Playa Hotels & Resorts N.V. Reports Fourth Quarter and Full Year 2019 Results

FAIRFAX, Va., Feb. 27, 2020 (GLOBE NEWSWIRE) — Playa Hotels & Resorts N.V. (the “Company”) (NASDAQ: PLYA) today announced results of operations for the three months and year ended December 31, 2019.
Three Months Ended December 31, 2019 ResultsNet Loss was $17.9 million compared to a Net Loss of $14.2 million in 2018Adjusted Net Loss(1) was $9.9 million compared to an Adjusted Net Loss of $0.0 million in 2018Comparable Net Package RevPAR decreased 6.1% over 2018 to $178.19Net Package RevPAR decreased 6.0% over 2018 to $172.49, driven by a 1.0% decrease in Net Package ADR and a 400 basis points decrease in OccupancyOwned Resort EBITDA decreased 37.6% over 2018 to $28.3 millionOwned Resort EBITDA Margin decreased 10.4 percentage points over 2018 to 20.7%Adjusted EBITDA decreased 46.1% over 2018 to $20.0 millionAdjusted EBITDA Margin decreased 10.7 percentage points over 2018 to 14.7%Year Ended December 31, 2019 ResultsNet Loss was $4.4 million compared to Net Income of $19.0 million in 2018
Adjusted Net Income(1) was $8.7 million compared to Adjusted Net Income of $38.7 million in 2018
Comparable Net Package RevPAR decreased 3.4% over 2018 to $209.84
Net Package RevPAR decreased 3.7% over 2018 to $198.28, driven by a 450 basis points decrease in Occupancy, and partially offset by a 1.9% increase in Net Package ADR
Owned Resort EBITDA decreased 12.7% over 2018 to $185.9 million
Owned Resort EBITDA Margin decreased 5.0 percentage points from 2018 to 30.7%
Adjusted EBITDA decreased 15.8% over 2018 to $150.7 million
Adjusted EBITDA Margin decreased 5.1 percentage points over 2018 to 24.8%(1) Adjusted Net Income/(Loss) excludes special items, which are those items deemed not to be reflective of ongoing operations.“We finished the year on a positive note with strong close-in bookings in the Dominican Republic and the Yucatán Peninsula helping offset transitory weakness in Jamaica. We faced many unforeseen challenges in 2019, but we continued to push forward on our mission to open and operate high return, high margin resorts, return capital to shareholders, and adjust our property portfolio to best position ourselves for the future. The completion of our major, multi-year capital projects marks a defining point in Playa’s history as these properties will be the future drivers of Playa’s growth and we expect the Company will now generate a substantial amount of free cash flow.As we look ahead to 2020, we are encouraged by recent bookings momentum in our portfolio, our Group business on the books, and customer reception of our new Hyatt Ziva and Hyatt Zilara Cap Cana, as well as our newly renovated Hilton All-Inclusive resorts. Despite our optimism, the slow recovery of the Dominican Republic travel trends and the lingering weakness in Mexico make us prudently cautious with respect to our outlook for the year.Regardless of the challenges that may surface in the new year, we remain committed to returning capital to our investors and pursuing value creating corporate actions.”Bruce D. Wardinski, Chairman and CEO of Playa Hotels & ResortsFinancial and Operating ResultsThe following table sets forth information with respect to the operating results of our total portfolio and comparable portfolio for the three months and years ended December 31, 2019 and 2018:Total PortfolioComparable Portfolio (5)
Balance Sheet
As of December 31, 2019, the Company held $20.9 million in cash and cash equivalents. Total interest-bearing debt was $1,046.4 million, comprised of our term loan secured debt due 2024 and outstanding balance on the Company’s Revolving Credit Facility. Effective March 29, 2018, we entered into two interest rate swaps to fix LIBOR at 2.85% on $800.0 million of our Term Loan B. As of December 31, 2019, there was $60.0 million outstanding on the Company’s Revolving Credit Facility.As of February 27, 2020, there is currently $45.0 million outstanding on the Company’s Revolving Credit Facility.To date, we have spent $258.6 million on the development of our new 750-room Hyatt Ziva and Hyatt Zilara Cap Cana, inclusive of land costs. Adjusting for this construction in progress spending, our net leverage stood at 5.1x as of December 31, 2019.Guidance
