Q3 2022 Playa Hotels & Resorts NV Earnings Call
Today, and the company undertakes no obligation to update forward looking statements.
For a 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 Playa resorts Dot com with the Companys recent releases. In addition 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 <unk>, Inscape, Pliers, Chairman and Chief Executive Officer will provide comments on the third quarter and key operational highlights I will then address our third quarter results and our.
Outlook for so wrapped up 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.
Despite persistent fears of a potential slowdown in leisure travel our business continued to perform very well during the third quarter.
<unk> demand has also remained strong as we head into our high season quarter was not without challenges however, as hurricane Fiona cause disruption in our Dominican Republic operations, which I'll touch on momentarily.
<unk> generated the highest third quarter adjusted EBITDA in the in.
In the company's history as a compelling value proposition continued to resonate with travelers as evidenced by our ADR growth compared to 2019 accelerating to approximately 53% on a reported basis or approximately 33% on a like for like basis adjusted for portfolio mix and noncash.
<unk>.
As of October 23rd our player owned and managed revenue on the books for the fourth quarter is pacing up nearly 16% year over year, and 52% versus 2019 with ADR gains accounting for the majority of the increases. It is important to note that these figures include the material impact from the resorts we have.
<unk> closed in the Dominican Republic weighing on both the comparison versus 2019 and the year over year comparison by approximately 20 percentage points.
As we look ahead to the first quarter of 2023 revenue is pacing up nearly 40% year over year with ADR is pacing up low double digits.
We are pleased with our revenue and ADR pacing, which have continued to build since our last earnings call led by a 27% increase in the <unk> segment revenue on the books.
Based on our business on the books, we expect our ported queue for ADR to grow at a high single digit to low double digit rate year over year, we have not observed any meaningful changes to cancellation activity or booking demand outside of the hurricane related activity.
Turning to our resorts in the Dominican Republic, but we are prepared to adjust our cost and staffing appropriately.
If we were to see a pullback in the consumer demand environment.
I want to remind everyone that not long ago, we like many others in our industry. We're forced to go to zero percent occupancy and slowly rebuild back to our baseline over the past two years. So the adjustments needed to adapt to a changing demand environment are quite fresh in her memory and we will act accordingly, if the conditions call for it.
With our book lead times at the healthiest levels, we have ever experienced we're confident in our ability to effectively manage through any potential slowdown. Although we are not seeing anything on the horizon at this time.
I still believe the recovery in leisure travel is not yet complete the consumer trial and awareness of the all inclusive experience still have a long runway.
And today's inflationary environment, our relative value proposition has become incredibly compelling despite our ADR gains.
This value continues to be reflected in our strong guest satisfaction scores and the pace of our bookings.
It is important to note that all of these positive trends are occurring without us recapturing a full consumer demand dynamic yet they're still groups of customers that have not traveled since the beginning of the pandemic and the lingering impact of the U S is testing entry requirement and other travel restrictions combined with a lengthy lead times.
That we have some time before all travelers are back in the air.
Finally, as I mentioned before although our headline ADR growth compared to 2019 has been robust robust the headline growth is benefiting approximately five percentage points from the noncash otas billing methodology change highlighted in our earnings release, approximately 13 percentage points from asset dispositions of.
Sure ADR resorts and the addition of our Hyatt cap Cana resort.
These are important considerations when contemplating our ADR growth sustainability and the compelling value we continue to offer our guests.
Strategically, we still believe that ceding some occupancy in favor of ADR, mainly at our Hyatt resorts is the best path forward for Playa as it establishes us as the right leader from a competitive standpoint in our respective markets and is more manageable from an operation standpoint.
With a growing inflationary pressure impacting both consumers globally and the cost of operations for businesses. We are focused on pricing to continue offering at fantastic value to our guests while managing the economic reality of higher operating expenses.
Third quarter fundamentals once again exhibited an acceleration in growth versus the comparable period in 2019 with healthy occupancy and broad based ADR strength, leading to year over year margin improvement, despite a difficult expense inflation environment and lapping record third quarter margins from the prior year.
Our Dominican Republic segment had an outstanding start to the quarter with July and August ADR up mid single digits year over year occupancy over 80% and resort margins expanding July set a new post Covid high for International Airport arrivals and <unk>, followed by a strong August .
