Q4 2023 Playa Hotels & Resorts NV Earnings Call

Operator: Thank you. Thank you. Thank you. Good morning and welcome to the Playa Hotels & Resorts fourth quarter 2023 earnings release and conference call. All participants will be in listen-only mode.

Good morning, and welcome to the Playa hotels and resorts fourth quarter taught each forty-three earnings release and conference call. All participants will be in listen only mode should you need assistance. Please signal a conference specialist by pressing Star then zero on your telephone.

Operator: Should you need assistance, please signal a conference specialist by pressing star then zero on your telephone keypad. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then 1 on your telephone keypad.

Pat.

After todays presentation, there will be an opportunity to ask questions to ask a question you May Press Star then one on your telephone keypad 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 email with the company.

Operator: To withdraw your question, please press star then 2. Please note this event is being recorded. I would now like to turn the conference over to Ryan Hymel of the company. Please go ahead, sir.

Please go ahead Sir.

Ryan Hymel: Thank you very much, Drew. Good morning, everyone, and welcome again to Playa Hotels & Resorts' fourth quarter 2023 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 a discussion of some of the risk factors that could cause our 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.

Thank you very much drew.

Everyone and welcome again to Playa hotels, <unk> resorts fourth quarter 2023 earnings conference call before we begin I'd like to remind participants that many of our comments today will be considered forward looking statements that 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 update forward looking statements for.

For a discussion of some of the risk factors that could cause our results to differ. Please review the risk factors section of our annual report on Form 10-K, which we filed last night, but the S E T.

Bruce D. Wardinski: We've updated our investor relations website at investors.playaresorts.com with the company's recent release. In addition, reconciliations to GAAP of the non-GAAP financial measures we discussed on today's call were included in yesterday's press release. On the call today, Bruce Wardinski, Playa's Chairman and Chief Executive Officer, will provide comments on the fourth quarter demand trends and key operational highlights. I will then review the fourth quarter results and our outlook for 2024. Bruce will wrap up the call with some concluding remarks before we turn it over to Q&A. With that, I'll turn it over to Bruce. Great. Thanks, Ryan. Good morning, everyone, and thank you for joining us.

We've updated our Investor relations website at investors that Playa resorts dot com, but the Companys recent releases.

Additionally, reconciliations to GAAP of the non-GAAP financial measures. We discussed on todays call were included in yesterday's press release on.

On the call today, Bruce <unk>, Vice Chairman and Chief Executive Officer will provide comments on the fourth quarter demand trends and key operational highlights I will then review the fourth quarter results and our outlook for 'twenty 'twenty four Bruce will wrap up the call with some concluding remarks before we turn it over to Q&A with that I'll turn it over to Bruce great. Thanks, Ryan Good morning, everyone and thank you for joining us.

Bruce D. Wardinski: Our fourth quarter results exceeded our expectations, coming in well above the high end of our expected range. The better-than-expected results were broad-based across our segments, driven by strong demand during the high... Before we dive in, I'd like to remind everyone that Hurricane Fiona hit the Dominican Republic in late September of 2022, causing us to temporarily close the Hyatt Ziva and Florida Cap Cana and Hilton La Romana Resorts for repairs for a portion of the 3rd and 4th quarters of 2022. We estimate this had a 5.4 million negative impact net of business interruption proceeds on adjusted EBITDA in Q4 2022 but was an approximate 70 basis points benefit to our reported Q4 2022 owned resort EBITDA margin, as there were no corresponding revenues accompanying the business interruption proceeds we received. Comparability of our KPIs for the fourth quarter is further challenged by the fact that the affected resorts reopened for only the highest ADR portion of the quarter. Playa's owned resort Evita of $73.6 million in the fourth quarter of 2023 included a significant year-over-year foreign currency exchange headwind of approximately $5.6 million due to the appreciation of the Mexican peso.

Our fourth quarter results exceeded our expectations coming in well above the high end of our expected range the better than expected results were broad based across our segments driven by strong demand during the high season before we dive in I'd like to remind everyone that hurricane Fiona hit the Dominican Republic in late September of 2022, causing us to temporarily close the Hyatt Ziv in Florida.

Ghana, and Hilton La Romana resorts for repairs for portion of the third and fourth quarters of 2022.

We estimate this had a $5 4 million negative impact net of business interruption proceeds on adjusted EBITDA. In Q4, 2022 that was an approximate 70 basis point benefit to our reported Q4 2022 owned resort EBITDA margin as there were no corresponding revenues are accompanying the business interruption proceeds.

To receive comparability of our Kpis for the fourth quarter as further challenged by the fact that the effected resorts reopen for only the highest ADR portion of the quarter.

<unk> owned resort EBITDA of $73 $6 million in the fourth quarter of 2023 included a significant year over year foreign currency exchange headwind of approximately $5 $6 million due to the appreciation of the Mexican peso.

Bruce D. Wardinski: A Benefit from Business Interruption Proceeds of approximately $900,000 and negative EBITDA at the Jewel Resorts in the Dominican Republic. For Q4 2023, we estimate that the FX headwinds had a negative 250 basis points impact on both our reported owned resort EBITDA margin, as well as for our legacy portfolio, which excludes the dual resorts in the Dominican Republic. Adjusting for all of these factors, underlying adjusted EBITDA growth for the legacy portfolio was approximately 6% during the fourth quarter.

There's some business interruption proceeds.

Approximately $900000 in negative EBITDA at the jewel resorts.

And Republic.

For Q4, 2023, we estimate that the FX headwinds had a negative 250 basis points impact on both a reported owned resort EBITDA margin as well as for our legacy portfolio, which excludes the jewel resorts in the Dominican Republic.

Adjusting for all of these factors underlying adjusted EBITDA growth for legacy portfolio was approximately 6% during the fourth quarter.

Bruce D. Wardinski: Finally, we have included a breakout of segment financial KPIs excluding the DR Jeweled Resorts for the fourth quarter and full year 2023 on pages 17 and 20 of our earnings release to help you with your modeling and provide a frame of reference for the impact on our financials from these significantly lower ADR resorts. For our discussion today, commentary on comparable full-year 2024 KPIs is synonymous with our legacy portfolio, as the Jewel Palm Beach was closed for a portion of Q1 of 2023, and the Jewel Punta Cana was sold during Q4 of 2023, and thus would not be comparable for the full-year metrics. As we outlined earlier in 2023, our expectation was that the first quarter would represent the highest year-over-year ADR and EBITDA growth in 2023, as we lapped the impact of Omicron in early 2022, and growth would normalize as we enter the second half of 2023, as the base comparison period had less noise. Additionally, based on our pacing and booking data, we were of the belief that the brief slowdown in bookings experienced ahead of the summer travel season was likely the result of pent-up demand for European travel, not indicative of weak demand for traditional winter travel to beach and warm-weather destinations.

Finally, we've included a break breakout of segment financial Kpis, excluding the Dr. Joel resorts for the fourth quarter and full year 2023 on pages 17, and 20 of our earnings release to help you with your modeling provide a frame of reference for the impact on our financials from the significantly lower ADR resource.

Our discussion today commentary on comparable full year 2024, kpis synonymous with our legacy portfolio.

The dual Palm Beach was closed for a portion of Q1 'twenty three and digital economy was sold during Q4 2023, and thus would not be comparable for the full year metrics.

As we outlined earlier in 2023, our expectation was that the first quarter would represent the highest year over year ADR and EBITDA growth in 'twenty two 'twenty three as we lap the impact from <unk> in early 2022 and growth would normalize as we enter the second half of 2023 is the base comparison period had less noise.

Additionally, based on our pacing for booking data we were of the belief that the brief slowdown in bookings experienced ahead of the summer travel season was likely the result of pent up demand for European travel not indicative of weak demand for traditional winter travel to beach can warm weather destinations.

Bruce D. Wardinski: This view largely came to fruition during the fourth quarter of 2023, as demand during the high season, particularly in Mexico, exceeded our expectations and aided our ADR growth as these peak season bookings came at healthy rates. Our results in the Yucatan were quite exceptional on a currency-adjusted basis, with occupancy nearing fourth-quarter 2018, and 2019 levels. Our fourth quarter 2022 Yucatan ADR reflected multiple favorable true-up adjustments. Excluding these adjustments, underlying fourth quarter ADR in the Yucatan increased approximately 2% year-over-year.

This view largely came to fruition during the fourth quarter of 2023 as close in demand during the high season, particularly in Mexico exceeded our expectations and aided our ADR growth as these peak season bookings came at healthy rates our results in the Yucatan were quite exceptional on a currency adjusted basis with occupancy nearing fourth quarter two.

<unk> thousand 18, and 2019 levels, our fourth quarter 2022, Yucatan ADR reflected multiple favorable true up adjustments. Excluding these adjustments underlying fourth quarter ADR in the Yucatan increased approximately 2% year over year.

Bruce D. Wardinski: The most remarkable aspect of our fourth quarter in Yucatan, however, was the continued execution by our operations teams in Mexico, which were able to grow currency neutral margins by approximately 100 basis points year over year on modest reported ADR growth. As you may recall, following the realignment of key management personnel, we've been revisiting various processes, staffing models, and procurement practices since the second quarter of 2023, and the results of our efforts really began to show in the second half of the year as ADR growth models. As we've mentioned on previous earnings calls, the process improvement will be iterative, and we will continue increasing efficiency where possible to help offset the impacts of rising wages and inflation in various expense categories.

The most remarkable aspects of our fourth quarter and the Yucatan. However, with the continued execution by our operations teams in Mexico, which we're able to grow currency neutral margins approximately 100 basis points year over year on modest reported ADR growth as.

As you May recall following the realignment of key management personnel, we've been revisiting various processes staffing models and procurement practices since the second quarter of 2023 and the results of our efforts really began to show in the second half of the year as ADR growth moderated as we've mentioned on previous earnings calls the process improvement will be at or.

And we will continue increasing efficiency, where possible to help offset the impacts of rising wages and inflation various expense categories.

Bruce D. Wardinski: We believe we can hold FX neutral margins steady year-over-year in the Yucatan in 2024 on positive low-single-digit to mid-single-digit ADR growth, despite underlying wage pressure continuing. In the Pacific, close-in-demand health ADR growth in this segment as well, partially offset by year-over-year occupancy declines as a result of Hurricanes Norma and Lydia and our ongoing renovation work We estimate that Hurricanes Norma and Lydia negatively impacted segment ETHADOP by approximately $1 to $1.25 million in the quarter.