Achievement of the anticipated results is subject to the risks disclosed in the Company’s filings with the U.S. Securities and Exchange Commission. The Company expects Adjusted EBITDA for the full year 2020 to be as follows:Our 2020 outlook is predicated on the following assumptions:Total Portfolio RevPAR growth: flat to low single digit decline;Potential future acquisitions, dispositions, or management agreement changes are explicitly excluded from our outlook.The Company is not able to provide a reconciliation of our 2020 Adjusted EBITDA outlook to our anticipated 2020 U.S. GAAP net income as we are unable to reasonably estimate the impact of changes in fair value related to our interest rate swaps that is recorded within interest expense, which could be significant.Earnings CallThe Company will host a conference call to discuss its fourth quarter and annual results on Friday, February 28, 2020 at 9:00 a.m. (Eastern Daylight Time). The conference call can be accessed by dialing (833) 683-7154 for domestic participants and (409) 983-9744 for international participants. The conference ID number is 3464086. Additionally, interested parties may listen to a taped replay of the entire conference call commencing two hours after the call’s completion on Friday, February 28, 2020. This replay will run through Friday, March 6, 2020. The access number for a taped replay of the conference call is (855) 859-2056 or (404) 537-3406 using the same conference ID number. There will also be a webcast of the conference call accessible on the Company’s investor relations website at www.investors.playaresorts.com.To facilitate a greater understanding of our fourth quarter results and Playa’s overall strategy, we have posted two supplemental decks to the Events & Presentations section of our investor relations website which can be found at www.investors.playaresorts.com.About the CompanyPlaya is a leading owner, operator and developer of all-inclusive resorts in prime beachfront locations in popular vacation destinations in Mexico and the Caribbean. Playa owns and/or manages a total portfolio consisting of 23 resorts (8,690 rooms) located in Mexico, Jamaica, and the Dominican Republic. In Mexico, Playa owns and manages the Hyatt Zilara Cancún, Hyatt Ziva Cancún, Panama Jack Resorts Cancún, Panama Jack Resorts Playa del Carmen, Hilton Playa del Carmen All-Inclusive Resort, Hyatt Ziva Puerto Vallarta and Hyatt Ziva Los Cabos. In Jamaica, Playa owns and manages the Hyatt Zilara Rose Hall, the Hyatt Ziva Rose Hall, Hilton Rose Hall Resort & Spa, Jewel Dunn’s River Beach Resort & Spa, Jewel Grande Montego Bay Resort & Spa, Jewel Runaway Bay Beach Resort & Waterpark and Jewel Paradise Cove Beach Resort & Spa. In the Dominican Republic, Playa owns and manages the Hilton La Romana All-Inclusive Family Resort, the Hilton La Romana All-Inclusive Adult Resort, the Hyatt Ziva Cap Cana, and the Hyatt Zilara Cap Cana. Playa also owns four resorts in Mexico and the Dominican Republic that are managed by a third party and Playa manages the Sanctuary Cap Cana in the Dominican Republic.Forward-Looking StatementsThis press release contains ‘‘forward-looking statements,’’ as defined by federal securities laws. Forward-looking statements reflect Playa’s current expectations and projections about future events at the time, and thus involve uncertainty and risk. The words “believe,” “expect,” “anticipate,” “will,” “could,” “would,” “should,” “may,” “plan,” “estimate,” “intend,” “predict,” “potential,” “continue,” and the negatives of these words and other similar expressions generally identify forward looking statements. Such forward-looking statements are subject to various risks and uncertainties, including those described under the section entitled “Risk Factors” in Playa’s Annual Report on Form 10-K, filed with the SEC on February 27, 2020, as such factors may be updated from time to time in Playa’s periodic filings with the SEC, which are accessible on the SEC’s website at www.sec.gov. Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these statements. These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this release and in Playa’s filings with the SEC. While forward-looking statements reflect Playa’s good faith beliefs, they are not guarantees of future performance. Playa disclaims any obligation to publicly update or revise any forward-looking statement to reflect changes in underlying assumptions or factors, new information, data or methods, future events or other changes after the date of this press release, except as required by applicable law. You should not place undue reliance on any forward-looking statements, which are based only on information currently available to Playa (or to third parties making the forward-looking statements).Definitions of Non-U.S. GAAP Measures and Operating StatisticsOccupancy“Occupancy” represents the total number of rooms sold for a period divided by the total number of rooms available during such period. The total number of rooms available excludes any rooms considered “Out of Order” due to renovation or a temporary problem rendering them inadequate for occupancy for an extended period of time. Occupancy is a useful measure of the utilization of a resort’s total available capacity and can be used to gauge demand at a specific resort or group of properties during a given period. Occupancy levels also enable us to optimize Net Package ADR (as defined below) by increasing or decreasing the stated rate for our all-inclusive packages as demand for a resort increases or decreases.Net Package Average Daily Rate (“Net Package ADR”)“Net Package ADR” represents total Net Package Revenue for a period divided by the total number of rooms sold during such period. Net Package ADR trends and patterns provide useful information concerning the pricing environment and the nature of the guest base of our portfolio or comparable portfolio, as applicable. Net Package ADR is a commonly used performance measure in the all-inclusive segment of the lodging industry, and is commonly used to assess the stated rates that guests are willing to pay through various distribution channels.Net Package Revenue per Available Room (“Net Package RevPAR”)“Net Package RevPAR” is the product of Net Package ADR and the average daily occupancy percentage. Net Package RevPAR does not reflect the impact of non-package revenue. Although Net Package RevPAR does not include this additional revenue, it generally is considered the key performance measure in the all-inclusive segment of the lodging industry to identify trend information with respect to net room revenue produced by our portfolio or comparable portfolio, as applicable, and to evaluate operating performance on a consolidated basis or a regional basis, as applicable.Net Package Revenue, Net Non-package Revenue, Owned Net Revenue, Management Fee Revenue, Cost Reimbursements and Total Net Revenue“Net Package Revenue” is derived from the sale of all-inclusive packages, which include room accommodations, food and beverage services, kids club and entertainment activities, net of compulsory tips paid to employees. Government mandated compulsory tips in the Dominican Republic are not included in this adjustment, as they are already excluded from revenue. Revenue is recognized, net of discounts and rebates, when the rooms are occupied and/or the relevant services have been rendered. Advance deposits received from guests are deferred and included in trade and other payables until the rooms are occupied and/or the relevant services have been rendered, at which point the revenue is recognized.“Net Non-package Revenue” represents all other revenues earned from the operations of our resorts, other than Net Package Revenue, net of compulsory tips paid to employees. Government mandated compulsory tips in the Dominican Republic are not included in this adjustment, as they are already excluded from revenue. Net Non-package Revenue includes revenue associated with guests’ purchases of upgrades, premium services and amenities, such as premium rooms, dining experiences, wines and spirits and spa packages, which are not included in the all-inclusive package. Revenue not included in a guest’s all-inclusive package is recognized when the goods are consumed.“Owned Net Revenue” represents Net Package Revenue and Net Non-Package Revenue. Owned Net Revenue represents a key indicator to assess the overall performance of our business and analyze trends, such as consumer demand, brand preference and competition. In analyzing our Owned Net Revenues, our management differentiates between Net Package Revenue and Net Non-package Revenue. Guests at our resorts purchase packages at stated rates, which include room accommodations, food and beverage services and entertainment activities, in contrast to other lodging business models, which typically only include the room accommodations in the stated rate. The amenities at all-inclusive resorts typically include a variety of buffet and á la carte restaurants, bars, activities, and shows and entertainment throughout the day.