Financial Data and Key Metrics Changes - The second quarter results exceeded expectations, driven by strong demand and pricing discipline, with occupancy levels increasing compared to the first quarter [7][10] - The company reported a total unrestricted cash balance of approximately $238 million as of June 30, 2021, with no cash burn on a company-wide operational basis during the second quarter [17][18] - ADR growth in Q2 over 2019 was approximately 16%, with property EBITDA margins reaching around 26% at only 50% occupancy [54] Business Line Data and Key Metrics Changes - Mexico led the recovery with comparable occupancies in the high 50s for the quarter, and occupancy levels increased into the 60s by June [9][10] - Jamaica saw a sequential improvement in international passenger arrivals by over 30 percentage points compared to 2019, with occupancy approaching 60% in June [11] - The Dominican Republic experienced a 20% improvement in occupancy versus Q1, driven by the flagship Hyatt Ziva & Zilara Cap Cana, which achieved EBITDA margins nearing 40% [12] Market Data and Key Metrics Changes - The Pacific segment reported significant recovery, with international passenger arrivals exceeding 2019 levels in Las Cabos and Puerto Vallarta [27] - The overall performance of the Dominican Republic was weighed down by two externally managed properties, which lagged behind globally branded resorts [13][28] - The U.S. sourced approximately 77% of managed room nights, reflecting a shift in customer mix due to travel restrictions [30] Company Strategy and Development Direction - The company is focused on growing high-return opportunities leveraging direct booking capabilities and all-inclusive operating expertise [36][37] - Management is currently not pursuing ground-up development projects but is interested in turnkey resort opportunities that are under-branded and under-managed [37] - The company aims to increase consumer direct business to at least 50% by 2023, with 48.5% of room nights booked directly in Q2 2021 [13] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism for the upcoming high season and 2022, citing strong competitive positioning and rate strength [35] - The company does not foresee significant impacts from the Delta variant on bookings or cancellations as of now [8] - Management acknowledged challenges in the labor market but noted that the situation is not as dire as in the U.S., with vaccination rates among employees being high in the Dominican Republic [80] Other Important Information - The company completed the sale of the Capri hotel, generating net proceeds of just under $50 million, which was partially used to pay down debt [18] - The MICE group business is showing strong demand, with approximately $14 million of group business on the books for 2021, and over $30 million for 2022 [21][22] Q&A Session Summary Question: What are the occupancy caps in Mexico and Jamaica? - Management stated that occupancy caps are not significantly impacting business, with caps at 70% in Quintana Roo and 80% in Puerto Vallarta, and they are focused on driving ADRs [40] Question: How are rates and ADRs expected to perform? - Management indicated that everyone is paying more, and they believe the current rate increases may reset a new floor for future pricing [41][42] Question: What is the outlook for EBITDA and margins? - Management expects that strong ADRs will allow for comparable pre-pandemic property EBITDA margins at lower occupancy levels, despite anticipated cost increases [54][55] Question: How are the externally managed properties performing? - The two externally managed properties are lagging due to being non-branded and reliant on higher-cost tour operator channels, but management hopes for improvement as airlift increases [56][57] Question: What is the competitive landscape like? - Management believes they are gaining market share due to the quality of their properties and service, and they are well-positioned to take advantage of any distressed opportunities that may arise [63][64]

[PART I. FINANCIAL INFORMATION](index=2&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements (unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20(unaudited)) This section presents the unaudited condensed consolidated financial statements, including balance sheets, statements of operations, and cash flows, with detailed notes [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) | Metric | June 30, 2021 ($ in thousands) | December 31, 2020 ($ in thousands) | | :----------------------------- | :----------------------------- | :----------------------------- | | Cash and cash equivalents | 237,715 | 146,919 | | Total assets | 2,042,931 | 2,097,665 | | Debt | 945,409 | 1,251,267 | | Total liabilities | 1,405,559 | 1,529,529 | | Total shareholders' equity | 637,372 | 568,136 | - Cash and cash equivalents increased by **$90.8 million** from December 31, 2020, to June 30, 2021, reflecting improved liquidity[9](index=9&type=chunk) - Total debt decreased by **$305.8 million**, contributing to a reduction in total liabilities[9](index=9&type=chunk) [Condensed Consolidated Statements of Operations](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) | Metric | 3 Months Ended June 30, 2021 ($ in thousands) | 3 Months Ended June 30, 2020 ($ in thousands) | 6 Months Ended June 30, 2021 ($ in thousands) | 6 Months Ended June 30, 2020 ($ in thousands) | | :----------------------------- | :------------------------------------ | :------------------------------------ | :------------------------------------ | :------------------------------------ | | Total revenue | 128,803 | 982 | 206,549 | 178,210 | | Operating loss | (642) | (86,042) | (53,465) | (82,626) | | Net loss | (7,768) | (87,458) | (77,513) | (110,014) | | Losses per share - Basic | (0.05) | (0.67) | (0.48) | (0.85) | - Total revenue for the three months ended June 30, 2021, significantly increased to **$128.8 million** from **$0.98 million** in the prior year, reflecting the reopening of resorts[11](index=11&type=chunk) - Net loss for the three months ended June 30, 2021, improved substantially to **$7.8 million** from **$87.5 million** in the same period last year[11](index=11&type=chunk) [Condensed Consolidated Statements of Comprehensive Loss](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Loss) | Metric | 3 Months Ended June 30, 2021 ($ in thousands) | 3 Months Ended June 30, 2020 ($ in thousands) | 6 Months Ended June 30, 2021 ($ in thousands) | 6 Months Ended June 30, 2020 ($ in thousands) | | :------------------------------------ | :------------------------------------ | :------------------------------------ | :------------------------------------ | :------------------------------------ | | Net loss | (7,768) | (87,458) | (77,513) | (110,014) | | Total other comprehensive income (loss) | 2,984 | 3,078 | 5,867 | (12,025) | | Comprehensive loss | (4,784) | (84,380) | (71,646) | (122,039) | - Total other comprehensive income for the six months ended June 30, 2021, was **$5.9 million**, a significant improvement from a loss of **$12.0 million** in the prior year, primarily due to unrealized gains on interest rate swaps[14](index=14&type=chunk) [Condensed Consolidated Statements of Shareholders' Equity](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Shareholders'%20Equity) - Total shareholders' equity increased from **$568.1 million** as of December 31, 2020, to **$637.4 million** as of June 30, 2021[19](index=19&type=chunk) - The increase in shareholders' equity was primarily driven by a **$137.7 million** equity issuance, net, partially offset by a net loss of **$77.5 million** for the six months ended June 30, 2021[19](index=19&type=chunk) - Paid-in capital increased by **$140.7 million** from December 31, 2020, to June 30, 2021[19](index=19&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) | Cash Flow Activity | 6 Months Ended June 30, 2021 ($ in thousands) | 6 Months Ended June 30, 2020 ($ in thousands) | | :-------------------------------- | :------------------------------------ | :------------------------------------ | | Net cash used in operating activities | (13,578) | (28,396) | | Net cash provided by investing activities | 80,560 | 58,862 | | Net cash provided by financing activities | 23,520 | 227,544 | | Increase in cash and cash equivalents | 90,502 | 258,010 | - Net cash used in operating activities decreased by **$14.8 million**, from **$28.4 million** in 2020 to **$13.6 million** in 2021, indicating improved operational cash burn[22](index=22&type=chunk) - Net cash provided by investing activities increased by **$21.7 million**, primarily due to higher proceeds from asset sales in 2021[22](index=22&type=chunk) - Net cash provided by financing activities decreased significantly by **$204.0 million**, mainly due to lower debt issuances and higher debt repayments in 2021 compared to 2020[22](index=22&type=chunk) [Notes to the Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements) [Note 1. Organization, operations and basis of presentation](index=10&type=section&id=Note%201.%20Organization,%20operations%20and%20basis%20of%20presentation) - Playa Hotels & Resorts N.V. is a leading owner, operator, and developer of all-inclusive resorts in Mexico, the Dominican Republic, and Jamaica, with a portfolio of **22 resorts**[26](index=26&type=chunk) - All resorts, which temporarily suspended operations from late March through June 2020 due to COVID-19, were reopened as of June 30, 2021, with additional safety measures[27](index=27&type=chunk) - The unaudited interim financial statements are prepared in accordance with U.S. GAAP and should be read in conjunction with the 2020 Annual Report on Form 10-K[28](index=28&type=chunk) [Note 2. Significant accounting policies](index=10&type=section&id=Note%202.%20Significant%20accounting%20policies) - The company adopted ASU No. 2019-12, Income Taxes (Topic 740), in January 2021, resulting in a **$3.4 million** cumulative-effect adjustment to opening retained earnings for deferred tax liabilities related to Dominican Republic resorts[31](index=31&type=chunk) - The company is evaluating the impact of ASU No. 2020-04, Reference Rate Reform (Topic 848), which provides optional expedients for applying GAAP to transactions affected by reference rate reform, with potential early adoption[32](index=32&type=chunk) [Note 3. Revenue](index=11&type=section&id=Note%203.%20Revenue) | Revenue Type | 3 Months Ended June 30, 2021 ($ in thousands) | 3 Months Ended June 30, 2020 ($ in thousands) | 6 Months Ended June 30, 2021 ($ in thousands) | 6 Months Ended June 30, 2020 ($ in thousands) | | :------------- | :------------------------------------ | :------------------------------------ | :------------------------------------ | :------------------------------------ | | Package | 104,780 | 302 | 168,674 | 153,357 | | Non-package | 22,602 | 240 | 35,597 | 22,818 | | Management fees| 452 | (18) | 796 | 627 | | Total revenue | 128,803 | 982 | 206,549 | 178,210 | - Package revenue for the three months ended June 30, 2021, saw a dramatic increase to **$104.8 million** from **$0.3 million** in the prior year, reflecting the resumption of resort operations[33](index=33&type=chunk) - Advance deposits, recorded as contract liabilities, are generally recognized as revenue within one year, with no material contract assets reported[35](index=35&type=chunk) [Note 4. Property and equipment](index=12&type=section&id=Note%204.%20Property%20and%20equipment) | Metric | June 30, 2021 ($ in thousands) | December 31, 2020 ($ in thousands) | | :----------------------------- | :----------------------------- | :----------------------------- | | Total property and equipment, gross | 2,045,231 | 2,177,629 | | Accumulated depreciation | (432,457) | (450,246) | | Total property and equipment, net | 1,612,774 | 1,727,383 | - Net property and equipment decreased by **$114.6 million** from December 31, 2020, to June 30, 2021, primarily due to asset sales[36](index=36&type=chunk) - The company completed the sale of Capri Resort for **$55.2 million** in June 2021, recognizing a **$24.0 million** impairment loss and a **$0.5 million** loss on sale[37](index=37&type=chunk)[38](index=38&type=chunk) - The Dreams Puerto Aventuras was sold for **$34.3 million** in February 2021, resulting in a gain of less than **$0.1 million**[39](index=39&type=chunk) [Note 5. Income taxes](index=13&type=section&id=Note%205.%20Income%20taxes) | Metric | 3 Months Ended June 30, 2021 ($ in thousands) | 6 Months Ended June 30, 2020 ($ in thousands) | | :---------------- | :------------------------------------ | :------------------------------------ | | Income tax benefit | 12,452 | 13,536 | - Income tax benefits were **$12.5 million** and **$14.4 million** for the three and six months ended June 30, 2021, respectively, including discrete adjustments from resort sales and valuation allowances[43](index=43&type=chunk) - The sale of Capri Resort resulted in a **$5.6 million** income tax benefit from deferred tax liability write-off and a **$1.2 million** income tax expense from capital gains[44](index=44&type=chunk) - Additional valuation allowances of **$0.7 million** and **$3.7 million** were recognized against deferred tax assets for Mexico and Jamaica entities due to COVID-19 impacts[45](index=45&type=chunk) [Note 6. Related party transactions](index=14&type=section&id=Note%206.%20Related%20party%20transactions) - Hyatt Hotels Corporation is a related party due to ownership and board representation, with Playa paying franchise fees and receiving reimbursements for loyalty program guests[48](index=48&type=chunk) - Davidson Kempner Capital Management L.P. (DKCM) is a related party, with affiliated funds being lenders for the Property Loan and Additional Credit Facility, resulting in interest payments from Playa[50](index=50&type=chunk) | Related Party | Transaction | 3 Months Ended June 30, 2021 ($ in thousands) | 6 Months Ended June 30, 2021 ($ in thousands) | | :-------------- | :------------ | :------------------------------------ | :------------------------------------ | | Hyatt | Franchise fees| 4,459 | 7,975 | | DKCM | Interest expense | 5,467 | 10,871 | [Note 7. Commitments and contingencies](index=14&type=section&id=Note%207.%20Commitments%20and%20contingencies) - The company is involved in various claims and lawsuits in the normal course of business, which are covered by insurance, and the ultimate outcome is not expected to have a material effect on financial statements[53](index=53&type=chunk) - Playa Resorts Holding B.V. is the head of the Dutch fiscal unity and is jointly and severally liable for the tax liabilities of the fiscal unity[54](index=54&type=chunk) [Note 8. Ordinary shares](index=15&type=section&id=Note%208.