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Playa Hotels & Resorts N.V. (PLYA)·Q3 2024 Earnings Summary

Executive Summary

  • Q3 2024 results were below prior-year but exceeded internal expectations, driven by FX tailwinds (+170 bps to resort margins), modest fee revenue growth, and lower corporate expense timing; Total revenue was $183.5M, Adjusted EBITDA $25.1M, and Owned Resort EBITDA $36.6M, with diluted EPS of -$0.02 .
  • Guidance was narrowed to FY 2024 Adjusted EBITDA of $250–$255M (from $250–$275M previously), citing improving Jamaica demand and favorable FX; management guided Q4 Adjusted EBITDA to $48–$53M, occupancy low–mid-70s, ADR up mid-single digits YoY, and ~50 bps FX margin tailwind .
  • Segment trends: Yucatán resilient; Dominican Republic steady with reduced BI proceeds; Pacific Coast pressured by renovations; Jamaica materially weaker but improving with lower ADRs to rebuild occupancy into high season .
  • Capital allocation remains a positive catalyst: ~$50M of buybacks in Q3 and ~$25M in October, >$140M YTD, with ~$50M authorization remaining; net leverage ~3.3x and strong FCF conversion support continued repurchases .

What Went Well and What Went Wrong

What Went Well

  • “Improving demand in Jamaica and the Pacific Coast, combined with continued execution in the Yucatan and Dominican Republic, resulted in our Q3 Owned Resort EBITDA and Adjusted EBITDA exceeding our expectations” – Bruce Wardinski .
  • FX helped: management estimated a ~170 bps resort margin tailwind and ~$2.9M EBITDA benefit in Q3, better than anticipated due to favorable MXN/USD moves .
  • Direct channel progress and fee income: 46.2% of owned/managed transient revenue booked direct (+50 bps YoY), with Playa Collection fee ramp contributing ~$1M upside in Q3 .

What Went Wrong

  • Jamaica faced a ~30% RevPAR decline, driven by the U.S. travel advisory and Hurricane Beryl; Owned Resort EBITDA margin fell to 8.9% (-21.9 pts YoY) .
  • Pacific Coast renovations drove occupancy down ~20 pts and EBITDA down ~60% in Q3; ADR was lower amid construction disruption .
  • Company-wide margin compression: Adjusted EBITDA margin fell to 14.2% (-5.6 pts YoY), with underlying margins down ~660 bps after adjusting for FX and BI effects .

Financial Results

Consolidated quarterly metrics

MetricQ3 2023Q1 2024Q2 2024Q3 2024
Total revenue ($USD Millions)$213.145 $300.635 $235.475 $183.517
Net income (loss) ($USD Millions)$(10.504) $54.341 $13.170 $(2.734)
Diluted EPS ($USD)$(0.07) $0.39 $0.10 $(0.02)
Adjusted EBITDA ($USD Millions)$40.511 $113.472 $63.697 $25.119
Adjusted EBITDA Margin (%)19.8% 39.1% 28.0% 14.2%
Owned Resort EBITDA ($USD Millions)$52.797 $124.040 $75.081 $36.568
Owned Resort EBITDA Margin (%)26.2% 43.3% 33.5% 21.1%

Segment breakdown – Total Portfolio (Q3 YoY)

SegmentOccupancy (%)Net Package ADR ($)Net Package RevPAR ($)Owned Net Revenue ($USD ‘000s)Owned Resort EBITDA ($USD ‘000s)Owned Resort EBITDA Margin (%)
Yucatán Peninsula – Q3’2373.9 399.10 294.84 $65,138 $16,844 25.9%
Yucatán Peninsula – Q3’2471.2 407.15 290.07 $65,290 $16,158 24.7%
Pacific Coast – Q3’2364.5 478.83 309.05 $29,236 $7,947 27.2%
Pacific Coast – Q3’2444.1 451.89 199.48 $20,083 $3,178 15.8%
Dominican Republic – Q3’2366.4 306.69 203.76 $57,142 $12,673 22.2%
Dominican Republic – Q3’2463.9 393.32 251.29 $51,736 $14,041 27.1%
Jamaica – Q3’2377.6 422.23 327.86 $49,838 $15,333 30.8%
Jamaica – Q3’2463.5 363.50 230.91 $35,904 $3,191 8.9%