“Management Fee Revenue” is derived from fees earned for managing hotels owned by third-parties. The fees earned are typically composed of a base fee, which is computed as a percentage of resort revenue, and an incentive fee, which is computed as a percentage of resort profitability. Management Fee Revenue was immaterial to our operations for the three months and years ended December 31, 2019 and 2018, but we expect Management Fee Revenue to be a more relevant indicator to assess the overall performance of our business in the future as we enter into more management contracts. “Total Net Revenue” represents Net Package Revenue, Net Non-package Revenue and Management Fee Revenue. “Cost Reimbursements” is excluded from Total Net Revenue as it is not considered a key indicator of financial and operating performance. Cost reimbursements is derived from the reimbursement of certain costs incurred by Playa on behalf of resorts managed by Playa and owned by third parties. This revenue is fully offset by reimbursable costs and has no net impact on operating income or net income.The following table shows a reconciliation of Total Net Revenue, Net Package Revenue, Net Non-Package Revenue, Management Fee Revenue and Total Net Revenue to total revenue for the three months and years ended December 31, 2019 and 2018:Total PortfolioOur comparable portfolio for the years ended December 31, 2019 and 2018 excludes the following resorts: Hilton La Romana All-Inclusive Resort and Hilton Playa del Carmen All-Inclusive Resort, which were under renovation in 2019, Hilton Rose Hall Resort & Spa, Jewel Runaway Bay Beach Resort & Waterpark, Jewel Dunn’s River Beach Resort & Spa, Jewel Paradise Cove Beach Resort & Spa and Jewel Grande Montego Bay Resort & Spa, which were acquired on June 1, 2018, and Hyatt Ziva and Hyatt Zilara Cap Cana, a ground-up development opened during November 2019.
EBITDA, Adjusted EBITDA, Owned Resort EBITDA, Adjusted EBITDA Margin and Owned Resort EBITDA MarginWe define EBITDA, a non-U.S. GAAP financial measure, as net (loss) income, determined in accordance with U.S. GAAP, for the period presented, before interest expense, income tax and depreciation and amortization expense. We define Adjusted EBITDA, a non-U.S. GAAP financial measure, as EBITDA further adjusted to exclude the following items:Other (expense) incomePre-opening expenseTransaction expensesSeverance expenseOther tax expenseGain on property damage insurance proceedsShare-based compensationLoss on extinguishment of debtNon-service cost components of net periodic pension cost (benefit)Other items which may include, but are not limited to the following: management contract termination fees; gains or losses from legal settlements; repairs from hurricanes and tropical storms; impairment losses and Jamaica delayed opening accrual reversals.We also believe that Adjusted EBITDA is useful to investors for two principal reasons. First, we believe Adjusted EBITDA assists investors in comparing our performance over various reporting periods on a consistent basis by removing from our operating results the impact of items that do not reflect our core operating performance. For example, changes in foreign exchange rates (which are the principal driver of changes in other expense), and expenses related to capital raising, strategic initiatives and other corporate initiatives, such as expansion into new markets (which are the principal drivers of changes in transaction expenses), are not indicative of the operating performance of our resorts. The other adjustments included in our definition of Adjusted EBITDA relate to items that occur infrequently and therefore would obstruct the comparability of our operating results over reporting periods. For example, revenue from insurance policies, other than business interruption insurance policies, is infrequent in nature, and we believe excluding these expense and revenue items permits investors to better evaluate the core operating performance of our resorts over time. We believe Adjusted EBITDA Margin provides our investors a useful measurement of operating profitability for the same reasons we find Adjusted EBITDA useful.The