Playa Hotels & Resorts(PLYA) - 2020 Q2 - Earnings Call Transcript

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]