Faced with lower-than-expected occupancy and sluggish subscription sales, luxury travel brand Inspirato lowered its 2022 financial outlook and relocated a third of its sales and marketing staff to new or expanded segments it focuses on, namely business travel and philanthropy.
This all happened when the Denver, Colorado, company had to review its balance sheet and income statements for the first and second quarters due to what it admitted were weak financial controls. The company said during its third-quarter earnings call on Tuesday that the restatements had no material impact on Inspirato’s business or cash flow. A late financial return had led to a Nasdaq non-compliance notice in November.
Inspirato lowered its full-year 2022 revenue guidance from $350 million to $360 million from $340 million to $340 million due to lower-than-expected fourth-quarter occupancy and slowed sales of its core product, Pass subscriptions.
The company also expects a higher full-year 2022 loss on an adjusted earnings basis of $35 million compared to its previous guidance of $25 million to $15 million. Inspirato linked the higher forecast loss to “lower-than-expected travel demand during the busy holiday season, as well as the slower pace of new Pass subscription sales and higher-than-expected operating expenses,” according to its third-quarter earnings announcement.
“People are past revenge travels,” co-founder and CEO Brent Handler told financial analysts during Inspiration’s third-quarter earnings call. “There is a bit of travel fatigue there. For example, last year there was some softness in our domestic portfolio in the summer as everyone wanted to be in Europe. We expect the house to come back this year and a lot of people going to Europe and the Inspirato members might be out of their system.”
Inspirato is trying to reinvent itself a bit by expanding its extended stay and corporate travel offerings, as well as developing a new product that allows nonprofits to purchase travel packages for donors and others. It’s called Inspiration for Good.
The company argued that some of these new initiatives would reduce customer acquisition costs.
“So we’re really trying to build more of an ecosystem and a platform where luxury travel is at the center, and we can [have] this philanthropy, individual pay-as-you-go, have chosen different ways to consume our fantastic portfolio, all of which are a way to see us make the TAM (total addressable market) bigger,” Handler said.
He said that in 2023 Inspirato will focus on improving its cost structure and optimizing its portfolio rather than growing it.
Inspirato trimmed its net loss to $7.3 million in the third quarter from a net loss of $9.1 million a year earlier. Sales increased 44 percent to $93 million.
In early afternoon trading on Tuesday, shares of Inspirato were trading at about $1.20, down more than 10 percent from Monday’s closing price.
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