Inspirato's Problems Run Deep Despite Blame on Macroeconomic Issues

25.08.2023 - 14:17 / skift.com / Pranavi Agarwal

Inspirato, the luxury hospitality subscription brand, has cited “ongoing macroeconomic uncertainty” as it made workforce cuts and scaled back its 2022 financial outlook, yet this is at odds with the bullish commentary from other travel companies, especially as regions like Asia reopen for international travel.

This suggests deeper problems at Inspirato, a company which went public in February 2022 via a special purpose acquisition company merger, and saw its stock price soar from $10 to $55 in a week. This induced a short squeeze, and Inspirato is now trading at just $1.30 per share, with the stock down more than 70 percent in the last six months. 

Inspirato has not been immune to investor fears of a looming recession, as many hospitality and travel companies saw their stock prices impacted in 2022. While major hotels and online travel agencies such as Hilton, Hyatt and Expedia are seeing a stock rally in the last few weeks, up 10-30 percent year to date on the back of easing inflation rates and strong demand, Inspirato has made cuts to its workforce and brought down its  2022 revenue and EBITDA guidance. 

While Inspirato cites this on “ongoing macroeconomic uncertainty,” other travel companies are seeing the luxury segment, particularly hotel chains, leading the recovery. This suggests Inspirato-specific problems.

Founded in 2010, Inspirato is currently unprofitable. It aims to generate $340 million in revenue in 2022, with an adjusted EBITDA loss of $35 million. This is a downgrade of guidance that management gave earlier in the year, namely $350-$360 million in revenue, and an EBITDA loss in the $25 million to $15 million range.

Notably, management’s guidance during second quarter earnings in August included the statement that “the Company anticipates generating positive adjusted EBITDA for the full-year 2023.” However, the company excluded that profitability measure from its third quarter earnings report in December, although co-founder and CEO Brent Handler said during the conference call that the company’s goal is to revert “to positive adjusted EBITDA and (we) expect to achieve greater than $400 million of revenue for full year 2023.”

Given the lows of where the stock is trading and the recent slashing of 12 percent of its workforce, Inspirato management is clearly taking desperate actions to maintain costs and prevent a further downgrade to EBITDA consensus and share price. 

We also note that Inspirato is currently overvalued on a one-year forward Enterprise Value/EBITDA basis. Inspirato is trading at more than triple the multiple of its online travel peers. 

Inspirato interestingly is blaming macroeconomic uncertainty as the key reason for streamling its workforce despite the CEO saying