%20Ordinary%20shares) - On January 11, 2021, the company issued **28,750,000** ordinary shares in a public equity offering, raising **$137.7 million** in cash consideration, net of underwriting discounts[55](index=55&type=chunk) - As of June 30, 2021, there were **164,209,875** ordinary shares outstanding, with a par value of **€0.10** per share[56](index=56&type=chunk) [Note 9. Share-based compensation](index=15&type=section&id=Note%209.%20Share-based%20compensation) - The 2017 Omnibus Incentive Plan is used to attract and retain key personnel, with **4,841,947** shares available for future grants as of June 30, 2021[57](index=57&type=chunk) | Restricted Share Awards Activity | Number of Shares | Weighted-Average Grant Date Fair Value ($) | | :------------------------------- | :--------------- | :--------------------------------------- | | Unvested balance at January 1, 2021 | 2,225,139 | 8.53 | | Granted | 1,925,298 | 5.45 | | Vested | (897,793) | 8.61 | | Forfeited | (7,956) | 8.66 | | Unvested balance at June 30, 2021 | 3,244,688 | 6.68 | - In January 2021, **1,027,519** performance share awards were issued, with vesting based on Relative TSR and Absolute TSR targets over a three-year period[59](index=59&type=chunk) [Note 10. Earnings per share](index=16&type=section&id=Note%2010.%20Earnings%20per%20share) | Metric | 3 Months Ended June 30, 2021 | 3 Months Ended June 30, 2020 | 6 Months Ended June 30, 2021 | 6 Months Ended June 30, 2020 | | :------------------------------------------------ | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net loss ($ in thousands) | (7,768) | (87,458) | (77,513) | (110,014) | | Denominator for basic EPS - weighted-average shares | 164,119,693 | 130,466,383 | 162,482,673 | 129,876,545 | | EPS - Basic ($) | (0.05) | (0.67) | (0.48) | (0.85) | | EPS - Diluted ($) | (0.05) | (0.67) | (0.48) | (0.85) | - Unvested performance-based equity awards (**1,027,519** shares) and restricted share awards (**3,244,688** shares) were excluded from diluted EPS calculations for the three and six months ended June 30, 2021, as their effect would have been anti-dilutive[62](index=62&type=chunk)[63](index=63&type=chunk) [Note 11. Debt](index=17&type=section&id=Note%2011.%20Debt) | Debt Type | Interest Rate | Maturity Date | Outstanding Balance as of June 30, 2021 ($ in thousands) | Outstanding Balance as of December 31, 2020 ($ in thousands) | | :----------------------------- | :------------ | :------------ | :--------------------------------------- | :--------------------------------------- | | Revolving Credit Facility | LIBOR + 3.00-4.00% | April 27, 2022 / Jan 27, 2024 | — | 84,667 | | Term Loan | LIBOR + 2.75% | April 27, 2024 | 946,919 | 976,348 | | Term A1 Loan | 11.4777% | April 27, 2024 | 35,000 | 35,000 | | Term A2 Loan | 11.4777% | April 27, 2024 | 31,000 | 31,000 | | Term A3 Loan | LIBOR + 3.00% | April 27, 2024 | 28,000 | 28,000 | | Property Loan | 9.25% | July 1, 2025 | 110,000 | 110,000 | | Total debt, net | | | 1,139,162 | 1,251,267 | - The Fifth Amendment to the Amended & Restated Credit Agreement extended the maturity date for **$68.0 million** of the revolving credit facility to January 2024 and repaid the **$84.7 million** outstanding balance[67](index=67&type=chunk) - The company was in compliance with all applicable debt covenants as of June 30, 2021, maintaining a minimum liquidity balance of **$70.0 million** through the Relief Period[68](index=68&type=chunk) [Note 12. Derivative financial instruments](index=18&type=section&id=Note%2012.%20Derivative%20financial%20instruments) - The company uses two interest rate swaps with notional values of **$200.0 million** and **$600.0 million** to mitigate interest rate risk on its floating rate debt, fixing LIBOR at **2.85%** on **$800.0 million** of the Term Loan[69](index=69&type=chunk) - These interest rate swaps are designated as cash flow hedges but were deemed ineffective due to decreasing interest rates, with all fair value changes recognized through interest expense[70](index=70&type=chunk) | Metric | June 30, 2021 ($ in thousands) | December 31, 2020 ($ in thousands) | | :----------------------------- | :----------------------------- | :----------------------------- | | Interest rate swaps (Derivative financial instruments) | 35,924 | 46,340 | [Note 13. Fair value of financial instruments](index=19&type=section&id=Note%2013.%20Fair%20value%20of%20financial%20instruments) - The company's financial instruments, excluding debt, approximate their fair values as of June 30, 2021, and December 31, 2020, with no Level 3 instruments reported[75](index=75&type=chunk) | Financial Liability | Carrying Value as of June 30, 2021 ($ in thousands) | Fair Value as of June 30, 2021 ($ in thousands) | | :------------------ | :------------------------------------ | :------------------------------------ | | Term Loan | 943,161 | 927,421 | | Term A1 Loan | 33,969 | 35,327 | | Term A2 Loan | 30,087 | 31,289 | | Term A3 Loan | 27,175 | 27,648 | | Property Loan | 102,521 | 111,841 | | Total liabilities | 1,136,913 | 1,133,526 | - Fair values for interest rate swaps are estimated using expected future cash flows and observable market-based inputs, including interest rate curves and credit valuation adjustments[76](index=76&type=chunk) [Note 14. Other balance sheet items](index=21&type=section&id=Note%2014.%20Other%20balance%20sheet%20items) | Metric | June 30, 2021 ($ in thousands) | December 31, 2020 ($ in thousands) | | :----------------------------- | :----------------------------- | :----------------------------- | | Trade and other receivables, net | 39,695 | 25,433 | | Prepayments and other assets | 39,391 | 47,638 | | Goodwill, net | 61,654 | 61,654 | | Other intangible assets | 8,040 | 8,556 | | Trade and other payables | 138,534 | 123,410 | | Other liabilities | 28,971 | 29,768 | - Trade and other receivables, net, increased by **$14.3 million**, while prepayments and other assets decreased by **$8.2 million**[77](index=77&type=chunk)[80](index=80&type=chunk) - Goodwill remained stable at **$61.7 million**, with no impairment losses recognized during the three and six months ended June 30, 2021[81](index=81&type=chunk) [Note 15. Segment information](index=24&type=section&id=Note%2015.%20Segment%20information) - The company operates in four reportable geographic segments: Yucatán Peninsula, Pacific Coast, Dominican Republic, and Jamaica[86](index=86&type=chunk) - Performance is primarily evaluated using Adjusted EBITDA and Owned Resort EBITDA, which are non-U.S. GAAP measures[88](index=88&type=chunk) | Segment Owned Net Revenue | 3 Months Ended June 30, 2021 ($ in thousands) | 3 Months Ended June 30, 2020 ($ in thousands) | 6 Months Ended June 30, 2021 ($ in thousands) | 6 Months Ended June 30, 2020 ($ in thousands) | | :-------------------------- | :------------------------------------ | :------------------------------------ | :------------------------------------ | :------------------------------------ | | Yucatán Peninsula | 45,067 | 21 | 78,670 | 62,338 | | Pacific Coast | 20,514 | (74) | 29,135 | 21,081 | | Dominican Republic | 33,888 | 11 | 54,769 | 35,607 | | Jamaica | 24,134 | 564 | 35,856 | 52,000 | | Total Segment Owned Net Revenue | 123,603 | 522 | 198,430 | 171,026 | | Segment Owned Resort EBITDA | 3 Months Ended June 30, 2021 ($ in thousands) | 3 Months Ended June 30, 2020 ($ in thousands) | 6 Months Ended June 30, 2021 ($ in thousands) | 6 Months Ended June 30, 2020 ($ in thousands) | | :-------------------------- | :------------------------------------ | :------------------------------------ | :------------------------------------ | :------------------------------------ | | Yucatán Peninsula | 13,022 | (8,004) | 20,196 | 16,931 | | Pacific Coast | 7,078 | (2,816) | 7,563 | 6,056 | | Dominican Republic | 7,926 | (4,881) | 9,592 | 2,908 | | Jamaica | 4,072 | (8,097) | 1,292 | 10,976 | | Total Segment Owned Resort EBITDA | 32,098 | (23,798) | 38,643 | 36,871 | [Note 16. Subsequent events](index=26&type=section&id=Note%2016.%20Subsequent%20events) - There were no subsequent events since June 30, 2021, that required disclosure in the interim Condensed Consolidated Financial Statements[95](index=95&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=27&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section analyzes the company's financial condition and operational results, highlighting recovery from the pandemic, key metrics, and liquidity management [Cautionary Note Regarding Forward-Looking Statements](index=27&type=section&id=Cautionary%20Note%20Regarding%20Forward-Looking%20Statements) - The report contains forward-looking statements subject to various risks, including general economic uncertainty, changes in regional conditions, and the success of brand relationships[98](index=98&type=chunk)[99](index=99&type=chunk) - The most significant factor impacting forward-looking statements is the adverse effects of the COVID-19 pandemic, including reduced occupancy, resurgences of variants, and economic impacts[98](index=98&type=chunk) - The company disclaims any obligation to publicly update or revise forward-looking statements, except as required by law[100](index=100&type=chunk) [Overview](index=29&type=section&id=Overview) - Playa is a leading owner, operator, and developer of **22** all-inclusive resorts (**8,366** rooms) in Mexico, Jamaica, and the Dominican Republic[101](index=101&type=chunk) | Metric | 3 Months Ended June 30, 2021 ($ in thousands) | 3 Months Ended June 30, 2020 ($ in thousands) | | :---------------- | :------------------------------------ | :------------------------------------ | | Net loss | (7,800) | (87,500) | | Total revenue | 128,800 | 1,000 | | Net Package RevPAR| 150.98 | 0 | | Adjusted EBITDA | 22,900 | (31,400) | - The company leverages operating expertise and relationships with global hospitality brands like Hyatt and Hilton to enhance guest experience and drive repeat business[101](index=101&type=chunk) [Impact of COVID-19 Pandemic](index=30&type=section&id=Impact%20of%20COVID-19%20Pandemic) - The COVID-19 pandemic severely impacted global leisure travel, leading to temporary resort suspensions in March 2020 and reduced occupancy levels even after reopening[104](index=104&type=chunk)[105](index=105&type=chunk) - As of June 30, 2021, all resorts are open, and occupancy has increased due to vaccine availability and easing travel restrictions, though still below pre-pandemic levels[105](index=105&type=chunk) - Liquidity measures taken in 2021 include raising **$138.0 million** in equity, repaying the Revolving Credit Facility, and selling Dreams Puerto Aventuras (**$34.5 million**) and Capri Resort (**$55.2 million**)[106](index=106&type=chunk)[108](index=108&type=chunk) [Our Portfolio of Resorts](index=31&type=section&id=Our%20Portfolio%20of%20Resorts) | Segment | Owned Resorts (Rooms) | Managed Resorts (Rooms) | | :----------------- | :-------------------- | :---------------------- | | Yucatán Peninsula | 5 (2,126) | 2 (498) | | Pacific Coast | 2 (926) | 0 | | Dominican Republic | 5 (2,269) | 1 (324) | | Jamaica | 4 (1,104) | 1 (129) | | Total | 16 (6,425) | 4 (951) | - As of June 30, 2021, Playa owned and/or managed a total portfolio of **22** resorts (**8,366** rooms) across Mexico, Jamaica, and the Dominican Republic[101](index=101&type=chunk)[109](index=109&type=chunk)[110](index=110&type=chunk) - New management agreements were entered into for Hyatt Ziva Riviera Cancún (expected Q3 2021 opening) and Hyatt Zilara Riviera Maya (expected Q1 2022 opening), both currently closed for renovations[110](index=110&type=chunk) [Results of Operations - Three Months Ended June 30, 2021 and 2020](index=32&type=section&id=Results%20of%20Operations%20-%20Three%20Months%20Ended%20June%2030,%202021%20and%202020) | Metric | 2021 ($ in thousands) | 2020 ($ in thousands) | Change ($ in thousands) | % Change | | :------------------------------------ | :-------------------- | :-------------------- | :---------------------- | :------- | | Total revenue | 128,803 | 982 | 127,821 | 13,016.4%| | Operating loss | (642) | (86,042) | 85,400 | 99.3% | | Net loss | (7,768) | (87,458) | 79,690 | 91.1% | | Adjusted EBITDA | 22,915 | (31,422) | 54,337 | 172.9% | | Adjusted EBITDA Margin | 18.4% | (5,996.6)% | 6,015.0 pts | 100.3% | - Total revenue increased by **$127.8 million** (**13,016.4%**) due to the resumption of resort operations compared to the prior year when all resorts were closed[111](index=111&type=chunk)[115](index=115&type=chunk) - Net loss significantly improved by **$79.7 million** (**91.1%**) year-over-year[111](index=111&type=chunk) [Total Revenue and Total Net Revenue](index=33&type=section&id=Total%20Revenue%20and%20Total%20Net%20Revenue) | Revenue Type | 2021 ($ in thousands) | 2020 ($ in thousands) | Change ($ in thousands) | % Change | | :------------------------ | :-------------------- | :-------------------- | :---------------------- | :------- | | Net Package Revenue | 101,615 | 302 | 101,313 | 33,547.4%| | Net Non-package Revenue | 22,357 | 240 | 22,117 | 9,215.4% | | Management Fee Revenue | 452 | (18) | 470 | 2,611.1% | | Total Net Revenue | 124,424 | 524 | 123,900 | 23,645.0%| - Comparable Total Net Revenue increased by **$124.0 million** (**24,892.2%**) due to the reopening of resorts[114](index=114&type=chunk)[117](index=117&type=chunk) [Direct Expenses](index=34&type=section&id=Direct%20Expenses) | Expense Type | 2021 ($ in thousands) | 2020 ($ in thousands) | Change ($ in thousands) | % Change | | :-------------------------- | :-------------------- | :-------------------- | :---------------------- | :------- | | Direct expenses | 79,534 | 20,380 | 59,154 | 290.3% | | Less: compulsory tips | 3,410 | — | 3,410 | —% | | Net Direct Expenses | 76,124 | 20,380 | 55,744 | 273.5% | - Net Direct Expenses increased by **$55.7 million** (**273.5%**) due to the resumption of resort operations[118](index=118&type=chunk)[119](index=119&type=chunk) - Food and beverage expenses increased by **2,252.8%**, and salaries and wages increased by **149.2%** year-over-year[121](index=121&type=chunk) [Selling, General and Administrative Expenses](index=36&type=section&id=Selling,%20General%20and%20Administrative%20Expenses) - Selling, general and administrative expenses increased by **$8.8 million** (**44.6%**) to **$28.6 million**, driven by increased advertising, commissions, and corporate personnel expenses due to resort reopenings[123](index=123&type=chunk) - Share-based compensation expense increased by **$0.7 million** due to January 2021 grants[123](index=123&type=chunk) - These increases were partially offset by a **$1.2 million** decrease in insurance expenses following asset sales[123](index=123&type=chunk) [Depreciation and Amortization Expense](index=36&type=section&id=Depreciation%20and%20Amortization%20Expense) - Depreciation and amortization expense decreased by **$2.4 million** (**10.6%**) to **$20.0 million**, primarily due to