LuxUrban Hotels Responds to Inaccurate and Misleading Short Seller Report

LuxUrban Hotels Inc. (“LuxUrban” or the “Company”) (Nasdaq: LUXH), which utilizes an asset-light business model to lease entire hotels on a long-term basis and rent out hotel rooms in these properties in key major metropolitan cities, today provided the following response to allegations included in a short sale report issued on January 17, 2024. The author of this report has disclosed an economic incentive to negatively influence the Company’s stock price.

In the Company’s estimation, the so-called report reflects a fundamental lack of understanding of its operations and industry, contains unsubstantiated claims from anonymous sources, regurgitates dated and previously disclosed information that the Company believes is not germane to the current state of its business and outlook, and relies heavily on speculation and mischaracterizations.

The Company believes that the publication of this report is an attempt by the short seller to create a fog of misinformation that masks the value-creating initiatives well underway at LuxUrban, and to manipulate the Company’s stock price to financially benefit the short seller at the expense of LuxUrban’s stakeholders. The report itself states that the author and other parties have a short position in the Company’s securities and would realize “significant gains” in the event that the price of the Company’s securities decline.

While there are multiple inaccuracies contained in the report, the Company offers the below to address what it believes to be among the most glaring:

• As previously announced, the Company is scheduled to begin welcoming guests on or before January 30, 2024 at The Royalton by LuxUrban, Trademark Collection^® by Wyndham and has a set date with the property’s ownership to be delivered possession of the asset.
• The Company prepares and files its periodic and current reports with the Securities and Exchange Commission (“SEC”) in compliance with applicable law. Consistent with the Company’s prior disclosures, all litigation involving the Company as of the date of this release is considered by the Company to be ordinary course and immaterial.
• All litigation risks & liabilities have been accrued for in the Company’s financial statements and are primarily related to the Company’s legacy apartment rental business.
• The Company takes particular exception to the libelous, gratuitous commentary included in the short seller’s report with respect to Grassi & Co., CPAs, P.C., the 56^th-largest accounting firm in the United States¹ and the Company’s independent outside auditor.
• The Company believes that it has very good working relationships with its landlords, as evidenced by additional deal flow originating from these landlords and multiple hotel transactions with the same landlords.
• Consistent with industry practice, and as all sophisticated investors in the hospitality space are aware, the Company’s calculation of RevPAR includes a variety of components in addition to posted rental revenue, such as ancillary revenue, fees, and expenses.

The Company is transparent and consistent in discussing its growth and operating strategies and remains optimistic about its prospects and the strength of its evolving business profile. The Company has adopted a conservative posture with respect to guidance, reflecting the inherent complexity of its operations. The Company believes that this approach is responsible and in the best interests of its shareholders. To that end, the Company has reiterated its Net Rental Revenue and EBITDA guidance for full year 2023 and full year 2024 as well as its forecasts for hotel rooms under long-term Master Lease Agreement (MLA). These expected increases are being driven by a variety of factors, including the financial, brand and operating support provided by Wyndham Hotels & Resorts that allows LuxUrban to, among other things, pursue larger (200+ room) hotel properties.

The Company will continue to assess this report, intends to evaluate its legal remedies to any inaccurate misinformation disseminated by third parties, and appreciates the continued support of its stakeholders.

LuxUrban Hotels Inc.

LuxUrban Hotels Inc. utilizes an asset light business model to lease entire hotels on a long-term basis and rent out hotel rooms in the properties it leases to business and vacation travelers through the Company’s online portal and third-party sales and distribution channels. The Company currently manages a portfolio of hotel rooms in New York, Washington D.C., Miami Beach, New Orleans and Los Angeles. As of November 30, 2023 the Company had 2,032 hotel rooms under lease, including properties not yet available for rent, and seeks to rapidly build its portfolio on favorable economics through the acquisition of additional accommodations that were dislocated or are underutilized as a result of the pandemic and current economic conditions. In late 2021, the Company commenced the process of winding down its legacy business of leasing and re-leasing multifamily residential units, as it pivoted toward its new strategy of leasing hotels. This transition has been substantially completed.

Forward Looking Statements

This press release contains certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 (set forth in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended). The statements contained in this release that are not purely historical are forward-looking statements. Forward-looking statements include, but are not limited to, statements regarding expectations, hopes, beliefs, intentions or strategies regarding the future. In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. Generally, the words “anticipates,” “believes,” “continues,” “could,” “estimates,” “expects,” “intends,” “may,” “might,” “plans,” “possible,” “potential,” “predicts,” “projects,” “should,” “would” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. Forward-looking statements in this release may include, for example, statements with respect to the success of the Company’s collaboration with Wyndham Hotels & Resorts, scheduled property openings, expected closing of noted lease transactions, the Company’s ability to continue closing on additional leases for properties in the Company’s pipeline, as well the Company’s anticipated ability to commercialize efficiently and profitably the properties it leases and will lease in the future. The forward-looking statements contained in this release are based on current expectations and belief concerning future developments and their potential effect on the Company. There can be no assurance that future developments will be those that have been anticipated. These forward-looking statements are subject to a number of risks, uncertainties (some of which are beyond our control) or other assumptions that may cause actual results of performance to be materially different from those expressed or implied by these forward-looking statements, including those set forth under the caption “Risk Factors” in our public filings with the SEC, including in Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2022, and any updates to those factors as set forth in subsequent Quarterly Reports on Form 10-Q or other public filings with the SEC. The forward-looking information and forward-looking statements contained in this press release are made as of the date of this press release, and the Company does not undertake to update any forward-looking information and/or forward-looking statements that are contained or referenced herein, except in accordance with applicable securities laws.

¹ According to Insider Public Accounting

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