Playa Hotels & Resorts N.V.

Good morning and welcome to the Playa Hotel's fourth quarter 2020 earnings call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask a question. To ask a question, you may press star, then one on your touchtone phone. To withdraw your question, please press star, then two. Please note this event is being recorded. I would now like to turn the conference over to Ryan Emel. Please go ahead.

Thank you very, very much. Good morning, everyone, and welcome again to Playa Hotels and Resorts' fourth quarter 2020 earnings conference call. 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 could cause our actual results to differ, please review the risk factors section of our annual report on Form 10-K, which we filed last night with the Securities and Exchange Commission. We've updated our investor relations website at investors.plyresorts.com with the company's recent releases. In addition, a reconciliation to GAAP of the non-GAAP financial measures we discussed on this call were included in yesterday's press release. On today's call, Bruce Radinsky, Playa's Chairman and Chief Executive Officer, will provide some comments on the fourth quarter and key operational highlights. And I will then address our fourth quarter results, our liquidity situation, and our outlook. Bruce will then wrap up the call with some concluding remarks before we turn it over to Q&A. With that, I'll turn the call over to Bruce.

Great. Thanks, Ryan. Good morning, everyone, and thanks for joining us. We appreciate your interest in Playa and hope that all of you are in good health and spirits as the country and the world continues the recovery process from the pandemic. I'll begin today by reviewing our fourth quarter results by geographic segment, then share some learnings on the operational front as we continue to adapt to changing travel restrictions, and then wrap up with insights into the current booking environment. I'll then turn the call over to Ryan to discuss our balance sheet, discuss our results, and provide color on our outlook. I'm very pleased to be able to say that our business continued to recover during the fourth quarter as we reopened nearly every one of our properties and the year finished on a high note with an incredibly strong holiday period. Once again, our operations team and hotel associates showcased their commitment to service at the highest levels and demonstrated superb flexibility in dealing with the ongoing changes as a result of new COVID restrictions and protocols. Their dedication and hard work, combined with safety measures taken to protect our guests, have helped maintain market leadership at many of our hotels since our reopening. During the fourth quarter, our business in the Yucatan continued to build on early momentum from Q3, with our occupancies improving each month of the quarter while maintaining our ADR discipline. Passenger arrivals into the market also improved each month of the quarter on both an absolute and year-over-year decline basis. As you recall, Mexico did not have any travel restrictions in place with respect to pre-flight COVID testing or mandatory quarantines, for international tourists upon arrival, and importantly, has remained consistent with respect to these policies. This has led to less consumer confusion versus other destinations and has helped business confidence during the reopening. Similarly, the Dominican Republic removed their testing requirements for entry into the country in September, and passenger arrivals into the Punta Cana Airport meaningfully improved as we entered our high season. Our flagship Hyatt Ziva in Zalora Capcana was our first asset in the segment to open and has continued to ramp up sequentially each month. The Hilton La Romana reopened in November and has also shown a nice trajectory during the high season. But the segment's performance was weighed down by our two externally managed properties, which have lagged behind our branded hotels in the segment. Moving on to Jamaica. Unfortunately, we have seen no material improvement in Jamaica, as we believe the country's entry requirements weighed on visitation growth and led to a very modest increase in airlift during the fourth quarter as compared to the third quarter. Finally, the Pacific Coast started the fourth quarter off with very healthy levels of occupancy in airlift trajectory that was indicating this market to be the most likely to be the first to achieve 2019 KPI levels. But airlift trends deteriorated as the quarter progressed, as travel and quarantine restrictions tightened in key sourcing markets, particularly California. Importantly, our occupancy decline has fared better than the passenger arrivals decline in the Yucatan, Jamaica, and the Dominican Republic. Our focus remains on providing a safe, enjoyable guest experience, minimizing cash burn, maintaining great leadership, and positioning ourselves for maximum profit capture as we anticipate that pent-up demand will return later in 2021. I believe the pandemic accelerated many trends affecting consumer behavior that were already in motion, with the most notable for us being the shift to direct booking channels. Our focus on direct booking channels enabled us to ramp occupancy faster than many third-party-reliant competitors and is leading to share gains. We realize our current mix shift of direct bookings will naturally move lower as other channels rebound, and many of the pandemic restrictions are loosened. However, we are confident our company is on target with our five-year plan to increase consumer direct business to at least 50% by 2023. In aggregate, during the fourth quarter of 2020, 55.9% of revenues booked were direct, up 20.2 points year over year. reflecting the relative strength of our direct channels and our business model as a whole versus most of our competition. During the fourth quarter, PlayaResorts.com accounted for 29.6% of our total revenue bookings, up 13.6 points year over year. Looking ahead to 2021, as of February 15th, PlayaResorts.com has generated 49.1 million of bookings for 2021, versus $36.7 million for 2020 at the same time last year. As we look ahead, our direct channels continue to recover at a much faster rate than indirect, particularly the extremely challenged tour operator segment. On the marketing front, we have significantly increased our local in-country marketing efforts and believe this strategic move is paying off during this difficult time, particularly in markets where travel restrictions remain. We have implemented contactless QR code access throughout our resorts as both a safety measure and as a driver of non-packaged revenue and to facilitate the overall ease of the guest experience. Non-packaged revenue continues to be one of the pleasant surprises of the recovery, driven by pent-up demand and an improved offering. We also received quite a bit of media attention around our Work and Learn from Paradise initiative, which takes advantage of the current remote work environment for many people throughout the U.S. We continue to believe that we offer a fantastic socially distanced vacation experience given our large resort footprint and the holiday period performance further reinforce the view that we will be a market leader as the recovery progresses. Our fourth quarter momentum carried into the new year as revenue pacing in the Dominican Republic and Mexico for Q1 improved versus the pace at the time of our last earnings call and also in absolute versus Q4. We were very pleased to not see the same cancellation uptick on a net basis that many others in the travel complex saw during the fourth quarter, really reinforcing the pent-up demand thesis and perhaps suggesting it was an easier decision to skip holiday travels rather than cancel a much-needed vacation. However, as I'm sure comes as no surprise, The announcement of the new CDC guidelines for international arrivals to the U.S. has had a negative impact on our bookings and has disrupted the improvement we had been seeing during the high season in 2021 thus far. With the guidelines having been put into action on January 26, it is still relatively early and difficult to assess the full impact. We've moved quickly to secure testing capacity on property at our resorts where possible at no cost to our guests. to make the vacation experience as seamless as possible. Again, I am incredibly proud of our operations team and their ability to adapt to the rapidly changing environment, minimizing guest disruption to the extent possible. Thus far, and again, it is still too early to assess the impact of the CDC guidelines. The demand deterioration has not been as bad as we feared, using Jamaica as a proxy for testing aversion, which is likely a function of one, widespread nature of this guideline being more of a new norm that travelers have to accept. And two, our team's working hard to educate and answer questions regarding the changes and providing free antigen tests onsite where possible. Another positive early takeaway is that we have already tested over 15,000 guests and have had far less than 1% test positive for COVID so far. Ryan will share more details on this shortly. With that, I will turn the call back over to Ryan to discuss the balance sheet and what we are seeing in the operating environment.