Inspirato Incorporated

Thank you for standing by. Welcome to the Inspirato Third Quarter 2022 Earnings Call. At this time, all participants are in a listen-only mode. After the presentation, there will be a question and answer session. To ask a question during the session, you'll need to press star 1 1 on your telephone. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Kyle Sork, Investor Relations. Please go ahead.

Thank you, and good morning. On today's call, we have co-founder and CEO Brent Handler and CFO Webb Naber. Yesterday afternoon, we issued our press release announcing our third quarter results and posted an updated investor presentation, both of which are available on the investor relations page of our website at investor.inspirato.com. Before we begin our formal remarks, we remind everyone that some of today's comments are forward-looking statements. including but not limited to our expectations of future operating results and financial position, guidance and growth prospects, our anticipated future expenses and investments, business strategy and plans, and market growth, market positions, and potential market opportunities. These statements are based on assumptions, and we assume no obligation to update them. Actual results could differ materially. We refer you to our SEC filings for a more detailed discussion of additional risks. In addition, during the call, management will discuss non-GAAP measures, which are useful in evaluating the company's operating performance. These measures should not be considered in isolation or as a substitute for our financial results prepared in accordance with GAAP. Reconciliations of these measures to the most directly comparable GAAP measures are included in our earnings release. With that, I'll turn the call over to our CEO, Brent Handler.

Thank you, Kyle, and good morning, everyone. On our previous calls, we have highlighted a number of new company records and expressed confidence in the ability to execute our short-term and long-term business plan thanks to a resilient and growing subscription base of high net worth travel enthusiasts. Today, in spite of rising interest rates and macro uncertainty, we continue to establish new company milestones. We are less than a month away from completing a year That will see approximately 45% revenue growth, and we are extremely confident in our multi-year outlook. We entered 2022 with several key objectives. First and foremost was an emphasis on growing the supply of our residents and hotels to meet the demands of our growing subscriber base. Throughout the year, we have successfully demonstrated that this often identified key risk is very much an opportunity for Inspirato. As of September 30th, we had 726 controlled accommodations, an increase of nearly 50% year over year, and 35% year to date. Importantly, we have strategically entered key markets in an effort to not only better serve our existing subscribers, but also to grow our presence for potential new subscribers. Our partnership with Canoe Place Inn in the Hamptons is a perfect example of this approach. We also successfully increased our scale in existing high demand areas such as Kiowa Island, Park City, and Costa Rica. In terms of full year 2022 guidance, we now anticipate revenue of approximately $340 million and an adjusted EBITDA loss of approximately $35 million. These downward revisions are the product of a few contributing factors. First, a reallocation of internal sales and marketing resources to new and expanded target markets, business and philanthropy. Second, lower than anticipated InspiratoPath subscription sales in the fourth quarter. And third, lower than expected fourth quarter total occupancy due to less than anticipated travel demand during the peak festive season. We are keeping a close eye on these trends and believe we have built in the appropriate level of risk into our 2023 guidance. In terms of reallocating internal resources, we believe there are a number of long-term benefits to increasing internal focus on Inspirato for Business and Inspirato for Good, including lower customer acquisition costs, stable and growing recurring revenue, and a strong pipeline of highly qualified prospects for our flagship club and past subscription offerings. We believe these new products will further diversify our revenue streams and significantly expand our universe of potential subscribers. In years past, investment in digital marketing served as the key driver of our subscription growth. Now, with the early success of Inspirata for Business and Inspirata for Good, we have new marketing channels that are actually generating revenue while simultaneously driving lead generation and ultimately new subscriber growth. In other words, we are beginning to be paid for something that has historically cost us money. This combination of increased revenue and reduced expenses as it relates to customer acquisition has the potential to meaningfully improve our LTV to CAC and should accelerate our path to profitability. As far as early results, Inspirata for Good, which was launched just three months ago, is off to a tremendous start. By year end, we expect to have sold more than 500 subscription and trip packages, amounting to $1 million of incremental revenue, only a small portion of which is recognized in 2022, as it is split between subscription revenue over time and travel revenue at the time of trip. Equally important, our new Inspirato for Good subscribers have donated over $1 million to the charities of their choice. Last week, we launched Jaunt Living, a new extended stay offering that we believe will be a unique and differentiated benefit for our members. Our Jaunt Living trip list features extended stays ranging from two weeks to one year and select Inspirado accommodations with each reservation including the personalized service that is hallmark of traveling with Inspirado. As we head into 2023, our primary focus is on leveraging our existing infrastructure and the investments made throughout 2022 to improve our cost structure, both above and below the line. While we are well-positioned to opportunistically grow our supply in 2023, we're more focused on portfolio optimization than portfolio growth. In terms of additional cost savings, we are committed to being thoughtful regarding incremental investments and anticipate our OpEx as a percent of revenue to materially improve over next year. Much of this projected improvement is attributable to the fundamental change in the Inspirato customer acquisition cost equation I just referenced. We are now prioritizing our stated goal of returning to positive adjusted EBITDA and expect to achieve greater than $400 million of revenue for full year 2023. Finally, I want to thank our talented and dedicated team for all of their hard work throughout the course of the year. 2022 has been a year of outstanding growth and change, highlighted by a number of tremendous accomplishments. We look forward to more of the same in 2023. With that, I'll turn the call over to Webb to discuss the quarter in more detail.