asset sales in May 2020, February 2021, and June 2021[124](index=124&type=chunk) [Impairment Loss](index=36&type=section&id=Impairment%20Loss) - Impairment loss decreased by **$25.3 million** (**100.0%**) to zero, as the prior year included a **$25.3 million** property and equipment impairment from assets held for sale[125](index=125&type=chunk) [Interest Expense](index=36&type=section&id=Interest%20Expense) - Interest expense decreased by **$2.0 million** (**9.4%**) to **$19.0 million**, mainly due to a **$7.0 million** decrease from changes in the fair value of interest rate swaps (non-cash gain in 2021 vs. non-cash loss in 2020)[126](index=126&type=chunk) - Cash interest paid increased by **$5.0 million** to **$19.9 million**, driven by additional interest from the Additional Senior Secured Credit Facility and Property Loan Agreement[127](index=127&type=chunk) [Income Tax Benefit](index=36&type=section&id=Income%20Tax%20Benefit) - Income tax benefit decreased by **$2.2 million** (**15.0%**) to **$12.5 million**[128](index=128&type=chunk) - This decrease was primarily due to lower pre-tax book losses, decreased discrete tax benefits, and increased tax expense from valuation allowances, partially offset by increased tax benefits from the Capri Resort sale and foreign exchange fluctuations[128](index=128&type=chunk) [Results of Operations - Six Months Ended June 30, 2021 and 2020](index=38&type=section&id=Results%20of%20Operations%20-%20Six%20Months%20Ended%20June%2030,%202021%20and%202020) | Metric | 2021 ($ in thousands) | 2020 ($ in thousands) | Change ($ in thousands) | % Change | | :------------------------------------ | :-------------------- | :-------------------- | :---------------------- | :------- | | Total revenue | 206,549 | 178,210 | 28,339 | 15.9% | | Operating loss | (53,465) | (82,626) | 29,161 | 35.3% | | Net loss | (77,513) | (110,014) | 32,501 | 29.5% | | Adjusted EBITDA | 20,410 | 18,921 | 1,489 | 7.9% | | Adjusted EBITDA Margin | 10.2% | 11.0% | (0.8)pts | (7.3)% | - Total revenue increased by **$28.3 million** (**15.9%**) due to the resumption of resort operations[130](index=130&type=chunk)[134](index=134&type=chunk) - Net loss improved by **$32.5 million** (**29.5%**) year-over-year[130](index=130&type=chunk) [Total Revenue and Total Net Revenue](index=39&type=section&id=Total%20Revenue%20and%20Total%20Net%20Revenue) | Revenue Type | 2021 ($ in thousands) | 2020 ($ in thousands) | Change ($ in thousands) | % Change | | :------------------------ | :-------------------- | :-------------------- | :---------------------- | :------- | | Net Package Revenue | 163,698 | 148,398 | 15,300 | 10.3% | | Net Non-package Revenue | 35,226 | 22,663 | 12,563 | 55.4% | | Management Fee Revenue | 796 | 627 | 169 | 27.0% | | Total Net Revenue | 199,720 | 171,688 | 28,032 | 16.3% | - Comparable Total Net Revenue increased by **$49.2 million** (**32.9%**) due to the resumption of resort operations[133](index=133&type=chunk)[137](index=137&type=chunk) [Direct Expenses](index=40&type=section&id=Direct%20Expenses) | Expense Type | 2021 ($ in thousands) | 2020 ($ in thousands) | Change ($ in thousands) | % Change | | :-------------------------- | :-------------------- | :-------------------- | :---------------------- | :------- | | Direct expenses | 139,755 | 118,278 | 21,477 | 18.2% | | Less: compulsory tips | 5,347 | 5,114 | 233 | 4.6% | | Net Direct Expenses | 134,408 | 113,164 | 21,244 | 18.8% | - Net Direct Expenses increased by **$21.2 million** (**18.8%**) due to the resumption of resort operations[138](index=138&type=chunk)[139](index=139&type=chunk) - Food and beverage expenses increased by **24.2%**, and salaries and wages increased by **9.0%** year-over-year[141](index=141&type=chunk) [Selling, General and Administrative Expenses](index=41&type=section&id=Selling,%20General%20and%20Administrative%20Expenses) - Selling, general and administrative expenses decreased by **$0.4 million** (**0.7%**) to **$53.2 million**, primarily due to lower professional fees and insurance expenses following asset sales[143](index=143&type=chunk) - This decrease was partially offset by increased advertising, commissions, and corporate personnel expenses due to resort reopenings[143](index=143&type=chunk) [Depreciation and Amortization Expense](index=42&type=section&id=Depreciation%20and%20Amortization%20Expense) - Depreciation and amortization expense decreased by **$6.5 million** (**13.6%**) to **$40.9 million**, mainly due to asset dispositions and accelerated depreciation from renovation projects in 2020[144](index=144&type=chunk) [Impairment Loss](index=42&type=section&id=Impairment%20Loss) - Impairment loss decreased by **$17.4 million** (**42.1%**) to **$24.0 million**[145](index=145&type=chunk) - The decrease was driven by **$25.3 million** of property and equipment impairment and **$16.2 million** goodwill impairment in 2020, partially offset by a **$24.0 million** property and equipment impairment in 2021 related to the Capri Resort sale[145](index=145&type=chunk) [Interest Expense](index=42&type=section&id=Interest%20Expense) - Interest expense decreased by **$4.8 million** (**11.4%**) to **$37.1 million**, primarily due to a **$16.0 million** decrease from changes in the fair value of interest rate swaps and lower Revolving Credit Facility interest[146](index=146&type=chunk) - Cash interest paid increased by **$9.8 million** to **$38.7 million**, mainly due to the Additional Senior Secured Credit Facility and Property Loan Agreement executed in June 2020[147](index=147&type=chunk) [Income Tax Benefit](index=42&type=section&id=Income%20Tax%20Benefit) - Income tax benefit increased by **$0.9 million** (**6.4%**) to **$14.4 million**[148](index=148&type=chunk) - This increase was mainly driven by higher pre-tax book losses, increased tax benefits from the Capri Resort sale, and foreign exchange rate fluctuations, partially offset by increased valuation allowances and decreased discrete tax benefits[148](index=148&type=chunk) [Key Indicators of Financial and Operating Performance](index=43&type=section&id=Key%20Indicators%20of%20Financial%20and%20Operating%20Performance) - The company uses non-U.S. GAAP measures like Net Package Revenue, Net Non-package Revenue, Owned Net Revenue, Management Fee Revenue, Total Net Revenue, Occupancy, Net Package ADR, Net Package RevPAR, Adjusted EBITDA, and Owned Resort EBITDA to monitor performance[149](index=149&type=chunk)[153](index=153&type=chunk) - Adjusted EBITDA is considered a key performance indicator by the Board and management for assessing core operating performance and determining variable compensation[168](index=168&type=chunk) - Comparable non-U.S. GAAP measures exclude results from resorts not owned or in operation for the entire reporting period, providing consistent metrics for evaluating operating resorts[170](index=170&type=chunk) [Segment Results - Three Months Ended June 30, 2021 and 2020](index=49&type=section&id=Segment%20Results%20-%20Three%20Months%20Ended%20June%2030,%202021%20and%202020) | Segment | Owned Net Revenue 2021 ($ in thousands) | Owned Net Revenue 2020 ($ in thousands) | Owned Resort EBITDA 2021 ($ in thousands) | Owned Resort EBITDA 2020 ($ in thousands) | | :----------------- | :------------------------------------ | :------------------------------------ | :---------------------------------------- | :---------------------------------------- | | Yucatán Peninsula | 45,067 | 21 | 13,022 | (8,004) | | Pacific Coast | 20,514 | (74) | 7,078 | (2,816) | | Dominican Republic | 33,888 | 11 | 7,926 | (4,881) | | Jamaica | 24,134 | 564 | 4,072 | (8,097) | | Total | 123,603 | 522 | 32,098 | (23,798) | - All segments showed significant increases in Owned Net Revenue and Owned Resort EBITDA due to the resumption of operations compared to Q2 2020 when resorts were closed[174](index=174&type=chunk) [Yucatán Peninsula](index=50&type=section&id=Yucat%C3%A1n%20Peninsula) - Comparable Owned Net Revenue increased by **$45.1 million** (**68,328.8%**) due to resort reopenings[176](index=176&type=chunk) - Comparable Net Package ADR was **$328.51**, benefiting from a change in OTA billing methodology; excluding this, it would be **$321.58**[176](index=176&type=chunk) - Comparable Owned Resort EBITDA increased by **$20.4 million** (**308.2%**)[178](index=178&type=chunk) [Pacific Coast](index=51&type=section&id=Pacific%20Coast) - Owned Net Revenue increased by **$20.6 million** (**27,821.6%**) due to resort reopenings[179](index=179&type=chunk) - Net Package ADR was **$339.20**, with a **$5.83** benefit from OTA billing changes; excluding this, it would be **$333.37**[179](index=179&type=chunk) - Owned Resort EBITDA increased by **$9.9 million** (**351.3%**)[181](index=181&type=chunk) [Dominican Republic](index=51&type=section&id=Dominican%20Republic) - Owned Net Revenue increased by **$33.9 million** (**307,972.7%**) due to resort reopenings[182](index=182&type=chunk) - Net Package ADR increased by **$75.36** (**41.3%**) compared to 2019, driven by the opening of Hyatt Ziva and Hyatt Zilara Cap Cana[183](index=183&type=chunk) - Owned Resort EBITDA increased by **$12.8 million** (**262.4%**)[184](index=184&type=chunk) [Jamaica](index=52&type=section&id=Jamaica) - Comparable Owned Net Revenue increased by **$23.6 million** (**3,773.1%**) due to resort reopenings[186](index=186&type=chunk) - Comparable Net Package ADR decreased by **$13.72** (**4.3%**) compared to 2019[187](index=187&type=chunk) - Comparable Owned Resort EBITDA increased by **$10.7 million** (**159.1%**)[187](index=187&type=chunk) [Segment Results - Six Months Ended June 30, 2021 and 2020](index=53&type=section&id=Segment%20Results%20-%20Six%20Months%20Ended%20June%2030,%202021%20and%202020) | Segment | Owned Net Revenue 2021 ($ in thousands) | Owned Net Revenue 2020 ($ in thousands) | Owned Resort EBITDA 2021 ($ in thousands) | Owned Resort EBITDA 2020 ($ in thousands) | | :----------------- | :------------------------------------ | :------------------------------------ | :---------------------------------------- | :---------------------------------------- | | Yucatán Peninsula | 78,670 | 62,338 | 20,196 | 16,931 | | Pacific Coast | 29,135 | 21,081 | 7,563 | 6,056 | | Dominican Republic | 54,769 | 35,607 | 9,592 | 2,908 | | Jamaica | 35,856 | 52,000 | 1,292 | 10,976 | | Total | 198,430 | 171,026 | 38,643 | 36,871 | - Yucatán Peninsula, Pacific Coast, and Dominican Republic segments showed strong growth in Owned Net Revenue and Owned Resort EBITDA, while Jamaica experienced declines[188](index=188&type=chunk) [Yucatán Peninsula](index=54&type=section&id=Yucat%C3%A1n%20Peninsula) - Comparable Owned Net Revenue increased by **$26.6 million** (**52.2%**) due to resort reopenings[190](index=190&type=chunk) - Comparable Net Package ADR was **$314.43**, with a **$3.83** benefit from OTA billing changes; excluding this, it would be **$310.60**[190](index=190&type=chunk) - Comparable Owned Resort EBITDA increased by **$6.4 million** (**42.5%**)[192](index=192&type=chunk) [Pacific Coast](index=55&type=section&id=Pacific%20Coast) - Owned Net Revenue increased by **$8.1 million** (**38.2%**) due to resort reopenings[194](index=194&type=chunk) - Net Package ADR was **$330.29**, with a **$3.98** benefit from OTA billing changes; excluding this, it would be **$326.31**[194](index=194&type=chunk) - Owned Resort EBITDA increased by **$1.5 million** (**24.9%**)[196](index=196&type=chunk) [Dominican Republic](index=55&type=section&id=Dominican%20Republic) - Owned Net Revenue increased by **$19.2 million** (**53.8%**) due to resort reopenings[197](index=197&type=chunk) - Net Package ADR increased by **$56.06** (**26.6%**) compared to 2019, driven by the opening of Hyatt Ziva and Hyatt Zilara Cap Cana[198](index=198&type=chunk) - Owned Resort EBITDA increased by **$6.7 million** (**229.8%**)[199](index=199&type=chunk) [Jamaica](index=56&type=section&id=Jamaica) - Owned Net Revenue decreased by **$5.3 million** (**12.8%**) due to a higher mix of occupancy at lower chain scale resorts[201](index=201&type=chunk) - Comparable Net Package ADR decreased by **$53.50** (**15.3%**) compared to 2019[202](index=202&type=chunk) - Owned Resort EBITDA decreased by **$7.3 million** (**89.6%**)[202](index=202&type=chunk) [Non-U.S. GAAP Financial Measures](index=57&type=section&id=Non-U.S.%20GAAP%20Financial%20Measures) | Metric | 3 Months Ended June 30, 2021 ($ in thousands) | 3 Months Ended June 30, 2020 ($ in thousands) | 6 Months Ended June 30, 2021 ($ in thousands) | 6 Months Ended June 30, 2020 ($ in thousands) | | :-------------------------- | :------------------------------------ | :------------------------------------ | :------------------------------------ | :------------------------------------ | | Net loss | (7,768) | (87,458) | (77,513) | (110,014) | | EBITDA | 18,747 | (58,789) | (13,899) | (34,320) | | Adjusted EBITDA | 22,915 | (31,422) | 20,410 | 18,921 | | Owned Resort EBITDA | 32,098 | (23,798) | 38,643 | 36,871 | | Comparable Owned Resort EBITDA | 32,776 | (21,029) | 39,502 | 32,219 | - Adjusted EBITDA for the three months ended June 30, 2021, was **$22.9 million**, a significant improvement from a loss of **$31.4 million** in the prior year[204](index=204&type=chunk) - Comparable Owned Resort EBITDA for the six months ended June 30, 2021, increased to **$39.5 million** from **$32.2 million** in the prior year[204](index=204&type=chunk) [Seasonality](index=57&type=section&id=Seasonality) - The lodging industry's seasonality typically results in highest demand and package rates between mid-December and April[205](index=205&type=chunk) - The COVID-19 pandemic has altered these seasonal trends in 2020 and 2021, impacting predictable fluctuations in revenue and liquidity[206](index=206&type=chunk) [Inflation](index=57&type=section&id=Inflation) - Recent inflation may limit the company's ability to fully offset cost increases by adjusting room rates due to competitive pressures and the ongoing effects of the COVID-19 pandemic[207](index=207&type=chunk) [Liquidity and Capital Resources](index=58&type=section&id=Liquidity%20and%20Capital%20Resources) - Available cash increased to **$237.7 million** as of June 30, 2021, from **$146.9 million** at December 31, 2020, driven by equity raises and asset sales[209](index=209&type=chunk) - Short-term liquidity needs are expected to be met through existing cash, equity issuances, or short-term borrowings under the **$85.0 million** Revolving Credit Facility[211](index=211&type=chunk) - Long-term liquidity needs may include property developments, acquisitions, and debt repayment, to be met through various financing sources including equity or debt issuances[212](index=212&type=chunk)[214](index=214&type=chunk) [Cash Flows](index=59&type=section&id=Cash%20Flows) | Cash Flow Activity | 6 Months Ended June 30, 2021 ($ in thousands) | 6 