Over we did experience a setback toward the end of the quarter as a result of hurricane Fiona, particularly at our Hyatt and Hilton resorts in the Dominican Republic.
As we stated in our September press release, although there was no structural damage to either resort the water buildup and repairs at our F&B outlets required additional attention.
We felt it was prudent to temporarily shut down the resource to perform the cleanup and repairs as quickly as possible to ensure we return to the level of service and quality our guests have come to expect from us.
The repair work is progressing nicely and will likely be completed ahead of schedule in time for the high season.
While the closing of these resorts has been highly disruptive and unfortunate I am extremely pleased with what we've seen on the booking front.
As of now we haven't seen any material impact on bookings for Q1 at either resort and have had no mice groups canceled like top corner. In fact, most guests. We're highly encouraged that encouraged by the earlier than expected reopening of the resorts.
We estimate that the closures were an approximate $3 million negative hit to Q3, EBITDA and about 90 points drag on resort markets.
We are anticipating a $13 million to $15 million impact to Q4, EBITDA I would like to remind everyone that we carry property and business interruption insurance and have been working closely with our insurance providers to remedy the situation in a timely manner.
Turning to Jamaica, the recovery continued to progress in Jamaica with Q3 international passenger arrivals into Montego Bay Airport exceeding 2019 levels. Following the increase in flight capacity during the second quarter.
Bookings have also remained strong for Jamaica segment, following the removal of Jamaica as Covid testing entry requirements in April of this year.
Jamaica represents the biggest opportunity within our portfolio as ADR growth in this segment has lagged the impressive underlying growth exhibited in our other segments. As there is a lag between demand growth and the lift to ADR is higher rated bookings mix in.
Finally, our resorts in Mexico, which have led the way during the post pandemic recovery for Playa had another strong quarter with our highest segment occupancy as well as double digit underlying year over year ADR growth.
<unk>.
Shifting to bookings our focus on direct channels continues to pay off and we are confident that play is on target with our five year plan to increase consumer direct business to at least 50% by 2023.
In aggregate during the third quarter of 2020 to 43, 5% of Playa managed room nights booked were booked direct up two two percentage points year over year, marking the first year over year increase since our occupancy recover to over 50%.
During the third quarter of 2022, Playa resorts Dot com accounted for approximately 13% of our total Playa managed room night bookings continuing to be a critical factor in our in.
And our customer sourcing in ADR gains.
Taking a look at who is traveling a little less than 40% of our Playa managed room night stays in the quarter came from our direct channels as our group and tour operator mix improved year over year, and our OTA mix remained depressed geographically, our U S and South American customer sourcing remained steady while our European and can.
Adrian business improved year over year given.
Given the changing state of travel restrictions, we estimate our Canadian customer mix is still only two thirds recovered in our Asian customer mix is only 25% recovered versus pre pandemic levels for our owned and managed properties.
Our booking window of approximately four months with significantly longer than Q3 2019 as a result of the robust pacing figures, we have been sharing with you in recent earnings calls.
Once again I would like to thank all of our associates that have continued to deliver world class service in the face of pandemic related challenges their unwavering passion and dedication to service is what truly sets player apart.
With that I'll turn the call back over to Ryan to discuss the balance sheet and our outlook.
Thank you Bruce Good morning, again, we finished the quarter with a total cash balance.
Approximately $372 million as of September 30th we currently have no outstanding borrowings on our revolving credit facility and our total outstanding interest bearing debt is $1 1 billion, our net leverage on a trailing basis stands at approximately three two times and we anticipate our cash capex spend for full year 2022 to be approximately $35 million for the year.
Year with roughly 5 million being carried over from Capex, we didn't spend in 2021 as anticipated.
The majority of our projected 2022 Capex at this point is maintenance related.
On the capital allocation front as you may have seen our board of directors reauthorized $100 million share repurchase program in September of 2020 to.
Subsequently as of October 31, we have repurchased approximately approximately $21 million.
And roughly 364 million shares under this new authorization.
Turning our attention to mice group business, our 2022 net Mike's group business on the books is approximately $48 million versus 49 million at the time of our last earnings call and is well ahead of our final full year 2019 <unk> revenue.
Of roughly $32 million about 20% of the $48 million is expected to stay with us in the fourth quarter.