Thanks, Brent. I'd like to echo your sentiment of thanks to the employees. There has been a lot of hard work throughout the year aimed at improving existing processes and implementing new ones, all of which has us very well positioned for 2023 and beyond. Since going public earlier this year, we have invested in personnel in our financial and accounting group. The restatements to our prior period balance sheets and income statements had no material impact on the company's results of operations, revenues, or operating cash flows for either of the impacted quarters. We are confident that the newly improved and implemented processes and procedures will ensure more timely, accurate reporting moving forward. Moving to our third quarter results. we once again delivered record-setting results in multiple key aspects of our business, namely revenue, active subscriptions, total nights delivered, and controlled accommodations. Total revenue for the quarter was $93 million, an increase of 44% year-over-year and 11% sequentially. Our subscription revenue of $39 million represents an increase of $53 million compared to the third quarter of 2021 and is primarily driven by the continued adoption of Inspirato Pass, which ended the period up 60% year-over-year at just over 3,800 subscriptions. Pass subscriptions now account for 24% of our total active subscriptions, which ended the quarter at approximately 16,300. This compares to 17% of total active subscriptions just a year ago. Travel revenue for the quarter of $55 million represents a 38% increase from the third quarter of 2021. In terms of the drivers of travel revenue, we achieved 25% year-over-year growth in total nights delivered, a record 51,000 nights, and 18% growth in our residence ADR to approximately $1,800 a night. Over the past year, we've delivered historically strong occupancy levels, albeit off from the peak of all peaks that we experienced in 2021, as well as strong ADR increases. Gross margin for the quarter was 30 million or 32% of revenue compared to 22 million or 35% of revenue in the third quarter of 2021. Similar to last quarter, our gross margin was impacted by the integration of new properties as onboarding, outfitting, staffing, and the time needed to fill the booking calendar typically results in short-term margin compression. As Brent highlighted, we intend to shift our focus to portfolio optimization from portfolio expansion in 2023, and we anticipate delivering improved gross margins over time. This quarter, Total operating expense as a percent of revenue improved to 43% compared to 48% a year ago and 49% in each of the first and second quarters of 2022. Moving forward, we look to leverage our increased scale as well as deliver on a renewed focus on costs to achieve positive adjusted EBITDA in the near term. We had a net loss of $7.3 million and an adjusted EBITDA loss of $6.8 million compared to losses of 9.1 and 4.1 million, respectively, in the third quarter of 2021. Shifting to the balance sheet, we exited the quarter with approximately 84 million of cash on hand. As we highlighted in the press release, we anticipate a year-end cash balance of approximately 80 million with no outstanding debt. Our team is excited for 2023 and ready to accomplish very clear and achievable goals aimed at driving long-term shareholder value.

With that, I'll turn the call over to the moderator for Q&A.