Months Ended June 30, 2020 ($ in thousands) | | :-------------------------------- | :------------------------------------ | :------------------------------------ | | Net cash used in operating activities | (13,578) | (28,396) | | Net cash provided by investing activities | 80,560 | 58,862 | | Net cash provided by financing activities | 23,520 | 227,544 | - Net cash used in operating activities improved to **$13.6 million** in 2021 from **$28.4 million** in 2020, reflecting reduced net loss and non-cash adjustments[218](index=218&type=chunk)[220](index=220&type=chunk) - Net cash provided by investing activities increased to **$80.6 million** in 2021, primarily due to **$89.1 million** in net proceeds from asset sales[219](index=219&type=chunk)[220](index=220&type=chunk) - Net cash provided by financing activities decreased to **$23.5 million** in 2021, mainly due to **$137.7 million** from equity issuance offset by **$29.4 million** in Term Loan principal payments and **$84.7 million** in Revolving Credit Facility repayments[221](index=221&type=chunk)[225](index=225&type=chunk) [Contractual Obligations](index=62&type=section&id=Contractual%20Obligations) - Total debt decreased by **$114.1 million** to **$1,153.2 million** as of June 30, 2021, driven by repayments on the Revolving Credit Facility and Term Loan[232](index=232&type=chunk) - The company anticipates repaying net proceeds from asset sales (Jewel Dunn's River, Jewel Runaway Bay, Dreams Puerto Aventuras, and Capri Resort) in May 2022, February 2023, and December 2022, respectively, in accordance with credit agreements[233](index=233&type=chunk) [Off Balance Sheet Arrangements](index=62&type=section&id=Off%20Balance%20Sheet%20Arrangements) - The company had no off-balance sheet arrangements for the three and six months ended June 30, 2021 and 2020[234](index=234&type=chunk) [Critical Accounting Policies and Estimates](index=62&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) - The preparation of financial statements requires significant management judgment and estimates, which are subject to greater volatility due to the COVID-19 pandemic's increased uncertainty[235](index=235&type=chunk) - No material changes to critical accounting policies or methodologies have occurred, except for those disclosed in Note 2[238](index=238&type=chunk) [Fair Value of Financial Instruments](index=64&type=section&id=Fair%20Value%20of%20Financial%20Instruments) - The fair value of financial instruments, excluding debt, approximates their carrying value, as detailed in Note 13[239](index=239&type=chunk) [Related Party Transactions](index=64&type=section&id=Related%20Party%20Transactions) - Information on related party transactions is provided in Note 6 to the Condensed Consolidated Financial Statements[240](index=240&type=chunk) [Recent Accounting Pronouncements](index=64&type=section&id=Recent%20Accounting%20Pronouncements) - Details on recent accounting pronouncements are available in Note 2 to the Condensed Consolidated Financial Statements[241](index=241&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=64&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section outlines the company's exposure to market risks, including interest rate and foreign currency risks, and management strategies [Interest Rate Risk](index=64&type=section&id=Interest%20Rate%20Risk) - As of June 30, 2021, **15%** of outstanding indebtedness bore interest at floating rates, and **85%** at fixed rates[243](index=243&type=chunk) - A **1.0%** increase in market interest rates on floating rate debt would decrease future earnings and cash flows by approximately **$0.2 million** annually[243](index=243&type=chunk) - The company uses an interest rate swap to manage exposure to floating rate risk, fixing LIBOR at **2.85%** on **$800.0 million** of its Term Loan[243](index=243&type=chunk)[69](index=69&type=chunk) [Foreign Currency Risk](index=64&type=section&id=Foreign%20Currency%20Risk) - Approximately **3.2%** of revenues and **84%** of operating expenses for the six months ended June 30, 2021, were denominated in currencies other than the U.S. dollar[244](index=244&type=chunk)[245](index=245&type=chunk) - A **5%** adverse change in foreign exchange rates would impact net income before tax by approximately **$3.5 million** for Mexican Peso, **$2.0 million** for Dominican Peso, and **$1.6 million** for Jamaican Dollar denominated expenses[246](index=246&type=chunk) - The company currently does not have outstanding derivatives or other financial instruments to hedge foreign currency exchange risk[247](index=247&type=chunk) [Item 4. Controls and Procedures](index=65&type=section&id=Item%204.%20Controls%20and%20Procedures) This section addresses the effectiveness of disclosure controls and procedures, reporting on changes and an identified material weakness in income tax provision [Disclosure Controls and Procedures](index=65&type=section&id=Disclosure%20Controls%20and%20Procedures) - As of June 30, 2021, the company's disclosure controls and procedures were not effective due to an identified material weakness in internal control over financial reporting[248](index=248&type=chunk) [Changes in Internal Control Over Financial Reporting](index=65&type=section&id=Changes%20in%20Internal%20Control%20Over%20Financial%20Reporting) - No material changes in internal control over financial reporting occurred during the most recent fiscal quarter[249](index=249&type=chunk) - A material weakness related to the income tax provision (the 'Tax Weakness') identified as of December 31, 2020, has not yet been remediated[249](index=249&type=chunk) - Remediation efforts include hiring additional resources and implementing enhanced policies, procedures, and controls for income tax account reconciliations and analysis[249](index=249&type=chunk) [PART II. OTHER INFORMATION](index=66&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=66&type=section&id=Item%201.%20Legal%20Proceedings) This section reports on routine legal claims and administrative proceedings, none expected to materially affect financial condition or operations - The company is subject to claims and administrative proceedings in the ordinary course of business, none of which are believed to be material[252](index=252&type=chunk) - The ultimate outcome of such proceedings is not expected to have a material adverse effect on the company's financial condition, cash flows, or results of operations[252](index=252&type=chunk) [Item 1A. Risk Factors](index=66&type=section&id=Item%201A.%20Risk%20Factors) This section confirms no material changes to risk factors previously disclosed in the Annual Report on Form 10-K - No material changes to the risk factors have occurred since the Annual Report on Form 10-K filed on March 4, 2021[253](index=253&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=66&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section reports no unregistered sales of equity securities or use of proceeds from such sales during the period - There were no unregistered sales of equity securities during the period[254](index=254&type=chunk) - There was no use of proceeds from unregistered sales of equity securities[255](index=255&type=chunk) [Item 3. Defaults Upon Senior Securities](index=66&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This section states no defaults upon senior securities occurred during the reporting period - There were no defaults upon senior securities during the period[257](index=257&type=chunk) [Item 4. Mine Safety Disclosures](index=66&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section indicates that mine safety disclosures are not applicable to the company's operations - Mine safety disclosures are not applicable to the registrant[258](index=258&type=chunk) [Item 5. Other Information](index=66&type=section&id=Item%205.%20Other%20Information) This section confirms no other information is reported under this item - No other information is reported under this item[259](index=259&type=chunk) [Item 6. Exhibits](index=67&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including CEO/CFO certifications and XBRL financial statements - Exhibits include certifications of the Chief Executive Officer and Chief Financial Officer pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002[261](index=261&type=chunk) - The financial statements and notes are filed in XBRL (eXtensible Business Reporting Language) format as Exhibit 101[261](index=261&type=chunk)

Playa Hotels & Resorts N.V. (NASDAQ:PLYA) Q1 2021 Earnings Conference Call May 6, 2021 11:30 AM ET Company Participants Ryan Hymel – Executive Vice President and Chief Financial Officer Bruce Wardinski – Chairman and Chief Executive Officer Conference Call Participants Chris Woronka – Deutsche Bank Shaun Kelley – Bank of America Smedes Rose – Citi Patrick Scholes – Truist Securities Jonathan Jenkins – Janney Chad Beynon – Macquarie Operator Good day, and welcome to the Playa Hotels First Quarter 2021 Earnin ...

[PART I. FINANCIAL INFORMATION](index=2&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This part presents the company's unaudited financial statements, management's discussion and analysis, market risk disclosures, and controls and procedures for the first quarter [Item 1. Financial Statements (unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20(unaudited)) This section presents the unaudited condensed consolidated financial statements for Q1 2021, including core financial statements and detailed notes, reflecting the significant impact of the COVID-19 pandemic [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) | Metric | As of March 31, 2021 ($ in millions) | As of December 31, 2020 ($ in millions) | Change ($ in millions) | | :-------------------------- | :------------------------------------ | :------------------------------------- | :---------------------- | | Cash and cash equivalents | 200.4 | 146.9 | 53.5 | | Total assets | 2,068.9 | 2,097.7 | (28.8) | | Debt | 972.0 | 1,251.3 | (279.3) | | Total liabilities | 1,430.2 | 1,529.5 | (99.3) | | Total shareholders' equity | 638.7 | 568.1 | 70.6 | [Condensed Consolidated Statements of Operations](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) | Metric | Three Months Ended March 31, 2021 ($ in millions) | Three Months Ended March 31, 2020 ($ in millions) | Change ($ in millions) | % Change | | :-------------------------- | :------------------------------------------------- | :------------------------------------------------- | :---------------------- | :------- | | Total revenue | 77.7 | 177.2 | (99.5) | (56.1)% | | Operating (loss) income | (52.8) | 3.4 | (56.2) | (1,646.3)% | | Net loss | (69.7) | (22.6) | (47.2) | 209.2% | | Losses per share - Basic | (0.43) | (0.17) | (0.26) | 152.9% | [Condensed Consolidated Statements of Comprehensive Loss](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Loss) | Metric | Three Months Ended March 31, 2021 ($ in millions) | Three Months Ended March 31, 2020 ($ in millions) | Change ($ in millions) | | :-------------------------------- | :------------------------------------------------- | :------------------------------------------------- | :---------------------- | | Net loss | (69.7) | (22.6) | (47.2) | | Unrealized gain (loss) on interest rate swaps | 2.9 | (15.0) | 17.9 | | Total other comprehensive income (loss) | 2.9 | (15.1) | 18.0 | | Comprehensive loss | (66.9) | (37.7) | (29.2) | [Condensed Consolidated Statements of Shareholders' Equity](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Shareholders'%20Equity) | Metric | As of March 31, 2021 ($ in millions) | As of December 31, 2020 ($ in millions) | Change ($ in millions) | | :-------------------------- | :------------------------------------ | :------------------------------------- | :---------------------- | | Ordinary shares | 18.5 | 14.9 | 3.6 | | Paid-in capital | 1,167.4 | 1,030.1 | 137.3 | | Accumulated deficit | (502.4) | (429.3) | (73.2) | | Total shareholders' equity | 638.7 | 568.1 | 70.6 | - Equity issuance in Q1 2021 contributed **$137.7 million** to paid-in capital[16](index=16&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) | Cash Flow Activity | Three Months Ended March 31, 2021 ($ in millions) | Three Months Ended March 31, 2020 ($ in millions) | Change ($ in millions) | | :-------------------------------- | :------------------------------------------------- | :------------------------------------------------- | :---------------------- | | Net cash (used in) provided by operating activities | (26.6) | 26.7 | (53.3) | | Net cash provided by investing activities | 29.6 | 2.0 | 27.6 | | Net cash provided by financing activities | 50.4 | 19.9 | 30.5 | | Increase in cash and cash equivalents | 53.5 | 48.7 | 4.8 | [Notes to the Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations and disclosures for the condensed consolidated financial statements, covering key accounting policies, revenue, assets, liabilities, equity, and segment information, highlighting COVID-19's ongoing impact [Note 1. Organization, operations and basis of presentation](index=9&type=section&id=Note%201.%20Organization,%20operations%20and%20basis%20of%20presentation) - Playa Hotels & Resorts N.V. is a leading owner, operator, and developer of **22 all-inclusive resorts** in Mexico, the Dominican Republic, and Jamaica[23](index=23&type=chunk) - Due to COVID-19, all resorts temporarily suspended operations from late March through June 2020, with all except the Capri Resort reopened as of March 31, 2021[24](index=24&type=chunk) [Note 2. Significant accounting policies](index=9&type=section&id=Note%202.%20Significant%20accounting%20policies) - The adoption of ASU No. 2019-12 resulted in a **$3.4 million cumulative-effect adjustment** to opening retained earnings for Q1 2021, impacting deferred tax liabilities and expense for Dominican Republic resorts[28](index=28&type=chunk) [Note 3. Revenue](index=10&type=section&id=Note%203.%20Revenue) | Revenue Type | Q1 2021 ($ in millions) | Q1 2020 ($ in millions) | Change ($ in millions) | % Change | | :------------- | :----------------------- | :----------------------- | :---------------------- | :------- | | Package | 63.9 | 153.1 | (89.2) | (58.3)% | | Non-package | 13.0 | 22.6 | (9.6) | (42.4)% | | Management fees| 0.3 | 0.6 | (0.3) | (46.7)% | | Cost reimbursements | 0.5 | 1.0 | (0.4) | (46.0)% | | Total revenue | 77.7 | 177.2 | (99.5) | (56.1)% | | Geographic Segment | Q1 2021 Total Revenue ($ in millions) | Q1 2020 Total Revenue ($ in millions) | | :----------------- | :------------------------------------- | :------------------------------------- | | Yucatán Peninsula | 34.7 | 64.3 | | Pacific Coast | 8.9 | 21.8 | | Dominican Republic | 20.9 | 35.6 | | Jamaica | 12.7 | 54.5 | [Note 4. Property and equipment](index=11&type=section&id=Note%204.