KPIs – Total Portfolio (Q3 YoY)

KPIQ3 2023Q3 2024
Occupancy (%)70.7 63.4
Net Package ADR ($)381.41 397.69
Net Package RevPAR ($)269.50 252.12
Total Net Revenue ($USD ‘000s)$204,305 $176,403
Adjusted EBITDA ($USD ‘000s)$40,511 $25,119
Adjusted EBITDA Margin (%)19.8% 14.2%

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Adjusted EBITDA ($USD Millions)FY 2024$250–$275M (maintained in Q1; “near low end” in Q2) $250–$255M Narrowed downward toward low end
Adjusted EBITDA ($USD Millions)Q4 2024n/a$48–$53M New
Occupancy (%)Q4 2024n/aLow–mid 70s New
Package ADR (YoY)Q4 2024n/aUp mid-single digits New
Owned resort EBITDA marginsQ4 2024n/aDecline significantly YoY; FX +~50 bps; prior-year BI +40 bps comp headwind New detail
Fee income (Playa Collection + Mgmt fees)Q4 2024n/a$2–$3M New
Corporate expenseQ4 2024n/a$15–$16M New
FX impact (EBITDA)FY 2024Headwind $5–$8M (earlier) Headwind $0–$3M; Q4 +$1M Improved outlook
ADR (Total vs Legacy)FY 2024n/aTotal mid-single digits; Legacy low-single digits New detail

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2)Current Period (Q3)Trend
FX (MXN/USD)Q1/Q2: MXN appreciation was a headwind; hedges in place Q3: ~170 bps margin tailwind; Q4 +~50 bps expected; FY headwind trimmed to ~$0–$3M; 2025 hedged ~70–75% at ~19.5% weighted avg Improving
Jamaica travel advisoryQ1: Advisory pressured demand; Q2: ongoing headwinds Q3: Large YoY declines; strategy to lower ADR 10–15% to rebuild occupancy; pacing flat occupancy into high season Stabilizing occupancy at lower ADRs
Hurricanes/disruptionQ2: Hurricane Beryl impacted Q3 demand; Pacific renovations disruptive Q3: Beryl impact most acute in Q3; normalization through quarter; less impact expected in Q4 Easing
Renovations (Pacific, Zilara Cancún)Q1: Accelerated Pacific; higher 2024 capex Q3: Pacific peak disruption in Q3; bulk to complete by holidays; Zilara Cancún shutdown planned in 2025; sets up 2026 upside Nearing completion (Pacific); 2025 work (Zilara)
MICE businessQ2: MICE supportive; some legacy low-rate contracts Q3: 2024 net MICE on books ~$68M (+~13% YoY); 2025 ~$45M (lower vs prior year due to renovations and lapping a buyout) 2024 strong; 2025 softer
Direct booking mixQ1/Q2: Emphasis on brand/direct distribution Q3: 46.2% transient revenue booked direct (+50 bps YoY); website ~13% of room-night bookings Gradually improving
Airlift/capacityn/aQ3: Airlift declines bottomed in Q3; stabilizing in Q4/Q1; premium locations buffer impact Stabilizing

Management Commentary

  • “We now expect our FY 2024 Adjusted EBITDA to be $250–255 million, reflecting the improving demand in Jamaica and a more favorable FX outlook.” – Bruce D. Wardinski, Chairman & CEO .
  • “Our third quarter results exceeded our expectations... $1M higher fee income, $1M lower corporate expense (timing), and a favorable FX tailwind of ~$2.9M” – Prepared remarks .
  • “Demand began to firm up as we moved through the peak of construction disruption [Pacific]. We anticipate completing the bulk of the renovations ahead of the holidays with the remaining rooms to be completed in early 2025.” .
  • “Our occupancy is pacing close to flat year-over-year [Jamaica], albeit at lower ADRs... the relative value should aid the destination over time.” .