As a reminder, to ask a question, you'll need to press star 1 1 on your telephone. Please stand by while we compile the Q&A roster. Our first question comes from the line of Mike Grondahl with Northland Capital Markets. Your line is now open.

Hey, guys. Thank you. My first question is really just it sounds like you're increasing your focus on Inspirato for business and Inspirato for good. Roughly about what percent of the sales force do you have focused on those two areas?

Thanks, Mike. This is Brent. You know, it's a little bit in flux now as we see exactly how the market adopts to those two relatively new initiatives. Thus far, both of them have been going really well. As you can imagine, Inspirato for Business has a longer sales cycle but larger transactions, and Inspirato for Good has a much shorter sales cycle but smaller transactions. But I think if you put the two together and we think about next year, I would say somewhere in the neighborhood of about a third, roughly, of the total sales force being allocated to those two new initiatives would be kind of a fair estimate. But we're watching them both optimistically as they are kind of outperforming performing our initial expectations, and we've kind of put some conservatism into the plan for next year as we think about what ultimately they will become. As the year progresses and as we understand better ways to acquire those customers and more efficacy in our marketing, I could see those things changing over time.

Got it. Yeah, they sound pretty exciting. And then how are you marketing Jaunt for living kind of the extended stay product I think it could be characterized as?

This is Brent again. Good question. I mean, the great part about having loyal subscribers and people who are paying money to be part of a platform where they're able to travel with the service and certainty of Inspirato is marketing is really nothing because we already have the Jaunt franchise that has worked really well for, you know, some of those have been going, you know, Jaunt has really been around for now about a decade. And so by putting Jaunt Living in the Jaunt family, there is a Wednesday email that gets sent out at 1 o'clock Mountain Time, and Jaunt Living just becomes another version of that kind of members-only way to be able to save. And we're also highly optimistic that Jaunt Living will make a lot of sense and have great appeal for our base. Historically, because inventory has been so tight, we've actually not really allowed other than on very special occasions, an Inspirato member to stay in one of our residences for longer than a couple of weeks. What we've now realized with post-pandemic, still a lot of work from anywhere, and kind of the new normal of how people want to experience the world, particularly with residential accommodations, we have very high expectations for jaunt living, and there's really no incremental cost or incremental marketing or incremental sales. required for that opportunity. It's something that members have been delighted about. The response has been very positive, essentially universally positive. And, you know, it's a little bit of a considered purchase, right? People are going to take some time to think about where might they stay for a couple of months. But we have a team of people that are working with our members, talking to them about the art of the possible for ways that they could experience in our portfolio in kind of an opportunity they've never been able to do before. One other important part about Jaunt Living is it also opens up a whole new avenue for us inventory there's a lot of inventory that is available throughout the world where there are short-term rental restrictions so you're not even allowed to operate in certain jurisdictions without for example a 30 day length of stay and jaunt living provides us an opportunity now to be able to participate in those markets where otherwise for example we may not have been able to participate at all so we're very excited about that new opportunity

Great. Maybe just lastly, any update on retention for pass and club subscribers?

Sure. Hey, Mike, this is Webb. As you know, and we've discussed in the past, retention is something that we monitor closely internally across all of our different product types. We haven't published numbers since the pandemic. wanting to get a full 12 months of stabilized sort of non-impacted numbers in order to have a clean baseline for analysis. So we're hopeful, Mike, that that'll be this year. It looks like it is as we're approaching the end of the year, and that we'll be able to sometime in the first quarter come out with some robust work to share with you and the market on retention for the full calendar year 2022. Got it. Okay. Hey, thank you.

Our next question comes from the line of Jed Kelly with Oppenheimer. Your line is now open.

Hey, great. Thanks for taking my questions. Just circling back to your past subscribers, can you touch on the impact, sort of the downturn in the equity market we've seen, how has that impacted sort of your sales pipeline and and all your PATH and club members and how that's impacting subscriptions?

