Playa Hotels & Resorts N.V.

Good day and welcome to the Playa Hotels and Resorts fourth quarter 2021 earnings conference call. All participants will be in a 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 questions. To ask a question, you may press star then one on your telephone keypad. And 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 Mr. Ryan Himmel. Please go ahead.

Thank you very much, Chuck. Good morning, everyone, and welcome to Playa Hotels and Resorts' fourth 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-K, which we filed last night with the SEC. We've updated our investor relations website at investors.plyoresorts.com with the company's recent releases. In addition, reconciliations to GAF of the non-GAF financial measures we discussed on this call were included in yesterday's press release. On today's call, Bruce Wardinsky, Plius Chairman and Chief Executive Officer, will provide comments on the fourth quarter and key operational highlights. I will then address our fourth quarter results and our outlook. Bruce will 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 thank you for joining us. I'm sure most of you have had a chance to review our fourth quarter results reported last night, so let's get into the discussion. The fourth quarter fundamentals once again improved sequentially, with occupancies and flight capacity continuing to ramp up, particularly in the Dominican Republic. The strength in the business was consistent and broad-based, with occupancy improving sequentially each month and similar year-over-year ADR advances as well. That is to say, the ADR gains were not only driven by pricing during the peak demand holiday period. In fact, they have been remarkably steady on a percentage basis for the last six months. More importantly, our fourth quarter 2021 results represent the highest resort margin percentage and absolute EBITDA for any of our historical fourth quarters. While this may seem like an obvious mandate, I'm incredibly proud of how the entire organization is working together to execute our strategy. I truly believe that each functional area of playa is improving each day, and it couldn't be happening at a more critical time. On the booking front, following the slowdown in the summer, our sales picked up dramatically during the first two months of the fourth quarter, reaching new weekly sales peaks in October and November, before slowing down in December, likely due to the outbreak of the Omicron variant. Though Omicron had a modest impact on potential close-in bookings for December and January, Its impact was relatively short-lived as our weekly revenue booking surged in January, with several consecutive record-setting weeks. I believe we are still in the early innings of the resurgence in travel, and it will likely be a multi-year process to find the equilibrium, given that travel was a universal love for so many of us in the pre-pandemic era. With that in mind, I'm pleased to share with you that our pacing figures for 2022 remained elevated compared to pre-pandemic levels and are successfully lapping 2021. I believe we offer an incredible relative value even with the recent ADR gains, and that is being recognized by more travelers as our awareness grows. I think it is also becoming more likely that we are going to get a permanent repricing for off-peak periods. Suddenly, I don't think the idea of going to Mexico in August sounds all that bad. Ryan will share the details on our booking trends with you momentarily. Looking at our segments, Mexico continues to perform well for us, hosting another quarter of exceptional underlying top-line KPIs and margins. International passenger arrivals exceeded 2019 levels in September for the first time since the beginning of the pandemic and have not looked back. Moving on to the Dominican Republic, we experienced our biggest sequential occupancy improvement in the quarter. We were hopeful for this segment as we entered the quarter, given our forward bookings and the forecasted increase in flight capacity, but the performance in the quarter exceeded our expectations. As you may recall, the DR had the biggest mix of European guests in the pre-pandemic period, which was a drag on its performance, particularly in our mid-scale properties. Once again, our flagship Hyatt Stevens Alara Capcana, led the way as it has established itself as a rate leader in the market with the resort's EBITDA margins exceeding 40% during the fourth quarter with occupancy only in the low 60s. The resort's progress and ramp give us further confidence that we can achieve our goal of 12% to 15% stabilized cash-on-cash returns on our investment there. The segment's profit performance was weighed down by our two externally managed properties, which have lagged behind our globally branded resorts in the segment with respect to rate gains, and also yield a significantly lower absolute ADR compared to our globally branded implied managed resorts. Turning to Jamaica, the segment's recovery largely stalled out compared to our other geographic segments and its third quarter results, as the back-to-back variant waves had a disproportionate impact there, given the more stringent entry testing requirements. The impact has lingered into the first quarter of 2022, but bookings in Jamaica are picking up for the rest of the year, and the impact is diminishing as we look out to Q2 and beyond. Our focus on direct channels continues to pay off, and we are confident that Playa is well 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 2021, 41.6% of room nights booked were booked direct, down 10.6 percentage points year over year, reflecting the continued relative strength of our direct channels, including a significant acceleration in group and third party source business. During the fourth quarter of 2021, ApplyYourResource.com accounted for 17.4% of our total room night bookings, down 8.2 percentage point year over year. Looking at 2022, as of January 17th, ApplyYourResource.com generated approximately 70 million of bookings for 2022 compared to only $40 million for the 2021 comparable period. This is a critical aspect of our business that I believe many overlook. We at Playa drive a significant portion of our direct revenues in-house, which is now a major competitive advantage for our current portfolio and for potential third-party managed resorts in the future. Finally, as a reminder, we anticipated that as the world slowly returned to normal, Our mix of direct business would likely fall below 50%, but we still believe it will remain higher than levels seen immediately prior to the pandemic, and significantly higher on an absolute dollar basis. Taking a look at who is traveling, just over 40% of the Playa Manish room night stays in the corridor came from our direct channels, as our group mix improved sequentially and the OTA mix remained significantly depressed. Geographically, our U.S. sourcing increased approximately 13 percentage points compared to Q4 2019 to 64% of managed room nights, while our South American source business increased 400 basis points. But the biggest change in our business was the return of our European guests, which makes three percentage points higher in Q4 21 than Q4 19. Given the current state of travel restrictions, Our Canadian and Asian customer mix remained significantly depressed versus pre-pandemic levels. Our booking window improved versus Q3, but remained shorter than pre-pandemic levels. Our length of stay during the fourth quarter was in line with Q4 2019 and up nearly 10% versus Q4 2020. And this trend is expected to continue as we rely less on close-in bookings. Finally, we recently announced a strategic partnership with Wyndham Hotels. which we believe will accelerate growth in the mid-scale and upper mid-scale segment of our portfolio by leveraging Wyndham's sizable database of customer relationships to increase exposure and awareness of the value proposition of the all-inclusive model. We completed the conversion of two resorts during the fourth quarter and officially welcomed our first guest on December 1st to the new Wyndham Ultra concept in both Cancun and Playa del Carmen. The transition went smoothly from an operational perspective, but just as critical for us, Wyndham has been a superb partner to work with behind the scenes. I look forward to sharing more with you about this new relationship in the coming quarters. Once again, I would like to thank all of our associates that have continued to deliver world-class service in the face of myriad pandemic-related challenges. Their unwavering passion and dedication to service is what truly sets Playa apart. With that, I'll turn the call back over to Ryan to discuss the balance sheet and our outlook.