On this page of StockholderLetter.com we present the latest annual shareholder letter from Playa Hotels & Resorts N.V. — ticker symbol PLYA. Reading current and past PLYA letters to shareholders can bring important insights into the investment thesis.
![VALUED SHAREHOLDERS,
Playa s best in class Service From the Heart led to another excellent year in
2023, as our value proposition continued to resonate with our guests. The
compelling value of our all-inclusive offering at a time of rapidly rising costs
for many consumer facing items will continue to be an important competitive
advantage for Playa and our ability to sustain growth in the future. We were
able to deliver value to our guests while growing RevPAR 14%, leading to
UHFRUG $GMXVWHG (%,7'$ DQG IUHH FDVK RZ 7KH IXQGDPHQWDO LPSURYHPHQW LQ
2023 was led by our resorts in Jamaica, following the removal of COVID-19
related travel restrictions during the second quarter of 2022. The year was
not without challenges, as the transition of resort operations at the two Jewel
resorts in the Dominican Republic and adverse foreign currency exchange
UDWH ); XFWXDWLRQV ZHUH PHDQLQJIXO KHDGZLQGV GXULQJ 'HVSLWH
the challenges presented by FX and the two Jewel resorts in the Dominican
Republic, we still managed to generate our highest annual ADR, RevPAR,
and Adjusted EBITDA in the Company s history. We expect leisure demand
to remain steady in 2024 and remain focused on managing what is in our
control to continue offering a compelling value proposition to our guests
and driving growth for our shareholders through prudent capital allocation
and portfolio optimization.
2023 FINANCIAL PERFORMANCE HIGHLIGHTS
As we outlined in the beginning of the year, we expected more robust
QDQFLDO UHVXOWV GXULQJ WKH UVW KDOI RI GXH WR WKH QHJDWLYH LPSDFW
IURP WKH 2PLFURQ YDULDQW H[SHULHQFHG GXULQJ WKH UVW KDOI RI DQG WKDW
results would moderate to a more normalized level in the second half of the
year. That expectation largely came to fruition as our ADR growth moderated
to healthy mid-to-high single digit year-over-year growth during the second
KDOI RI WKH \HDU +RZHYHU RXU FRQWLQXHG IRFXV RQ RSHUDWLQJ HI FLHQF\ KHOSHG
RIIVHW WKH LPSDFW RI HOHYDWHG H[SHQVH LQ DWLRQ DQG PRUH QRUPDOL]HG $'5
growth. Adjusting for the impact of Hurricane Fiona related disruptions
and business interruption insurance proceeds, we were able to drive yearover-year margin expansion, on a currency neutral basis, in our core legacy
portfolio during the second half of 2023.
Jamaica was our standout segment of the year, with year-over-year RevPAR
growth of nearly 26% driving Owned Resort EBITDA growth of 43%. We
ZHUH FRQ GHQW WKDW -DPDLFD ZRXOG VHH D KHDOWK\ UHFRYHU\ DIWHU -DPDLFD
removed their travel restrictions in the second quarter of 2022, as this was
our best performing segment prior to the pandemic, and we did not believe
WKHUH ZHUH DQ\ VWUXFWXUDO FKDQJHV LQ WKH PDUNHW WR SUHYHQW D VLJQL FDQW
improvement in fundamentals.
,Q WKH 'RPLQLFDQ 5HSXEOLF RXU DJVKLS +\DWW =LYD DQG +\DWW =LODUD &DS
Cana property continued to set the standard in the market and delivered
another excellent year, but the segment faced a substantial headwind from
the Jewel Punta Cana and Jewel Palm Beach resorts, which experienced an
XQSUR WDEOH \HDU LQ IROORZLQJ WKH GLVUXSWLRQ LQ RSHUDWLRQV DV D UHVXOW
of the change in resort management. Subsequently, we announced the sale
of the Jewel Punta Cana resort during the fourth quarter of 2023 and are
actively pursuing the disposition of the Jewel Palm Beach resort.