We believe we can hold FX neutral margin steady year over year on the Yucatan in 2024, I'm positive low single digit to mid single digit ADR growth despite underlying wage pressure continuing.

In the Pacific close in demand helped ADR growth in this segment as well, partially offset by year over year occupancy declines as a result of hurricanes, Norma and Libya and our ongoing renovation work.

The Hurricane storm and Libya negatively impacted segment EBITDA by approximately one to $1 million to $5 million in the quarter similar to the Yucatan. The Pacific was able to grow margins on a currency neutral basis by approximately 290 290 basis points year over year, despite significant wage pressure.

Bruce D. Wardinski: Similar to the Yucatan, the Pacific was able to grow margins on a currency-neutral basis by approximately 290 basis points year over year despite significant wage pressure. We expect to continue our renovation work in this segment during 2024, which should further help sustain rate growth in the future, as the Hyatt Los Cabos has not had any major renovation work done since the significant renovation that occurred following Hurricane Odile in 2014. In the DR, fundamental strength during the fourth quarter was led by the Hyatt-Kopkana, which continues to be the preeminent resort in one of the top resort markets in the world and was our best performing resort in Q4. However, results in the segment were hindered by the Jewell Resorts, which posted a modest loss in Q4.

We expect to continue our renovation work in this segment during 2024, which should further help sustained rate growth in the future as the Hyatt Los Cabos had not had any major renovation work done since a significant renovation that occurred following hurricane odile in 2014.

And the D are fundamental strength during the fourth quarter was led by the Hyatt cap Cana, which continues to be the pre eminent resort one of the top resort markets in the World and was our best performing resort in Q4 results. In this segment were hindered by the dual resource, which posted a modest loss in Q4 as.

Bruce D. Wardinski: As a reminder, we completed the sale of the Jewel Punta Cana in late December, and the Jewel Palm Beach was closed for a significant portion of Q1 2023, which we expect will provide a meaningful year over year increase in EBITDA during Q1 2024. The two resorts combined for an EPDOT loss of approximately $15 million in 2023, with the Jewel Palm Beach's loss in the fourth quarter narrowing to just under $1 million. We are still actively pursuing a sale of Jewel Palm Beach, but we do not have any updates on the status of the sale process at this time.

As a reminder, we completed the sale of the dual pump O'connor in late December and the dual Palm Beach was closed for a significant portion of Q1 2023, which we expect will provide a meaningful year over year increase in EBITDA during Q1, 'twenty 'twenty for the two.

Resorts combined for an EBITDA loss of approximately $15 million in 2023 with the dual palm beaches loss in the fourth quarter narrowing to just under $1 million. We are still actively pursuing a sale of dual palm beach, but do not have any updates on the status of the sale process at this time.

Bruce D. Wardinski: Finally, Jamaica had another solid quarter, with occupancy increasing slightly year over year, along with mid-single-digit ADR growth, despite a significant headwind from lower market group mix year over year. The segment was off to a good start in 2024, but the U.S. State Department's Travel Advisory Notice for Jamaica on January 23rd has had a negative impact on the segment near term, as cancellations picked up meaningfully. Although the warning doesn't pertain to our resorts as much as the major metro areas and the fact that the level of the travel advisory was unchanged from the prior advisory, the press coverage of this advisory notice was significantly greater than prior warnings. Bookings in Jamaica have since stabilized, but the majority of the cancellations were for states in the coming months and will be difficult to backfill. Given the warning level was not based on any new incidents or data, the impact of this, while unfortunate, will likely be confined to lost bookings in March through June.

Finally, Jamaica had another solid quarter with occupancy increasing slightly year over year, along with mid single digit ADR growth.

Spy, a significant headwind from lower mice group mix year over year. The segment was off to a good start in 2024, but the U S State Department's travel advisory notice for Jamaica on January 23rd.

Had a negative impact on the segment near term cancellations picked up meaningfully.

Although the warning doesn't pertain to our resorts as much as the major metro areas and the fact that the level of the travel advisory was unchanged from the prior advisory the press coverage of this advisory notice was significantly greater than prior warnings bookings in Jamaica have since stabilized, but the majority of the cancellations were per stage in the coming months and will be <unk>.

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Given the warning level was not based on any new incidence of data the impact of this while unfortunate and that will likely be confined the lost bookings in March through June.

Bruce D. Wardinski: Looking at demand as a whole, demand for the fourth quarter of 2023 and beyond improved in July of last year, continued to accelerate through the third quarter, and remained healthy in the fourth quarter. In aggregate, during the fourth quarter of 2023, 47.4% of Playa's owned and managed transit revenues were booked directly, down 460 basis points year-over-year. The decline was driven by fewer World of Hyatt redemption bookings, following a spike during the first quarter of 2023 ahead of a change in the conversion rate per point redemption, which pulled quite a bit of demand.

Looking at demand as a whole demand for the fourth quarter of 2023 and beyond improved in July of last year continue to accelerate through the third quarter remained healthy in the fourth quarter in aggregate during the fourth quarter of 2023, 47, 4% apply owned and mandates transient revenues booked where book direct.

Down 460 basis points year over year.

The decline was driven by fewer world of Hyatt redemption bookings following a spike during the first quarter of 2023 ahead of the change in the conversion rate per point redemptions, which pulled forward quite a bit of demand we.

Bruce D. Wardinski: We expect this to smooth out over time and believe we are in line with our targeted 50% transient direct book revenue measure. Additionally, during the fourth quarter of 2023, PlayaResource.com accounted for approximately 13.6% of our total Playa-owned and managed transit alumni bookings, continuing to be a critical factor in our customer sourcing and ADR. If you're interested in taking a look at who is traveling, roughly 43.3% of the Playa-owned and managed room nights stays in the quarter came from our direct, Geographically, the biggest change in our guest mix during the fourth quarter was our European and Mexican-sourced guest mix.

We expect this to smooth out over time and believe we are in line with our targeted 50% train team direct book revenue mix during the fourth quarter of 2023 ply resource Dot com accounted for approximately 13, 6% of our total quiet owned and managed transient room night bookings continuing to be a critical.

<unk> and our customers sourcing and ADR gains.

Look at who is traveling roughly 43, 3% of the Playa owned and managed room nights stayed in the quarter came from our direct channels geographically the biggest change in our guest mix during the fourth quarter was our European and Mexican sourced guest mix, both of which were up nearly 300 basis points year over year our agents.

Bruce D. Wardinski: Both of which were up nearly 300 basis points year-over-year. Our agent sort guest mix improved modestly year-over-year but remains the most depressed as it is still only approximately 25% recovered versus pre-pandemic level. Our Canadian guest mix has remained relatively muted at approximately 60% recovered versus pre-pandemic level.

Guest mix improved modestly year over year that remains the most depressed as it is still only approximately 25% recovered versus pre pandemic levels our Canadian guests.

Remained relatively muted at approximately 60% recovered versus pre pandemic levels. However, there's recently been a significant increase in flight capacity into our markets from Canada for the high season, So I am optimistic our Canadian guests mix will improve in the coming months.

Bruce D. Wardinski: However, there's recently been a significant increase in flight capacity into our markets from Canada for the high season, so I'm optimistic our Canadian guest mix will improve in the coming months. Our visibility remains a critical factor of our success, as our booking window was just over three months during the fourth quarter. In total, while 2023 was a very successful year for Playa on many fronts, we faced significant headwinds that masked the robust performance in our corporate. However, our focus on execution and the stellar fundamentals should shine brighter in the near future as the profit headwinds are expected to abate. Starting in the first quarter, we will begin to reverse the significant profit decline at the two jewel properties in the Dominican Republic.

Our visibility remains a critical factor of our success is our booking window was just over three months during the fourth quarter.

In total while 2023 was a very successful year for Playa on many fronts, we faced significant headwinds masked the robust performance from our core.

Core portfolio, however, our focus on execution and the stellar fundamentals should shine brighter in the near future.

Headwinds are expected to abate starting in the first quarter, we will begin to lap the significant profit decline at the <unk> properties in the Dominican Republic.

Bruce D. Wardinski: Current U.S. dollar-Mexican peso spot FX rates, we expect FX pressure to ease significantly beginning in Q3 2024, and we will be lapping the significant increase in our insurance expense in Q2 2024 as well. Finally, on the capital allocation front, we repurchased approximately $33.5 million worth of Playa stock during the fourth quarter and an additional $14.6 million thus far in the first quarter, bringing our total repurchases since resuming our program in September 2022 to approximately $245 million, or approximately 20% of the shares outstanding.

Current U S dollar Mexican peso spot FX rates, we expect FX pressure to ease significantly beginning in Q3 2024.

We will be lapping the significant increase in our in our insurance expense in Q2 2024 as well.

Finally on the capital allocation front, we repurchased approximately $33 $5 million worth of Playa stock during the fourth quarter.

And an additional $14 6 million, thus far in the first quarter, bringing our total repurchases since resuming our program in September 2022 to approximately $245 million or approximately 20% of the shares outstanding.

Bruce D. Wardinski: We continue to believe that our significant free cash flow generation is underappreciated given the modest amount of ROI-driven CapEx expected in the near term and continued healthy business fundamentals. Once again, I would like to thank all of our associates who have continued to deliver world-class service in the face of unexpected challenges and rising operating costs. Their unwavering passion and dedication to service from the heart is what truly sets Playa apart.

We continue to believe that our significant free cash flow generation is underappreciated given the modest amount of ROI driven capex expected in the near term and continued healthy business fundamentals.

Once again I would like to thank all of our associates, who have continued to deliver to deliver world class service in the face of unexpected unexpected challenges some rising operating costs their unwavering passion and dedication to service from the heart is what truly sets <unk> apart.

Ryan Hymel: With that, I will turn the call back over to Ryan to discuss the balance sheet and our alpha. Thank you, Bruce. Good morning again, everyone.

That I will turn the call back over to Ryan to discuss the balance sheet and our outlook.

Thank you Bruce.

Ryan Hymel: I'll begin again with a recap of the segment fundamentals, followed by an overview of our balance sheet and expected uses of cash, and conclude with our outlook for 24. Before I begin my review, I'd like to remind everyone that starting in the first quarter of 2023, we elected to reclassify on-premise room upgrade revenue from non-packaged revenue to package revenue to be consistent with industry trends. We've recasted prior periods to conform with the current period presentation.

