- Owned Resort EBITDA: $75.1 million in Q2 2024.
- Foreign Currency Exchange Headwind: Approximately $1.4 million due to the appreciation of the Mexican peso.
- Business Interruption Insurance Proceeds: Approximately $1 million received in Q2 2024.
- Reported Owned Resort EBITDA Margin: Declined 180 basis points year over year.
- Underlying Owned Resort EBITDA Growth: Down approximately 4% for the total portfolio and down approximately 8% for the legacy portfolio.
- Yucatán Segment ADR Growth: Just over 3% year over year.
- Yucatán Segment EBITDA Growth: Nearly 10% underlying growth.
- Pacific Segment RevPAR Decline: 12% year over year.
- DR Segment EBITDA Growth: 31% underlying growth, led by legacy assets up approximately 11% on 6.6% RevPAR growth.
- Jamaica Segment RevPAR Decline: Approximately 20% year over year.
- Hurricane Beryl EBITDA Impact: Estimated $2.5 million to $3.5 million in Jamaica, $6 million to $8 million across all segments.
- Stock Repurchase: Approximately $37 million worth of stock repurchased in Q2 2024, additional $12 million in Q3 2024.
- Total Cash Balance: Just under $234 million.
- Total Outstanding Interest Bearing Debt: $1.08 billion.
- Net Leverage: 3.1 times trailing basis.
- Full-Year Adjusted EBITDA Guidance: Low end of $250 million to $275 million range.
- Q3 2024 Owned Resort EBITDA Guidance: $31 million to $35 million.
- Q3 2024 Adjusted EBITDA Guidance: $17 million to $21 million.
Release Date: August 06, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Second-quarter results exceeded expectations, driven by strong performance in the Yucatán and Dominican Republic segments.
- Playa's owned resort EBITDA was $75.1 million, despite a $1.4 million foreign currency exchange headwind.
- Expense efficiencies were broad-based, particularly in insurance, which saw a significant sequential improvement.
- Direct bookings increased, with 47.4% of Playa owned and managed transient revenues booked directly, up 10 basis points year over year.
- Repurchased approximately $37 million worth of Playa stock during the second quarter, demonstrating strong capital allocation.
Negative Points
- Renovation work in the Pacific segment led to a decline in occupancy and flat ADR year over year, with an estimated full-year construction disruption impact of $15 million to $19 million.
- Jamaica segment faced a material decline in resort EBITDA due to a 20% RevPAR decline, exacerbated by a U.S. State Department travel advisory.
- Hurricane Beryl had a meaningful impact on demand, estimated to affect EBITDA by $6 million to $8 million across all segments.
- Labor costs were a headwind due to ongoing wage inflation across markets.
- MICE group business for 2025 is down approximately 25% compared to the previous year, partly due to renovation work in the Pacific Coast.
Q & A Highlights
Playa Hotels & Resorts NV (PLYA, Financial) Q2 2024 Earnings Call Highlights
Q: Could there be additional lingering effects from the disruption at Los Cabos? How are you thinking about the ROI on the CapEx?
A: (Bruce Wardinski, CEO) We don't expect more disruption. The additional disruption was related to jackhammering, which has now ended. The new product will be exceptional, especially for MICE customers.
A: (Ryan Hymel, CFO) The forecast does not assume any meaningful change in booking or cancellation rates once the jackhammering finishes. The ROI on the project is expected to protect existing EBIT and potentially gain market share.
Q: Are you seeing any different trends in terms of room categories or price elasticity?
A: (Ryan Hymel, CFO) No significant changes in trends. The value proposition in the Yucatán and DR remains strong, and people are still prioritizing vacations.
Q: When is the renovation work at Cabo expected to be finished?
A: (Ryan Hymel, CFO) The heavy jackhammering should finish by the end of August. Some rooms will still be out of service early next year, but the loudest disruptions should subside by the end of this month.
Q: How is your MICE group business pacing for next year?
A: (Ryan Hymel, CFO) It's pacing down about 25% year over year, largely due to the renovation work in Cabo. We expect to market the hotel for 2026 once the renovations are complete.
Q: Do you have any conservatism in your guidance for additional hurricanes?
A: (Ryan Hymel, CFO) No, the guidance is based on current conditions. Another large storm would impact results, but the disruption would be less significant outside of the high season.
Q: Can you provide more color on insurance costs and wage growth expectations?
A: (Ryan Hymel, CFO) Insurance costs are flat to slightly down, representing 5% to 7% of our overall cost base. We expect mid to high-single digit wage growth across the portfolio.
Q: Can you help us think through the bridge for 2025, considering factors like Beryl, construction disruption, and Jamaica normalization?
A: (Ryan Hymel, CFO) The Pacific Coast renovations will be largely done by the end of this year, with some rooms out of service in Q1 2025. FX could be a high single-digit to low double-digit tailwind. Jamaica's impact will likely continue into Q1 2025, with potential improvement starting in Q2.
Q: Is there any new supply in the Jamaica market affecting your performance?
A: (Bruce Wardinski, CEO) Yes, but it's at a lower price point and in lesser locations. It could have a minor impact, but it's not direct competition.
Q: Any updates on efforts to address the U.S. State Department's travel advisory for Jamaica?
A: (Bruce Wardinski, CEO) We've had meetings with the Jamaican ambassador and other stakeholders. Progress is being made, but it's a challenging situation. We're hopeful for improvements.
Q: What are your plans for the Zilara Cancun renovation?
A: (Bruce Wardinski, CEO) This will be a complete reinvention, not just a lifecycle renovation. We plan to shut the resort down for 8-9 months and potentially increase the room count. The goal is to significantly enhance the ADR and guest experience.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