Pacing for the 2023 has remained incredibly strong with nearly $40 million already on the books, which is 27% higher than what we shared with you on our last earnings call. The return to this mice business should provide a good base to help manage yields and drive improved profitability year over year, particularly at our results our resorts in Cabo Rosol and Cott com.
Onto the fundamentals, excluding the impact from Hurricane Fiona our third quarter results exceeded our expectations as a result of better than expected ADR and occupancy.
With respect to the topline occupancy came in slightly above our expectations driven by close in demand in Mexico.
ADR also came in above our expectations led by better than anticipated ADR gains in Jamaica, and the Dominican Republic at both of our Playa managed properties.
On the cost front as Bruce mentioned the teams have done an excellent job navigating the challenges of our current environment.
Margins were well ahead of Q3, 19, and 18 levels and again exceeded Q3 2021 record margins.
This was a top line led margin gain as cost pressures, mainly in food and beverage and utility costs remained elevated.
While these expense fluctuations have been challenging to manage the year over year rate of change has stabilized giving us.
A sense of hope to have returned to a more normal cost outlook.
I'd like to remind everyone of some factors that may comparing in analyzing our fundamentals versus 2018 in 2019 period difficult.
First as you recall, we closed on the <unk> transaction in June of 2018, and as you know while the Jamaican market has historically had higher ADR is on a like for like basis. The operating costs are higher and thus had a lower margin profile.
Second the construction disruption we experienced in 2019 related to our Hilton conversions other most pronounced impact during Q2 and Q3 of 2019.
And and the Dominican Republic experienced a slowdown related to perceived safety concerns beginning in June 2019, which carried through to the rest of the year.
At the segment level as Bruce mentioned, we experienced broad based strength in the third quarter of 2022, excluding the impact of Hurricane Fiona.
To make it began to close the price gap versus comparable resorts in the recovery in Jamaica has the potential to be a meaningful contributor to EBIT growth in 2023 as the relative ADR growth has lagged our other segments and historically comparable resorts, Jamaica made nice headway during the third quarter as evidenced by a 660 basis point year over year resort.
Margin improvement in the third quarter as its relative ADR performance caught up despite ongoing operating expense inflation pressure.
Adjusting ADR in Jamaica for the mix and impact of asset dispositions like for like <unk>, and Jamaica are still lagging comparable periods by roughly 10% to 20 percentage points.
The tailwind of the strength in my segment and the removal of the Covid entry requirements, Jamaica will be particularly exciting for us to monitor in the coming months as a reminder, Jamaica got off to a slower start in 2022 due to the omicron variant, having a disproportionate impact on the segment given its COVID-19 testing requirements at the time.
Looking at our other segments. The Yucatan Peninsula continue to deliver strong results with sequential occupancy improvement in reported ADR gains of nearly 60, 67% versus Q3 2019, a 44% adjusted for OTA Commission changes and mixed impact from asset dispositions.
On a year over year basis, Yucatan segment, ADR increase just under 12% or roughly nine 5% adjusted for OTA Commission changes.
These non these noncash commission change Theres also weighed on year over year Yucatan margins by approximately 60 basis points as we're required to gross up both the revenue and the expense under U S. GAAP, but it should have a diminishing impact on our reported results as we continue to lap the implementation of the change in the recovery of the OTA channel mix in general.
Utilities, and food and beverage remained headwinds on the cost front during the third quarter, but our Yucatan operations team has continued to execute at a high level with <unk> with an underlying margin improvement year over year, when adjusting for the timing of lumpy out of quarter of expenses, such as brand fees and the aforementioned noncash OTA Commission impact.
The Pacific Coast had another fantastic quarter with underlying ADR gains of 75, 5% versus 2019, or 16, 5% year over year, leading to robust margin performance in spite of cost pressure.
So limiter to the Yucatan the Pacific Coast resort margins were impacted by roughly 70 basis points year over year as a result of the OTA Commission adjustment.
In the Dominican Republic, the segment had an excellent start to the quarter. Once again led by is even though our top the disruption and resort closure in the third quarter related to hurricane Fiona negatively impacted the Dr segment by roughly 360 basis points of occupancy approximately $6 of ADR and approximately $3 million of resort EBITDA.