Sure. This is Brent. Great question. I think it's fair to say that the PATH product does the best when there's less uncertainty in the market. So PATH didn't do well during the pandemic for obvious reasons because travel was somewhat impacted. PATH going into this kind of economic malaise that we're in right now with people not wanting to make longer-term commitments, potentially not knowing about their job or not having as much certainty about their exact situation. We have seen some impact, as we disclosed in Q4, around PATH. PASS essentially is a different way of being able to consume Inspirato inventory. And what you'll see and what you'll hear about over the coming quarters is that we've really now focused on this revenue stream that is going to be more durable and more sustainable over time because it's more diversified. So if you think about our portfolio as a fixed expense with our operated residences, think about PATH being a channel and CLUB being a channel. And today we're really talking about three new channels that are able to absorb that inventory and continue to provide great REVPAR and great unit economics for Inspirato. So one of them would be Jaunt Living. Another would be Inspirato for Business. and another would be Inspirato for good, all of those things have opportunities to complete and fill reservations in the portfolio. We do not expect Inspirato Pass to have the growth that it had in 2022 moving forward into 2023. That being said, we have diversified enough where we feel like we can still run the portfolio at a very good rev par, really focusing on our expenses at the field level as well. So you should be able to see greater gross margin as well as growth in the portfolio because we still have homes that have yet to be released into next year and absorbing all of that

uh absorbing all of that demand in a more diversified way really provides a lot more opportunity for us to maximize rev far which essentially is the name of the game got it that's very helpful and then just on the on the next year's guidance i think you said 400 million in revenue for 2023 is there any way you could provide like a breakdown on how we should be thinking between the difference between travel revenue and subscription revenue

Yeah, Jed, this is Webb. We haven't put out, of course, that level of granularity. Given the base of revenue that we have in place and our subscriber count today being 8% or so higher than it was at the beginning of the year, we do think we'll be starting off at a more robust level with some embedded growth in that subscriber count. So I would look for that mix because of that ballast, the mix between travel and subscription revenue could be roughly where it is now. I wouldn't expect there to be material change.

Got it. Sorry, just one other component that's going to be quite important in the coming quarters. We're not prepared to talk about it today in detail, but a preview of coming attractions is, interestingly, Inspirato for Business and Inspirato for Good both contain a combination of subscription revenue and paid and stayed revenue because they come with bundled membership as well as travel. So there's going to be a new component of subscription revenue that we'll be talking about in future quarters that is essentially a different type of subscription than our consumer subscription from Paxton Club, but subscription revenue nonetheless. And so we'll have some breakdown of how that works in future quarters as we start to get more sophisticated in that reporting for the plan next year.

Got it. And then can you talk about sort of how you're approaching your supply roadmap into next year? I guess 80 percent occupancy is sort of that sweet spot that you talked about. But how should we think about sort of, you know, you know, how is the supply? I guess how is, you know, procuring the supply? How's that environment? Just how should we think about your roadmap?

It's something, as you know, that we focus on, Jed. Going back almost two years ago now, I guess a solid 18 months, we had stood up dedicated infrastructure and really sort of a muscular platform for acquiring new supply across our bread and butter, high net worth, what we call retail channel, as well as institutional and hotel channels. That's the pipeline that we've built. You saw it in our investor deck posted last night. We still have 70 contractually committed residences slated for delivery in the coming months, in the coming year. So delivering on that pipeline, building it and delivering on it has been a number one priority. I think in terms of targeting occupancy, you're right. Historically, we ran before the pandemic to within the 70s in total occupancy or even lower at times. So getting up in the high 80s, what was running a little hot, somewhere around 80, seems to work really well. It strikes the right balance of being able to grow our supplies with new and diverse inventory and being able to offer all of our subscribers a deep and broad and diverse set of travel alternatives. So I look for it to be around the same. You've seen the pipeline narrow a bit as we've been really selective, given the uncertainty Brent mentioned in the market. But we feel good about the capital markets actually unlocking supply opportunities to come our way.

Got it. Thank you.

Our next question comes from the line of Brett Novlock with Cantor Fitzgerald. Your line is now open.

Hi, guys. Thanks for my question. Just, I guess, can you help me frame the growth cadence for next year? Your implied kind of 4Q guide is a pretty steep deceleration from this quarter. Should we expect kind of similar levels of growth kind of throughout all next year, or maybe potential deceleration as we kind of progress throughout the year?