Despite being one of the best performing markets during the pandemicera and leading the way during the recovery, both of our major segments
in Mexico continued to show healthy fundamental growth in 2023. In
anticipation of a return to more moderate levels of growth, we strategically
realigned our operations management and implemented changes to our
VWDI QJ SURWRFROV DQG SURFHVVHV \LHOGLQJ WDQJLEOH FRVW VDYLQJV ZLWKRXW
FRPSURPLVLQJ WKH JXHVW H[SHULHQFH 7KH HI FLHQF\ PHDVXUHV UHVXOWHG LQ
year-over-year margin expansion in both of our Mexican segments during
the second half of 2023, on a currency neutral basis, as RevPAR growth
PRGHUDWHG +RZHYHU RXU HIIRUWV ZHUH ODUJHO\ RIIVHW E\ WKH QHJDWLYH QDQFLDO
impact of the appreciation of the Mexican Peso versus the U.S. Dollar, which
was a $25 million headwind in 2023.
Putting it all together, we were able to deliver record Adjusted EBITDA
of $272 million in 2023, despite the negative impacts from the Jewel
resorts in the Dominican Republic and foreign currency exchange rate
headwinds. We will continue executing our strategic objectives in 2024
and are expecting to deliver Adjusted EBITDA of $250-275 million for
WKH IXOO \HDU :H LQYHVWHG LQ WKH JXHVW H[SHULHQFH E\ VWDI QJ RXU UHVRUWV
to focus on service, which we believe will continue to pay off as our
value proposition resonate with consumers.
SIGNIFICANTLY IMPROVED LIQUIDITY PROFILE AND CASH FLOWS
We entered 2023 with nearly $816 million of net debt and trailing
12-month leverage of approximately 3.4x and exited 2023 with
nearly $817 million of net debt and trailing 12-month leverage of
DSSUR[LPDWHO\ [ UH HFWLQJ WKH VLJQL FDQW IUHH FDVK RZ JHQHUDWLRQ
of the business and our strategic resort portfolio optimization actions.
We were able to lower our net leverage ratio while reinvesting in
our assets and returning capital to shareholders through our share
repurchases.
$V \RX PD\ UHFDOO ZH UH QDQFHG RXU GHEW DQG LQFUHDVHG WKH FDSDFLW\
of our Revolving Credit Facility during the fourth quarter of 2022.
In April of 2023, we entered into two interest rate swaps to mitigate
WKH RDWLQJ LQWHUHVW UDWH ULVN RQ RXU WHUP ORDQ GXH 6HSDUDWHO\
in January of 2024, we entered into FX forwards to hedge part of
RXU H[SRVXUH WR WKH XFWXDWLRQV RI WKH 0H[LFDQ 3HVR SURYLGLQJ
better visibility for our operations and lower volatility related to the
Mexican Peso. With respect to capital allocation, our Board of Directors
reauthorized a new $200 million share repurchase program in February
of 2023, replacing the prior $100 million authorization announced in
September of 2022. In December of 2023, our Board of Directors once
again authorized another $200 million share repurchase authorization,
which replaced the prior February $200 million authorization that only](/plya/plya-shareholder-letter-20240422-page-2.png)
• 
4/22/2024 Letter Continued (Full PDF)
•
4/17/2023 PLYA Stockholder Letter
• More "Hotels" Category Stockholder Letters
•
PLYA Benford's Law Stock Score = 83
4/22/2024 Letter Continued (Full PDF)
•
4/17/2023 PLYA Stockholder Letter•
More "Hotels" Category Stockholder Letters•
PLYA Benford's Law Stock Score = 83PLYA Shareholder/Stockholder Letter Transcript:
