Receivers appointed to sell Selina Australia’s ‘flashpacker’ hotels

“With a lack of clarity on the various paths forward for Selina Australia and an absence of support from the parent company or its administrator, Dorado believes that appointing receivers and administrators is essential to protect our investors’ interests,” said Tim Moore, founding director of Dorado.

“Dorado remains open to providing support and oversight to an orderly and transparent process during the receivership and administration.”

While the global operations of Selina have floundered as a slower-than-expected recovery from the pandemic hit its global cash flows, its Australian business has proved a profitable outlier.

Last year, Selina Australia’s four hotels generating turnover of $14 million and pre-tax profits of about $3 million as it benefited from demand from budget-conscious digital nomads, backpackers and domestic travellers.

Funds managed by Dorado subsidiaries provided Selina Australia with a facility for its local operations. This facility was guaranteed by its now collapsed Nasdaq-listed parent company, Selina Hospitality.

In a statement, Dorado said Selina Hospitality administrator FTI Consulting did not have funding to provide ongoing support to its operating subsidiaries, including Selina Australia.

While receivers seek out potential buyers for the business, the Australian hotels – which are all leased – will continue to be operated by administrators and local staff.

Potential buyers of Selina Australia could include major offshore accommodation operators, without a presence in the country, but keen on a foothold in what is a potential high-growth category – trendy, budget accommodation targeted at Millennials.

The Selina hotels might also appeal to Australia and New Zealand operators. These include Drifter Hospitality Group, which operates backpacker lodges in New Zealand and will soon open a property in Byron Bay, according to its website.

There might also be interest from investors who backed the Selina “flashpacker” business model, which is based around renovated character-filled buildings and offering amenities such as co-working hubs and cooking classes for digital nomads and Millennials.

London-based Selina had a market cap of $US1.2 billion ($1.8 billion) when it listed on the Nasdaq in 2022. But it is now worth just US$547,000 ($829,000) after losing 99 per cent of its value.

Problems for Selina stem from its inability to generate sufficient cash flow to meet its debt obligations, resulting in a default.

In an added twist to the Australian business, on July 1, Selina sold a 42.9 per cent stake in Selina Australia to Osprey International (an affiliate of education provider Global University Systems) for about $5.3 million.