Playa Hotels & Resorts N.V.

Good day and welcome to the Playa Hotel's first quarter 2021 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 that this event is being recorded. I would now like to turn the conference over to Ryan Emel, Executive Vice President. Please go ahead.

Thank you, Eilidh. Good morning, everyone, and welcome to Playa Hotels & Resorts' first quarter 2021 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-Q, which we filed last night with the Securities and Exchange Commission. We've updated our investor relations website at investors.plyoresorts.com with the company's recent releases. In addition, a reconciliation to U.S. GAAP of the non-GAAP financial measures we discussed on this call were included in yesterday's press release. On today's call, Bruce Rodinsky, Playa's Chairman and Chief Executive Officer, will provide some comments on the first quarter and key operational highlights. I will then address our first quarter results, our liquidity position, 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 a lot, Ryan. Good morning, everyone, and thanks for joining us. As always, we appreciate your interest in Playa and hope that all of you are in good health and spirits. I'll begin today with a review of our first quarter results by geographic segment, followed by insights into the current booking environment. I'll then turn the call over to Ryan to discuss our balance sheet, provide more detail on our results and on our outlook. We came in at 2021 enthusiastic and hopeful as our business saw significant improvement during the holiday period and booking momentum for 2021 was picking up steam. while many others in the travel industries were experiencing a more volatile recovery, with the difference likely attributable to Ply's predominantly leisure-focused portfolio. The change in travel guidelines from the CDC in January caused some level of volatility during the first quarter as it sparked a wave of cancellations and significantly impacted our February results as we became even more reliant on extremely close in demand. Our operations team and hotel associates once again rose to the occasion and rapidly adapted to the change by offering onsite antigen testing at all of our resorts, providing a seamless guest experience given the new COVID testing requirements. The team's dedication and hard work, combined with safety measures implemented to protect our guests, have helped maintain market leadership at many of our resorts since our reopening process began last year. We shared with you on our last earnings call that we thought the worst of the restriction-related disruption impact was behind us based on an acceleration in booking volume and stabilization in our cancellation activity. This rebound in demand led to a robust march for playa, largely driven by the spring break holidays. The very quick bounce back was also highly encouraging as it signified travelers' pent-up demand to get back out into the world and enjoy life again. During the first quarter, our business in the Yucatan continued to build on momentum from Q4, with our segment occupancy reaching a new post-pandemic monthly high in March, following a pause in February. Importantly, we did not have to sacrifice on ADR to build guest counts, which is particularly encouraging as we continue to progress through the recovery. International passenger arrivals into the market also reached a post-pandemic high on an absolute basis in the month of March. 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 notably has remained consistent with respect to these policies. This has led to less consumer confusion compared to other destinations and has helped sustain business confidence during the reopening phase. Similarly, the Dominican Republic removed its 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, Hyde Ziva and Zalara Capcana, was our first resort in the segment to reopen and has continued to be one of the most impressive resort properties in the market. The Hilton La Romana reopened in November and has also shown a nice occupancy trajectory through the first quarter, but the segment's overall portfolio performance was weighed down by our two externally managed properties, which have lagged our branded hotels in the segment and also yield a significantly lower absolute ADR compared to our branded properties. Moving on to Jamaica, March was a very encouraging month for this segment as the flagship Hyatt's Evens Alara Rose Hall Resort had its best month since the pandemic began, and international passenger arrivals had a meaningful step up on an absolute basis versus January and February. The country's entry requirements continue to weigh on visitation compared to other destinations and will be a constraining factor for the recovery in this segment. Finally, the Pacific Coast also finished the quarter on a high note with a strong performance in March and international passenger arrivals hitting a new post-pandemic high on an absolute basis in March. 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 our cash burn, maintaining rate leadership, and positioning Playa for maximum profit capture as we anticipate that pent-up demand continues to return throughout 2021 and beyond. I believe the pandemic accelerated many trends affecting consumer behavior that were already in motion prior to the onset of the pandemic, with the most notable for us being the shift to direct booking channels. Our focus on direct booking channels has enabled us to ramp occupancy faster than many third-party relying competitors and is leading to share gains. We realize our current percentage 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 well on target with our five-year plan to increase consumer direct business to at least 50% by 2023. In aggregate, during the first quarter of 2021, 50.7% of room nights booked were direct, up 19.3 percentage 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 first quarter, ApplyYourResource.com accounted for 24.4% of our total bookings, up 10.4 percentage points year over year. Looking ahead to 2021 as a whole, as of April 15th, ApplyYourResource.com has generated 76 million of bookings for 2021 versus 30 million for 2020 at the same time last year, and versus almost 39 million for the 2019 comparable period. Our direct channels continue to recover at a much faster rate than other channels, 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 selection. We continue to believe that we offer a fantastic vacation experience, given our large outdoor resort footprints and a focus on guest safety, and our performance following the revised CDC travel guidelines further reinforce the view that we expect to be a market leader as the recovery progresses. With respect to demand and booking behavior, the change in the CDC's guidelines did not have a meaningful impact on our pace of bookings for the second half of 2021. Demand for the second quarter was impacted, as well as our ADR during February and March, but demand for Q2 began to pick up significantly since the final week of February and has remained very robust. Hopefully this glimpse into our business was helpful as you think about the macro environment and our fundamental performance drivers. I also want to reiterate on a personal level how meaningful it has been to me for the resource to be able to ramp up staffing and safely bring back so many of our world-class associates. Their eagerness to return and deliver service from the heart has resulted in feedback that has truly humbled me. So again, I would like to thank each and every Ply employee for your contribution during these very challenging times. 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.