Yeah. Hey, Brett, this is Webb. I missed the first part of your question. I apologize. Could you repeat that?

I'm sorry. Just kind of looking for any, I guess, help on how to model revenue for next year. You know, there's going to be a pretty big deceleration on a year-over-year growth basis for the fourth quarter. Should we expect kind of on a sequential basis from that point on for revenue growth to kind of continue to decelerate into the end of next year? Or is there any seasonal factors that we should be aware of?

Yeah, it's a good question. So, you're right. I mean, look, we're forecasting a little shy of 20% growth for the year. We actually think, given the environment we've been in, we felt pretty good about being able to broadcast that number while also delivering positive adjustability to docs. In terms of the seasonality, the biggest thing we see there is, it hits on the question that was asked earlier, is the mix by quarter between travel and subscription varies a lot. Subscription revenue, of course, by its nature, is very steady and predictable. In the first quarter of the year, we typically see some of our highest travel volumes. That's both occupancy and rate. So that leverages into a lot of travel revenue growth. Then, of course, and we saw it this last year, in the second quarter, we typically see a whole lot less travel, lower occupancy, and lower rate. So I'd be focused, Brett, on sort of a mix between the two for each quarter, but hitting that overall growth target to get to 400 million, which is, like I said, a couple points just below 20%.

Got it. Understood. And then on the cost side of the business, you talked about portfolio optimization helping gross margin. What is the more immediate-term impact of these actions versus the long-term? And I guess, should we be expecting gross margin to improve on a year-over-year basis in 2023?

Yeah, it's a good question. You're right. We do highlight that during periods of significant operating portfolio growth like we've been experiencing and delivered on, that does impact margins to some degree. It's sort of a natural expense and revenue mismatch when you're onboarding a significant volume of new properties. I think in terms of the year over year growth margin forecast, that's not a level of detail we put out. I would highlight that, and we said it in our call remarks earlier, that 2021, peak of all peaks, and actually bled into the beginning of 2022. You saw in the first quarter, I think our record gross margins maybe in the history of the company in the first quarter of the year. So we're not modeling that. My hunch is that'll be tough to top. The way we think about that is the success and the growth of this business, both from an investor perspective and from a subscriber perspective, was never predicated on 88% occupancy, you know, the numbers that we delivered in the last year. Being in the 80s, we can deliver solid gross margins and get to our long-term trajectory in the high 30s or low 40s on a percentage basis.

Got it. Understood. And then your comment on the kind of operating expense reduction. Am I supposed to take that, or I guess are we supposed to take that as total operating expenses in 2023 will be less than, or are you just referring to as a percentage of sales, you would expect a decline?

Yeah, hey, it's a good question. It's something we're really focused on. We have grown so much in the last two years now, and that's been really growing our infrastructure. Much of it having to do with going public. we we foresee in our in our broadcasting that that total dollar number will be less in 2023 than it was in 2022. obviously on a percentage basis as well but the total dollar is actually a reduction in our four corporate operating expense loss probably a couple and on the entrado

InSprout is selected with InSprout for good and InSprout for business. You guys kind of briefly talked about, and I guess we could get more on this in the coming quarters, the kind of, you know, both a subscription and a, you know, the travel component embedded in that model. How do you treat that from an ARR perspective? Is just a subscription component included in ARR for this product?