Morning, again, everyone I'll begin again with the recap of the segment fundamental.

Followed by an overview of our balance sheet and expected uses of cash and conclude with our outlook for 'twenty four before I begin my review I would like to remind everyone that starting in the first quarter of 2023, we elected to reclassify on premise room upgrade revenue from non package revenue to package revenue to be consistent with industry trends, we have recast the prior.

Periods to conform with the current period presentation. A reconciliation of these changes made to the prior reporting period for 'twenty, one and 'twenty two can be found in our investor deck on slide five.

Ryan Hymel: A reconciliation of these changes made to the prior reporting period for 21 and 22 can be found in our investor deck on slide five. As Bruce mentioned, there are some unique items affecting the comparability of our financials in the second half of 2023 that I'd like to remind you of before we dive in.

As Bruce mentioned, there are some unique items affecting the comparability of our financials in the second half of 2023, I would like to remind you before we dive in.

First <unk>.

Ryan Hymel: Hurricane Fiona hit the Dominican Republic towards the end of Q3 2022 and caused significant disruption at the Hilton La Romana and the Hyatt Cap Cana, which we chose to temporarily close for a small portion of Q3 2022 and over half of Q4 2022. We shared on a previous earnings call that we estimate the EBITDA impact to be... for Q3 2022 to be roughly $3 million and approximately 80 to 90 basis points to reach an even margin. And for the fourth quarter of 2022, a $5.4 million EBITDA impact net of business interruption. Given the pronounced seasonality of our ADRs during the fourth quarter, these resorts were disproportionately open during the much higher ADR portion of the quarter, skewing our Q4 2022 ADR comparison.

Hurricane Fiona hit the Dominican Republic towards the end of Q3, 2022 and caused significant disruption at the Hilton La Romana and Hyatt cap Cana, which we chose to temporarily closed for a small portion of Q3 2002 and over half of Q4 2002.

We shared on our previous earnings calls that we estimate the EBIT impact would be.

To Q3, 2022 to be roughly $3 million and approximately 80 to 90 basis points to resort EBITDA margins and for the fourth quarter of 2002, a $5 4 million EBIT impact net of business interruption.

Even the pronounced seasonality of our ADR during the fourth quarter. These resorts were disproportionately open during the much higher ADR portion of the quarter skewing, our Q4 2022 ADR comparisons.

Ryan Hymel: Secondly, the Mexican peso had a very large year-over-year change during the fourth quarter of 2023, which negatively impacted our EBITDA by approximately $5.5 million and resort margins by 250 pesos. For full year 2023, the strengthening of the Mexican peso had an approximately $24.1 million impact on our own resort EBITDA, or 260 basis points, and a $24.5 million impact on our total adjusted EBITDA Thirdly, during the fourth quarter of 22, as we've mentioned previously, we had several adjustments that significantly increased the reported Q4-22 ADRs. The largest of these was related to an advanced pricing agreement rate in the Dominican Republic, which we detailed in our Q4-2022 earnings release on page 17. As a reminder, these adjustments total nearly $10 of ADR, or two and a half.

Secondly, the Mexican peso had a very large year over year change during the fourth quarter of 2023, which negatively impacted our EBITDA by approximately $5 $5 million and resort margins by 250 basis points for full year 2023, the strengthening of the Mexican peso had an approximately $24 $1 million impact on our owned resort EBITDA.

260 basis points, and a $24 $5 million impact on our total adjusted EBITDA.

But I believe during the fourth quarter of 'twenty two as we've mentioned previously we had several adjustments that significantly increase the reported Q4 'twenty. Two ADR is the largest of these was it related to an advanced pricing agreement rates in the Dominican Republic, which we detailed in our Q4 2022 earnings release on page 17, as a reminder, these adjustments totaled nearly $10.

ADR or two 5%.

Ryan Hymel: Fourth, business interruption, we recognize again a gain of roughly $900,000 from BI proceeds during the fourth quarter of 2023, which increased owned resort even margins by approximately $40,000. And as a reminder, for the full year 2019, we recognize a gain of $6.1 million from business interruption proceeds and recoverable expenses. And lastly, as we've mentioned, the DR Jewels, these resorts continue to weigh on the performance of the portfolio in 2023, negatively impacting own resort even margins by over 250 basis points for the fourth quarter. And for the full year, the two resorts recorded an even loss of approximately $15 million and negatively impacted own resort margins by approximately $280 million.

Fourth business interruption, we recognize again a gain of roughly $900000 from bi proceeds during the fourth quarter of 'twenty, three which increase owned resort EBITDA margins by approximately 40 basis points and as a reminder, for the full year 2003, we recognized the gain of $6 1 million from business interruption proceeds in recoverable expenses.

And lastly, as we've mentioned in the Dr. Jules These resorts continue to weigh on the performance of the portfolio in 2003 negatively impacting owned resort EBITDA margins by over 250 basis points for the fourth quarter and for the full year 'twenty three the two resorts recorded an EBIT loss of approximately $15 million and negatively impacted owned resort margins by approximately two <unk>.

Ryan Hymel: Okay, now moving on to the fundamentals. Before I begin, all references to expense and margin KPIs are on a currency-neutral basis unless otherwise stated. Our fourth quarter results were ahead of our expectations as demand steadily picked up throughout the quarter. Higher demand and easing pressure from food and beverage and utilities expenses, again on an FX-neutral basis, as well as our cost efficiency measures, led to a reported resort margin decline of about 290 basis points, which again included a 250 basis point.

80 basis points.

Now moving onto the fundamentals before I begin all references to expense and margin kpis on a currency neutral basis, unless otherwise stated.

Our fourth quarter results were ahead of our expectations as demand steadily picked up throughout the quarter higher demand and easing pressure from food and beverage and utilities expenses again on an FX neutral basis as well as our cost efficiency measures led to a reported.

Resort margin decline of about 290 basis points, which again included a 250 basis point.

Ryan Hymel: N.V. N.V. and a 40 basis point benefit from Business Interruption Proceedings and a 70-basis point headwind from the two jewel resorts in the Dominican. So, adjusting for foreign exchange and business interruption in the prior period and this period, our legacy portfolio maintained margins on a year-over-year basis. The higher demand for ADR gains in the quarter was very broad-based, with all segments reporting year-over-year ADR growth, excluding the two dual resorts in the DR. On the cost front, food and beverage costs continue to be favorable as a result of lower input prices and cost efficiency efforts by our operations. Utilities and labor were also favorable in the quarter, with the latter reflecting efficiency measures as wage inflation continues to remain a headwind.

Year over year headwind from foreign exchange and a 40 basis point benefit from business interruption proceeds and a 70 basis point headwind from the two dual resorts in the Dominican so adjusting for foreign exchange and business interruption in the prior period and this period, our legacy portfolio maintain margins on a year over year basis, the higher demand for ADR gains.

In the quarter was very broad based with all segments reporting year over year ADR growth, excluding the two dual reserves in the Dr. On the cost front food and beverage cost continued to be favorable as a result of lower input prices and cost efficiency efforts by our operations team utilities and labor were also favorable in the quarter with the latter reflecting efficiency measures as wage inflation.

<unk> continues to remain a headwind.

Ryan Hymel: As Bruce mentioned, we're undertaking efforts to streamline and improve our procurement process across the entire portfolio to take advantage of our scale. These efforts are really just beginning to bear fruit from the heavy lifting undertaken thus far in 23, and we expect the benefits to accelerate as the company moves into 24 and beyond, as our cost savings are currently mid-single digits to high-single digit improvements per category. We estimate that we've only penetrated roughly 30% of the potential addressable procurement savings thus far, with half of the savings flowing into our costs during the fourth quarter of 2020. Now, turning to our MICE group business, our 2024 net MICE group business on the books is approximately $52 million, up roughly 23% compared to the same time last year.

As Bruce mentioned, we are undertaking efforts to streamline and improve our procurement process across the entire portfolio to take advantage of our scale. These efforts are really just beginning to bear fruit from the heavy lifting undertaken thus far in 'twenty three and we expect the benefits to accelerate as the company moves into 'twenty four and beyond as our cost savings are averaging currently mid single digit to high single digit improve.

<unk> per category.

We estimate that we've only penetrated roughly 30% of the potential addressable procurement savings, thus far with half of the savings flowing into our cost during the fourth quarter of 2023.

Now turning to our <unk> business, our 2024 net nice group business on the books is approximately $62 million up roughly 23% compared to the same time last year, our mice business on the books for 24 is much more balanced versus 2023, which as a reminder had difficult year over year mice comparisons in the second half versus what we traditionally experience.

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Finally, turning to the balance sheet, we finished the quarter with total cash balance of $272 $5 million and total outstanding interest bearing debt of $1 9 billion.

Ryan Hymel: Our MICE business on the books for 2024 is much more balanced versus 2023, which, as a reminder, had difficult year-over-year MICE comparisons in the second half versus what we traditionally experience. Finally, turning to the balance sheet, we finish the quarter with a total cash balance of $272.5 million and total outstanding interest-bearing debt of $1.09 billion. We currently have no outstanding borrowings on our $225 million re

We currently have no outstanding borrowings under our $225 million revolving credit facility.

And our net leverage on a trailing basis stands at approximately three times excluding leases.

We anticipate our cash capex spend for full year 2024 to be approximately $80 million to $90 million for the year partitioned out between $35 million to $40 million for maintenance Capex and the remainder are designated for ROI oriented projects.

Ryan Hymel: Our net leverage on a trailing basis spans approximately three times, excluding leasing. We anticipate our cash CapEx spend for full year 2024 to be approximately $80 to $90 million for the year, partitioned out between $35 to $40 million for maintenance CapEx and the remainder designated for ROI-oriented projects. Also, as a reminder, effective April 15th, we entered into two interest rate swaps to mitigate the floating interest rate risk in our term loan due 2029. We entered into a two- and three-year contract, both of which have fixed notional amounts of $275 million and carry fixed SOFR rates of 4.05% and 3.71%, respectively. We've implemented foreign exchange hedges on approximately half of our Mexican peso exposure for 2024, which should greatly reduce the volatility of the impact of our reported EBITDA. Based on exchange rates at the time we entered into the FX swaps, we estimate the full-year 2024 FX impact from the Mexican peso to be approximately $7 to $11 million.