As Bruce mentioned, we are well underway with remediation efforts and have already made excellent progress on the insurance claim process and expect to begin receiving payments very soon.
And when you look to the fourth quarter and the upcoming high season I continue to be excited about our potential based on how our book of business has been building, we are particularly encouraged by year over year ADR gains in revenue pacing as we lap as we lap second half 2020 one's record performance bookings have remained strong with no signs of consumer weakness or increased cancellations outside of those related to her.
Akane Fiona.
Typically we are approximately 95% booked for the fourth quarter at this time and roughly 65% to 70% for the first quarter. So we feel pretty good about our visibility, but understand it can change rather quickly.
Now for the fourth quarter of 2022, we expect owned resort EBITDA to be between 48% and $52 million inclusive of the aforementioned $13 million to $15 million impact in the Dominican Republic from hurricane related closures.
To be clear I'm, reforming I'm, referring to 48% to $52 million of resort EBITDA before corporate expense.
We expect occupancy levels to be in the mid <unk> on a reported basis again inclusive of a high single digit percentage point impact from hurricane related closures.
With respect to Q4, ADR, we expect high single digit to low double digit year over year ADR growth on a reported basis, which again is an acceleration versus Q3 in trend when compared to 2019.
As a reminder, in Q4 of 'twenty, one we recorded a favorable adjustment in accordance with OECD guidelines for transfer pricing.
This adjustment is detailed in our Q4 'twenty one earnings release and related filings, but I wanted to call. It out here as it was a roughly one percentage point benefit to total company ADR, but had an outsized impact on our reported results in Mexico, boosting Yucatan Q4, 'twenty, one ADR by roughly $8 50.
Pacific Coast ADR by $2 75, but also had a positive 120 basis point impact on Yucatan resort margin as well as a 50 basis point impact to total portfolio margins in Q4 one.
We do not anticipate inflation to be materially different in the fourth quarter of 'twenty, two as compared to the rest of the year and as a reminder, our cost experienced a step up inflation during the middle of 2021.
While we do expect to report year over year resort margin declines in the fourth quarter due to the impact of hurricane Fiona excluding that disruption, we still expect to hold or grow underlying resort margins year over year that differently, excluding the impact of the hurricane and the Dr. We expect our other segment margins in total to be.
Flat or up slightly year over year.
Finally, we also intend to take over management of our two third party managed resorts in the Dominican Republic during the fourth quarter and very early in Q1 of next year respectively.
Our Q4 owned resort EBITDA guidance reflects a conservative impact from the transition of management at these resorts.
Although we're not giving guidance for 2023 today I want to share some thoughts to help you with modeling as you think about next year as I mentioned, we're currently pacing year over year for.
For ADR gains of 10% or more in the first half of the year.
We'll be lapping omicron during the first quarter, which impacted our Q1 2020 to occupancy levels and ADR.
We expect full year occupancy to be fairly similar to 2022 adjusting for extraneous factors.
We began experiencing higher cost inflation in food and beverage and utilities during the first quarter of 2022 and while the pressure has persisted as we mentioned earlier it has begun to level off particularly in food and beverage. It has not proceeded to become meaningfully worse.
2022.
Our results are fully staffed with the exception of lags in Jamaica, and we have good visibility on wages and related growth.
And finally, we hope to receive insurance claim proceeds related to the impact of Hurricane Fiona on our resorts in sometime in Q4 of 'twenty two and in 2023.
I hope that framework helps guide you as you fine tune your models and it gives you further insight in what we're seeing and expecting with that I will turn it back over to Bruce for some closing remarks.
Okay. Thanks, Brian with the increasing uncertainty in the macro backdrop, we are diligently focused on the areas within our control and are carefully monitoring the landscape.
Given our leisure focused most important factor for our success will be employment as a major uptick in job losses or confidence could potentially derail to ship back to travel and services away from durables.
Continue to believe the price certainty and amazing value provided by play is all inclusive resorts resonate extremely well with travelers even in the face of an uncertain economic backdrop.
We have a lot of momentum behind us as we enter the new year and high season, and I am hopeful that 2023 will build on the significant progress we made in 2022.
Finally on the capital allocation front, while I respect the uncertainty in the world right now.
I believe our stock is attractively valued given our book lead times ability to adjust costs, where appropriate and value of the underlying real estate.