%20Property%20and%20equipment) - On February 5, 2021, the company sold Dreams Puerto Aventuras for **$34.5 million in cash**, recognizing a **$0.2 million loss**[35](index=35&type=chunk) - On March 31, 2021, an agreement was made to sell Capri Resort for **$55.0 million in cash**, resulting in a **$24.0 million impairment loss**[37](index=37&type=chunk) [Note 5. Income taxes](index=12&type=section&id=Note%205.%20Income%20taxes) - The company recognized an income tax benefit of **$2.0 million** for Q1 2021, a significant increase from a **$1.1 million provision** in Q1 2020, primarily due to lower pre-tax book income, impairment on Capri Resort, and foreign exchange rate fluctuations[41](index=41&type=chunk) - An additional **$3.0 million valuation allowance** was recognized against deferred tax assets of Mexico and Jamaica entities[40](index=40&type=chunk)[41](index=41&type=chunk) [Note 6. Related party transactions](index=12&type=section&id=Note%206.%20Related%20party%20transactions) | Related Party | Transaction | Q1 2021 ($ in millions) | Q1 2020 ($ in millions) | | :------------ | :---------- | :----------------------- | :----------------------- | | Hyatt | Franchise fees | 3.5 | 5.5 | | Sagicor | Insurance premiums | 0.2 | 0.4 | | Sagicor | Cost reimbursements | 0.4 | 0.7 | | Chief Executive Officer | Lease expense | 0.2 | 0.2 | | DKCM | Interest expense | 5.4 | — | [Note 8. Ordinary shares](index=13&type=section&id=Note%208.%20Ordinary%20shares) - On January 11, 2021, the company issued **28,750,000 ordinary shares** in a public equity offering, receiving **$137.7 million in cash**, net of costs[50](index=50&type=chunk) - As of March 31, 2021, there were **164,029,575 ordinary shares** outstanding[51](index=51&type=chunk) [Note 11. Debt](index=15&type=section&id=Note%2011.%20Debt) | Debt Type | As of March 31, 2021 ($ in millions) | As of December 31, 2020 ($ in millions) | | :-------------------------- | :------------------------------------ | :------------------------------------- | | Revolving Credit Facilities | — | 84.7 | | Term Loan (net) | 1,060.7 | 1,062.7 | | Property Loan (net) | 102.1 | 101.6 | | Financing lease obligations | 2.3 | 2.3 | | Total debt, net | 1,165.1 | 1,251.3 | - The Fifth Amendment to the Amended & Restated Credit Agreement extended **$68.0 million** of the revolving credit facility to January 2024, repaid the **$84.7 million** outstanding balance, and increased the interest rate on the extended portion to LIBOR plus 4.00%[62](index=62&type=chunk) - The company was in compliance with all applicable financial covenants as of March 31, 2021, including maintaining a minimum liquidity balance of **$60.0 million** through the Relief Period (March 31, 2022)[63](index=63&type=chunk) [Note 12. Derivative financial instruments](index=17&type=section&id=Note%2012.%20Derivative%20financial%20instruments) - The company uses two interest rate swaps with fixed notional values of **$200.0 million** and **$600.0 million** to mitigate interest rate risk, fixing LIBOR at 2.85% on **$800.0 million** of its Term Loan[64](index=64&type=chunk) | Metric | As of March 31, 2021 ($ in millions) | As of December 31, 2020 ($ in millions) | | :-------------------------- | :------------------------------------ | :------------------------------------- | | Interest rate swaps (Derivative financial instruments) | 40.8 | 46.3 | - Unrealized gain on interest rate swaps was **$2.9 million** for Q1 2021, compared to a loss of **$15.0 million** for Q1 2020, recognized through other comprehensive income (loss)[13](index=13&type=chunk) [Note 13. Fair value of financial instruments](index=17&type=section&id=Note%2013.%20Fair%20value%20of%20financial%20instruments) | Financial Instrument | Fair Value (March 31, 2021, $ in millions) | Fair Value (December 31, 2020, $ in millions) | Fair Value Hierarchy Level | | :------------------- | :------------------------------------------ | :------------------------------------------- | :------------------------- | | Interest rate swap | 40.8 | 46.3 | Level 2 | | Financial Instrument | Fair Value (March 31, 2021, $ in millions) | Fair Value Hierarchy Level | | :------------------- | :------------------------------------------ | :------------------------- | | Impaired long-lived assets (Capri Resort) | 55.0 | Level 2 | [Note 15. Segment information](index=22&type=section&id=Note%2015.%20Segment%20information) - The company evaluates business segment performance primarily on Adjusted EBITDA and Owned Resort EBITDA, which are non-GAAP measures[81](index=81&type=chunk)[82](index=82&type=chunk) | Metric | Q1 2021 ($ in millions) | Q1 2020 ($ in millions) | Change ($ in millions) | % Change | | :-------------------------- | :----------------------- | :----------------------- | :---------------------- | :------- | | Segment Owned Net Revenue | 74.8 | 170.5 | (95.7) | (56.1)% | | Segment Owned Resort EBITDA | 6.5 | 60.7 | (54.1) | (89.2)% | | Total Adjusted EBITDA | (2.5) | 50.3 | (52.8) | (105.0)% | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=25&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's analysis of Q1 2021 financial condition and operations, emphasizing the adverse impact of COVID-19 on revenue, profitability, and liquidity, alongside mitigation strategies and key performance metrics [Cautionary Note Regarding Forward-Looking Statements](index=25&type=section&id=Cautionary%20Note%20Regarding%20Forward-Looking%20Statements) - The report contains forward-looking statements subject to various factors that could cause actual outcomes to differ materially, with the COVID-19 pandemic being one of the most significant factors[89](index=89&type=chunk) [Overview](index=26&type=section&id=Overview) - Playa is a leading owner, operator, and developer of **22 all-inclusive resorts** (**8,366 rooms**) in Mexico, Jamaica, and the Dominican Republic[92](index=92&type=chunk) | Metric | Q1 2021 | Q1 2020 | Change | | :------------------ | :------ | :------ | :----- | | Net loss | $(69.7)M | $(22.6)M | $(47.1)M | | Total revenue | $77.7M | $177.2M | $(99.5)M | | Net Package RevPAR | $91.40 | $197.55 | $(106.15) | | Adjusted EBITDA | $(2.5)M | $50.3M | $(52.8)M | [Impact of COVID-19 Pandemic](index=26&type=section&id=Impact%20of%20COVID-19%20Pandemic) - The COVID-19 pandemic severely reduced occupancy levels and significantly disrupted global leisure travel, leading to temporary resort suspensions and adverse economic effects[94](index=94&type=chunk)[95](index=95&type=chunk) - As of March 31, 2021, the company had **$200.4 million** in available cash and implemented several liquidity measures[97](index=97&type=chunk) - Raised **$138.0 million** in additional capital through an equity offering in January 2021[99](index=99&type=chunk) - Repaid the outstanding balance under the Revolving Credit Facility and amended/extended it in February 2021[99](index=99&type=chunk) - Sold Dreams Puerto Aventuras for **$34.5 million** in February 2021[99](index=99&type=chunk) - Entered an agreement to sell Capri Resort for **$55.0 million** in March 2021[99](index=99&type=chunk) [Our Portfolio of Resorts](index=29&type=section&id=Our%20Portfolio%20of%20Resorts) - As of March 31, 2021, Playa's portfolio consisted of **22 owned and/or managed resorts** (**8,366 rooms**) across the Yucatán Peninsula, Pacific Coast, Dominican Republic, and Jamaica[100](index=100&type=chunk)[102](index=102&type=chunk) [Results of Operations](index=30&type=section&id=Results%20of%20Operations) The company experienced significant declines in revenue and profitability for Q1 2021 compared to Q1 2020, primarily due to reduced occupancy from the COVID-19 pandemic, leading to substantial operating losses despite cost-cutting measures [Total Revenue and Total Net Revenue](index=31&type=section&id=Total%20Revenue%20and%20Total%20Net%20Revenue) | Metric | Q1 2021 ($ in millions) | Q1 2020 ($ in millions) | Change ($ in millions) | % Change | | :------------------ | :----------------------- | :----------------------- | :---------------------- | :------- | | Total revenue | 77.7 | 177.2 | (99.5) | (56.1)% | | Total Net Revenue | 75.3 | 171.2 | (95.9) | (56.0)% | | Occupancy (Total Portfolio) | 31.6% | 66.6% | (35.0)pts | (52.6)% | | Net Package RevPAR (Total Portfolio) | $91.40 | $197.55 | $(106.15) | (53.7)% | - The decreases in total revenue and total net revenue were primarily due to reduced occupancy at all resorts as a result of the COVID-19 pandemic[107](index=107&type=chunk) [Direct Expenses](index=32&type=section&id=Direct%20Expenses) | Metric | Q1 2021 ($ in millions) | Q1 2020 ($ in millions) | Change ($ in millions) | % Change | | :------------------ | :----------------------- | :----------------------- | :---------------------- | :------- | | Net Direct Expenses | 58.3 | 92.8 | (34.5) | (37.2)% | | Salaries and wages | 25.0 | 37.6 | (12.6) | (33.4)% | | Food and beverages | 10.3 | 20.9 | (10.6) | (50.7)% | - Net Direct Expenses decreased due to reduced occupancy and cost-cutting measures in response to the COVID-19 pandemic[112](index=112&type=chunk)[113](index=113&type=chunk) [Selling, General and Administrative Expenses](index=34&type=section&id=Selling,%20General%20and%20Administrative%20Expenses) - Selling, general and administrative expenses decreased by **$9.2 million** (27.1%) year-over-year, driven by reduced advertising and commissions (**$5.0 million**), professional fees (**$1.2 million**), and corporate personnel costs (**$1.1 million**)[116](index=116&type=chunk) [Depreciation and Amortization Expense](index=34&type=section&id=Depreciation%20and%20Amortization%20Expense) - Depreciation and amortization expense decreased by **$4.1 million** (16.3%) year-over-year, primarily due to **$2.2 million** of accelerated depreciation in 2020 and **$2.2 million** from asset sales[117](index=117&type=chunk) [Impairment Loss](index=34&type=section&id=Impairment%20Loss) - Impairment loss increased by **$7.8 million** (48.5%) year-over-year, driven by a **$24.0 million** property and equipment impairment for the Capri Resort in Q1 2021, partially offset by **$16.2 million** in goodwill impairment losses in Q1 2020[118](index=118&type=chunk) [Interest Expense](index=34&type=section&id=Interest%20Expense) - Interest expense decreased by **$2.8 million** (13.3%) year-over-year, primarily due to a **$9.0 million** decrease from the change in fair value of interest rate swaps, partially offset by additional interest from the Additional Senior Secured Credit Facility (**$2.2 million**) and Property Loan Agreement (**$2.5 million**)[119](index=119&type=chunk) - Cash interest paid increased by **$4.8 million** (33.9%) to **$18.9 million**[120](index=120&type=chunk) [Income Tax Benefit](index=34&type=section&id=Income%20Tax%20Benefit) - The company recorded an income tax benefit of **$2.0 million** for Q1 2021, compared to an income tax provision of **$1.1 million** for Q1 2020[121](index=121&type=chunk) [Key Indicators of Financial and Operating Performance](index=35&type=section&id=Key%20Indicators%20of%20Financial%20and%20Operating%20Performance) This section defines and explains key financial and operational metrics, including revenue measures, occupancy, ADR, RevPAR, and Adjusted EBITDA, along with the usefulness and limitations of these non-GAAP measures [Net Package Revenue, Net Non-package Revenue, Owned Net Revenue, Management Fee Revenue, Cost Reimbursements, Total Net Revenue and Net Direct Expenses](index=35&type=section&id=Net%20Package%20Revenue,%20Net%20Non-package%20Revenue,%20Owned%20Net%20Revenue,%20Management%20Fee%20Revenue,%20Cost%20Reimbursements,%20Total%20Net%20Revenue%20and%20Net%20Direct%20Expenses) - Definitions provided for Net Package Revenue, Net Non-package Revenue, Owned Net Revenue, Management Fee Revenue, Cost Reimbursements, Total Net Revenue, and Net Direct Expenses, emphasizing the exclusion of compulsory tips for clearer operating results[123](index=123&type=chunk)[124](index=124&type=chunk)[125](index=125&type=chunk)[126](index=126&type=chunk)[128](index=128&type=chunk)[129](index=129&type=chunk) [Occupancy](index=37&type=section&id=Occupancy) - Occupancy measures the utilization of a resort's total available capacity, indicating demand and influencing Net Package ADR optimization[130](index=130&type=chunk) [Net Package ADR](index=37&type=section&id=Net%20Package%20ADR) - Net Package ADR (Average Daily Rate) reflects the average rate paid for all-inclusive packages, providing insights into pricing and guest base[131](index=131&type=chunk) [Net Package RevPAR](index=37&type=section&id=Net%20Package%20RevPAR) - Net Package RevPAR (Revenue Per Available Room) is the product of Net Package ADR and occupancy, serving as a key performance measure in the all-inclusive lodging industry[132](index=132&type=chunk) [EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin, Owned Resort EBITDA, and Owned Resort EBITDA Margin](index=37&type=section&id=EBITDA,%20Adjusted%20EBITDA,%20Adjusted%20EBITDA%20Margin,%20Owned%20Resort%20EBITDA,%20and%20Owned%20Resort%20EBITDA%20Margin) - Definitions provided for EBITDA, Adjusted EBITDA (excluding various non-core items), Adjusted EBITDA Margin, Owned Resort EBITDA, and Owned Resort EBITDA Margin, which are non-GAAP financial measures used for performance evaluation[133](index=133&type=chunk)[134](index=134&type=chunk)[135](index=135&type=chunk)[136](index=136&type=chunk) [Usefulness and Limitation of Non-U.S. GAAP Measures](index=39&type=section&id=Usefulness%20and%20Limitation%20of%20Non-U.S.%20GAAP%20Measures) - Non-U.S. GAAP measures are useful for comparing performance consistently by removing non-core impacts and are key performance indicators for management, but they have limitations as they may not be comparable across companies and are not substitutes for U.S. GAAP measures[137](index=137&type=chunk)[138](index=138&type=chunk)[139](index=139&type=chunk)[140](index=140&type=chunk) [Comparable Non-U.S. GAAP Measures](index=39&type=section&id=Comparable%20Non-U.S.