ANNUAL REPORT 2023 Hiltton Playa Playa ay del d Car a men en VALUED SHAREHOLDERS, Playa s best in class Service From the Heart led to another excellent year in 2023, as our value proposition continued to resonate with our guests. The compelling value of our all-inclusive offering at a time of rapidly rising costs for many consumer facing items will continue to be an important competitive advantage for Playa and our ability to sustain growth in the future. We were able to deliver value to our guests while growing RevPAR 14%, leading to UHFRUG $GMXVWHG (%,7'$ DQG IUHH FDVK RZ 7KH IXQGDPHQWDO LPSURYHPHQW LQ 2023 was led by our resorts in Jamaica, following the removal of COVID-19 related travel restrictions during the second quarter of 2022. The year was not without challenges, as the transition of resort operations at the two Jewel resorts in the Dominican Republic and adverse foreign currency exchange UDWH ); XFWXDWLRQV ZHUH PHDQLQJIXO KHDGZLQGV GXULQJ 'HVSLWH the challenges presented by FX and the two Jewel resorts in the Dominican Republic, we still managed to generate our highest annual ADR, RevPAR, and Adjusted EBITDA in the Company s history. We expect leisure demand to remain steady in 2024 and remain focused on managing what is in our control to continue offering a compelling value proposition to our guests and driving growth for our shareholders through prudent capital allocation and portfolio optimization. 2023 FINANCIAL PERFORMANCE HIGHLIGHTS As we outlined in the beginning of the year, we expected more robust QDQFLDO UHVXOWV GXULQJ WKH UVW KDOI RI GXH WR WKH QHJDWLYH LPSDFW IURP WKH 2PLFURQ YDULDQW H[SHULHQFHG GXULQJ WKH UVW KDOI RI DQG WKDW results would moderate to a more normalized level in the second half of the year. That expectation largely came to fruition as our ADR growth moderated to healthy mid-to-high single digit year-over-year growth during the second KDOI RI WKH \HDU +RZHYHU RXU FRQWLQXHG IRFXV RQ RSHUDWLQJ HI FLHQF\ KHOSHG RIIVHW WKH LPSDFW RI HOHYDWHG H[SHQVH LQ DWLRQ DQG PRUH QRUPDOL]HG $'5 growth. Adjusting for the impact of Hurricane Fiona related disruptions and business interruption insurance proceeds, we were able to drive yearover-year margin expansion, on a currency neutral basis, in our core legacy portfolio during the second half of 2023. Jamaica was our standout segment of the year, with year-over-year RevPAR growth of nearly 26% driving Owned Resort EBITDA growth of 43%. We ZHUH FRQ GHQW WKDW -DPDLFD ZRXOG VHH D KHDOWK\ UHFRYHU\ DIWHU -DPDLFD removed their travel restrictions in the second quarter of 2022, as this was our best performing segment prior to the pandemic, and we did not believe WKHUH ZHUH DQ\ VWUXFWXUDO FKDQJHV LQ WKH PDUNHW WR SUHYHQW D VLJQL FDQW improvement in fundamentals. ,Q WKH 'RPLQLFDQ 5HSXEOLF RXU DJVKLS +\DWW =LYD DQG +\DWW =LODUD &DS Cana property continued to set the standard in the market and delivered another excellent year, but the segment faced a substantial headwind from the Jewel Punta Cana and Jewel Palm Beach resorts, which experienced an XQSUR WDEOH \HDU LQ IROORZLQJ WKH GLVUXSWLRQ LQ RSHUDWLRQV DV D UHVXOW of the change in resort management. Subsequently, we announced the sale of the Jewel Punta Cana resort during the fourth quarter of 2023 and are actively pursuing the disposition of the Jewel Palm Beach resort. Despite being one of the best performing markets during the pandemicera and leading the way during the recovery, both of our major segments in Mexico continued to show healthy fundamental growth in 2023. In anticipation of a return to more moderate levels of growth, we strategically realigned our operations management and implemented changes to our VWDI QJ SURWRFROV DQG SURFHVVHV \LHOGLQJ WDQJLEOH FRVW VDYLQJV ZLWKRXW FRPSURPLVLQJ WKH JXHVW H[SHULHQFH 7KH HI FLHQF\ PHDVXUHV UHVXOWHG LQ year-over-year margin expansion in both of our Mexican segments during the second half of 2023, on a currency neutral basis, as RevPAR growth PRGHUDWHG +RZHYHU RXU HIIRUWV ZHUH ODUJHO\ RIIVHW E\ WKH