Also as a reminder, effective April 15th we entered into two interest rate swaps to mitigate the floating interest rate risk in our term loan due 2029, we entered into a two and three year contract both of which had fixed notional amount of $275 million and carry fixed sofa rates of 4.05 and $3 seven.

And 1% respectively.

Really we've implemented foreign exchange hedges on approximately half of our Mexican peso exposure for 2024, which should greatly reduce the volatility of the impact of our reported EBIT of this year.

Just on exchange rates at the time, we entered into the FX swaps, we estimate the full year 2020 for FX impacts for the Mexican peso to be approximately $7 million to $11 million, but again with nearly 75% of that impact coming in Q1, 24, and nearly 100% of that impact in the first half of the year.

On the capital allocation front as Bruce mentioned, we repurchased an additional $33 $5 million of stock during the fourth quarter, an additional $14 6 million. Thus far in Q1 of 'twenty four since we began repurchasing shares that last September we purchased over $32 8 million shares or as Bruce mentioned nearly 20% of the.

Ryan Hymel: But again, with nearly 75% of that impact coming in Q1 of 2024 and nearly 100% of that impact in the first half of this year. On the capital allocation front, as Bruce mentioned, we repurchased an additional $33.5 million of stock during the fourth quarter and an additional $14.6 million thus far in Q1. Since we began repurchasing shares since last September, we've purchased over 32.8 million shares, or, as Bruce mentioned, nearly 21% of the shares up to date. We still have over $185 million or $180 million remaining on our existing repurchase authorization.

Shares outstanding we still have over 185 or $180 million.

Remaining on our existing repurchase authorization.

And with our leverage ratio is at or near three times, the anticipated free cash flow generation of the business and the attractive valuation of our stock. We believe repurchasing shares is a very compelling use of capital and attendees, our discretionary capital to repurchase shares going forward depending on market conditions.

So now turning our attention to our outlook for 2024, as we mentioned in our release, we expect our full year 2024, adjusted EBITDA to be between $250 million to $275 million, which includes the following key considerations and inputs.

So first it assumes ADR growth of mid single digits for the total portfolio.

Ryan Hymel: And with our leverage ratios at or near three times, the anticipated free cash flow generation of the business, and the attractive valuation of our stock, we believe repurchasing shares is a very compelling use of capital and intend to use our discretionary capital to repurchase shares going forward, depending on the market. So now turning our attention to our outlook for 2024, as we mentioned in our release, we expect our full year 2024 adjusted EBITDA to be between $250 million and $275 million, which includes the following key considerations and inputs. So first, it assumes ADR growth of mid-single digits for the total portfolio and Low Single Digits for the Comparable Legacy Portfolio. The driving force of the delta between these two is a positive, approximately 360 basis point impact from removing the lower ADR ruminant from the mix from the recently sold Juul pump account.

And low single digits for the comparable legacy portfolio the.

The driving force of the Delta between these two is a positive approximately 360 basis point impact from removing the lower ADR room night mix from the recently sold dual pump economy.

Partially offset by the ramping occupancy annual bondage.

Occupancy, we expect to be up mid single digits.

Mid single percentage points.

For the total portfolio and up modestly for the comparable legacy portfolio.

We expect revpar growth of low double digits for the total portfolio.

And low single digits.

Mid single digits for the comparable portfolio we.

We estimate that the disposition of the dual pump the corner and they're ramping occupancy at the Jewel Palm Beach contributed approximately 900 basis points to 2020 for Revpar, but the vast majority of that contribution being from the <unk>.

<unk> of disposing of the dual pump Dakota, and only a modest contribution to revpar from the dual palm beach as improving occupancy partially offset by the negative mix of ADR.

Ryan Hymel: Partially offset by the ramping occupancy of Jewel Pump. Occupancy, we expect to be up mid-single digits for the total portfolio and up modestly for the comparable legacy portfolio. We expect rev par growth of low double digits for the total portfolio and low single digits to mid-single digits for the comparable portfolio.

Again, as we mentioned, we assume FX headwinds of $7 million to $11 million based on current exchange rates.

And we expect construction disruption impact of approximately mid single digit to high single digit EBITDA in the Pacific and at the Hyatt <unk> Cancun.

Inflation as we as we've mentioned several times on this call we have been diligently working to improve our efficiency and we believe we've lowered our margin leverage hurdle to approximately 4% ADR rate growth to hold margins flat on a currency and business interruption adjusted basis.

Ryan Hymel: We estimate that the disposition of the Jewel Punta Cana and the ramping occupancy at the Jewel Palm Beach contributes approximately 900 basis points to 2024 REVPAR, with the vast majority of that contribution being from the result of disposing of the Jewel Punta Cana and only a modest contribution to REVPAR from the Jewel Palm Beach, as improving occupancy is partially offset by the negative mix of ADR. Again, as we mentioned, we assume FX headwinds of $7 to $11 million based on current exchange rates. And we expect construction disruption impact of approximately mid-single-digit to high-single-digit EBITDA in the Pacific and at the highest of the large.

And then lastly, we expect a modest negative net impact from annualized corporate expense increases from 23, again, partially offset by higher and growing fee income from our managed business in the Playa collection fees.

And with regards to the cadence.

We expect the first quarter to show the most robust profit in the year given the Q1 2023 comparison, which as a reminder included a $5 million loss of the Dr. Jules.

So again to sum this up at the midpoint this $250 million to $275 million range represents approximately 1% decline year over year versus the business interruption adjusted $265 $8 million.

Ryan Hymel: Inflation, as we've mentioned several times on this call, we've been diligently working to improve our efficiency, and we believe we've lowered our margin leverage hurdle to approximately 4% ADR rate growth to hold margins flat on a currency and business interruption adjusted basis. And then lastly, we expect a modest negative net impact from annualized and corporate expense increases from 2023, again partially offset by higher and growing fee income from our managed business and the Playa collection. And with regard to the cadence, we expect the first quarter to show the most robust profit in the year, given the Q1 2023 comparison, which, as a reminder, included a $5 million loss at the DR Jewels. So again, to sum this up, at the midpoint, this $250 to $275 million range represents approximately a 1% decline year-over-year versus the business interruption-adjusted $265.8 million. N.V. N.V. Now moving on to the first quarter.

Bigger that we reported in 'twenty three.

Now moving onto the first quarter for the first quarter 'twenty four we expect reported occupancy to be in the low to mid 80% and reported package ADR to decline low single digits year over year basis again due to the dual Palm Beach, However, comparable legacy portfolio ADR is expected to grow low.

Single digits.

We expect owned resort EBITDA margin to decline year over year, given the continuing FX headwinds in Mexico, which are expected to negatively impact margins by approximately 200 basis points at today's spot rates.

Putting it all together, we expect Q1 owned resort EBITDA of $108 million to $114 million.

Playa collection and management fee income of roughly two to $3 5 million.

Corporate expense of approximately $14 million to $15 million, which again includes a negative FX impact related to our office in Mexico.

Ryan Hymel: For the first quarter of 24, we expect reported occupancy to be in the low to mid 80% and reported package ADR to decline low single digits year-over-year, again due to the jewel Palm Beach. However, comparable legacy portfolio ADR is expected to grow low single digits. We expect owned resort EBITDA margins to decline year over year, given the continuing FX headwinds in Mexico, which are expected to negatively impact margins by approximately 200 basis points at today's spot rate. Putting it all together, we expect Q1 owned resort EBITDA of $108 to $114 million. Acquire a collection and management fee income of roughly $2 to $3.5 million.

And finally.

Q1, adjusted EBITDA of $98 million to $104 million.

Given our booking window, we are currently 96% booked for the first quarter.

Hope that framework helps guide you as you fine tune your models and gets further insight to what we're seeing and expecting with that I'll turn it back over to Bruce for some concluding remarks, great. Thanks, Brian. So the year is off to a good start with solid top line growth. Despite the setback in Jamaica from the travel warning and lapping difficult comparisons from 2023, we remain.

Focus on the areas within our control such as our expense efficiency efforts and ongoing portfolio optimization on the latter point, we are actively working on the sale of the dual Palm Beach will be continuing the renovation work that are slated in the Pacific as well as beginning renovation work on a successful Hyatt resorts in Kingdom, we will continue to.

Ryan Hymel: Corporate expense of approximately $14 to $15 million, which again includes a negative FX impact related to our office in Mexico. Q1 Adjusted EBITDA of $98 to $104 million. Given our booking window, we are currently 96% booked for the first quarter. We hope that framework helps guide you as you find your new models and gives further insight into what we're seeing and expecting. With that, I'll turn it back over to Bruce for some concluding remarks. Great. Thanks, Ryan.

The significant free cash flow, we generate into share repurchases and our marketing market, leading assets setting us up to accelerate growth beyond 2024.

So that concludes our presentation and now we'll open it up for Q&A.

We will now begin the question and answer session to ask a question you May Press Star then one on your telephone keypad.

Bruce D. Wardinski: So, the year's off to a good start with solid top-line growth, despite the step back in Jamaica from the travel warning and lapping difficult comparisons from 2023. We remain focused on the areas within our control, such as our expense efficiency efforts and ongoing portfolio optimization. On the latter point, we are actively working on the sale of the Jewel Palm Beach and will be continuing the renovation work that is slated for the Pacific, as well as beginning renovation work on our successful Hyatt Resorts in King County.

If youre using a speakerphone please pick up your handset before pressing the keys if at any time. Your question has been addressed and you would like to withdraw your question. Please press Star then two.

Again it is star then one to ask a question.

At this time, we will pause momentarily to assemble our roster.

The first question comes from Smedes Rose with Citi. Please go ahead.

Oh, hi, thanks.

I mean, you have a lot of moving pieces here that are probably taking a little time to kind of go through more carefully but I guess my question is really if you could just speak to.

Operator: We will continue to redeploy the significant free cash flow we generate into share repurchases and our market-leading assets, setting us up to accelerate growth beyond 2021. So that concludes our presentation, and now we'll open it up for Q&A. We will now begin the question-and-answer session. To ask a question, you may press Star, then 1 on your telephone keypad.

Underlying kind of demand and booking patterns that you've seen thus far in 2024, and I know you gave some EBITDA guidance, but I mean.