Yeah, this is Brent. Like I said, we'll give a lot more color on this. in the quarters to come because it's new to us as well. But in the example of both Inspirato for Business and Inspirato for Good, when a company, for example, purchases reward travel for their employees as well as membership access for their employees, the revenue is actually split between recognized revenue when the travel is delivered and subscription revenue over the period of the contract. And some of those contracts are a year. Some of those contracts are three years. And so the subscription revenue would be not dissimilar to a SaaS model or a corporate subscription, for example, where at the end of term, you'd have to go re-up and resell the company when the term is over. Similarly, with Inspirato for Good, a bundled membership is included in the actual transaction that the purchaser is making. Just to back up a second with Inspirato for Good, again, we're very excited about this. In an example where the donor pays, I'm giving this illustratively, if they were to pay $4,000 at an actual nonprofit event, it would be very logical that 2,000 of that would go directly to the nonprofit. 2,000 of that would come to Inspirato. Of the 2,000 that comes to Inspirato, a percentage would go towards a one-year subscription and a percentage would be deferred in revenue until delivered when the travel actually takes place. So that's kind of the makeup of how that works. How we're going to report on it and sort of, what's the right word, to segment our subscription revenue, kind of stay tuned until next quarter. But we're very optimistic that those are, first of all, expands our TAM massively. Those are two very, very large markets that we have not participated in that allow us to have a different lens of the consumer on what it is that they're purchasing. and we also think that it gives us a long-term sustainable way of introducing more people to inspirato who potentially might want to travel with inspirato for different reasons as one quick example one of the large lead gen that we're getting for jaunt living is actually coming from inspirato for business we have a particular very large financial services firm that is providing Inspirato to their wealth advisors, both for reward travel as well as membership. Those people have a lot of flexibility. A lot of them are at the age in which they want to be living in other parts of the world. That's an example where we were able to do a transaction on Inspirato for business, but it turned into not only an inexpensive lead flow for Jaunt Living, but actually being paid for that lead to be able to come part of Jaunt Living and be able to travel with us as well. So we're really trying to build more of an ecosystem and a platform where luxury travel is in the middle and you can pick up this philanthropy, individual pay as you go, pass, select, different ways to be able to consume our fantastic portfolio, all of which is a way of saying we're making the PAM larger.

Got it. Thank you. That was a lot. Maybe if I just ask one last question, you know, I guess end of year at like 80 million in cash, this quarter was I think that the largest kind of cash burn that you guys had, which seems pretty, I guess, a result of deferred revenue and working cash. is this the you know would you expect this to kind of be the the bottom in terms of free cash flow burn um and going into here should we expect kind of free cash flow to be closer to to positive or break even yeah brett this is webb i i think historically and this year again was the case that yes the third quarter is typically the largest

the quarter in which we consume the largest amount of cash. It's just a logistical reality. We deliver a whole lot of travel in the third quarter, and we don't have any significant booking events or booking demands. I mean, people are on the beach in August. on vacation, not booking the next vacation. So that's a typical seasonal dynamic that we've seen throughout history. We do expect that that quarter will be the largest quarter, the bottom of the trough, as you said, in terms of consumption of cash.

Perfect. All right. Thanks, guys. Really appreciate it.

Our next question comes from the line of Thomas Champion with Piper Sandler. Your line is now open.

Hi, this is Jim on for Tom. Thanks for taking the question. So I guess first on the accounting issue that resulted in the delayed filing, can you talk a little bit about your internal controls and kind of what can be done to prevent this going forward?

Yeah, as I said in my remarks, Jim, it's been a focus of ours in terms of staffing up and adding to the team as we've made this transition to being public. We have brought on a, for the first time, Everett has brought a head of internal audit that is tasked with delivering on the type of control environment that you would expect with a public company of our like kind and character. So we were confident that some of the initial steps we've taken and that the medium term plan of putting that control environment in place that we won't experience any additional issues were Of course, noted in my remarks that the issues found didn't affect revenue and they weren't material in any sense to the operating results of the business. But look, we're focused on getting that control of our place and that's why we brought on the new headcount to ensure that gets done in a timely and thorough fashion.

Great. And then I guess just on the portfolio optimization, is there an opportunity to sort of maybe get rid of properties that have less year-round utilization. I know we've talked, you guys talked to certain properties being better in that respect based on the geography.

Yeah, a big part of our margin optimization over time We'll be doing exactly that and fine-tuning the mix of properties. Different geographies operate at dramatically different margins, sort of logical when you think through it. You highlighted the calendar availability. That is part of it. So we are and will continue to prune the portfolio both for customer satisfaction and also for margin.

Great. That helps. That's all for me.

Thank you.

Our next question comes from the line of Jocelyn Hu with Evercore ISI. Your line is now open.