second principal reason that we believe Adjusted EBITDA is useful to investors is that it is considered a key performance indicator by our board of directors (our “Board”) and management. In addition, the compensation committee of our Board determines the annual variable compensation for certain members of our management based, in part, on consolidated Adjusted EBITDA. We believe that Adjusted EBITDA is useful to investors because it provides investors with information utilized by our Board and management to assess our performance and may (subject to the limitations described below) enable investors to compare the performance of our portfolio to our competitors.We define Owned Resort EBITDA as Adjusted EBITDA before corporate expenses and Management Fee Revenue. EBITDA, Adjusted EBITDA and Owned Resort EBITDA are not a substitute for net (loss) income or any other measure determined in accordance with U.S. GAAP. There are limitations to the utility of non-U.S. GAAP financial measures, such as Adjusted EBITDA. For example, other companies in our industry may define Adjusted EBITDA differently than we do. As a result, it may be difficult to use Adjusted EBITDA or similarly named non-U.S. GAAP financial measures that other companies publish to compare the performance of those companies to our performance. Because of these limitations, EBITDA, Adjusted EBITDA, and Owned Resort EBITDA should not be considered as a measure of the income or loss generated by our business or discretionary cash available for investment in our business, and investors should carefully consider our U.S. GAAP results presented.“Adjusted EBITDA Margin” represents Adjusted EBITDA as a percentage of Total Net Revenue. “Owned Resort EBITDA Margin” represents Owned Resort EBITDA as a percentage of Owned Net Revenue. We believe these margins provide our investors a useful measurement of operating profitability for the same reasons we find Adjusted EBITDA and Owned Resort EBITDA useful.Adjusted Net (Loss) Income“Adjusted Net (Loss) Income” is a non-GAAP performance measure. We define Adjusted Net (Loss) Income as net (loss) income attributable to Playa Hotels & Resorts, determined in accordance with U.S. GAAP, excluding special items which are not reflective of our core operating performance, such as one-time expenses related to debt extinguishment and transaction expenses. We believe Adjusted Net (Loss) Income provides meaningful comparisons of ongoing operating results, by removing from net income the impact of items that do not reflect our normalized operations.Adjusted Net (Loss) Income is not a substitute for net (loss) income or any other measure determined in accordance with U.S. GAAP. There are limitations to the utility of non-U.S. GAAP financial measures, such as Adjusted Net (Loss) Income. For example, other companies in our industry may define Adjusted Net (Loss) Income differently than we do. As a result, it may be difficult to use Adjusted Net (Loss) Income or similarly named non-U.S. GAAP financial measures that other companies publish to compare the performance of those companies to our performance. Because of these and other limitations, Adjusted Net (Loss) Income should not be considered as a measure of the income or loss generated by our business or discretionary cash available for investment in our business, and investors should carefully consider our U.S. GAAP results presented in this release.Playa Hotels & Resorts N.V.
Reconciliation of Net (Loss) Income to EBITDA, Adjusted EBITDA and Owned Resort EBITDA
($ in thousands)
The following is a reconciliation of our U.S. GAAP net (loss) income to EBITDA, Adjusted EBITDA and Owned Resort EBITDA for the three months and years ended December 31, 2019 and 2018:
Playa Hotels & Resorts N.V.
Reconciliation of Net (Loss) Income to Adjusted Net (Loss) Income
($ in thousands)
The following table reconciles our net (loss) income to Adjusted Net (Loss) Income for the three months and years ended December 31, 2019 and 2018:
Playa Hotels & Resorts N.V.
Consolidated Balance Sheets
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 Playa Hotels & Resorts N.V.
Consolidated Statements of Operations
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Playa Hotels & Resorts N.V.
Consolidated Debt Summary – As of December 31, 2019
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Playa Hotels & Resorts N.V.