We will remain prudent and nimble to maintain flexibility based on the changing macroeconomic backdrop, but feel that at current valuations share repurchases should be a continued consideration in the capital allocation discussion.
As Ryan mentioned, we have notified the manager of our third party managed resorts of our intention to take over management of the resorts during the fourth quarter of 2022, and very early Q1, respectively, but we have not decided on capital investment into the properties as we carefully weigh uses of capital.
With that I'll open up the line for any questions.
We will now begin the question and answer session.
To ask a question you May press Star then one on your telephone keypad.
We are using a speakerphone please pick up your handset before pressing the keys to withdraw your question. Please press Star then two.
At this time, we will pause momentarily to assemble our roster.
Our first question is from Chad Beynon with.
With Macquarie. Please go ahead.
Hi, Good morning. This is Aaron on for Chad. Thanks for taking my question.
Sure.
Hey can you refresh us on how you see.
<unk> environment and look senior markets.
Supply growth should be fairly muted in the coming years, but balancing that against some inroads.
<unk> U S hotel companies are making in Mexico, and the Caribbean, How do you see that playing out.
Sure, Yes, I mean, I think youre right overall I mean the.
As always happens in the lodging industry in our segment.
And unique in that when you get in.
Interest rates going up.
Number of development slows down because most people are borrowing to do those kind of projects. So.
It's kind of a tradeoff, though because our segment.
<unk> is very very strong and I think the future future is very bright and you alluded to.
Significant brand interest in the brands are entering we think net net it's all a positive for us so when it comes to <unk>.
Branded all inclusive.
We've been doing it longer than anyone else.
Very well established and have a great reputation and so we think theres opportunities for us to continue to grow in.
The branded all inclusive segment.
Not going to see significant levels of new supply come in and any supply that does come in it tends to be further and further away from the airports because just by definition.
The land closer to the airports has been pretty much pretty much develop so.
Most of our properties are in incredible locations and so I think we benefit from that as well. So that's not overly big concern I think the more focus of the brands and the awareness of kind of the loyalty.
Customers in the loyalty program. So those brands all of the all inclusive segment will just benefit us more and more so we don't we don't view that as a negative just the opposite we view it as a very strong positive.
If that addresses your question here.
Yes, that's great. Thank you.
As a follow up wanted to touch on the Dominican Republic.
And I appreciate all the color you gave based on your experience what could be overall medium term impact be after the hurricane just in terms of.
Systems airports, and any lingering customer concerns or perceptions.
So overall I mean, the fortunate thing here is this was a category one hurricane the unfortunate thing for Playa is that the I hit top corner.
We're located so we got we got kind of a more significant impact than you would expect for that type of hurricane and it lingered for about four hours right on top of our resorts. So we.
We felt the best thing to do was to shut down as we said because.
That that resort, especially that and the Hilton resort of La Romana are incredibly attract.
Attractive resorts with very high customer satisfaction, where like the best thing to do is to shut them down to fix them and not trying to drag out the repairs over an extended period of time and maintain the resorts open. So I think it was the right decision. The good news is as we said we're reopening sooner so.
We reopened the Hilton adult section already on the first of November .
Reopened the adult section of compound on the 15th of November So everything is moving full.
Full speed ahead, the airport never shut down not four.
Anytime at all and the overall market is incredibly strong. So there is no really lingering effects in our booking.
As we highlighted four for Q1 is not impacted at all so I think things are going to be incredibly positive there and honestly.
The opportunity to.
Fixed things, while there are no guests at the resorts really made it.
These are going to be better resourced from our standpoint, it was better to do with and if we had dragged it out one guests were there.
Got it. Thank you that's perfect congrats on the quarter.
Thank you.
The next question is from Smedes Rose with Citi. Please go ahead.
Hi, Thanks, I was just wondering.
A lot of good news.
You shared and I was just wondering maybe if you could talk a little bit about what youre seeing.
And bookings from customers from Europe , and I, just kind of as a reminder, which of your resorts maybe have a little bit more of the European.
Demand segment, and I guess I'm, just wondering because it does feel like at least consensus economics suggest that Europe , it's definitely either in or will be in a recession and then just.
It sounds like Youre, not seeing anything that maybe you could just talk about a little bit more.
