Playa Hotels & Resorts NV has given praise to the recovery and growth of the high-demand Jamaican tourism market as the lynchpin for its highest owned-resort EBITDA (earnings before interest, tax, depreciation and amortization) of US$83.1 million during the second quarter.

The Dutch-based hospitality firm, which operates in Mexico, the Dominican Republic and Jamaica, saw total occupancy across its portfolio of 73.5 per cent, with the Jamaican market seeing the highest Q2 occupancy in its history of 82.4 per cent. Owned net revenue for Jamaica across its five north coast properties grew 31 per cent to US$57.42 million with owned-resort EBITDA jumping 81 per cent to US$21.92 million. The EBITDA margin also saw considerable improvement from 27.7 per cent to 38.2 per cent, which means that Playa was able to retain more of its earnings before other expenses.

“The fundamental strength was led by performance in our Jamaican segment, as the segment reported record second quarter occupancy and year over year ADR [average daily rate] gains of 26 per cent. As a reminder, Jamaica removed COVID-related travel restrictions during the second quarter of 2022, making it the last of our major geographic segments to do so. We remain optimistic about the runway for the recovery in Jamaica given the strength of that market prior to the pandemic and the major infrastructure efforts under way to help further increase tourism,” said Bruce D Wardinski, chairman and CEO of Playa in the 8-K filing.

Playa owns two Hyatt properties in Montego Bay, the Hilton Rose Hall Resort and Spa and the Jewel Paradise Cove and Jewel Grande Montego Bay in Jamaica. It also manages 129 rooms at the Jewel Grande on behalf of Sagicor Financial Company Limited. These Jamaican resorts resulted in Playa having a net package ADR of US$454.59 and net package RevPAR (revenue per available room) of US$374.72 during the second quarter. This is a significant improvement to when it had an ADR of US$294.39 and RevPAR of US$237.30 in June 2019 when it also owned the Jewel Dunn’s River and Jewel Runaway Bay properties in one of Jamaica’s best years for tourism. Both properties were subsequently sold to Sandals International in April 2020 with the Dunn’s River location reopened earlier this year.

For the overall six months, owned net revenue climbed 37 per cent to US$120.40 million due to more guests from the United States of America. The owned-EBITDA came in at US$49 million on a margin of 40.7 per cent.

“Jamaica draws very significantly from the north-east coast of the US, and you know that’s a great market to draw from because those customers are willing to pay higher rates than other markets. And the other place that it draws very well from our higher-end groups. The ongoing recovery in addition to the significant investment being made to improve the Montego Bay airport, which is expected to be completed in the near future, bode well for the Jamaican segment for the second half of 2023 and beyond,” Wardinski added on the prospects for the Jamaican market.

The Sangster International Airport (SIA) is currently undergoing a US$140-million upgrade which is seeing the runway being expanded along with larger internal facilities within the airport such as check-in halls, car park and lounges. According to the air traffic reports of Grupo Aeroportuario del Pacífico, SAB de CV (Pacific Airport Group) for June and July, the Sangster International Airport processed 448,500 passengers and 513,700 passengers, respectively during the period, which is a 15 per cent improvement compared to 2019 figures of 391,700 passengers and 443,100 passengers respectively. The airport welcomed three new North American routes via Frontier Airlines in February along with the resumption of non-stop flights to Jamaica by LATAM Airlines. Norse Atlantic Airways will also be operating from London’s Gatwick Airport in October to SIA as well.

Despite all of the positives noted during the period, the Playa chairman noted the impact of a travel warning during Q2. The only notable travel warning during the period was a May 10 notice by the United States Embassy for a level three notice indicating for visitors to reconsider travel.

“Finally, we experienced a safety-related travel warning for Jamaica during the quarter which temporarily impacted bookings and weighed on June results. These types of warnings are not unusual nor unheard of in Jamaica. However, this one picked up more media coverage than we typically see and led to some disruption in bookings and cancellations, particularly in the group segment. It was, however, very short-lived as we are not seeing any lingering effects into the fall,” Wardinski explained in the earnings call last Friday.

Apart from the praise given to the Jamaican market, Playa also noted the double-digit improvement in owned-net revenue in the Yucatán Peninsula and Pacific coast in Mexico albeit the foreign exchange impact from the appreciation of the Mexican peso. The Dominican Republic segment was relatively flat during the period due to decreased occupancy and the disruptions stemming from Hurricane Fiona in 2022. Playa also benefited from gaining three new managed properties during the first six months from the Spanish markets.

With respect to the group’s Q2 earnings, consolidated revenue improved 12 per cent to US$248.04 million with net income decreasing by 32 per cent to US$20.63 million from higher expenses. For the overall six months, total revenue increased 18 per cent to US$521.84 million with net income down 14 per cent to US$63.35 million. Earnings per share (EPS) for Q2 and the six months was US$0.13 and US$0.40, respectively.

Playa’s total assets decreased during the first six months to US$2.04 billion with cash remaining at US$268.85 million. Total liabilities declined to US$1.37 billion with shareholder’s equity increasing to US$670.80 million. Playa repurchased 8.73 million shares for US$75.36 million under the recently announced US$200-million share repurchase programme.

Although Playa mentioned general improvement in its earnings, its share price fell from US$8 to US$7.41 last Friday as the performance lagged analyst estimates of US$0.15 for EPS. The price closed Tuesday at US$7.35 which gave it a market capitalisation of US$1.12 billion.