Playa Hotels & Resorts N.V. Price & Performance (PLYA)

Thank you very much, Andrea. Good morning, everyone, and welcome to Playa Hotels and Resorts fourth quarter twenty twenty four earnings conference call. Given the potential transaction with Hyatt, today's call will focus on the fourth quarter twenty twenty four results and will not include a Q and A session. Before we begin, I'd like to remind participants that many of our comments today will be considered forward looking statements and are subject to numerous risks and uncertainties that may cause the company's actual results to differ materially from what has been communicated. Forward looking statements made today are effective only as of today and the company undertakes no obligation to update forward looking statements. For a discussion of some of the factors that would cause our actual results to differ, please review the Risk Factors section of our annual report on Form 10 ks, which we filed last night, the SEC. Updated our Investor Relations website at investors.flyresorts.com, Playa the company's recent releases. In addition, reconciliations to GAAP of the non GAAP financial measures we discuss on call were included in yesterday's press release. With that, I'll turn the call over to Bruce Swartzinski.

Great. Thanks, Ryan. Good morning, everyone, and thank you for joining us. As you may have seen, we announced on February 10, 2025 We entered into an agreement with Hyatt Hotels Corporation pursuant to which a wholly owned subsidiary of Hyatt will acquire all outstanding share supply $13.5 per share in cash. We will not be commenting on the potential transaction aside from Wako's already disclosed in press releases and regulatory documents including the SEC filing we made this week which our Board recommended in favor of the tender offer. Other than to reiterate that we believe the transaction is an outstanding result for shareholders that recognizes the value creation efforts of all Playa associates over the years as we change the all inclusive landscape. Turning to the fourth quarter, our results exceeded our expectations driven by strong demand across all segments and finished with a phenomenal holiday season as demand fully normalized post hurricane barrel. [indiscernible] of $67,100,000 in the fourth quarter of twenty twenty four included a benefit from business interruption insurance proceeds of approximately $1,100,000 compared to 09/2023. Excluding business interruption insurance, the upside compared to the expectation shared on our last earnings call was driven by better than expected close in demand across the portfolio and better than expected ADR growth in the Pacific Coast Yucatan and Dominican Republic. $1,100,000,000 lower and a higher than anticipated foreign currency exchange tailwind of approximately 2,000,000 For Q4 twenty twenty four, we estimate that FX was a 200 basis points tailwind for our Business interruption proceeds received in Q4 twenty twenty four favorably impacted resort margins by approximately 50 basis basis points, but was a 10 basis points net tailwind on a year over over year basis as the amount of business interruption procedure received was only slightly higher in 2024.

Adjusting for all of these factors, underlying owned resort EBITDA growth was down approximately 15% the fourth quarter for the total portfolio and down approximately 17.5% for the legacy portfolio, both improving sequentially as the bulk of the disruption from Hurricane Barrel was for stays in the third quarter of twenty twenty four. The fourth quarter was still challenged by the construction disruption in the Pacific Coast the U. S. State Department Travel Advisory under Jamaica, Jamaican segment and the lingering impact of Hurricane Barrel.

At the segment level, our teams in the Yucatan did an excellent job on the cost front despite the challenges Occupancy declined 70 basis points year over year in the fourth quarter driving currency neutral margins to decline by approximately and underlying EBITDA growth of approximately negative 4%. The modest currency neutral EBITDA decline on flat year over year RevPAR reflects our ongoing efficiency efforts, which really began gaining traction in the second half of twenty twenty three. The Pacific, our planned renovation work in this segment continued during the fourth quarter. With the peak of the guest impacting construction work taking place during Q3 the year over year occupancy decline improved sequentially. Renovation work has remained on track and is expected to be completed in Q1 twenty twenty five. Turning to the Doctor, completed the sale of the JUUL Ponticana Resort in late December of twenty twenty three. And the Jewel Palm Beach Resort was closed for a significant portion of Q1 twenty twenty three and sold in the third quarter of twenty twenty four. The remaining core resorts in this segment continue to perform well on an underlying basis with both occupancy and ADR increasing year over year in the fourth quarter driving approximately positive 9% underlying profit growth after adjusting for business interruption proceeds in both periods.

Finally, Jamaica's fourth quarter was largely as expected. With the approximately 16% RevPAR decline improving compared to the negative 30% decline in the third quarter. Resulting in a material 50% decline in resort EBITDA. We outlined on our last earnings call, segment was starting to regain its footing especially for the fourth quarter but the recovery was significantly disrupted by Hurricane Barrel in late June. Subsequent to the fourth quarter, we recently closed on the sale of the Jewel Paradise Cover resort on February twenty, twenty twenty five, for a gross consideration of $28,500,000 Fiscal year 2024 adjusted EBITDA of $258,000,000 was in line with the forecast shared with you at the beginning of the year but the path was quite choppy. Compared to the guidance to start the year, we received $3,200,000 of business interruption proceeds FX was a $9,000,000 to $10,000,000 dollar expected tailwind construction disruption in the Pacific Coast was approximately $10,000,000 worse than expected, Hurricane Barrel had a significant impact on the second half of the year the travel warning issued for Jamaica number. Approximate $25,000,000 to $30,000,000 impact on the segment. Excluding business interruption and FX, underlying EBITDA grew 3.5% in the Yucatan and 8.4% at our legacy Dominican Republic resort.

Underlying profits in the Pacific Coast fell by 19.6% and Jamaica experienced a 36.2% decline. Taking a look at our guest segmentation, During the fourth quarter of twenty twenty four, 47.6% of Playa owned and managed transient revenues booked were booked direct, up 30 basis points year over year. While roughly 43.3% of the Playa owned and managed transient room nights stays in the quarter came from our direct channels, which was consistent with Q4 twenty twenty three. Fireresource.com accounted for approximately 13% of our total Playa owned and managed transient roommate bookings continuing to be a critical factor in our customer sourcing into ADR games. Our direct sourcing mix has improved by over 20 percentage points compared to 2018 and has been a critical competitive advantage driving product success in the post pandemic era. Geographically, our South American, European and Canadian guest mix all improved meaningfully year over year our American sourced guest mix continues to normalize. The recovery of our Canadian guest segmentation versus pre pandemic remains near 80% and our American guest mix is roughly back to pre pandemic European and South American guest mix remained the most elevated versus pre pandemic at 175%, while our agent guest mix was largely unchanged and remains only approximately 25% with Epworth.

Finally, on the capital allocation front, we repurchased approximately one point Playa bringing our total repurchases since resuming our program in September 2022 to approximately $376,000,000 representing nearly 30% of the shares outstanding at the time. Capital expenditures in 2024 came in lower than anticipated at approximately $97,000,000 largely due to the timing of payments and slippage into 2025. We finished the year with a cash balance of $189,000,000 and total outstanding interest bearing debt $1,080,000,000 Separately, we have implemented FX hedges on approximately 75% of our Mexican peso exposure for 2025 an exchange rate of approximately 19.5 compared to our average incurred exchange rate of approximately 18.3 in 2024, which should result in a favorable year over year FX Once again, I would like to thank all of our associates who have continued to deliver world class service and really redefine the all inclusive experience with their unwavering passion and dedication to service [indiscernible] You very much for participating on today's call.

The conference has now concluded. Thank you for attending today's presentation and you may now disconnect.