And I guess kind of any impact from the shift in Easter and if that's affecting bookings at all.

Yes.

Bruce mentioned in his closing remarks, the first quarter is off to a great a great start.

On the eastern front for us anytime Easters further out, but just essentially elongate our high season. So it's a week earlier this year. So the benefit of Easter moved into Q, because that's a very important week for us a modest market, particularly in Mexico, So that benefits in Q1, but it does essentially shortens our high season by approximately a week and it sounded like a week or two right.

Operator: If you're using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been answered and you would like to withdraw your question... Please press star then 2.

Operator: Again, it is star more than one to ask a question. At this time, we will pause momentarily to assemble our roster. The first question comes from Smedes Rose with Citi. Please go ahead.

After Easter are slower months for us so longer is better further out is better. So it has no impact on our overall results just from a being a week shorter but things are off to a really good start things are pacing well in the first half of the year I think one of the main points that we want to get across and we think about our margin are kind of pacing and then just the pace of our growth.

Smedes Rose: Hi, thanks. We have a lot of moving pieces here that I'll probably take a little time to kind of go through more carefully, but I guess my question is really if you could just speak to the underlying kind of demand and booking patterns that you've seen thus far in 2024. I know you gave some EBITDA guidance, but I mean... You know, and I guess kind of any impact from the shift in Easter and if that's affecting bookings at all. Yeah, as Bruce mentioned in his closing remarks, the first quarter is off to a great start. On the Easter front, for us, any time Easter is further out, it just essentially elongates our high season.

In 2024, it's pretty evenly balanced obviously, the first quarter had some comparability issues because the jewels were a drag in Q1 of last year and a dual palm Beach wasn't open but generally the kind of cadence of our revpar growth in our topline stats for ADR and for Revpar are pretty even throughout the year I do think there has been.

Kind of a return to kind of normal seasonality in our business, but other than that I think it's things are off to a great start the biggest thing that we needed to monitor as Bruce mentioned was the impact of the cancellations from the travel warning from from Jamaica, I know, we've talked to many many folks last night it has already stabilized.

Ryan Hymel: So it's a week earlier this year, so the benefit of Easter moves into Q1, because that's a very important week for us in Manzanta, particularly in Mexico. So that benefits Q1, but it just essentially shortens our high season by approximately a week. And essentially, the week or two right after Easter are slower months for us.

<unk> at least from a page turn positive again quickly, but we're not back yet to par. So the next kind of couple of months, particularly in March and April and May will really give us some insight into how well we're able to recover some of that lost business, but other than that things have started off well.

Ryan Hymel: So, longer is better, further out is better, so it has a nominal impact on our overall results, just from it being a week shorter. But things are off to a really good start. Things are pacing well in the first half of the year. I think one of the main points that we want to get across when we think about our margin or our kind of pacing and then just the pace of our growth in 2024, it's pretty evenly balanced. Obviously, the first quarter has some comparability issues because the jewels were a drag in Q1 of last year, and the Jewel Palm Beach wasn't open.

Yeah.

So could you just speak to what you're seeing on the on the supply side I guess, specifically in engine Baker.

And as you've heard from other folks that there's quite a bit of construction.

Underway and maybe how you're thinking about that.

Yeah. There is that of all the markets are again planned or at least what's been kind of announced.

Probably the highest number of potential room counts youre talking kind of mid teens potential rooms being added again, assuming it all get done that market in general has not had an immense amount of supply and I'm talking specifically in Montego Bay Airport has not had a lot of supply over the years.

Ryan Hymel: But generally, the kind of cadence of our REVPAR growth and our top line stats for ADR and for REVPAR are pretty even throughout the year. I do think there's been kind of a return to kind of normal seasonality in our business, but other than that, I think things are off to a great start. The biggest thing that we needed to monitor, as Bruce mentioned, was the impact of the cancellations from the travel warning from Jamaica. I know we talked to many folks last night.

Yes.

Hello.

Yes.

Okay. So youre still there smedes just to make sure we didn't lose anybody.

Alright.

For example back market.

From 2019% to 23% CAGR with less than 2%.

So there is a little bit more coming in there, but generally what's planned is still low to mid single digit room nights in all of our destinations and again that assumes that all gets done.

Ryan Hymel: It has already stabilized, at least it's turned positive again quickly, but we're not back yet so far. The next couple months, particularly in March, April, and May, will really give us some insight into how well we're able to recover some of that lost business. But other than that, things have started off well. Thanks.

Thank you.

Thanks Hamid.

The next question comes from Shaun Kelly with Bank of America. Please go ahead.

Hi, good morning, everyone.

Ryan Bruce maybe just to follow up on Steve's question. There I mean, I guess one question. We ask is just on <unk>.

Ryan Hymel: And could you just speak to what you're seeing on the supply side, I guess, specifically in Jamaica, where we've heard from other folks that there's quite a bit of construction underway and maybe how you're thinking about that. Yeah, there is that of all the markets have again planned, or at least what's been kind of announced, it's probably the highest number of potential room counts. You're talking kind of mid-teens potential rooms being added again, assuming it all gets done. That market, in general, has not had an immense amount of supply, and I'm talking specifically about Montego Bay Airport, which has not had a lot of supply over the years. Hello, yes. Okay, so you're still here, Smedes? Okay, we just want to make sure we didn't lose everybody. Sorry

Can you see the same level of improvement in the peaks that you would that you would see in the shoulders and.

It's a little far out, but I think the surprise has been some of the strength you've seen even as you kind of approach peak season. It seems like things actually accelerated a little bit. So just kind of how do you think about peaks and valleys a little bit because again I think maybe in the shoulder season, we're not really sure if that's an easier comp or if that is a.

Yeah, a place where just behavior is normalizing and kind of wondering how you're seeing it.

Sure.

Great question, Sean So I mean, I would say.

If you look back.

Couple of quarters ago, right everybody's concern was that the leisure bubble has burst and particularly on our business that you know the benefits that we got in 'twenty. One 'twenty two we're diminishing right in <unk>.

Ryan Hymel: For example, that market, you know, from 2019 to 2023, its CAGR is less than 2%. So, there is a little bit more coming in there, but generally, what's planned is still low- to mid-single-digit room nights in all of our destinations. And again, that assumes it all gets... Thank you. The next question comes from Shaun Kelley with Bank of America. Please go ahead. Hi, good morning,

People are going to Europe, or they're not willing to pay the amounts or where.

It kind of it was transient demand well I think what's more transitory is what I meant but what I think we've really seen is that the demand is still there it's really strong.

Shaun Clisby Kelley: You know, Ryan, Bruce, maybe just to follow up on Smedes' question there, I mean, I guess one question we've asked is just, you know, can you see the same level of improvement in, you know, the peak that you would see in the shoulders. And, you know, I know it's a little far out, but, you know, I think the surprise has been some of the strength you've seen, you know, even So just kind of how do you think about peaks and valleys a little bit? Because, again, I think maybe in the shoulder seasons, we're not really sure if that's an easier comp or if that is a, you know, place where just behavior is normalizing and kind of wondering how you're seeing it. Sure. It's a great question, Shaun.

What we did in December what we're seeing so far in the first quarter is incredibly positive for our business. So so I think the you know the.

Fear that people had that you know it was kind of going away or going to greatly drop.

Not materialized and I don't believe it's going to materialize. So so the second part of your question is okay. What does that mean for the shoulder season is it going to be an easier comp or is it going to be you know kind of a continued.

Return to normalization I think it's more just a return to normalization sure maybe will benefit from an easier comp, but that's kind of related to that but I think you know historically our business drives a huge amount of our profit in the first four months of the year and then into.

Bruce D. Wardinski: So, I mean, I would say, you know, if you look back, a couple quarters ago, right, everybody's concern was that the leisure bubble had burst and, particularly, in our business, that, you know, the benefits that we got in 21 and 22 were diminishing, right, and people were, you know, going to Europe, or they were not willing to pay the amounts, or, you know, it was a transient Well, I think what's more transitory is what I meant. But what I think we've really seen is that the demand is still there. It's really strong and, you know, what we did in December and what we're seeing so far in the first quarter is incredibly positive for our business. So, I think, you know, the fear that people had that, you know, it was kind of, you know, going away or going to greatly drop, you know, has not materialized, and I don't believe it's going to materialize.

December and I think youre kind of going back to that kind of pattern.

The good news for US is it is accelerating so what we what we saw in the fourth quarter, particularly in December and what were seeing in the first quarter is accelerating and so I think that bodes well for our business, it's kind of nausea, smedes that we've got a lot of moving pieces here and it's hard to kind of discern it but I think if you just kind of forget about like so many of them.

Moving pieces and if you can just focus on the underlying fundamentals I think it's a positive story.

Bruce D. Wardinski: So, the second part of your question is, okay, what does that mean for the shoulder season? Is it going to be an easier comp, or is it going to be, you know, kind of a continued, you know, return to normalization? I think it's more just a return to normalization. Sure, maybe we'll benefit from an easier comp, you know, that's kind of related to that. But I think, you know, historically, our business derives a huge amount of its profit, you know, in the first four months of the year and then, you know, in December. And I think you're kind of going back to that kind of pattern. The good news for us is that, you know, it is accelerating.

Very helpful. Thanks, Bruce and then my follow up would just be.

A little bit more kind of thought around margins I think we're all increasingly comfortable with the cost and inflation growth at domestic hotels and Bruce I know you have a lot of experience and a lot of colleagues and contacts in that world. So we I think we all know what they're up against which is probably the lower bound of mid single digit.

Let's call. It four odd percent inflationary pressure is probably what many companies. We talk to are looking for the question for Playa as more.

Bruce D. Wardinski: So, what we saw in the fourth quarter, particularly in December, and what we're seeing in the first quarter is accelerating. And so, I think that bodes well for our business. It's kind of messy, as Smeet said, we've got a lot of moving pieces here, and it's hard to kind of discern them. But I think if you just kind of forget about so many of the moving pieces and if you can just focus on the underlying fundamentals, I think it's a positive story. Very helpful.

Let's leave FX out of it because we know that separate but like axa, excluding FX, what's different for Playa is is the wage pressure you face a little higher just given what's going on in the local dynamics. There you know is that offset by procurement just help us think about the layers that are a little different given your portfolio.

