impact to our Consolidated Balance Sheets and Consolidated Statements of Operations and Comprehensive Loss with respect to future stock-based compensation costs, specifically related to the performance based units which vest upon our stock price being above $15/share, as well as any other equity based transactions.
Added
A hypothetical 10% increase or decrease in our stock price would not have an impact on our Consolidated Financial Statements for the year ended December 31, 2024. 46 Table of Contents

Other ISPOW 10-K year-over-year comparisons