Hi. Thank you for taking my question. I'm asking a question for Joanna. I'm wondering how do you plan to reach positive EBITDA in 2023 if macro worsens? Like, what does focusing on portfolio optimization mean? Like, any elaboration on that would be appreciated.

Sure. Hey, Jocelyn. This is Webb. I think that a couple levers that I point to are one, and I made references earlier, we already have pretty meaningful embedded growth, both in a larger subscriber count, paying subscribers now, so we're sort of starting off the year at a higher number. And then on the other side, we have significant visibility into our forward booking calendar. And we look at that and see a fairly robust level of booking activity at really high rates, higher than we would have otherwise forecast. So the combination of those two, combined with what was referenced earlier around not only containing corporate operating expenses, but actually delivering a net dollar reduction in corporate operating expenses for the year, Those are the levers that will lead us down the path to delivering positive adjusted EBITDA.

Thank you. And then I recently came across an article saying, I know you guys focus on luxury rental, but I saw some like, in general, vacation rental owners have seen some of their bookings coming to a halt, probably because of the short rising supply as people look for additional income or for reasons like that. So just wondering if you're seeing that as well, or anything you heard in the tree.

Yeah, this is Brian. That's, you know, it's a really good, it's a really good question. It's been such a strange, let's see, almost three years now, I think almost three years. Going kind of back to the pandemic where everything just shut down and then very slowly people started to feel comfortable traveling again albeit at um you know much lower rates eventually that just reached a peak which was last q1 maybe q4 of 21 q1 of 22 where there just was not enough supply everybody just wanted to travel That kind of worked its way into maybe the very beginning of Q2. And then we have seen a difference in just overall travel demand. It's not been remarkable. It's not been something that's jarring, but we are seeing that for sure. People have moved past revenge travel. There's a little bit of travel fatigue out there. Last year, there was some softness, for example, in our domestic portfolio in the summer, because everybody wanted to be in Europe. We're anticipating that this year, the domestic is going to be coming back. And a lot of people got Europe and other Toronto members maybe, you know, out of their system. I think for us, it's very important to continually think about how fast is the portfolio growing. Last year, the operating portfolio grew 40%, last year meaning 2022. That's just a tremendous amount of growth. That's a lot of houses that have to be onboarded, turned on, calendars get turned on kind of late in the cycle. So somebody has to make a decision to go book a nice vacation, you know, two weeks or a month in advance. That's going to be much more regulated in 2023. There's going to be a lot less inventory that's going to be opening. And much of that inventory that's going to be opening in 2023 has actually already been released by Inspirato. So the combination of less growth and more importantly, a more diversified, robust, and really a kind of more sustainable way of acquiring customers that reaches a much larger TAM allows us to be able to have confidence in this call it roughly 80% total occupancy number because a lot more at-bats are going to be coming our way through Inspirato for Business, Inspirato for Good, and Jaunt Living. Those are three plays that just were not in the playbook in 2022 and combining that with a lot less growth on top of starting with a larger subscription base gives us confidence in our plan. All that being said, for sure, just out in the world, we are definitely seeing a difference in, you know, people will just travel and stay at home at any cost. I think those, you know, those days are over and we have to work harder and be more creative and more innovative to build the portfolio and run a profitability.

Thank you. I have one last question, just a small one, I guess. Just curious how many properties you have on your website where you have your inventory are exclusive to InferAli?

We have, in terms of exclusive properties, we put them in a couple different buckets. Jocelyn, the biggest of which, and sort of what we're known for, are our exclusive residences. And I think we finished the quarter just over 500. I think the exact number is 509. So those are the ones that I point to as exclusive. We do have total total accommodations of more than 700 and the balance, the additional 200. A number of those are actually exclusive with respect to the specific unit, for instance, in the case of something on the premises of a five-star luxury resort. But that gets into shades of gray around how we might define exclusivity.

Thank you. That concludes today's question and answer session. I'd like to turn the call back to management for closing remarks.

Wonderful. Thank you. Well, appreciate everybody's thoughtful questions and listening to our story today. I want to wish everybody a happy holiday, and I think hopefully we'll be back at this next quarter. We'll talk to you then. Thank you.

This concludes today's conference call. Thank you for participating. You may now disconnect.