Playa Hotels & Resorts NV (PLYA) 2024 Q4 法說會逐字稿

Good day and welcome to the Playa Hotels and Resorts 4th quarter 2024 earnings conference call.

(Operator Instructions) Please note this call is also being recorded. I would now like to hand the call to Ryan Hymel. Please go ahead.

Thank you very much, Andrea. Good morning, everyone, and welcome to Playa Hotels and Resorts. 4th quarter 2024 earnings conference call. Given the potential transaction with Hyatt, today's call will focus on the 4th quarter 24 results and will not include a Q&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 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 10k, which we filed last night with the SEC.

We've updated our investor relations website at investors.flyer resorts.com with the company's recent releases. In addition, reconciliation the GAAP of the non-gap financial measures we discussed on this call were included in yesterday's press release. With that, I'll turn the call over to Bruce Wardinski.

Great. Thanks, Ryan. Good morning, everyone, and thank you for joining us. As you may have seen, we announced on February 10, 2025 that we entered into an agreement with Hyatt Hotels Corporation pursuant to which a wholly owned subsidiary of Hyatt will acquire all outstanding shares of PLA for $13.50 per share in cash. We will not be commenting on the potential transaction aside from what was already disclosed in press releases and regulatory documents, including the SEC filing we made this week in 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 associates over the years as we change the all-inclusive landscape.

Turning to the 4th 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 beryl.

Its own resort of $67.1 million in the fourth quarter of 2024 included a benefit from business interruption insurance proceeds of approximately $1.1 million compared to $900,000 in Q4 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. $1.1 million lower corporate expense and a higher than anticipated foreign currency exchange tailwind of approximately $2 million.

For Q4 2024, we estimate that FX was a 200 basis points tailwind for a reported owned resort, Eva margin. Business interruption proceeds received in Q4 2024 favorably impacted resort margins by approximately 50 basis points, but was a 10 basis points net tailwind on a year over year basis as the amount of business interruption proceeds received was only slightly higher in 2024. Adjusting for all of these factors, underlying owned resort Ipeta growth was down approximately 15% in 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 Beryl was for stays in the third quarter of 2024. The fourth quarter was still challenged by the construction disruption in the Pacific coast. The US State Department travel advisory on our Jamaica Jamaican segment and the lingering impact of Hurricane Darryl.

At the segment level, our teams in the Yucatan did an excellent job on the cost front despite the challenges presented by Hurricane Beryl. Occupancy declined 70 basis points year over year in the 4th quarter, driving currency neutral margins to decline by approximately 210 basis points year over year and underlying EBA growth of approximately 4%.

The modest currency neutral EA decline on flat year over year revPAR reflects our ongoing efficiency efforts which really began gaining traction in the second half of 2023.

In the Pacific, her planned renovation work in this segment continued during the 4th quarter with the peak of the guest impacting construction work taking place during Q3, the year over year occupancy decline improved sequentially. The renovation work has remained on track and is expected to be completed in Q1 2025.

Turning to the DR, we completed the sale of the Jewel Puntaconda resort in late December of 2023, and the Jewel Palm Beach resort was closed for a significant portion of Q1 2023 and sold in the third quarter of 2024.

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 4th quarter and driving approximately 9% underlying profit growth after adjusting for business interruption proceeds in both periods.

Finally, Jamaica's 4th quarter was largely as expected, with the approximately 16% revpar decline improving compared to the negative 30% decline in the 3rd quarter, resulting in a material 50% decline in resort to die. As we outlined on our last earnings call, the segment was starting to regain its footing, especially for the fourth quarter, but the recovery was significantly disrupted by Hurricane Beryl in late June. Subsequent to the fourth quarter, we recently closed on the sale of the Jewel Paradise Cove resort on February 20, 2025 for a gross consideration of $28.5 million.

Fiscal year 2024, adjusted IA $258 million 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 $3.2 million of business interruption proceeds. FX was a $9 to $10 million expected tailwind. Construction disruption in the Pacific coast was approximately $10 million worse than expected. Hurricane Beryl had a significant impact on the second half of the year, and the travel warning issued for Jamaica had approximately $25 to $30 million impact on the segment.

Excluding business interruption and FX, underlying EPA grew 3.5% in the Yucatan and 8.4% at our legacy Dominican Republic resorts. 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 2024, 47.6% of Playa owned and managed transient revenues booked were booked direct, up 30 basis points year every 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 2023.

FlyerResource.com accounted for approximately 13% of our total owned and managed transient room make bookings, continuing to be a critical factor in our customer sourcing and ADR gas. Our direct sourcing mix has improved by over 20% points compared to 2018 and has been a critical competitive advantage driving player success in the post-pandemic era.

Geographically, our South American, European, and Canadian guest mix all improved meaningfully year over year as our American source 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 levels. The European and South American guest mix remain the most elevated versus pre-pandemic at 175%, while our agent guest mix was largely unchanged and remains only approximately 25% recovered.

Finally, on the capital allocation front, we repurchased approximately $25 million worth of Playa stock during the fourth quarter, bringing our total repurchases since resuming our program in September 2022 to approximately $376 million representing nearly 30% of the shares outstanding at the time.

Capital expenditures in 2024 came in lower than anticipated at approximately $97 million largely due to the timing of payments and slippage into 2025. We finished the year with a cash balance of $189 million in total outstanding interest bearing debt of $1.8 billion. Separately, we have implemented FX hedges on approximately 75% of our Mexican peso exposure for 2025 at 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 benefit.

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 from the heart.

Thank you very much for participating on today's call.

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