Your exposures.

Yes, you hit that on the head so excluding the effects of FX is kind of we look out to 'twenty four we expect call it kind of four to four 5%.

Bruce D. Wardinski: Thanks, Bruce. And then my follow-up would just be a little bit more thought around margins. I think we're all increasingly comfortable with the cost and inflation growth in domestic hotels. And, Bruce, I know you have a lot of experience and a lot of colleagues and contacts in that world. So I think we all know what they're up against, which is probably the lower bound of mid-single digit. Let's call it 4-odd percent inflationary pressure is probably what many companies we talk to are looking for. The question for Playa is more what's – let's leave FX out of it because we know that's separate. But like excluding FX, what's different for Playa?

Opex growth the biggest contributing factor to that at least in 'twenty four is labor costs, mostly in Jamaica they actually.

Did a large minimum wage increase in the second half of 2023 it was 44%.

So youre lapping youre annualizing that figure in 2024.

<unk> also changed around some of the smaller smaller set minimum wage or benefits PTO and things like that in Mexico, but the Jamaica kind of catch up is the largest impact of that kind of four to four 5%. That's 80 to 100 basis points of that is Jamaica is impact. So the nice part is once you get through this year you start to lap some of the impacts of that because.

Bruce D. Wardinski: Is the wage pressure you face a little higher just given what's going on in the local dynamics there? Is that offset by procurement? Just help us think about the layers that are a little different given your portfolio and your exposure. Yeah, you hit the nail on the head.

When you look back at kind of trends and you go back the last 10 years of when they raise usually after a big kind of catch up raise like that you are probably not going to see another big jump immediately the next year and the same thing we've seen in Mexico and the Dominican It's usually every couple of years they move they move minimum wage or something like that so Jamaica is the biggest focus.

Bruce D. Wardinski: So, excluding the effects of FX, as we look out to 2024, we expect to call it 4% to 4.5% off-X growth. The biggest contributing factor to that, at least in 2024, is labor costs, mostly in Jamaica. They actually did a large minimum wage increase in the second half of 2023. It was 44%.

It will be it's still too early to tell but it should be far better from everything we've seen from initial meetings with insurers will be renewing our insurance in April, but all signs point to a much better renewal certainly won't go backwards a bit it wont be up 40% to 50% like it was last year and then to your point some of the things that.

Bruce D. Wardinski: And so, you're lapping, you know, you're annualizing that figure in 2024. And they've also changed around some of the smaller, to a smaller extent minimum wage, benefits, PTO, and things like that in Mexico. But the Jamaican kind of catch-up is the largest impact, you know, of that kind of 4% to 4.5%. That's 80 to 100 basis points of that is Jamaica's impact. So, the nice part is once you get through this year, you start to see some of the impacts of that because, you know, when you look back at kind of trends and you go back the last 10 years of when they've raised, usually, after a big kind of catch-up raise like that, you're probably not going to see another big jump, you know, immediately the next year. And the same thing we've seen in Mexico and the Dominican Republic; it's usually every couple of years they raise the minimum wage or something like that.

<unk> done on procurement and staffing have really helped us lower that margin and leverage point to your point I mean, if you don't Miami I mentioned before those reductions on the procurement side.

It's mid single digit high single digit savings per category and that drove savings in 2023 for basically the back half of the year of about 1 million and a half bucks and so if you annualize that it's roughly $2 5 million and so essentially that what that relates to that have resulted in roughly 20% to 25 basis points of annualized cost savings and we're only 30% of the way through.

So now if you kind of extend what we're planning to attack in 2024, where we're targeting another $20 to 25% of the cost basis. If all goes well cumulatively by the end of 'twenty four we will have reduced our cost base by roughly 30% to 35 basis points permanently with more to attack from there. So to your point you can't do a whole lot about labor.

Bruce D. Wardinski: So, Jamaica is the biggest focus. Insurance, it will be, it's still too early to tell, but it should be far better from everything we've seen from initial meetings with insurers. We'll be renewing our insurance in April, but all signs point to a much better renewal. It certainly won't go backwards, but it won't be up, you know, 40 to 50% like it was last year.

Other than staffing, which we're not going to yank out.

A bunch of staff. So our focus is on what we can control and thats procurement and some of the staffing that we were doing the shoulder periods. So I know that's a long answer, but that's kind of what we're facing at least in our markets versus what that is and the guys in the U S are great.

Very clear thanks, Brian Thanks, Bruce.

Thanks, Sean.

The next question comes from Chad Beynon with Macquarie. Please go ahead.

Bruce D. Wardinski: And then to your point, some of the things that we've done on procurement and staffing have really helped us lower that margin and leverage points to your point. I mean, if you don't mind, I mentioned before those reductions on the procurement side, you know, they're mid-single-digit, high-single-digit savings per category, and that drove savings in 2023 for basically the back half of the year of about a million and a half bucks. And so if you annualize that, it's roughly two and a half million.

Good morning, Nice results. Thanks for taking my question.

Bruce with respect to I guess non same store growth you talked about some of the ROI projects that you're.

That you're working on in Mexico to kind of elevate.

The rankings and ratings within those luxury categories, but beyond this how are you thinking about kind of where the opportunities could be whether it's in the mid range like what you had announced with Wyndham, maybe additional luxury ROI projects and in the current portfolio or maybe expanding.

Bruce D. Wardinski: And so essentially, what that relates to, that results in roughly 20 to 25 basis points of annualized cost savings, and we're only 30% of the way through. So now, if you kind of extend what we're planning to attack in 2024, where we're targeting another 20 to 25% of the cost basis, if it all goes well, cumulatively, by the end of 2024, we will have reduced our cost base by roughly 30 to 35 basis points permanently, with more to attack from there. So to your point, we can't do a whole lot about labor, you know, other than staffing, which we're not going to yank out, you know, a bunch of staff.

Beyond that how are you just thinking about kind of the next five years, where you want additional focus to be.

Sure perfect perfect chat and adding the next five years a perfect because literally we are you know have a major focus internally on the next five years of Capex and what we can do with our existing portfolio.

We have great opportunities in the existing portfolio and they're kind of in three different kind of buckets. One is what you talked about okay, where can we just do ROI projects that improve our ability to get higher rates, okay and that can be rooms renovations that can be adding amenities. There can be a number of things that are in kind.

Bruce D. Wardinski: So our focus is on what we can control, and that's procurement and some of the staffing that we do in the shorter periods. So I know that's a long answer, but that's kind of what we're facing, at least in our markets, versus what the guys in the U.S. are facing. Very clear. Thanks, Ryan. Thanks, Bruce. Thanks, Shaun. The next question comes from Chad Bannon with Macquarie. Please go ahead.

In that bucket the second bucket is.

<unk> addition, we have you know a couple of different locations, where we have the ability to add rooms, and there was no higher kind of incremental ROI, then adding rooms, because you don't have to add a significant amount of infrastructure you may add some amenities, but it's not like the basics that you have to add everything. So there are two in particular that.

Chad Bannon: Morning. Thanks for taking my question. Bruce, with respect to, I guess, non-same-store growth, you talked about some of the ROI projects that you're working on in Mexico to kind of elevate the rankings and ratings within those luxury categories. But beyond this, how are you thinking about kind of where the opportunities could be, whether it's in the mid-range, like what you had announced with Wyndham, maybe additional luxury ROI projects in the current portfolio, or maybe expanding beyond this? How are you just thinking about the kind of next five years where you want additional focus to be? Thanks.

We're focused on where we can add probably you know net or.

<unk> combines you know probably 250 to 304 rooms.

That's the kind of projects that were very very focused on and then the final one is something that you know it's kind of less sexy.

But it's very beneficial and that's really kind of things that save us cost in the biggest area. There I mean, Ryan has talked a lot about the procure minute will continue theres not a lot of capex associated with that that's more processes and staffing, but there is another area and that is in energy in.

Bruce D. Wardinski: Sure. Perfect. Perfect, Chad.

Bruce D. Wardinski: And you adding the next five years is perfect because, literally, we have a major focus internally on the next five years of CapEx and what we can do with our existing portfolio. We have great opportunities in the existing portfolio, and they're kind of in three different kinds of buckets. One is what you talked about, okay, where can we just do ROI projects that improve our ability to get higher rates? And that can be room renovations, that can be adding amenities, there can be a number of things that are kind of in that bucket. The second bucket is room addition.

The opportunities there are pretty significant because historically you know in the Caribbean and these kind of markets, you're really relatively inefficient. So I keep voted in diesel fuel to islands at very high costs, and when Youre running kind of inefficient diesel fuel generators to generate electricity and whether we're doing it at the resort where local groups are doing it at.

The utilities, it's the same impact and it's very inefficient and it's also relatively at.

Bruce D. Wardinski: We have a couple different locations where we have the ability to add rooms, and there is no higher kind of incremental ROI than adding rooms because you don't have to add a significant amount of infrastructure. You may add some amenities, but it's not like the basics where you have to add everything. So there are two in particular that we're focused on where we can add probably net or combined probably 250, 300 more rooms. So that's the kind of projects that we're very, very focused on. And then the final one is something that is kind of less sexy, but it's very beneficial, and that's really the kind of thing that saves us costs. In the biggest area there, I mean, Ryan's talked a lot about procurement and will continue to talk about it.

Adverse to the climate. So the benefit is we can do some projects we've done a couple.

To evaluate it but I think there's great opportunities to do that from.

Many turbines liquid dash or liquefied natural gas opportunities solar opportunities a number of things that can really diminished.

Our costs lower our cost on the energy side. So you know there really high returning projects and we'll look at whether we spend the money or whether the outside firms spend some money, it's somewhat irrelevant whatever deal makes the most sense, but that's another area, we're going to be focused on so so as we look at the next five years, I think youre going to see us come back with more.

Bruce D. Wardinski: There's not a lot of CapEx associated with that. That's more processes and staffing. But there is another area, and that is in energy. And the opportunities there are pretty significant because, historically, in the Caribbean and these kinds of markets, you're really relatively inefficient. It's like you boat diesel fuel to islands at very high costs, and then you're running kind of inefficient diesel fuel generators to generate electricity.

<unk> plan, so hopefully by.

Either the next earnings call or the one after that you will see us laying out things that we're going to be focused on.