Yes, as far as the guest segmentation.
With the exception of Europe , Asia, and Canada at least through last quarter all of our destinations essentially had been back to kind of pre pre pandemic levels, obviously with the U S being the strongest and as a percentage of the overall pie a bigger percentage than we've ever had Europe has had its pockets depending on the various things that have been happening there over there, whether it's eastern Europe or western Europe .
Throughout the last 12 months, but as of this quarter Europe at least in total.
As a percentage of overall was essentially in line with where it was pre pandemic Asia is still roughly a quarter, where it was pre pandemic in Canada is probably two thirds of the way recovered.
Just as a reference Asia was 4% or less of our overall business pre pandemic in Canada with anywhere from eight to 10, so not all of our pockets are firing at all cylinders, but it's nice to see the return of Europe , specifically Europe .
You can imagine tends to travel a little more in the summer and specifically historically has been a bigger portion of our guest segmentation in the Dominican for instance, our Hilton La Romana when it was the previous brand it was like.
60, 70% Europe from the Summertime and <unk> say for two three weeks the rest of our markets are a little more U S centric or Latin American centric, but Dominican has been a big a big hub for European travelers.
And then as far as I guess.
Yeah go ahead.
Well I just wanted to ask you I mean, the direct bookings continues to really improve and I think just as a reminder, that's either through brand dot com or through your Playa.
Yep.
Measure terrific.
For every point that you were able to increase direct bookings.
To kind of quantify that.
Amount.
No.
On the other side right, yes, no yes, it really depends on what from where to where they are moving right and how they are booking and if youre potentially giving back some of that savings to kind of steal that customer what we tried to do on our earnings release excuse me in our.
Our presentations that we have on our on our Investor Relations website. We showed just like the general cost of acquiring a customer through each one of those channels. So you can kind of make assumptions and say, okay. If I remove X much X gross revenue from this channel to this channel it would equate to X dollars of revenue and then obviously make any kind of flowed the assumption on that that should be pretty high given the fact that.
There's really not a whole lot of associated costs associated with selling a room for more dollars in taking a bigger piece of that pie, but generally it's a it's kind of a broad assumption depending on how you are moving moving to customer.
Okay. Thank you I appreciate it.
And you did ask about just.
A little bit more I don't want to ignore your question just on on rates in recession like we said at this time, we're fully fully aware of what's happening in the macro backdrop, and we monitor it daily weekly and monthly and have discussions at the property level of sales and marketing and how we would adjust our reactive to consumer's propensity to spend with change.
But just given the book position in the data we've shared with you today, we're not seeing anything in the numbers, but we don't have our head in the sand, we're not completely ignoring the fact that there's there's a cadence out there in the world, but we will act accordingly, if it if it shows but thats why we have constantly tried to walk this fine line of delivering our guest experience.
<unk>, while continuing to push rate and margins.
And make sure that we are set up to have the best possible chance to be sustainable in the event that the world starts to change.
Thank you.
Thanks.
Gives me. The next question is from Patrick <unk> with <unk> Securities. Please go ahead. Thank you. Thank.
Thank you operator, good morning, everyone.
Pat.
I'm wondering if you could give us an update on the labor situations.
In your various markets and what site what type of.
Wage and benefit growth rates you have been seen thank you.
Yes, so it depends on the type of staff and where they sit.
The governments in Mexico, and the Dominican have raised minimum wage.
Every year every couple of years.
When <unk> took office in Mexico, I think as rates at three times since he's been in office.
And those raises have been anywhere from 18% to 22%, but that only affects a portion of our overall line staff and then a portion of that line staff.
Actual pay right.
Our lineup has had kits that are part of their salary from the rates that people pay right and that is not affected.
The remainder of the line staff and so essentially 20% to 25% of our line staff is subject to those minimum wage increases the remainder of the line staff is union and again, you've heard me say this many times, it's not work roles and Union, it's very different than the United States. They have unions purely to negotiate annual wages wage increases with the owners and operators of these properties.
Remainder of that staff has been anywhere mid to upper single digit increases rough.
Roughly on a year over year basis. So this isn't out of the ordinary for us its something we deal with every single year and we have fantastic relationships with all of our union so as.
As you can see and we tried to highlight when we talk about the cost pressures that we've seen over the last couple of quarters in the last 12 months.
