Playa Hotels & Resorts(PLYA) - 2020 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company began the quarter with $195 million of unrestricted cash and exited with approximately $147 million, indicating a cash burn rate improvement each month [25][26] - The cash burn was approximately $17 million, $14 million, and $11 million during the months of the quarter, with December showing strong performance due to the holiday season [25][26] - The company expects Q1 2021 cash burn to be higher than December's rate due to the absence of holiday benefits and recent CDC guideline changes [26][45] Business Line Data and Key Metrics Changes - Direct booking channels accounted for 55.9% of revenues booked in Q4 2020, up 20.2 points year-over-year, reflecting a strong shift towards direct bookings [16] - Playa's website, playaresorts.com, generated 29.6% of total revenue bookings, up 13.6 points year-over-year [17] - Group business for 2021 has been fluid, with $12 million on the books, and the company successfully rebooked nearly 84% of group business impacted by COVID [30][31] Market Data and Key Metrics Changes - The Yucatán market showed improved occupancy and ADR discipline, with passenger arrivals increasing each month [11][12] - The Dominican Republic saw a significant improvement in passenger arrivals after the removal of testing requirements in September, with the Hyatt Ziva & Zilara Cap Cana capturing market leadership [13][38] - Jamaica's market has not seen material improvement due to stringent entry requirements, leading to modest increases in airlift [14][39] Company Strategy and Development Direction - The company aims to increase direct business to at least 50% by 2023 as part of its five-year plan [16] - Focus on maintaining price integrity and controlling expenses to navigate the reopening process while preparing for pent-up demand in the second half of 2021 [50] - The company is leveraging its direct booking capabilities to enhance its competitive advantage and improve profitability [16][50] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the recovery in the second half of 2021, driven by vaccination rates and pent-up consumer demand [51] - The company is adapting to changing travel restrictions and has implemented safety measures to enhance guest experiences [10][21] - Management noted that the recent CDC guidelines have negatively impacted bookings but emphasized the importance of maintaining operational flexibility [20][21] Other Important Information - The company has no outstanding borrowings on its revolving credit facility and total outstanding interest-bearing debt of $1.18 billion [28] - CapEx spend for 2021 is expected to be in the range of $13 million to $18 million, with a focus on maintenance and final payments for property conversions [27] - The company has tested over 15,000 guests with less than 1% testing positive for COVID, showcasing effective safety measures [22] Q&A Session Summary Question: Opportunities to protect against last-minute cancellations - Management acknowledged the challenges of cancellation policies but emphasized maintaining rate discipline and controlling pricing as key strategies [55][56] Question: Thoughts on Marriott's recent deal - Management viewed the deal positively, believing it would drive more recognition for all-inclusive resorts and validate Playa's business model [60][62] Question: Cash burn run rate for Q1 2021 - Management indicated that the cash burn rate for Q1 would be higher than in December, aligning more closely with October or November levels [64][65] Question: Competitive landscape in Cancún and the Dominican Republic - Management noted that most properties in the Yucatán are open, while the Dominican Republic has seen a slower recovery with about 50-75% of rooms now open [67][68] Question: Timeline for returning to stabilized operations - Management expects a ramping period but believes the strong performance of key properties will allow for a quicker recovery compared to typical scenarios [70][74] Question: Recent booking trends and vaccination impact - Management confirmed an increase in U.S. bookings, reflecting optimism from the vaccine rollout and stimulus measures [76][77] Question: Concerns about additional capital raises - Management expressed confidence in current liquidity and cash position, but acknowledged the uncertainty of future market conditions [83]