In order to drive growth because it's critical as you know during the pandemic a lot of projects got put on the back shelf and the world are so uncertain and now it's pretty clear that our business is very very robust the brands continue to be incredibly interested in trying to penetrate and do more deals.

Bruce D. Wardinski: Whether we're doing it at the resort or local groups are doing it at their utilities, it's the same impact, and it's very inefficient. And it's also relatively adverse to the climate. So the benefit is we can do some projects. We've done a couple to evaluate them, but I think there are great opportunities to do that from mini turbines, liquefied natural gas opportunities, and solar opportunities. A number of things that can really diminish our costs and lower our costs on the energy side. So there are really high-returning projects. And we'll look at whether we spend the money or whether the outside firm spends the money. It's, in some ways, irrelevant.

Existing competition is improving their properties. So we need to improve ours, that's where our focus is going to be.

Great. Thanks.

And then more near term just kind of on the travel warnings situation in Jamaica, I guess looking at.

Previous periods when items like this have happened.

What generally happens is there price discounting for kind of the low to mid on geis and in luxury players like yourself hold pricing and sacrifice occupancy and then to your point, maybe the booking patterns recover or as they're discounted pricing for a longer period than.

Bruce D. Wardinski: Whatever deal makes the most sense, but that's another area we're going to be focused on. So as we look at the next five years, I think you're going to see us come back with more definitive plans. So hopefully, by either the next earnings call or the one after that, you will see us laying out things that we're going to be focusing on. All of those companies are doing a lot of work to improve their business, and so we're looking at ways to do that in order to drive growth because, you know, it's critical. During the pandemic, a lot of projects got put on the back shelf, and the world was so uncertain.

Then maybe you would hope for from from some of the others yes.

Yeah, I think the only real example of something where he had to discount pricing was way back in 2019. These usually have a short shelf life and again, we've got very disciplined revenue management team and Theyre not going to just quickly start adjusting rates to just get somebody in the door.

Bruce D. Wardinski: And now, you know, it's pretty clear that our business is very, very robust. The brands continue to be incredibly interested in trying to penetrate and do more deals. And then, more near term, on the travel warning situation in Jamaica, I guess looking at previous periods when items like this have happened, what generally happens?

We had our bookings turn negative for about a week, they're turned positive although theyre not picking up as much as they would normally right, but it is slowly building and so essentially what's what was taken out with potential occupancy on the books, but our rate on the books for those periods remains essentially flat to where we were at prior to that so this we expect to be shorter.

Bruce D. Wardinski: Is there price discounting for kind of the low to mid-end guys, and luxury players like yourself hold prices and sacrifice occupancy? And then, to your point, maybe the booking patterns recover, or is there discounted pricing for a longer period than maybe you would hope for from some of the others? Yeah, I think the only real example of something where we had discounted pricing was way back in 2019.

And so we'll have a lot more information on how that stabilized by the time, we get to our next earnings call and there's two kind of mitigating things that our commercial team has done which I think have been really positive. One is for the people who canceled in Jamaica, we reached out to them and try to sell them to Mexico, and the Dominican Republic, and we've had some success there and obviously there is no discounting of rates, so that kind of business and then the.

Bruce D. Wardinski: These usually have a short shelf life, and again, we've got a very disciplined revenue management team, and they're not going to just quickly start adjusting rates to just get somebody in the door. We had our bookings turn negative for about a week. They've turned positive, although they're not picking up as much as they would normally, but it's slowly building. And so, essentially, what was taken out was potential occupancy on the books, but our rate on the books for those periods remains essentially flat to where we were at prior to that. So this is, we expect to be shorter term, and so we'll have a lot more information on how that stabilizes by the time we get to our next earnings call. And there are two kinds of mitigating things that our commercial team has done, which I think have been really positive. One is for the people who canceled in Jamaica. We reached out to them and tried to sell them to Mexico and the Dominican Republic, and we've had some success there.

Second thing is focused on some some local group business to making group business, which.

Again, you don't have to discount because it's kind of a different at a different market, but we're not going to.

Overreact to this I mean, it's pretty ridiculous from the state Department viewpoint, absolutely nothing changed and they didn't change it was level III still a level III white why they felt the need to put that out I have no idea.

But like Brian said, the shelf life of these things these things tends to be relatively short lived yeah that that market was doing really well prior to that just wherever we're pacing and how we were building January and so we just view this as an agent to the potential upside from that market and so we'll have more information when were back in may.

Great. Thank you both appreciate it.

Thanks, Chad.

Our next question comes from Chris Rocco with Deutsche Bank. Please go ahead.

Hey, good morning, guys. Thanks for all the details so far.

So I got a slightly different direction.

You guys reviewed the mix of business I think you said you picked up some more European and locally Mexican source can you maybe remind us I know there's been a lot of focus on.

Bruce D. Wardinski: And obviously, there's no discounting of rates for that kind of business. And then the second thing is focused on some local group business, Jamaican group business, which again, you don't have to discount because it's kind of a different market. But we're not going to overreact to this. I mean, it's pretty ridiculous from the State Department viewpoint.

Non package Revpar and some of the kind of premium and upgrade options can you kind of remind us.

<unk>.

Geographies would be the best contributors to that if you get more recovery.

Bruce D. Wardinski: Absolutely nothing changed, and they didn't change; it was a level three, still a level three. Why they felt the need to put that out, I have no idea. Like Ryan said, the shelf life of these things tends to be relatively short-lived. That market was doing really well prior to that, just where we were pacing and how we were building January. And so we just view this as an aid to the potential upside from that market. We'll have more information when we're back in May. Thank you both.

<unk> is generally the highest paying customers, which generally at a high level where are the other Americans.

I remember a lot of people when they first get.

We introduced the all inclusive and I assume that somebody who comes in our low season, who's paying a cheaper package rate is more likely to spend on additional incidental items. It's the opposite that people have the money to pay the highest rates pay the highest for non package.

Okay.

Sure Fair enough and then.

Bruce D. Wardinski: I appreciate it. Thanks, guys. The next question comes from Chris Woronka with Deutsche Bank. Please go ahead.

Bruce you guys.

I look at the the Playa collection of management fees I think you took in about $11 million.

Chris J. Woronka: Hey, good morning, guys. Thanks for all the details so far. You guys reviewed the mix of business. I think you said you picked up some more European and locally Mexican products.

The full year of 'twenty, three which I think was about a double over 'twenty two and so the question is kind of.

How much focus do you have I know you do a lot of things apply a collection I don't know what the management contract opportunities are but also are there any other forms of I guess on ownership and are out there are there any kind of joint venture possibilities to get you a little bit more.

Bruce D. Wardinski: Can you maybe remind us, I know there's been a lot of focus on non-packaged Revpart and some of the kind of premium and upgrade options. Can you kind of remind us which geographies would be the best contributors to that if we get more recovery? It's generally the highest-paying customers, which are generally, at a high level, Americans. I remember a lot of people when they first get introduced to all-inclusive, and they assume that somebody who comes in our low season who's paying a cheaper package rate is more likely to spend on additional incidental items. It's the opposite.

You know it really just a little bit more I guess, you know top line, but also EBITDA from from external growth.

Sure.

Chris It's a great question like I said when I was.

Responded to Chad on the five year plan, we're definitely focused on driving more growth right and so a lot of it is just going to come from the own portfolio because to be realistic and thats going to move the needle more than anything else. Okay.

Bruce D. Wardinski: The people who have the money pay the highest rates, pay the highest for non-packaged content. Okay, sure, fair enough. And then, you know, Bruce, you guys, when I look at the Playa collection and management fees, I think you put in about $11 million. How much focus do you have?

On the management contract side.

It doesn't move the needle that much.

It will be a factor, but it won't be a significant factor.

Bruce D. Wardinski: I know you're doing a lot of things with Playa Collection. I don't know what the management contract opportunities are, but also, are there any other forms of ownership that are out there? Are there any kind of joint venture possibilities to get you a little bit more top line, but also EBITDA from external growth? Sure. No, Chris, it's a great question.

Plenty of collection is that's to be determined I.

I think that can be a nice nice kind of bump in kind of unexpected surprise, we should be fully rolled out to every one of our resorts within literally within the next few weeks, okay and so it is going to be nice that now we will have the sale centers opened across our entire portfolio and we'll see.

Bruce D. Wardinski: Like I said when I was responding to Chad on the five-year plan, we're definitely focused on driving more growth. A lot of it is just going to come from the portfolio because, to be realistic, that's going to move the needle more than anything else. On the management contract side, it doesn't move the needle that much, and it will be a factor, but it won't be a significant factor. Where the Playa Collection is, that's to be determined.

How does that play question sales ramp up okay. So that so that's I think a positive with regards to you know kind of what you said at joint ventures or other things absolutely. We are looking at those kinds of opportunities.

Bruce D. Wardinski: I think that could be a nice bump and an unexpected surprise. We should be fully rolled out to every one of our resorts literally within the next few weeks. It's going to be nice that now we will have the sales center open across our entire portfolio, and we'll see how the Playa Collection sales ramp up. That's, I think, a positive.

It's not always the simplest or quick as soon as they get done because you know of more interesting characters in our space probably than in traditional more institutional.

<unk> markets, but but there are some good opportunities and I am hopeful that in the near future, we'll be able to make some announcements and again it is not going to be like those will be massive kind of EBITDA growth opportunities, but I think there'll be like the Playa collection nice incremental growth to our core portfolio, but we're really focused on okay.

Bruce D. Wardinski: With regard to what you said, joint ventures or other things, absolutely. We are looking at those kinds of opportunities. It's not always the simplest or quickest things to get done because there are more interesting characters in our space than in traditional, more institutional markets, but there are some good opportunities, and I'm hopeful that in the near future, we'll be able to make some announcements. Again, it's not going to be like those will be massive EBITDA growth opportunities, but I think there'll be, like the Playa Collection, nice incremental growth to We're really focused on, okay, here's where we are today. The business is incredibly solid, as we've said.

Here's where we are today the business is incredibly solid.

As we've said.

Now how do we just kind of continue to improve improve our our revenues improve our EBITDA growth improve our margins I think thats, where the focus is going to be so we're.

Bruce D. Wardinski: Now, how do we just kind of continue to improve our revenues, improve our EBITDA growth, and improve our margins? I think that's where the focus is. So, you know, we're, you know, optimistic.

Optimistic and at the same time you know.