%20GAAP%20Measures) - Comparable non-U.S. GAAP measures (Adjusted EBITDA, Total Net Revenue, Net Package Revenue, Net Non-package Revenue, Net Direct Expenses) are presented to eliminate disparities from resort acquisitions, dispositions, or closures, providing consistent metrics for operating resorts[141](index=141&type=chunk) - Comparable resorts for Q1 2021 exclude Dreams Puerto Aventuras (sold Feb 2021) and Jewel Dunn's River/Runaway Bay (sold May 2020)[142](index=142&type=chunk) [Segment Results](index=41&type=section&id=Segment%20Results) All geographic segments experienced significant declines in Owned Net Revenue and Owned Resort EBITDA for Q1 2021 due to COVID-19's impact on occupancy, with varying regional performance and specific property influences | Segment | Q1 2021 Owned Net Revenue ($ in millions) | Q1 2020 Owned Net Revenue ($ in millions) | % Change | | :----------------- | :------------------------------------- | :------------------------------------- | :------- | | Yucatán Peninsula | 33.6 | 62.3 | (46.1)% | | Pacific Coast | 8.6 | 21.2 | (59.2)% | | Dominican Republic | 20.9 | 35.6 | (41.3)% | | Jamaica | 11.7 | 51.4 | (77.2)% | | Segment | Q1 2021 Owned Resort EBITDA ($ in millions) | Q1 2020 Owned Resort EBITDA ($ in millions) | % Change | | :----------------- | :------------------------------------- | :------------------------------------- | :------- | | Yucatán Peninsula | 7.2 | 24.9 | (71.2)% | | Pacific Coast | 0.5 | 8.9 | (94.5)% | | Dominican Republic | 1.7 | 7.8 | (78.6)% | | Jamaica | (2.8) | 19.1 | (114.6)% | [Yucatán Peninsula](index=42&type=section&id=Yucat%C3%A1n%20Peninsula) | Metric | Q1 2021 | Q1 2020 | Change | | :------------------ | :------ | :------ | :----- | | Occupancy | 41.8% | 74.1% | (32.3)pts | | Net Package ADR | $290.91 | $299.22 | $(8.31) | | Net Package RevPAR | $121.66 | $221.58 | $(99.92) | | Owned Net Revenue | $33.6M | $62.3M | $(28.7)M | | Owned Resort EBITDA | $7.2M | $24.9M | $(17.7)M | - Comparable Owned Net Revenue decreased by **43.6%** and Comparable Owned Resort EBITDA decreased by **70.2%** due to reduced occupancy from the COVID-19 pandemic[145](index=145&type=chunk)[146](index=146&type=chunk) [Pacific Coast](index=43&type=section&id=Pacific%20Coast) | Metric | Q1 2021 | Q1 2020 | Change | | :------------------ | :------ | :------ | :----- | | Occupancy | 28.0% | 62.4% | (34.4)pts | | Net Package ADR | $311.06 | $344.28 | $(33.22) | | Net Package RevPAR | $87.20 | $214.92 | $(127.72) | | Owned Net Revenue | $8.6M | $21.2M | $(12.5)M | | Owned Resort EBITDA | $0.5M | $8.9M | $(8.4)M | - Owned Net Revenue decreased by **59.2%** and Owned Resort EBITDA decreased by **94.5%**, primarily due to reduced occupancy and a significant decrease in MICE (meetings, incentives, conventions and events) room nights[148](index=148&type=chunk)[149](index=149&type=chunk) [Dominican Republic](index=43&type=section&id=Dominican%20Republic) | Metric | Q1 2021 | Q1 2020 | Change | | :------------------ | :------ | :------ | :----- | | Occupancy | 26.0% | 57.3% | (31.3)pts | | Net Package ADR | $282.27 | $227.33 | $54.94 | | Net Package RevPAR | $73.33 | $130.21 | $(56.88) | | Owned Net Revenue | $20.9M | $35.6M | $(14.7)M | | Owned Resort EBITDA | $1.7M | $7.8M | $(6.1)M | - Owned Net Revenue decreased by **41.3%** and Owned Resort EBITDA decreased by **78.6%** due to reduced occupancy, though Net Package ADR was positively impacted by the performance of Hyatt Ziva and Zilara Cap Cana[150](index=150&type=chunk)[151](index=151&type=chunk) [Jamaica](index=44&type=section&id=Jamaica) | Metric | Q1 2021 | Q1 2020 | Change | | :------------------ | :------ | :------ | :----- | | Occupancy | 26.3% | 70.8% | (44.5)pts | | Net Package ADR | $279.87 | $349.22 | $(69.35) | | Net Package RevPAR | $73.57 | $247.17 | $(173.60) | | Owned Net Revenue | $11.7M | $51.4M | $(39.7)M | | Owned Resort EBITDA | $(2.8)M | $19.1M | $(21.9)M | - Comparable Owned Net Revenue decreased by **71.3%** and Comparable Owned Resort EBITDA decreased by **120.9%** (shifting to negative) due to reduced occupancy and a negative impact on Net Package ADR from a higher mix of lower chain scale resorts[153](index=153&type=chunk)[154](index=154&type=chunk) [Non-U.S. GAAP Financial Measures](index=45&type=section&id=Non-U.S.%20GAAP%20Financial%20Measures) | Metric | Q1 2021 ($ in millions) | Q1 2020 ($ in millions) | | :-------------------------- | :----------------------- | :----------------------- | | Net loss | (69.7) | (22.6) | | EBITDA | (32.6) | 24.5 | | Adjusted EBITDA | (2.5) | 50.3 | | Owned Resort EBITDA | 6.5 | 60.7 | | Comparable Owned Resort EBITDA | 6.2 | 55.5 | [Seasonality](index=45&type=section&id=Seasonality) - The lodging industry's seasonality typically results in highest demand and rates between mid-December and April, but the COVID-19 pandemic has altered this trend in 2020 and 2021[157](index=157&type=chunk)[158](index=158&type=chunk) [Inflation](index=45&type=section&id=Inflation) - While lodging operators can adjust room rates for inflation, competitive pressures and the COVID-19 pandemic may limit the company's ability to fully offset inflationary cost increases[159](index=159&type=chunk) [Liquidity and Capital Resources](index=46&type=section&id=Liquidity%20and%20Capital%20Resources) The company's liquidity was significantly impacted by COVID-19, but available cash increased through equity raises and asset sales, with short-term needs met by existing cash and long-term needs potentially requiring further financing - Available cash increased to **$200.4 million** as of March 31, 2021, from **$146.9 million** at December 31, 2020, primarily due to a **$137.7 million** equity raise and **$34.3 million** from the sale of Dreams Puerto Aventuras[161](index=161&type=chunk) - Short-term liquidity requirements (**$68.0 million** in contractual obligations for 2021) are expected to be met through existing cash, non-core asset sales (e.g., Capri Resort for **$55.0 million**), and potential short-term borrowings from the **$85.0 million** Revolving Credit Facility[162](index=162&type=chunk)[163](index=163&type=chunk) - Total debt obligations decreased by **$87.2 million** to **$1,180.1 million** as of March 31, 2021, mainly due to the repayment of the **$84.7 million** Revolving Credit Facility balance[164](index=164&type=chunk)[182](index=182&type=chunk) [Cash Flows](index=47&type=section&id=Cash%20Flows) | Cash Flow Activity | Q1 2021 ($ in millions) | Q1 2020 ($ in millions) | | :-------------------------------- | :----------------------- | :----------------------- | | Net cash (used in) provided by operating activities | (26.6) | 26.7 | | Net cash provided by investing activities | 29.6 | 2.0 | | Net cash provided by financing activities | 50.4 | 19.9 | [Senior Secured Credit Facility](index=48&type=section&id=Senior%20Secured%20Credit%20Facility) - The Senior Secured Credit Facility includes a Term Loan (LIBOR + 2.75%, 1.0% LIBOR floor, matures April 27, 2024) and a Revolving Credit Facility (LIBOR + 3.00% or 4.00%, matures April 27, 2022 or January 27, 2024)[172](index=172&type=chunk) - Obligations are guaranteed by material subsidiaries and the company (limited recourse), collateralized by liens on Mexico resorts, personal property, and equity interests in certain subsidiaries[173](index=173&type=chunk)[174](index=174&type=chunk) [Additional Credit Facility](index=48&type=section&id=Additional%20Credit%20Facility) - Entered into on June 12, 2020, the Additional Credit Facility totals **$94.0 million**, consisting of Term A1 (**$35.0 million**, 11.4777% fixed), Term A2 (**$31.0 million**, 11.4777% fixed), and Term A3 (**$28.0 million**, LIBOR + 3.00%, 1.0% LIBOR floor), all maturing April 27, 2024[175](index=175&type=chunk)[177](index=177&type=chunk) - The facility does not require principal payments prior to maturity but includes mandatory prepayment requirements for certain asset sales if the net leverage ratio is above 4.00x[176](index=176&type=chunk) [Property Loan Agreement](index=50&type=section&id=Property%20Loan%20Agreement) - A **$110.0 million** Property Loan, entered into on June 12, 2020, has a fixed interest rate of 9.25% and matures on July 1, 2025, with no principal payments required prior to maturity[179](index=179&type=chunk) - The loan is collateralized by Hyatt Ziva and Hyatt Zilara Cap Cana (Dominican Republic) and Hilton Rose Hall Resort & Spa (Jamaica), and requires cash reserves until properties achieve a 1.50x debt service coverage ratio for two consecutive quarters[179](index=179&type=chunk)[180](index=180&type=chunk) [Contractual Obligations](index=50&type=section&id=Contractual%20Obligations) - Total debt decreased by **$87.2 million** from December 31, 2020, to March 31, 2021, primarily due to the repayment of the **$84.7 million** Revolving Credit Facility balance[182](index=182&type=chunk) - Anticipated prepayments from asset sales include **$27.6 million** in May 2022 (Jewel Dunn's River/Runaway Bay) and **$11.9 million** in February 2023 (Dreams Puerto Aventuras)[183](index=183&type=chunk) [Off Balance Sheet Arrangements](index=50&type=section&id=Off%20Balance%20Sheet%20Arrangements) - The company had no off-balance sheet arrangements for the three months ended March 31, 2021 and 2020[184](index=184&type=chunk) [Critical Accounting Policies and Estimates](index=50&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) - No material changes to critical accounting policies or methodologies, but the COVID-19 pandemic has increased uncertainty, impacting the ability to use past results for future performance estimates[185](index=185&type=chunk)[186](index=186&type=chunk) [Fair Value of Financial Instruments](index=50&type=section&id=Fair%20Value%20of%20Financial%20Instruments) - Financial instruments include cash, receivables, payables, derivatives, and debt; refer to Note 13 for detailed fair value information[187](index=187&type=chunk)[188](index=188&type=chunk) [Related Party Transactions](index=52&type=section&id=Related%20Party%20Transactions) - Refer to Note 6 for detailed information on related party transactions[189](index=189&type=chunk) [Recent Accounting Pronouncements](index=52&type=section&id=Recent%20Accounting%20Pronouncements) - Refer to Note 2 for information on recent accounting pronouncements[190](index=190&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=52&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section outlines the company's exposure to market risks, specifically interest rate and foreign currency risks, quantifying the potential impact of hypothetical changes on earnings and cash flows [Interest Rate Risk](index=52&type=section&id=Interest%20Rate%20Risk) - As of March 31, 2021, **17%** of outstanding indebtedness bore interest at floating rates and **83%** at fixed rates[192](index=192&type=chunk) - A **1.0% increase** in floating rates would decrease annual earnings and cash flows by approximately **$0.2 million**, assuming a **$0 million** Revolving Credit Facility balance; a **1.0% decrease** would have no impact due to the 1.0% LIBOR floor[192](index=192&type=chunk) [Foreign Currency Risk](index=52&type=section&id=Foreign%20Currency%20Risk) - Approximately **3.4%** of revenues and **82.6%** of operating expenses for Q1 2021 were denominated in currencies other than the U.S. dollar[193](index=193&type=chunk)[194](index=194&type=chunk) - A **5% adverse change** in foreign exchange rates would impact net income before tax by approximately **$1.5 million** for Mexican Peso-denominated expenses, **$0.8 million** for Dominican Peso, and **$0.7 million** for Jamaican Dollar[195](index=195&type=chunk) [Item 4. Controls and Procedures](index=53&type=section&id=Item%204.%20Controls%20and%20Procedures) The company's disclosure controls and procedures were ineffective as of March 31, 2021, due to an unremediated material weakness in income tax provision, with ongoing remediation efforts requiring sustained testing [Disclosure Controls and Procedures](index=53&type=section&id=Disclosure%20Controls%20and%20Procedures) - The company's disclosure controls and procedures were not effective as of March 31, 2021, due to an identified material weakness[197](index=197&type=chunk) [Changes in Internal Control Over Financial Reporting](index=53&type=section&id=Changes%20in%20Internal%20Control%20Over%20Financial%20Reporting) - A material weakness in internal control over financial reporting related to the income tax provision (the 'Tax Weakness') identified as of December 31, 2020, remains unremediated as of March 31, 2021[198](index=198&type=chunk) - Remediation efforts include hiring additional resources and developing enhanced policies, procedures, and controls for income tax accounting, but effectiveness requires successful testing over several quarters[198](index=198&type=chunk)[199](index=199&type=chunk) [PART II. OTHER INFORMATION](index=46&type=section&id=PART%20II.%20OTHER%20INFORMATION) This part covers legal proceedings, risk factors, equity sales, defaults, and other required disclosures for the reporting period [Item 1. Legal Proceedings](index=54&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various claims and lawsuits in the normal course of business, none of which are expected to have a material adverse effect on its financial condition or operations - The company is involved in various claims and lawsuits in the normal course of business, but none are expected to have a material adverse effect on its financial condition, cash flows, or results of operations[201](index=201&type=chunk) [Item 1A. Risk Factors](index=54&type=section&id=Item%201A.%20Risk%20Factors) No material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K as of March 31, 2021 - No material changes to risk factors from the Annual Report on Form 10-K as of March 31, 2021[202](index=202&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=54&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reported no unregistered sales of equity securities, use of proceeds, or issuer purchases of equity securities during the period - No unregistered sales of equity securities, use of proceeds, or issuer purchases of equity securities[203](index=203&type=chunk)[204](index=204&type=chunk)[205](index=205&type=chunk) [Item 3. Defaults Upon Senior Securities](index=54&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reported no defaults upon senior securities during the period - No defaults upon senior securities[206](index=206&type=chunk) [Item 4. Mine Safety Disclosures](index=54&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[207](index=207&type=chunk) [Item 5. Other Information](index=54&type=section&id=Item%205.%20Other%20Information) The company reported no other information for the period - No other information to report[208](index=208&type=chunk) [Item 6. Exhibits](index=55&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed as part of the Form 10-Q, including amendments to credit agreements, CEO/CFO certifications, and XBRL financial statements - Key exhibits include Fifth Amendment to Amended & Restated Credit Agreement, Second Amendment to Credit Agreement, CEO/CFO certifications (Sections 302 and 906), and XBRL financial statements[210](index=210&type=chunk)

Playa Hotels & Resorts N.V. (NASDAQ:PLYA) Q4 2020 Results Conference Call March 5, 2021 10:00 AM ET Company Participants Ryan Hymel - EVP and CFO Bruce Wardinski - Chairman and CEO Conference Call Participants Chris Woronka - Deutsche Bank Patrick Scholes - Truist Securities Chad Beynon - Macquarie Smedes Rose - Citi Jonathan Jenkins - Janney Operator Good morning, and welcome to the Playa Hotels Fourth Quarter 2020 Earnings Call. All participants will be in listen-only mode. [Operator Instructions] Please ...

