Playa Hotels & Resorts(US:PLYA)2023-05-06 07:59Financial Data and Key Metrics Changes - Playa Hotels & Resorts reported an EBITDA of $109.4 million in Q1 2023, the highest in the company's history, despite challenges from two dual resorts in the Dominican Republic and foreign currency headwinds [14] - Year-over-year ADR growth for the legacy portfolio was nearly 17%, contributing to a total reported ADR growth of approximately 27.4% for the quarter [14][18] - The company expects full-year adjusted EBITDA to be between $265 million and $285 million, reflecting an increase from previous guidance [22] Business Line Data and Key Metrics Changes - In the Dominican Republic, legacy resorts achieved a 20% year-over-year ADR growth with occupancy nearing 82% [2][33] - Jamaica reported the highest year-over-year ADR and resort margin expansion among segments, driven by increased MICE revenue [15] - The Pacific Coast segment experienced a 19% ADR improvement year-over-year, aided by a higher MICE Group mix [20] Market Data and Key Metrics Changes - Approximately 36% of Playa's room night stays came from direct channels, a decrease of 100 basis points year-over-year, while the group mix improved significantly by 460 basis points [1] - The Canadian guest mix increased by approximately 400 basis points year-over-year, while the Mexican source guest mix rose by 300 basis points [34] - The European source guest mix decreased significantly year-over-year but aligned with pre-pandemic levels [34] Company Strategy and Development Direction - The company plans to expand into new markets over the next 1 to 5 years, capitalizing on the strong consumer demand for all-inclusive resorts [46][47] - Playa continues to focus on share repurchases as a compelling use of capital, having repurchased approximately $107 million worth of stock since resuming the program in September 2022 [17][40] - The company is also exploring opportunities for renovations and expansions in existing properties to maintain competitive advantage [79] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strength of the legacy portfolio and the ability to maintain or grow resort margins despite challenges from foreign exchange and the two Jewel properties [50][72] - The company remains focused on monitoring macroeconomic conditions while emphasizing the value proposition of its all-inclusive resorts [56] - Management noted that the booking window remains at just over three months, which is critical for planning and revenue forecasting [34] Other Important Information - The company has entered into interest rate swaps to mitigate floating rate risk in its new term loan [53] - Playa anticipates a better inflation rate for its cost basket compared to 2022, with stabilization in food and beverage and utilities costs [55] Q&A Session Summary Question: What is the impact of the $20 million negative FX on guidance? - Management confirmed that the prior EBITDA guidance did not account for this impact, making the $20 million fully included in the current guidance [58] Question: How is the company managing the seasonal occurrence of seaweed? - Management stated that while seaweed is a seasonal issue, they have mechanisms in place to manage it effectively, and it does not significantly deter travel [58] Question: What are the long-term intentions for geographic diversification? - The company is interested in expanding into all-inclusive markets in Europe, the Mediterranean, North Africa, and other Caribbean countries [60] Question: What is the outlook for ADR in Q2? - Management indicated that the baseline fundamentals of the legacy portfolio continue to improve, with no signs of consumer resistance to current rates [63] Question: How is the competitive landscape regarding new supply? - Management noted that new projects are occurring but at a modest level, with no significant impact on market dynamics [83] Question: What is the status of the sale of the two Jewel properties? - The sale process is ongoing, but management could not provide a definitive timeline, expressing confidence in concluding transactions [85]