We will continue to repurchase our stock if kind of.

The stock price stays in the range that it's been in the last you know 18 24 months I think youll see us continue to do that.

Tyler Batory: And at the same time, you know, we will continue to repurchase our stock. If, you know, the stock price stays in the range that it's been in the last, you know, 18, 24 months, I think you'll see us continue to do that. And, you know, it's a pretty significant value enhancer as well. So those are the areas that we're focused on. Okay, yeah, thanks, very helpful. Thanks Chris. And the final question today comes from Tyler Batory with Oppenheimer. Please go ahead. Thank you. Good morning.

It's a pretty significant value enhancer as well so those are the areas that we're focused on.

Okay, Yeah, thanks very helpful.

Thanks, Greg Thanks, Chris.

And the final question today comes from Tyler <unk> with Oppenheimer. Please go ahead.

Thank you good morning.

Bruce D. Wardinski: Big picture question first. I think for a lot of companies, you know, we're trying to figure out what's normal in this post-COVID world after several years where things were not normal. So, this commentary on comp-red bar growth this year, low single digits to mid-single digits, is that normal? Is that what you would expect in terms of growth longer term? Could there be upside to that range?

Big Picture question first.

I think for a lot of companies.

Trying to figure out whats normal in this post COVID-19 world. After several years, where things were not normal. So this commentary on comp revpar growth. This year low single digit to mid single digits.

That normal is that what you would expect in terms of growth longer term could there be upside to that range and then the balance of ADR and occupancy. It sounds like this is mostly rate driven limited occupancy what are your latest thoughts on balancing occupancy and ADR going forward.

Bruce D. Wardinski: And then the balance of ADR and occupancy; it sounds like this is mostly rate-driven, limited occupancy. What are your latest thoughts on balancing occupancy and ADR going forward? Our thoughts on that and the yield management strategy haven't changed essentially to high levels. We're still focusing on feeding some occupancy in favor of rate, protecting the guest experience, protecting our guest satisfaction scores, which ultimately allows you to at a minimum maintain rates if not continue to drive them. So yeah, low to mid single-digit REF bar growth feels normal, and of course, like you said, it's mostly driven by ADR. There will be increases in our occupancy this year, but it's mostly because of the ramping from Palm Beach or the removal of Plimsocana from last year.

Our thoughts on that and the yield management strategy Hasnt changed essentially at a high level, we're still focusing on ceding some occupancy in favor of rates protecting the guest experience protecting our guest satisfaction scores, which ultimately allows you to at a minimum maintain rate if not continue to drive it and so yeah low low to mid single digit revpar growth.

As normal and of course like you said, it's mostly driven by ADR.

There will be increases in our occupancy this year, but it's mostly because of the ramping from palm beach or the removal of the kind of from last year, but the legacy portfolio should be modestly because I think we're pretty happy with where things sit as far as occupancy in our ability to yield if something dramatically changed which as you heard Bruce and me say a few times.

Bruce D. Wardinski: But the legacy portfolio should be modest because I think we're pretty happy with where things sit as far as occupancy and our ability to yield go. If something dramatically changed, which you heard Bruce and me say a few times, if the consumer propensity changed, or the world changed, or the summer version of the mean, which we're not seeing and don't expect, then maybe we would reconsider our occupancy versus ADR, but today we don't see a reason to do that.

The consumer's propensity to change the world change over some reversion to mean, which we're not seeing and don't expect that.

And then maybe we would reconsider our.

Occupancy versus ADR, but today, we don't see a reason to do so.

Okay, and then how about just this longer term perspective comp revpar low single digits to mid single digits.

Bruce D. Wardinski: Okay. And how about just this longer-term perspective, compra, parlo, single digits to mid-single digits? I mean, do you think that's – is that what you consider normal?

Is that is that what you consider normal.

Yeah, I think that's normal and then going back to the question of where we're going to be investing okay. So like one of the projects. We're going to we are we have land at one of our resorts, where we can add about 110 rooms, and so it's really going to be a hotel within a hotel right and those will be premium rooms, and so those are going to get higher rates and that's a lot of the focus that we have.

Bruce D. Wardinski: Yeah, I think that's normal. And then going back to the question of where we're going to be investing, okay, so one of the projects we're going to – we have land at one of our resorts where we can add about 110 rooms. So it's really going to be a hotel within a hotel, right? And those will be premium rooms. And so those are going to get higher rates, and that's a lot of the focus that we've had. Again, we put so many projects on the back burner in 2020, 2021, even 2022 because the world was so uncertain. So, you know, we're looking to rapidly execute some of these things.

Again, we put we put so many projects on the back burner.

In 2000, 22021, and even 2022, but you know.

The world is so uncertain, but now we're looking to rapidly execute some of these things and just the ability to to create more premium rate category rooms, Okay add other non package revenue opportunities that we're looking at we've had some success recently.

Bruce D. Wardinski: And, you know, just the ability to create more premium rate category rooms, okay, add other non-packaged revenue opportunities, you know, that we're looking at. We've had some success recently, you know, and we're hoping to do more of that, you know, things that will, you know, kind of drive that growth. So, you know, if you take that normal, which I do think, it's kind of a low single digit, you know, kind of mid-single digit increases are normal.

And we're hoping to do more of that you know things that will kind of drive that growth. So you know if.

If you take that normal, which I do think it's kind of a low single digit kind of mid single digit increases are normal and then you add 100, 200 300 basis points with some of these projects not maybe on the whole portfolio, but individual resource in all I think youll start to see.

Bruce D. Wardinski: And then you add, you know, 100, 200, 300 basis points with some of these projects, not maybe on the whole portfolio but in individual resorts and all, I think you'll start to see, you know, very healthy and attractive growth opportunities. And, more importantly than anything else, EBITDA growth, right? It's going to flow through. Okay, and then a multi-part question on the FX topic. Sounds like you have some hedges in place. I'm assuming that's not something that you had in the past.

Very healthy and attractive growth opportunities and more importantly than anything else EBITDA growth right. There is going to flow through.

Okay.

And then multi part question on the <unk>.

FX topic. It sounds like you have some hedges in place I'm, assuming that's not something that you had in the past. So just help us think about that help us think about the sensitivity here I mean, if the peso was 16 or 18.

That might mean for the for the guide and then another question that I get from a lot of new investors to the story it might be helpful to address in this.

Bruce D. Wardinski: So just help us think about that. Help us think about the sensitivity here. I mean, if the peso is 16 or 18, what that might mean for the guide. And then another question that I get from a lot of new investors to the story might be helpful to address in this public forum: Why is the appreciation of the peso a drag? You can just talk through all the mechanics there.

Public Forum, just why is the appreciation of the peso a drag if you could just talk through all the mechanics, there would be helpful.

Yes.

Translation of that because we report our functional currencies, USDA and roughly 60% to 65% of our Mexican expenses locally are denominated in peso the biggest one being wages right rapidly paying people in peso, we're spending a lot from vendors and food and beverage et cetera.

Ryan Hymel: Yeah, it's a translation issue because we report our functional currency is USD and roughly 60-65% of our Mexican expenses are denominated in pesos, the biggest one being wages, right? We're obviously paying people in pesos. We're spending a lot on vendors and food and beverages locally, and so it gets converted, so you divide it by a lower number when it gets converted to USD, it's higher. As far as the hedge that we put in place, so just in January, we hedged about 50% of our Mexican peso exposure, and so essentially, we sold volatility, and that's how you get to the ranges, right? We haven't done anything, and our exposure was not hedged, and the peso stayed at $17 for the year.

Locally and so it gets converted.

Divided by the day.

A lower number.

When it gets converted to the USDA is higher so on.

As far as the hedge that we put in place. So just in January we hedged about 50% of our Mexican peso exposure and so essentially we sold volatility so and that kind of and Thats, how you get to the range. It right. So if we hadn't.

Done anything and our exposure was not hedged and the peso stayed at <unk> 17 for the year, it's approximately $9 million hit year over year.

Ryan Hymel: It's approximately a $9 million hit year-over-year. Because we sold some volatility and assumed that our expense base stays exactly as we had forecasted, there's some upside to that, meaning that the lower end of that range is called at $7 million. So, there's kind of $2 to $2.5 million that we were paid to put that FX hedge in place because of where the curve sat at the time. The upper bound range of that is if our expenses or expense base is higher than we thought for some reason than our forecast, so that would bring you to the other end of that. So, we've kind of used the midpoint of $9 million if we had no hedge at a spot rate of $17, but if it stays at $17 and our expenses are exactly as we think, that moves to the lower end of that range, closer to $7 million. And again, almost the entirety of that is captured in the first half of the year. The impact of that is almost greater than the first half of the year.

Because we sold some volatility and assuming that our expense base stays exactly as we had forecasted there is some upside to that meaning that the lower end of that range is call. It $7 million. So theres kind of two to $2 $5 million that we were paid to put that FX hedge in place because of where the curves that at the time.

The upper bound range of that is if our expenses our expense base is higher than we thought for some reason that our forecast so that would bring it to the other end of that so we probably use the midpoint of $9 million and we had no hedge at a spot rate of 17, but if it's eight to 17 and our expenses are exactly as we think that moves to the lower end of that range to closer to $7 million and again almost entirety.

That is captured in the first half of the year the impact of that is on fire then first half of the year.

Okay, Alright, great very helpful. Thank you for the detail.

Thanks.

Hello.

This concludes our question and answer session I would like to turn the conference back over to Bruce <unk> for any closing remarks.

Tyler Batory: All right, great. Very helpful. Thank you for the detail.

Bruce D. Wardinski: Thanks, guys. Bye. This concludes our question and answer session. I would like to turn the conference back over to Bruce Wardinski for any closing remarks. Great, thanks everyone for participating. I think we covered a lot of material. Hopefully, it was useful, and we appreciate your interest in Playa. Thank you very much. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect. Please see the complete disclaimer at https://sites.google.com or at www.sites.google.com & www.google.com, BF-WATCH TV 2021 Title: Microsoft Office Word Document MSWordDoc Word. Document.8, BF-WATCH TV 2021 BF-WATCH TV 2021

Great. Thanks, everyone for participating I think we covered a lot of material hopefully is useful and.

We appreciate your interest in Playa, Thank you very much.

The conference has now concluded. Thank you for attending today's presentation you may now disconnect.

Okay.

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