Selina Collapses in Liquidity Crisis, Seeks Buyers

22.07.2024 - 17:16 / skift.com / Sean Oneill / Alan Woinski

Selina Hospitality, a hotel and experiences brand focused on youth travelers, said Monday it “no longer has any reasonable prospects of avoiding an insolvency.”

The news, released in a regulatory filing, follows a severe liquidity crisis for the once-promising hotel, hostel, and co-working space operator.

Selina’s board said administrators will explore a potential sale of some or all of the group’s operating subsidiaries and assets, contingent on securing the necessary funding.

The board effectively ceded control of the company’s affairs, business, and property to the administrators at FTI Consulting.

While the parent company is insolvent, the day-to-day operations of its subsidiaries remain under the control of their respective directors and management teams.

This development represents a significant fall from grace for Selina, which had positioned itself as a pioneer in the “digital nomad” hospitality sector, blending hotel accommodations with co-working spaces in trendy locations worldwide. It had about 29,000 “bedspaces” at its hostels and hotels worldwide as of earlier this year.

It also represents a potential failed bet by Global University Systems (G.U.S), which had invested $50 million in the company in the past year to stabilize it. G.U.S. is a profitable private company, generating about $900 million a year.

The final straw was when the company couldn’t come up with about a half-million dollar interest payment to a unit of the Inter-American Development Bank.

Selina went public in a special purpose acquisition company, or SPAC, deal in October 2022. Its merger with a blank check company enabled it to go public, but it failed to deliver enough capital to help Selina fund its future operations.

“When stock market historians look back on the past few years and the whole SPAC craze, they definitely have to include Selina in the biggest failure list,” said Alan Woinski, founder and editor of Skift’s Daily Lodging Report. 

Investors in the company that proposed merging with Selina sought redemptions for 96% of their money rather than taking shares in Selina. Since then, Selina has remained unprofitable and seen its capital reserves dwindle.

“It began trading on October 27, 2022, with a range of $9.75 to $49.49,” Woinski said. “By November 3, 2022, it was trading at $4.50. The rest is history for what is clearly the biggest disaster ever for a lodging-related company.”

The stock was down 25% Monday to $0.30. Expect Selina to be delisted from the Nasdaq Stock Exchange because of its inability to regain compliance with listing requirements.