QHJDWLYH QDQFLDO impact of the appreciation of the Mexican Peso versus the U.S. Dollar, which was a $25 million headwind in 2023. Putting it all together, we were able to deliver record Adjusted EBITDA of $272 million in 2023, despite the negative impacts from the Jewel resorts in the Dominican Republic and foreign currency exchange rate headwinds. We will continue executing our strategic objectives in 2024 and are expecting to deliver Adjusted EBITDA of $250-275 million for WKH IXOO \HDU :H LQYHVWHG LQ WKH JXHVW H[SHULHQFH E\ VWDI QJ RXU UHVRUWV to focus on service, which we believe will continue to pay off as our value proposition resonate with consumers. SIGNIFICANTLY IMPROVED LIQUIDITY PROFILE AND CASH FLOWS We entered 2023 with nearly $816 million of net debt and trailing 12-month leverage of approximately 3.4x and exited 2023 with nearly $817 million of net debt and trailing 12-month leverage of DSSUR[LPDWHO\ [ UH HFWLQJ WKH VLJQL FDQW IUHH FDVK RZ JHQHUDWLRQ of the business and our strategic resort portfolio optimization actions. We were able to lower our net leverage ratio while reinvesting in our assets and returning capital to shareholders through our share repurchases. $V \RX PD\ UHFDOO ZH UH QDQFHG RXU GHEW DQG LQFUHDVHG WKH FDSDFLW\ of our Revolving Credit Facility during the fourth quarter of 2022. In April of 2023, we entered into two interest rate swaps to mitigate WKH RDWLQJ LQWHUHVW UDWH ULVN RQ RXU WHUP ORDQ GXH 6HSDUDWHO\ in January of 2024, we entered into FX forwards to hedge part of RXU H[SRVXUH WR WKH XFWXDWLRQV RI WKH 0H[LFDQ 3HVR SURYLGLQJ better visibility for our operations and lower volatility related to the Mexican Peso. With respect to capital allocation, our Board of Directors reauthorized a new $200 million share repurchase program in February of 2023, replacing the prior $100 million authorization announced in September of 2022. In December of 2023, our Board of Directors once again authorized another $200 million share repurchase authorization, which replaced the prior February $200 million authorization that only SANCTUARY CAP CANA had approximately $30 million remaining. During 2023, we repurchased approximately $185 million of our stock and have continued to repurchase VKDUHV LQ *LYHQ WKH IUHH FDVK RZ JHQHUDWLRQ RI RXU EXVLQHVV DQG WKH attractive valuation of our stock, we continue to believe that repurchasing shares is an attractive use of capital on a risk adjusted basis. As of March 31, 2024, we have repurchased approximately $264 million worth of shares, or approximately 20% of the shares outstanding at the time of the program reauthorization in September of 2022. We will balance strategic capital investments in our portfolio with share repurchases and intend to maintain our leverage ratios well below pre-pandemic levels. CONTINUED PROGRESS ON STRATEGIC INITIATIVES With the business fundamentals and net leverage ratio on healthy footing, we are focused on continuing our portfolio optimization efforts in the coming years. During the fourth quarter of 2023, we announced the sale of the Jewel Punta Cana resort for total gross proceeds of $82 million and are pursuing the disposition of the Jewel Palm Beach resort, as we realign our capital investments into our resorts with superior long-term competitive positioning and returns. Our long-term asset planning and capital investments are critical to our success, facilitating the implementation of guest feedback while adapting to changes in the market to remain relevant to guests and driving fundamentals. 