Reportable Segment Operating Statistics – Three Months Ended December 31, 2019 and 2018
Highlights
Yucatán PeninsulaComparable Net Package RevPAR decreased 1.3% over the comparable period in the prior year, driven by a decrease in Net Package ADR of 3.4%, which was partially offset by an increase in Occupancy of 180 basis points.Comparable Owned Resort EBITDA decreased $4.3 million or 21.8% over the prior year.The decrease in Comparable Owned Resort EBITDA can be attributed to all properties within this segment.Pacific CoastComparable Net Package RevPAR decreased 2.5% over the comparable period in the prior year, driven by a decrease in Net Package ADR of 4.3%, and partially offset by an increase in Occupancy of 140 basis points.Comparable Owned Resort EBITDA decreased $1.5 million or 20.0% over the prior year.The decrease in Comparable Owned Resort EBITDA can be attributed to all properties within this segment, primarily due to the decrease in Comparable Owned Net Revenue as described above.Dominican RepublicComparable Net Package RevPAR decreased 29.8% over the prior year, driven by a decrease in Net Package ADR of 14.4%, and a decrease in Occupancy of 1,330 basis points.Comparable Owned Resort EBITDA decreased $2.4 million, or 70.6%, over the prior year.The decrease in Comparable Owned Resort EBITDA can be attributed to all properties within this segment, primarily due to the decrease in Comparable Owned Net Revenue as described above. The negative press regarding the Dominican Republic, and corresponding near-term business disruption, had a negative impact on results in this segment for the three months ended December 31, 2019.JamaicaComparable Net Package RevPAR decreased 5.1% over the prior year, driven by a decrease in Net Package ADR of 6.2%, which was partially offset by an increase in Occupancy of 90 basis points.Comparable Owned Resort EBITDA decreased $0.2 million, or 3.0%, over the prior year.This decrease was due to the performance of Hyatt Ziva and Hyatt Zilara Rose Hall, which accounted for a $1.8 million decrease in Comparable Owned Resort EBITDA compared to the three months ended December 31, 2018. Hyatt Ziva and Hyatt Zilara Rose Hall recorded a decrease in group revenue over prior period, which lead to decreased Comparable Net Package ADR and Comparable Owned Resort EBITDA.Playa Hotels & Resorts N.V.
Reportable Segment Operating Statistics – Years Ended December 31, 2019 and 2018
HighlightsYucatán PeninsulaComparable Net Package RevPAR decreased 5.1% over the comparable period in the prior year, driven by a decrease in Net Package ADR of 3.9% and a decrease in Occupancy of 100 basis points.Comparable Owned Resort EBITDA decreased $11.5 million or 13.6% over the prior year.The decrease in Comparable Owned Resort EBITDA can be attributed to all properties within this segment, primarily due to the decrease in Comparable Owned Net Revenue as described above. In addition to the revenue decline, all properties within this segment have been affected by increased insurance premiums and energy costs year over year which contributed to a $0.7 million decrease in Comparable Owned Resort EBITDA compared to the year ended December 31, 2018.Pacific CoastComparable Net Package RevPAR increased 1.5% over the comparable period in the prior year, driven by an increase in Net Package ADR of 1.6%, partially offset by a 10 basis point decrease in Occupancy.Comparable Owned Resort EBITDA increased $0.6 million or 1.9% over the prior year.The increase in Owned Resort EBITDA is attributed to continuous cost management improvements within the segment during the year ended December 31, 2019.Dominican RepublicComparable Net Package RevPAR decreased 13.4% over the prior year, driven by a decrease in Net Package ADR of 1.4% and a decrease in Occupancy of 1,000 basis points.Comparable Owned Resort EBITDA decreased $7.1 million, or 28.6%, over the prior year.This decrease was due to the performance of all properties in this segment, but was also impacted by Dreams Punta Cana due to a non-recurring gain from business interruption insurance proceeds of $1.5 million during the year ended December 31, 2018. The negative press regarding the Dominican Republic, and corresponding near-term business disruption, had a negative impact on results in this segment for the year ended December 31, 2019.JamaicaComparable Net Package RevPAR increased 6.2% over the prior year, driven by an increase in Net Package ADR of 5.5%, and an increase in Occupancy of 50 basis points.Comparable Owned Resort EBITDA increased $2.9 million, or 12.9%, over the prior year.Company Contact
Ryan Hymel, EVP and Chief Financial Officer
(571) 529-6113