It's been more on food and beverage and utilities and not so much labor because the labor has been fairly normal course for us which is good so I think as far as staffing levels in ftes per guest where essentially staff that have been snapped back to pre pandemic levels for a while now Jamaica, we've highlighted a few different times is.
Being a bit of a laggard just given the fact that one that market lagged occupancy and things like that but to just the dynamic of the workforce. There there were some people, leaving the destination altogether and so we are in the process, you're starting to see it in Q3, and Q4 and the process of kind of staffing up a little bit to make sure that we're not degradation in any of our our NPS scores in that.
Estimation, but as a whole compared to what others have to deal with in other parts of the world in the United States. The Labor story here for US is quite a good one.
Okay, Great update thank you.
The next question is from Tyler Batori with Oppenheimer. Please go ahead.
Good morning, guys. This is Jonathan on for Tyler Thanks for taking our questions Hey, Jonathan first first one from me the booking window continues to be tremendous Annie.
Any color or thoughts on the drivers of that extended booking window and the sustainability there.
Can you talk about the potential impact longer term to the business from the new elongated booking window.
Yes.
As we kind of mentioned earlier that long gated booking window, just allows us to be more nimble and thoughtful as we look out.
In further quarters and see what's on the books and how the consumers reacting so in a kind of a downside scenario. It allows us to see things faster than other peers may may be able to do so and it allows us to make decisions on what product offerings staffing levels things like that I think the biggest driver is just the pacing here as people are looking further and further out I don't want to use.
The word bargain shopping that's not what they are doing but because the rates and the and the demand for our destinations has continued to grow and more importantly remained steady throughout this recovery people are looking further out I think it was Bruce either last quarter over quarter before in his prepared remarks that now.
Now going to go into the Yucatan are going to Mexico in August or it doesn't seem so such a bad idea anymore right and I think we've essentially permanently reset the floor of our quote low season.
That distance between the high season low season, I think is contracting a little bit. So I think people are just looking further out.
And particularly given in a world, where there is more flexibility and work life balance or the ability to work from from various locations.
Can take trips the times, where they may otherwise have not wanted to so I think this is just a number of factors that have just added to the fact that people are booking further and further out yes, I'll just add to that I think with the airlines. If you look at the airlines everyone advisors.
The prices are going up if you wanted to get a good deal you better book early so I think people are <unk>.
Looking early is really changing kind of the psychology of the consumer for US for example, if you go back to the last two high seasons, a number of people I can tell you anecdotally couldn't get in during the times. They wanted to get in because our demand was so high so people are kind of learning from that and they're behaving differently.
So they are booking further out either as Ryan said or like the airlines to get.
The best rate, they can get or to make sure that they get the time and the location that they want.
I think it is.
Is a positive trend for us in that people kind of changed their behavior. The last thing. We want is that people think Oh I can book at the last minute and the nice thing is they don't feel that way.
That's great. Thank you for all the color there and then switching gears can you provide some color on the Wyndham Ultra brand, how it's progressing versus your expectations and other brands in the portfolio.
And do you foresee that becoming a more meaningful brand in your portfolio in the future.
With that in.
First preferred chime in here, obviously, I think that Brian has given us a number of different things not just on the on the two assets that we converted in our portfolio I think when we announced that the first entry for our two properties in that conversion I think one of the biggest things. We discussed there are a large number in our markets have kind of that three three.
Five star product in our markets and so it offers kind of some nice white space for us to take over additional third party contract. There's a lot of owners that are thinking of switching to the franchise model and management through Playa. So not only is it driven volume and some incremental direct bookings at the assets we own as you've seen from the recent announcements.
We've announced a few new multi products from our third party management portfolio as well. So I think it's on a few things for us and that relationship has been good.
Yes, I'd just echo everything Ron said.
Very helpful. Thank you for all the color guys Thats all from me.
Thanks, Sean.
This concludes our question and answer session I would like to turn the conference back over to Bruce <unk> for any closing remarks.
Great. Thank you everybody. We appreciate the time.
We're very happy with the third quarter resort results and things are looking great for.
For Q1 of 2023, and we're hoping to.
Have another favorable report when we were talking about the fourth quarter. Thanks, so much for joining us today.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
[music].
Yes.