PART I [Business](index=8&type=section&id=Item%201.%20Business) Playa Hotels & Resorts N.V. operates 21 all-inclusive resorts in Mexico and the Caribbean, leveraging strategic brand partnerships, with 2020 operations significantly impacted by the COVID-19 pandemic Portfolio Overview as of December 31, 2020 | Metric | Value | | :--- | :--- | | Total Resorts | 21 | | Total Rooms | 8,172 | | Locations | Mexico, Jamaica, Dominican Republic | - Playa's strategy is to leverage **globally recognized brand partnerships**, such as Hyatt and Hilton, to capitalize on the high volume of U.S. visitors to its operating regions[26](index=26&type=chunk)[28](index=28&type=chunk) - The COVID-19 pandemic had a **significant adverse impact** on the business starting in the first quarter of 2020, leading to the temporary suspension of operations at all resorts[33](index=33&type=chunk) - The company emphasizes its **integrated and scalable operating platform**, which manages 18 of its resorts and is designed to improve operating efficiency and integrate new acquisitions[34](index=34&type=chunk) - As of December 31, 2020, the company employed approximately **8,000 people**, with the majority located at its resorts in Jamaica, Mexico, and the Dominican Republic, with staffing levels temporarily adjusted in 2020 due to the pandemic[66](index=66&type=chunk) [Risk Factors](index=16&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks including the ongoing COVID-19 pandemic impact, geographic concentration, reliance on strategic partnerships, substantial debt, and a material weakness in internal controls over financial reporting - The COVID-19 pandemic is having a **significant material adverse effect** on business, results, cash flows, and financial condition, leading to **no revenues in Q2 2020** and severely reduced occupancy upon reopening[68](index=68&type=chunk)[69](index=69&type=chunk) - The company is exposed to risks from its **geographic concentration** in Mexico, Jamaica, and the Dominican Republic, including weather-related events like hurricanes[74](index=74&type=chunk) - **Critical relationships with Hyatt and Hilton** are essential, and their deterioration, failure to maintain brand standards, or termination of franchise agreements could significantly harm the business and portfolio value[77](index=77&type=chunk)[80](index=80&type=chunk)[89](index=89&type=chunk) - The company has **$1.27 billion substantial debt** as of December 31, 2020, which could restrict future operations, and its debt agreements impose significant restrictive covenants[116](index=116&type=chunk)[119](index=119&type=chunk) - A **material weakness in internal control over financial reporting related to income taxes** was identified for both 2020 and 2019, increasing the risk of a material misstatement in financial statements[134](index=134&type=chunk) [Unresolved Staff Comments](index=36&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reported no unresolved staff comments from the SEC - None[180](index=180&type=chunk) [Properties](index=37&type=section&id=Item%202.%20Properties) As of December 31, 2020, the company's portfolio comprises 21 resorts with 8,172 rooms across four geographic segments, with 7,720 rooms owned and 452 managed Portfolio Summary by Status (as of Dec 31, 2020) | Category | Total Rooms | | :--- | :--- | | Total Rooms Owned | 7,720 | | Total Rooms Operated (Managed) | 452 | | **Total Rooms Owned and Operated** | **8,172** | Portfolio Breakdown by Geographic Segment (Owned Rooms) | Segment | Number of Resorts | Total Rooms | | :--- | :--- | :--- | | Yucatán Peninsula | 7 | 2,642 | | Pacific Coast | 2 | 926 | | Dominican Republic | 6 | 2,644 | | Jamaica | 5 | 1,508 | [Legal Proceedings](index=37&type=section&id=Item%203.%20Legal%20Proceedings) The company is involved in various legal claims and lawsuits, with detailed information incorporated by reference from Note 8 of the Consolidated Financial Statements - Information on legal proceedings is incorporated by reference from **Note 8 – Commitments and contingencies** in the Consolidated Financial Statements[184](index=184&type=chunk) [Mine Safety Disclosures](index=38&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not Applicable[185](index=185&type=chunk) PART II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=38&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's ordinary shares trade on NASDAQ under "PLYA", with **164,029,575 shares outstanding** as of February 26, 2021, and no cash dividends paid or anticipated due to retention for operations and credit facility restrictions - The company's ordinary shares have traded on **NASDAQ under the symbol "PLYA"** since March 13, 2017[187](index=187&type=chunk) - The company has **never paid cash dividends** and does not plan to in the foreseeable future, with payments also being **restricted by its Senior Secured Credit Facility**[189](index=189&type=chunk) - In June 2020, the company sold **4,878,049 ordinary shares** to certain buyers for an aggregate purchase price of **$20.0 million**, at a price of $4.10 per share[192](index=192&type=chunk) [Selected Financial Data](index=39&type=section&id=Item%206.%20Selected%20Financial%20Data) Selected financial data for 2020 reflects a significant downturn due to COVID-19, with total revenue at **$273.2 million**, a net loss of **$262.4 million**, and **$99.9 million** net cash used in operating activities Selected Consolidated Statement of Operations Data ($ in thousands) | | 2020 | 2019 | 2018 | | :--- | :--- | :--- | :--- | | Total revenue | $273,189 | $636,477 | $617,013 | | Operating (loss) income | $(190,237) | $25,710 | $90,597 | | Net (loss) income | $(262,370) | $(4,357) | $18,977 | Selected Consolidated Balance Sheet Data ($ in thousands) | | 2020 | 2019 | 2018 | | :--- | :--- | :--- | :--- | | Total assets | $2,097,665 | $2,196,964 | $2,135,158 | | Total debt | $1,251,267 | $1,040,658 | $989,387 | | Total equity | $568,136 | $809,651 | $839,841 | Selected Consolidated Statement of Cash Flow Data ($ in thousands) | | 2020 | 2019 | 2018 | | :--- | :--- | :--- | :--- | | Net cash from Operating activities | $(99,938) | $72,188 | $114,430 | | Net cash from Investing activities | $29,412 | $(203,816) | $(204,586) | | Net cash from Financing activities | $222,455 | $36,206 | $89,280 | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=40&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) The COVID-19 pandemic severely impacted 2020 performance, leading to a **57.1% decrease in total revenue** to **$273.2 million** and a **$262.4 million net loss**, prompting significant liquidity preservation measures and phased resort reopenings - The COVID-19 pandemic led to the **temporary suspension of operations** at all resorts in late March 2020, with reopenings beginning July 1, 2020, resulting in a **significant adverse impact on revenue and liquidity**[201](index=201&type=chunk)[202](index=202&type=chunk) - To mitigate the pandemic's impact, the company raised **$224.0 million in additional capital**, sold two resorts for **$60.0 million**, deferred non-critical capital expenditures, and implemented broad compensation cuts[204](index=204&type=chunk) Key Performance Indicators (Total Portfolio, 2020 vs 2019) | Metric | 2020 | 2019 | % Change | | :--- | :--- | :--- | :--- | | Occupancy | 26.9% | 77.3% | (65.2)% | | Net Package RevPAR | $76.61 | $198.28 | (61.4)% | | Total Net Revenue ($M) | $262.9 | $607.2 | (56.7)% | | Adjusted EBITDA ($M) | $(21.2) | $150.7 | (114.1)% | - As of December 31, 2020, the company had **$146.9 million of available cash** (excluding restricted cash) and **$1.27 billion total debt obligations**[270](index=270&type=chunk)[273](index=273&type=chunk) - Critical accounting policies and estimates involve **significant judgment**, particularly in areas like business combinations, impairment of property and goodwill, and income taxes[292](index=292&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=62&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is exposed to interest rate risk, with **23% of debt at floating rates**, and foreign currency risk, where a **5% adverse change** could impact pre-tax net income by approximately **$10.5 million** annually - The company is exposed to interest rate risk, with **23% of its outstanding debt at floating rates** as of year-end 2020, where a **1.0% increase** in rates would result in an approximate **$1.2 million** annual increase in interest expense[313](index=313&type=chunk) - The company faces **foreign currency risk** as approximately **79.5% of its 2020 operating expenses** were denominated in local currencies, while revenues are primarily in U.S. dollars[315](index=315&type=chunk) - A hypothetical **5% adverse change** in foreign exchange rates would have impacted 2020 net income before tax by approximately **$5.0 million** (Mexican Peso), **$2.3 million** (Dominican Peso), and **$3.2 million** (Jamaican Dollar)[316](index=316&type=chunk) [Financial Statements and Supplementary Data](index=63&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents the audited consolidated financial statements for 2020, including an unqualified opinion on financials but an adverse opinion on internal control over financial reporting due to a material weakness in income tax provision - The independent auditor, Deloitte & Touche LLP, issued an **unqualified opinion on the financial statements** but an **adverse opinion on the effectiveness of internal control over financial reporting** as of December 31, 2020[322](index=322&type=chunk)[333](index=333&type=chunk) - The auditor identified a **material weakness in internal control over financial reporting**, stating that the company's control activities related to its **income tax provision** did not operate with a level of precision that would identify a material misstatement[339](index=339&type=chunk) Consolidated Balance Sheet Highlights ($ in thousands) | | Dec 31, 2020 | Dec 31, 2019 | | :--- | :--- | :--- | | Cash and cash equivalents | $146,919 | $20,931 | | Total Assets | $2,097,665 | $2,196,964 | | Total Debt | $1,251,267 | $1,040,658 | | Total Shareholders' Equity | $568,136 | $809,651 | Consolidated Statement of Operations Highlights ($ in thousands) | | 2020 | 2019 | 2018 | | :--- | :--- | :--- | :--- | | Total revenue | $273,189 | $636,477 | $617,013 | | Operating (loss) income | $(190,237) | $25,710 | $90,597 | | Net (loss) income | $(262,370) | $(4,357) | $18,977 | [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=115&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20With%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reported no changes in or disagreements with its accountants on accounting and financial disclosure - None[557](index=557&type=chunk) [Controls and Procedures](index=115&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were not effective as of December 31, 2020, due to a material weakness in internal control over financial reporting related to the income tax provision, with a remediation plan initiated - Management concluded that disclosure controls and procedures were **not effective** as of December 31, 2020[559](index=559&type=chunk) - A **material weakness** was identified in internal control over financial reporting: "The control activities related to our **income tax provision** did not operate with a level of precision that would identify a material misstatement"[561](index=561&type=chunk) - The company has initiated a **remediation plan** that includes hiring additional resources and implementing enhanced policies, procedures, and controls for income tax accounting[563](index=563&type=chunk) [Other Information](index=116&type=section&id=Item%209B.%20Other%20Information) The company reported no other information for this item - None[566](index=566&type=chunk) PART III [Directors, Executive Officers and Corporate Governance](index=117&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information on directors, executive officers, and corporate governance is incorporated by reference from the company's 2021 Annual General Meeting of Shareholders Proxy Statement - Information is **incorporated by reference** to the Company's Proxy Statement for the 2021 Annual General Meeting of Shareholders[569](index=569&type=chunk) [Executive Compensation](index=117&type=section&id=Item%2011.%20Executive%20Compensation) Information on executive compensation is incorporated by reference from the company's 2021 Annual General Meeting of Shareholders Proxy Statement - Information is **incorporated by reference** to the Company's Proxy Statement for the 2021 Annual General Meeting of Shareholders[570](index=570&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=117&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Information on security ownership is incorporated by reference from the 2021 Proxy Statement, with **8,043,686 securities** available for future issuance under equity compensation plans as of December 31, 2020 - Information is **incorporated by reference** to the Company's Proxy Statement for the 2021 Annual General Meeting of Shareholders[571](index=571&type=chunk) Securities Authorized for Issuance Under Equity Compensation Plans (as of Dec 31, 2020) | Plan Category | Securities remaining for future issuance | | :--- | :--- | | Equity compensation plans approved by security holders | 8,043,686 | | Total | 8,043,686 | [Certain Relationships and Related Transactions, and Director Independence](index=117&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information on certain relationships, related transactions, and director independence is incorporated by reference from the company's 2021 Annual General Meeting of Shareholders Proxy Statement - Information is **incorporated by reference** to the Company's Proxy Statement for the 2021 Annual General Meeting of Shareholders[574](index=574&type=chunk) [Principal Accountant Fees and Services](index=117&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) Information on principal accountant fees and services is incorporated by reference from the company's 2021 Annual General Meeting of Shareholders Proxy Statement - Information is **incorporated by reference** to the Company's Proxy Statement for the 2021 Annual General Meeting of Shareholders[575](index=575&type=chunk) PART IV [Exhibits and Financial Statement Schedules](index=118&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists financial statements, schedules, and exhibits filed with the Annual Report on Form 10-K, including corporate governance documents and material contracts - This section contains a list of **all financial statements, schedules, and exhibits** filed with the 10-K[578](index=578&type=chunk)[585](index=585&type=chunk) [Form 10-K Summary](index=121&type=section&id=Item%2016.%20Form%2010-K%20Summary) This item is not applicable to the company's filing - Not applicable[588](index=588&type=chunk)

Playa Hotels & Resorts N.V. (NASDAQ:PLYA) Q3 2020 Earnings Conference Call November 5, 2020 10:00 AM ET Company Participants Ryan Hymel - EVP and CFO Bruce Wardinski - Chairman and CEO Conference Call Participants Chris Woronka - Deutsche Bank Tyler Batory - Janney's Capital Market Smedes Rose - Citi Bank Aaron Lee - Macquarie Gregory Miller - Truist Securities Operator Ladies and gentlemen, thank you for standing by, and welcome to Q3 2020 Earnings Conference Call. At this time, all participants are in a ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ___________________________________________________ FORM 10-Q _______________________________________________ ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For quarterly period ended September 30, 2020 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. COMMISSION FILE NO. 1-38012 Playa Hotels & Resorts N.V. (Exact name of registrant as specified in i ...