Q&A Highlights

  • 2025/2026 bridge: Pacific recoups $10M of 2024 disruption in 2025, Jamaica ($10M) remains a wildcard until Q2’25, Zilara Cancún renovation implies ~$20M year-over-year swing in 2025; FX tailwind ~$12–$17M in 2025; framework suggests 2025 roughly flat to down ~5%, with potential 2026 EBITDA >$275M depending on recovery .
  • Festive season pacing solid (Yucatán/DR up; Jamaica down but improved vs Q3); Hyatt’s new all-inclusive management deal seen as strategically smart but not a negative for Playa given different customer/price-point positioning .
  • Jamaica strategy: No “race to the bottom.” Lower ADR by ~10–15% to rebuild occupancy back into the 70s, then yield up ADR as demand normalizes; expect lower margins near-term .
  • Airlift: Scheduled capacity declines appear to have bottomed in Q3; prime asset locations and ADR focus help mitigate impact; load factors expected to help .
  • FX and hedging: Q4 guidance assumes ~19 MXN; 2025 hedged ~70–75% of MXN expense base at ~19.5% avg; sensitivity ~1 MXN move ≈ ~$2.75M EBITDA per quarter (unhedged) .
  • Capex and buybacks: 2024 capex ~$100–$120M; similar magnitude in 2025 with Zilara project; continued consistent buybacks supported by strong FCF and noncore asset sales .

Estimates Context

  • Wall Street consensus via S&P Global was unavailable for PLYA for Q3 2024 due to missing mapping; as a result, formal comparisons vs consensus could not be completed [SpgiEstimatesError]. Values referenced from company filings and the earnings call; S&P Global consensus data was unavailable.

Key Takeaways for Investors

  • Near-term setup: Q4 guide ($48–$53M Adjusted EBITDA) plus FX tailwind (+~50 bps) and solid holiday demand underpin a likely sequential improvement vs Q3; watch Pacific renovation completion and Jamaica occupancy pacing into Q1 .
  • Medium-term: 2025 will absorb Zilara Cancún renovation (~$20M hit) and incomplete Pacific recovery, offset by FX hedges ($12–$17M tailwind) – setup points to stronger 2026 as assets ramp post-renovations .
  • Segment mix matters: Yucatán/DR strength can drive margin recovery once transitory headwinds fade; Jamaica strategy prioritizes occupancy rebuild via lower ADR before normalizing pricing .
  • Capital returns: Aggressive repurchases (>29% of float since 2022; ~$75M Q3–Oct alone) and net leverage ~3.3x support per-share value creation; authorization remaining ~$50M .
  • FX management increasingly effective: 2024 headwind now $0–$3M and Q4 +$1M; 2025 hedged ~70–75% MXN exposure at ~19.5% .
  • Watch BI comparability: Prior-year BI proceeds inflate YOY comps in DR and Q4’23; management provides adjusted views to isolate underlying trends .
  • Asset recycling: Sale of Jewel Palm Beach ($68M) and portfolio optimization continue to fund capex while protecting balance sheet flexibility .

Appendix: Additional Documents

  • Press release announced Q3 results and narrowed FY guidance; details on segment KPIs and balance sheet .
  • Q2/Q1 releases provide context on prior pacing, FX headwinds, BI impacts, and earlier guidance posture .
  • Sale of Jewel Palm Beach (cash consideration $68M; net proceeds ~$64M) supports capital allocation flexibility .
  • Kimpton Tres Rios debut (first all-inclusive for Kimpton) signals managed growth opportunities in Riviera Maya (early 2025 opening) .