Playa Hotels and Resorts NV recorded its best year on record as a swift recovery of tourism markets in Jamaica, the Dominican Republic and Mexico resulted in it generating US$977.50 million (J$150.14 billion) of revenue, a significant step up to the US$636.48 million (J$82.60 billion) earned in 2019.

The Dutch-based hospitality firm which operates its own proprietary room portfolio and provides management services for resorts owned by third parties, experienced a sharp rise in its net package ADR (average daily rate) to US$430.12, an improvement to the US$375.33 in 2022 and US$256.53 in 2019. This was against the backdrop of the company only having 6,504 rooms under its proprietary portfolio and 9,027 total rooms at the end of 2023 relative to the 8,238 rooms under the proprietary portfolio and 8,690 total rooms in 2019.

“The fourth quarter capped off a record year for Playa. Our fourth-quarter results exceeded our expectations, as demand accelerated through the quarter, with December occupancy in the Yucatán and Jamaica exceeding the December 2018 and 2019 average. We were effectively able to drive ADR as demand accelerated, leading to higher than anticipated Adjusted EBITDA for the fourth quarter. While foreign exchange rate headwinds persisted, our operations teams continued to improve our efficiency efforts in procurement and staffing,” said Bruce D Wardinski, Playa chairman and CEO, in the news release.

Playa’s total portfolio occupancy was 72 per cent for 2023, only down 0.2 per cent relative to 2022 as a result of lower occupancy at the Jewel Punta Cana, which was closed for the first quarter, and Jewel Palm Beach properties in the Dominican Republic. If these properties were excluded, occupancy would be up 5.2 per cent compared to 2022. The overall occupancy is still relatively below the 77.3 per cent achieved in 2019.

Playa sold its Jewel Punta Cana property on December 15 for a gross consideration of US$82 million and received a US$79.1 million net after transaction costs. Playa entered into a management agreement to operate the 620 rooms at the property, which is currently closed for renovations and is set to reopen operations in late 2024. The company is also pursuing the sale of the Jewel Palm Beach property according to Wardinski, but there was no update on the February 23 earnings call.

Its Jamaican portfolio saw its net revenue grow 22 per cent to US$219.90 million (J$33.77 billion) with its net package revenue jumping 26 per cent to US$187.49 million from its five properties which had an occupancy of 79.4 per cent. The owned resort EBITDA (earnings before interest, tax, depreciation, and amortisation) also hit a new high of US$80.50 million with an owned EBITDA margin of 36.6 per cent. The revenue per available room (RevPAR) also jumped from US$286.14 to US$359.71 over the year.

Playa spent US$8.14 million on its resorts in 2023 with its property, plant and equipment (PP&E) valued at US$422.77 million.

These figures are a sharp improvement to the US$193.56 million in net revenue earned in 2019 when it had seven properties, including the former Jewel Dunn’s River Beach Resort & Spa and the Jewel Runaway Bay Beach Resort & Waterpark properties, which had an occupancy of 79.0 per cent. The owned-resort EBITDA was US$55.18 million with an owned EBITDA margin of 28.5 per cent.

With respect to its Dominican Republic portfolio, net revenue grew ten per cent to US$253.70 million with the owned resort EBITDA coming in at US$80.08 million from five properties. The occupancy also dipped from 68.1 per cent to 62.3 per cent in 2023. However, if the Jewel Punta Cana and Palm Beach are excluded, total revenue was up 34 per cent to US$225.21 million with owned resort EBITDA at US$95.47 million and occupancy at 73.9 per cent. Playa’s properties were affected by Hurricane Fiona in mid-2022 which skewed the figures.

Playa’s two Hyatt Pacific Coast properties in Mexico brought in US$141.58 million in net revenue during 2023 with occupancy of 70.2 per cent and net package ADR of US$522.94. Its Yucatán Peninsula portfolio of five properties had a 10 per cent rise in net revenue of US$306.26 million and owned resort EBITDA of US$104.84 million from occupancy of 79.5 per cent. These five properties had a net package ADR of US$440.13 which is significant step up to the US$256.81 in 2019 with seven properties.

Playa’s operating income rose 35 per cent to US$175 million which was impacted by a US$5-million loss on sale of the Jewel Punta Cana property. The overall adjusted EBITDA figure grew 12 per cent to US$271.95 million which is a record high. Despite the positive growth in these areas, the two-thirds rise in interest costs resulted in profit before tax coming in at US$65.57 million, a 28 per cent improvement over the US$51.15 million in 2022. Net profit was down five per cent to US$53.85 million with earnings per share coming in at US$0.36.

Total assets declined seven per cent to US$1.93 billion as its PP&E dipped to US$1.42 billion. Cash and cash equivalents went down to US$272.52 million with most of the company’s operating cashflow going towards it share buyback programme. Total liabilities and shareholder’s equity were US$1.38 billion and US$554.80 million, respectively.

Playa’s 2024 outlook is for the company to have EBITDA ranging from US$250-275 million with Q1 adjusted EBITDA ranging from US$98-104 million. Playa terminated its management agreements with the Hyatt Ziva Riviera Cancun and Hyatt Zilara Riviera Maya totalling 729 rooms in December and expects to begin operating Wyndham Alltra Samaná of 404 rooms in mid-2024. The company entered into US$109.5 million (MXN$1.9 billion) of foreign currency forward contracts on January 10 to hedge parts of their cashflow in 2024.

Its still to be seen the impact to the Jamaican market following the recent USA travel advisory which resulted in cancellations over the next few months. While it has managed to have some guests go to the other Spanish resorts, Playa was having a 35 per cent off discount for Jamaican residents up to February 27 and is currently offering a 20 per cent ‘Find Your Moment’ discount until June 2024.

Sangster International Airport (SIA) in Jamaica reported a 7.8 per cent year-over-year growth to 442,500 terminal passengers and a 1.5 per cent rise at the Norman Manley International Airport to 113,900 terminal passengers for February. Playa’s Jamaican properties are situated on the North Coast with four in Montego Bay.

Playa US$186.89 million on share buybacks in 2023 which brought its issued share count to 136,081,891, slightly above the 134,571,290 shares at the end of 2020. Playa had issued shares during 2020-2021 to help stabilise its business which saw its share count hit 164.44 million at the end of 2021. The Playa board authorised a new US$200-million share buyback programme in December. Playa’s share price closed Thursday at US$9.50 which leaves it up 10 per cent in 2024 with a market capitalisation of US$1.30 billion, but below the US$11.95 price in June 2017.

FX rates: US$1-$153.5857 in December 2023. US$1-$129.7847 in December 2019.