Financial Data and Key Metrics Changes - The company reported a cash balance of $280 million as of June 30, 2020, which includes approximately $28 million in restricted cash [30] - Monthly cash burn was approximately $20 million in a zero revenue environment, but this is expected to decrease as two-thirds of resorts are currently open [44] - The company’s property level cash burn was approximately $8 million to $9 million per month while closed, with expectations for improvement as resorts reopen [43] Business Line Data and Key Metrics Changes - Direct bookings accounted for 51.6% of room nights booked in Q2 2020, up 23 percentage points year-over-year, indicating a strong performance in direct channels [16] - The company’s direct-to-consumer website generated $32.5 million in gross revenue for 2020, down from $47.5 million in 2019 [17] - The MICE (Meetings, Incentives, Conferences, and Exhibitions) business saw approximately 51% of 2020 group business impacted by the crisis, with a significant portion rebooking for later dates [28] Market Data and Key Metrics Changes - The U.S. source business increased to 80% of all business booked, while Mexico-based business rose to 13% [35] - The company noted that airlift to Mexico, particularly Cancun, is performing better than Jamaica and the Dominican Republic, which are still experiencing significant reductions in flight availability [83] - The company’s revenue on the books for Q4 2020 is down approximately 30% compared to the previous year, with declines evenly split between Jamaica and Mexico [39] Company Strategy and Development Direction - The company is focused on growing direct bookings and reducing customer acquisition costs, aiming to increase direct business to at least 50% by 2023 [16] - The company is exploring opportunities for consolidation in the all-inclusive space, particularly targeting family-owned operators that may struggle financially [67] - The company plans to enhance its health and wellness offerings and has introduced a unique extended stay program called "Work & Learn From Paradise" [15] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the recovery of leisure travel, noting that pent-up demand is evident, especially in Mexico [53] - The company is confident in its ability to maintain rate integrity, emphasizing the safety and experience offered at its resorts compared to competitors [52] - Management acknowledged the uncertainty in the market but remains hopeful for a rebound as travel restrictions ease and consumer confidence builds [45] Other Important Information - The company raised a total of $224 million in June through various financing methods to enhance liquidity [22] - The company has suspended share repurchase activity for the time being due to the current environment [33] - Incremental capital raised will increase interest expense by nearly $5 million per quarter going forward [25] Q&A Session Summary Question: How do you think the rate integrity holds up? - Management believes that rate is not a major concern as travelers prioritize safety and experience, and they expect occupancy to build over time [52][54] Question: What is the outlook for family-owned private companies in the market? - Management sees opportunities for consolidation as many family-owned operators may struggle financially, which could benefit Playa [67] Question: What are the expectations for EBITDA margins post-pandemic? - Management indicated it is too early to tell, but they expect some operational efficiencies to emerge as they ramp up operations [68] Question: What are the current trends in market share gains? - Management noted strong direct booking numbers and believes they will continue to perform well compared to competitors reliant on tour operators [76] Question: What is the booking window and cancellation trend? - The booking window has compressed to 30-45 days, with cancellations occurring closer to the date of stay, reflecting the flexibility in the current environment [81]

[PART I. FINANCIAL INFORMATION](index=3&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This section presents the company's financial statements, management's analysis of performance and condition, market risk disclosures, and internal controls for the period ended June 30, 2020 [Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) The company's financial statements for the period ending June 30, 2020, reflect a severe negative impact from the COVID-19 pandemic, leading to a dramatic decline in revenue, a significant net loss of **$110.0 million** for the first six months, and negative cash flow from operations Condensed Consolidated Balance Sheet Highlights | Balance Sheet Item | June 30, 2020 ($ in thousands) | Dec 31, 2019 ($ in thousands) | Change | | :--- | :--- | :--- | :--- | | Cash and cash equivalents | 251,022 | 20,931 | +1,099% | | Total assets | 2,267,264 | 2,196,964 | +3.2% | | Debt | 1,251,877 | 1,040,658 | +20.3% | | Total liabilities | 1,556,706 | 1,387,313 | +12.2% | | Total shareholders' equity | 710,558 | 809,651 | -12.2% | Condensed Consolidated Statement of Operations Highlights | Metric | Three Months Ended June 30, 2020 ($ in thousands) | Three Months Ended June 30, 2019 ($ in thousands) | Six Months Ended June 30, 2020 ($ in thousands) | Six Months Ended June 30, 2019 ($ in thousands) | | :--- | :--- | :--- | :--- | :--- | | Total revenue | 982 | 164,023 | 178,210 | 359,819 | | Operating (loss) income | (86,042) | 10,334 | (82,626) | 57,571 | | Net (loss) income | (87,458) | 1,040 | (110,014) | 44,028 | | (Losses) earnings per share - Diluted | (0.67) | 0.01 | (0.85) | 0.34 | Condensed Consolidated Statement of Cash Flows Highlights (Six Months Ended) | Cash Flow Activity | June 30, 2020 ($ in thousands) | June 30, 2019 ($ in thousands) | | :--- | :--- | :--- | | Net cash (used in) provided by operating activities | (28,396) | 86,076 | | Net cash provided by (used in) investing activities | 58,862 | (88,947) | | Net cash provided by (used in) financing activities | 227,544 | (8,972) | | **Increase (Decrease) in Cash** | **258,010** | **(11,843)** | [Notes to the Condensed Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements) The notes detail the severe impact of COVID-19, leading to the suspension of all 21 resorts from March to June 2020, prompting the sale of two resorts for **$60.0 million**, **$224.0 million** in new debt and equity, and a **$41.5 million** total impairment charge - Due to the COVID-19 pandemic, all of the company's 21 resorts temporarily suspended operations from late March through June 2020, with reopening beginning in stages on July 1, 2020, and 12 of 21 resorts open as of the report date[26](index=26&type=chunk) - To improve liquidity, the company sold two Jewel brand resorts for **$60.0 million**, raised additional capital through equity and debt, amended its Senior Secured Credit Facility to waive financial covenants until September 30, 2021, and significantly reduced staffing and capital expenditures[29](index=29&type=chunk)[41](index=41&type=chunk) - On June 12, 2020, the company entered into new debt agreements, including an Additional Credit Facility for **$94.0 million** and a Property Loan for **$110.0 million**, to bolster its financial position[76](index=76&type=chunk)[77](index=77&type=chunk)[81](index=81&type=chunk) - The company recognized a **$25.3 million** impairment loss on the Jewel Dunn's River and Jewel Runaway Bay resorts upon their classification as held for sale, with an additional **$16.2 million** goodwill impairment recorded in Q1 2020 due to decreased future cash flow forecasts caused by COVID-19[41](index=41&type=chunk)[99](index=99&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=30&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the unprecedented impact of the COVID-19 pandemic, causing a **99.4%** Q2 2020 revenue decrease, a **$87.5 million** net loss, and an Adjusted EBITDA loss of **$31.4 million**, while detailing liquidity preservation actions including **$224.0 million** in new capital and **$60.0 million** from resort sales [Impact of COVID-19 Pandemic and Overview](index=31&type=section&id=Impact%20of%20COVID-19%20Pandemic%20and%20Overview) The COVID-19 pandemic forced temporary suspension of all 21 resorts, causing near-total Q2 revenue loss, prompting **$224.0 million** in additional capital, **$60.0 million** from resort sales, and significant cost reductions to mitigate liquidity impact - All company resorts were temporarily closed from late March 2020 until July 1, 2020, due to the COVID-19 pandemic, with 12 out of 21 resorts having reopened as of the report date[127](index=127&type=chunk)[128](index=128&type=chunk) - To manage liquidity during the shutdown, the company raised **$224.0 million** in new debt and equity financing, sold two resorts for **$60.0 million**, borrowed an additional **$40.0 million** under its Revolving Credit Facility, and deferred all non-critical capital expenditures for 2020[129](index=129&type=chunk) [Results of Operations](index=36&type=section&id=Results%20of%20Operations) Q2 2020 total revenue plummeted **99.4%** to **$1.0 million**, resulting in an **$87.5 million** net loss, while H1 revenue fell **50.5%** to **$178.2 million** with a **$110.0 million** net loss, driven by resort closures, significant impairment losses, and increased interest expense Q2 2020 vs Q2 2019 Performance (Total Portfolio) | Metric | Q2 2020 | Q2 2019 | % Change | | :--- | :--- | :--- | :--- | | Occupancy | — % | 79.8% | (100.0)% | | Net Package RevPAR | $ — | $205.55 | (100.0)% | | Total Net Revenue | $0.5M | $155.5M | (99.7)% | | Adjusted EBITDA | $(31.4)M | $40.1M | (178.4)% | H1 2020 vs H1 2019 Performance (Total Portfolio) | Metric | H1 2020 | H1 2019 | % Change | | :--- | :--- | :--- | :--- | | Occupancy | 33.6% | 79.9% | (57.9)% | | Net Package RevPAR | $100.01 | $225.37 | (55.6)% | | Total Net Revenue | $171.7M | $344.4M | (50.1)% | | Adjusted EBITDA | $18.9M | $114.8M | (83.5)% | - Impairment losses for H1 2020 totaled **$41.4 million**, driven by a **$25.3 million** charge on two resorts classified as held for sale and a **$16.2 million** goodwill impairment due to reduced cash flow forecasts from COVID-19[174](index=174&type=chunk)[154](index=154&type=chunk) - Interest expense for Q2 2020 increased by **$10.3 million (96.1%)** YoY, primarily due to a **$5.9 million** charge from the change in fair value of interest rate swaps which became ineffective in March 2020[155](index=155&type=chunk) [Segment Results](index=51&type=section&id=Segment%20Results) All geographic segments experienced near-total revenue collapse and significant EBITDA losses in Q2 2020 due to system-wide resort closures, with H1 EBITDA seeing dramatic year-over-year declines ranging from **68% to 84%** across segments Owned Resort EBITDA by Segment (Three Months Ended June 30) | Segment | 2020 ($ in thousands) | 2019 ($ in thousands) | % Change | | :--- | :--- | :--- | :--- | | Yucatán Peninsula | (8,004) | 21,151 | (137.8)% | | Pacific Coast | (2,816) | 8,569 | (132.9)% | | Dominican Republic | (4,881) | 5,043 | (196.8)% | | Jamaica | (8,097) | 14,631 | (155.3)% | | **Total Segment** | **(23,798)** | **49,394** | **(148.2)%** | Owned Resort EBITDA by Segment (Six Months Ended June 30) | Segment | 2020 ($ in thousands) | 2019 ($ in thousands) | % Change | | :--- | :--- | :--- | :--- | | Yucatán Peninsula | 16,931 | 53,310 | (68.2)% | | Pacific Coast | 6,056 | 20,956 | (71.1)% | | Dominican Republic | 2,908 | 18,506 | (84.3)% | | Jamaica | 10,976 | 38,979 | (71.8)% | | **Total Segment** | **36,871** | **131,751** | **(72.0)%** | [Liquidity and Capital Resources](index=61&type=section&id=Liquidity%20and%20Capital%20Resources) The company's liquidity was severely impacted by the pandemic, with operating cash flow turning negative to **($28.4) million** for H1 2020, addressed by raising **$224.0 million** in new capital, selling two resorts for **$60.0 million**, and ending the quarter with **$251.0 million** in cash - As of July 31, 2020, the company had approximately **$228.0 million** of available cash, excluding **$25.7 million** of restricted cash[239](index=239&type=chunk) - On June 12, 2020, the company raised **$224.0 million** of additional capital through **$204.0 million** in debt financing and **$20.0 million** in equity financing[241](index=241&type=chunk) - The share repurchase program has been suspended to preserve cash, with approximately **$83.5 million** remaining under the authorization as of June 30, 2020[252](index=252&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=66&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is exposed to interest rate risk, with **23%** of debt at floating rates, where a **1.0%** increase would raise annual interest expense by approximately **$1.2 million**, and foreign currency risk due to **81.1%** of operating expenses being denominated in local currencies - As of June 30, 2020, **23%** of the company's debt bore floating interest rates, where a hypothetical **1.0%** increase in market rates would increase annual interest expense by approximately **$1.2 million**[275](index=275&type=chunk) - Approximately **81.1%** of operating expenses for H1 2020 were denominated in local currencies (Mexican Peso, Dominican Peso, Jamaican Dollar), creating exposure to foreign currency risk[277](index=277&type=chunk) [Controls and Procedures](index=67&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of June 30, 2020, with no material changes to internal control over financial reporting during the quarter - The Principal Executive Officer and Principal Financial Officer concluded that the company's disclosure controls and procedures were effective as of June 30, 2020[280](index=280&type=chunk) [PART II. OTHER INFORMATION](index=68&type=section&id=PART%20II.%20OTHER%20INFORMATION) This section details additional information including new risk factors related to the COVID-19 pandemic and the unregistered sale of equity securities [Risk Factors](index=68&type=section&id=Item%201A.%20Risk%20Factors) This section adds a significant risk factor detailing the material adverse effects of the COVID-19 pandemic, highlighting the unprecedented impact on the hospitality industry, resort closures, revenue loss, and the need to service substantial debt with severely reduced cash flow - A new, detailed risk factor was added to address the significant material adverse effects of the COVID-19 pandemic on the business, including resort closures, revenue loss, and uncertainty about the recovery of travel demand[285](index=285&type=chunk)[286](index=286&type=chunk) - Specific risks highlighted include the ability to service substantial debt with reduced cash flow, reliance on the recovery of commercial airline service, potential for non-cash impairment charges, and risks related to employee matters following terminations and furloughs[288](index=288&type=chunk)[294](index=294&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=69&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) On June 12, 2020, the company sold **4,878,049** ordinary shares in a private placement for **$20.0 million** at **$4.10** per share to affiliates of Davidson Kempner Capital Management LP, exempt from registration under the Securities Act - On June 12, 2020, the company sold **4,878,049** ordinary shares in a private placement for an aggregate price of **$20.0 million** (**$4.10** per share)[289](index=289&type=chunk)