Playa Hotels & Resorts(US:PLYA)2022-05-06 20:24Financial Data and Key Metrics Changes - The first quarter results exceeded expectations despite the impact of the Omicron variant, with a significant increase in bookings and revenue [4][10] - Playa's owned and managed revenue for the third quarter is pacing up 37% year-over-year and over 70% compared to 2019 [4] - The fourth quarter is pacing up 23% year-over-year and nearly 70% higher versus 2019 [4] Business Line Data and Key Metrics Changes - The Dominican Republic saw the largest sequential occupancy improvement, driven by the return of European guests [12] - The MICE business is pacing at two times pre-pandemic levels for the upcoming year, contributing positively to revenue [8][22] - Jamaica experienced the largest sequential improvement in occupancy during Q1, largely driven by group business [15] Market Data and Key Metrics Changes - U.S. sourcing increased approximately 10 percentage points compared to Q1 2019, now accounting for 67% of managed room nights [18] - European guest mix increased by 6 percentage points, while Canadian and Asian customer mixes remain significantly depressed [19] - The overall booking window has exceeded pre-pandemic lead times for the comparable period [19] Company Strategy and Development Direction - The company aims to increase direct bookings to at least 50% by 2023, with 42.4% of managed room nights booked directly in Q1 2022 [17] - The focus remains on maintaining high ADRs while improving customer experience and resort EBITDA margins [11][24] - The company is optimistic about M&A opportunities and management contracts, leveraging strong performance to attract interest from institutional owners [52][54] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about ongoing recovery and the potential for higher demand levels as customer segments fully recover [9][28] - The company anticipates a similar degree of inflation in the first half of 2022 as experienced in the second half of 2021, but does not expect severe cost pressures [25][60] - Future ADR growth is expected to be high single-digit year-over-year, with occupancy in the mid-70s for the second half of 2022 [27] Other Important Information - The company finished the quarter with a total unrestricted cash balance of just under $300 million and no outstanding borrowings on a revolving credit facility [20] - The introduction of the Wyndham Alltra brand has been positively received, with plans for potential expansion [69][70] Q&A Session All Questions and Answers Question: Clarification on ADR growth for Q2 - Management confirmed that Q2 ADR is expected to be nearly 40% higher than Q2 2019 ADR, which is close to Q1 levels [31][32] Question: Impact of Jamaica's recovery on overall performance - Management estimated Jamaica's recovery could represent a $69 million drag on EBITDA for Q1 due to occupancy and ADR impacts [34][35] Question: Supply landscape outlook in Cancun and DR - Management noted that while new supply is coming in, it is not expected to significantly impact existing properties due to the unique nature of the all-inclusive market [37][38] Question: Customer mix and rate strategy - Management emphasized a focus on maintaining rates rather than occupancy, with a significant increase in U.S. customers and a shift in customer demographics [45][49] Question: M&A activity outlook - Management expressed optimism about potential M&A activity and opportunities for management contracts, driven by strong performance and interest from institutional investors [52][54] Question: Margin outlook for the second half of the year - Management indicated that margins are expected to be flat compared to 2021, with high single-digit ADR growth anticipated [78][79] Question: Customer experience and new guests - Management confirmed an increase in first-time all-inclusive guests, driven by pandemic-related travel restrictions and a desire for safe travel options [84][86]