2SHUDWLQJ HI FLHQF\ LV D NH\ VWUDWHJLF IRFXV JLYHQ WKH HOHYDWHG OHYHO RI LQ DWLRQ IRU PDQ\ RI RXU VLJQL FDQW UHVRUW H[SHQVHV :H KDYH LQYHVWHG LQ RXU SURFXUHPHQW SUDFWLFHV DQG RSHUDWLRQV WHDPV DQG ZKLOH WKH HI FLHQF\ savings have been excellent thus far, we believe the potential for reducing costs has a longer runway in both procurement and core resort operations as vendor contracts mature, best practices are adapted and implemented, and the process iterates. The implementation of our third-party owned and operated vacation membership club program, The Playa Collection (TPC), continued during 2023 and we expect the roll-out to all of our resorts to be completed in 2024. While operating only in a portion of our resorts during 2023, the high margin, capital light fee stream from TPC reached over $3 million during the year. We expect to see healthy JURZWK IURP 73& LQ GULYLQJ FDSLWDO HI FLHQW JURZWK ZKLOH DOVR strengthening our relationships with our guests and further optimizing our customer acquisition costs. As we look ahead to 2024, I am encouraged by the demand we are seeing and our competitive positioning. Our revenue on the books for 2024 is up for every quarter of the year compared to 2023, with ADR for the comparable portfolio continuing to strengthen. Once again, I have to thank the extraordinary Playa associates at our resorts that make this all possible. They represent the very essence of hospitality and truly bring to life our Service From the Heart guest focus. I would also like WR WKDQN RXU LQYHVWRUV IRU \RXU RQJRLQJ VXSSRUW DQG FRQ GHQFH LQ WKH Playa team. Sincerely, BRUCE D. WARDINSKI &KDLUPDQ DQG &KLHI ([HFXWLYH 2I FHU OUR RESORTS DOMINICAN REPUBLIC HYATT ZILARA CAP CANA HYATT ZIVA CAP CANA HILTON LA ROMANA FAMILY RESORT 375 Rooms | Adults-Only Cap Cana, Dominican Republic 375 Rooms | All-Ages Cap Cana, Dominican Republic 418 Rooms | All-Ages La Romana, Dominican Republic HILTON LA ROMANA ADULT RESORT SANCTUARY CAP CANA* JEWEL PALM BEACH 356 Rooms | Adults-Only La Romana, Dominican Republic 324 Rooms | Adults-Only Punta Cana, Dominican Republic 500 Rooms | All-Ages Punta Cana, Dominican Republic MEXICO JEWEL PUNTA CANA* WYNDHAM ALLTRA SAMANA* HYATT ZILARA CANCUN 620 Rooms | All-Ages Punta Cana, Dominican Republic 404 Rooms | All-Ages Samana, Dominican Republic 310 Rooms | Adults-Only Cancun, Mexico HYATT ZIVA CANCUN HYATT ZIVA LOS CABOS HYATT ZIVA PUERTO VALLARTA 547 Rooms | All-Ages Cancun, Mexico 591 Rooms | All-Ages Cabo San Lucas, Mexico 335 Rooms | All-Ages Puerto Vallarta, Mexico * Managed by Playa Hotels & Resorts, owned by a third-party WYNDHAM ALLTRA CANCUN WYNDHAM ALLTRA PLAYA DEL CARMEN WYNDHAM ALLTRA VALLARTA* 458 Rooms | All-Ages Cancun, Mexico 287 Rooms | Adults-Only Playa del Carmen, Mexico 229 Rooms | All-Ages Nuevo Vallarta, Mexico HILTON PLAYA DEL CARMEN KIMPTON HACIENDA TRES RIOS* SEADUST CANCUN FAMILY RESORT* 524 Rooms | Adults-Only Playa del Carmen, Mexico 255 Rooms | All-Ages Playa del Carmen, Mexico 502 Rooms | All-Ages Cancun, Mexico JAMAICA THE YUCATAN RESORT PLAYA DEL CARMEN* HILTON ROSE HALL RESORT & SPA JEWEL PARADISE COVE BEACH RESORT & SPA 60 Rooms | Adults-Only Playa del Carmen, Mexico 495 Rooms | All-Ages Montego Bay, Jamaica 225 Rooms | Adults-Only Runaway Bay, Jamaica HYATT ZILARA ROSE HALL HYATT ZIVA ROSE HALL JEWEL GRANDE MONTEGO BAY RESORT & SPA + 344 Rooms | Adults-Only Montego Bay, Jamaica 276 Rooms | All-Ages Montego Bay, Jamaica 217 Rooms | All-Ages Montego Bay, Jamaica * Managed by Playa Hotels & Resorts, owned by a third-party + Two towers are managed by Playa Hotels & Resorts and owned by a third-party, and one tower is owned by Playa Hotels & Resorts