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Playa Hotels & Resorts N.V. - Quarter Report: 2023 March (Form 10-Q)




        
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________________________________________
FORM 10-Q
 _______________________________________________
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For quarterly period ended March 31, 2023

OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

COMMISSION FILE NO. 1-38012
 Playa Hotels & Resorts N.V.
(Exact name of registrant as specified in its charter)
TheNetherlands 98-1346104
       (State or other jurisdiction of incorporation or organization) (IRS Employer Identification Number)
Nieuwezijds Voorburgwal 104 
1012 SGAmsterdam,
theNetherlandsNot Applicable
 (Address of Principal Executive Offices) (Zip Code)
+31 6 82 55 84 30
(Registrant’s Telephone Number, Including Area Code)
 
Securities registered pursuant to Section 12(b) of the Act:
Title of each ClassTrading Symbol(s)Name of Each Exchange on Which Registered
Ordinary Shares, €0.10 par valuePLYAThe Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past ninety (90) days.    Yes    No  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes        No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer
Non-accelerated filer  Smaller reporting company         
Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.   

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).    Yes      No    

As of April 28, 2023, there were 152,255,818 shares of the registrant’s ordinary shares, €0.10 par value, outstanding.


Table of Contents

Playa Hotels & Resorts N.V.
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Table of Contents
PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Playa Hotels & Resorts N.V.
Condensed Consolidated Balance Sheets
($ in thousands, except share data)
(unaudited)
As of March 31,As of December 31,
20232022
ASSETS
Cash and cash equivalents$281,465 $283,945 
Trade and other receivables, net74,268 62,946 
Insurance recoverable20,586 34,191 
Accounts receivable from related parties11,408 8,806 
Inventories20,607 20,046 
Prepayments and other assets40,958 44,177 
Property and equipment, net1,527,188 1,536,567 
Derivative financial instruments— 3,510 
Goodwill, net61,654 61,654 
Other intangible assets6,293 6,556 
Deferred tax assets7,334 7,422 
Total assets$2,051,761 $2,069,820 
LIABILITIES AND SHAREHOLDERS’ EQUITY
Trade and other payables$200,694 $231,652 
Payables to related parties9,144 6,852 
Income tax payable 785 990 
Debt1,064,391 1,065,453 
Other liabilities31,149 30,685 
Deferred tax liabilities73,064 69,326 
Total liabilities1,379,227 1,404,958 
Commitments and contingencies (see Note 7)
Shareholders’ equity
Ordinary shares (par value €0.10; 500,000,000 shares authorized, 169,423,980 shares issued and 154,402,852 shares outstanding as of March 31, 2023 and 168,275,504 shares issued and 158,228,508 shares outstanding as of December 31, 2022)
18,822 18,700 
Treasury shares (at cost, 15,021,128 shares as of March 31, 2023 and 10,046,996 shares as of December 31, 2022)
(103,843)(62,953)
Paid-in capital1,192,134 1,189,090 
Accumulated other comprehensive loss(4,308)(6,985)
Accumulated deficit(430,271)(472,990)
Total shareholders’ equity 672,534 664,862 
Total liabilities and shareholders’ equity $2,051,761 $2,069,820 
The accompanying Notes form an integral part of the Condensed Consolidated Financial Statements.
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Playa Hotels & Resorts N.V.
Condensed Consolidated Statements of Operations
($ in thousands, except share data)
(unaudited)
Three Months Ended March 31,
20232022
Revenue
Package$233,568 $186,815 
Non-package34,045 29,454 
The Playa Collection726 296 
Management fees1,929 1,057 
Cost reimbursements3,534 1,952 
Total revenue273,802 219,574 
Direct and selling, general and administrative expenses
Direct128,968 106,840 
Selling, general and administrative45,127 37,239 
Depreciation and amortization19,191 19,500 
Reimbursed costs3,534 1,952 
Loss on sale of assets13 — 
Direct and selling, general and administrative expenses196,833 165,531 
Operating income76,969 54,043 
Interest expense(29,666)(9,168)
Other income (expense)232 (514)
Net income before tax47,535 44,361 
Income tax provision(4,816)(1,614)
Net income$42,719 $42,747 
Earnings per share
Basic$0.27 $0.26 
Diluted$0.27 $0.26 
Weighted average number of shares outstanding during the period - Basic157,314,177 165,743,382 
Weighted average number of shares outstanding during the period - Diluted158,772,453 166,888,129 
The accompanying Notes form an integral part of the Condensed Consolidated Financial Statements.
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Playa Hotels & Resorts N.V.
Condensed Consolidated Statements of Comprehensive Income
($ in thousands)
(unaudited)
Three Months Ended March 31,
20232022
Net income$42,719 $42,747 
Other comprehensive income, net of taxes
Gain on interest rate swaps2,895 2,894 
Pension obligation loss(218)(234)
Total other comprehensive income2,677 2,660 
Comprehensive income$45,396 $45,407 
The accompanying Notes form an integral part of the Condensed Consolidated Financial Statements.
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Playa Hotels & Resorts N.V.
Condensed Consolidated Statements of Shareholders’ Equity
($ in thousands, except share data)
(unaudited)
Ordinary SharesTreasury SharesPaid-In CapitalAccumulated Other
Comprehensive Loss
Accumulated DeficitTotal
SharesAmountSharesAmount
Balance at December 31, 2021164,438,280 $18,518 2,208,004 $(16,697)$1,177,380 $(18,671)$(529,696)$630,834 
Net income— — — — — — 42,747 42,747 
Other comprehensive income— — — — — 2,660 — 2,660 
Share-based compensation1,339,787 152 — — 3,204 — — 3,356 
Balance at March 31, 2022165,778,067 $18,670 2,208,004 $(16,697)$1,180,584 $(16,011)$(486,949)$679,597 

Ordinary SharesTreasury SharesPaid-In CapitalAccumulated Other
Comprehensive Loss
Accumulated DeficitTotal
SharesAmountSharesAmount
Balance at December 31, 2022158,228,508 $18,700 10,046,996 $(62,953)$1,189,090 $(6,985)$(472,990)$664,862 
Net income— — — — — — 42,719 42,719 
Other comprehensive income— — — — — 2,677 — 2,677 
Share-based compensation1,148,476 122 — — 3,044 — — 3,166 
Repurchase of ordinary shares(4,974,132)— 4,974,132 (40,890)— — — (40,890)
Balance at March 31, 2023154,402,852 $18,822 15,021,128 $(103,843)$1,192,134 $(4,308)$(430,271)$672,534 
The accompanying Notes form an integral part of the Condensed Consolidated Financial Statements.

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Playa Hotels & Resorts N.V.
Condensed Consolidated Statements of Cash Flows
($ in thousands)
(unaudited)
Three Months Ended March 31,
20232022
CASH FLOWS FROM OPERATING ACTIVITIES
Net income$42,719 $42,747 
Adjustments to reconcile net income to net cash from operating activities
Depreciation and amortization19,191 19,500 
Amortization of debt discount and issuance costs1,795 1,019 
Share-based compensation3,166 3,356 
Loss (gain) on derivative financial instruments6,405 (11,134)
Deferred income taxes3,826 1,572 
Loss on sale of assets13 — 
Amortization of key money(193)(238)
Provision for (recovery of) doubtful accounts81 (483)
Other198 (69)
Changes in assets and liabilities:
Trade and other receivables, net(11,403)(15,735)
Insurance recoverable5,626 — 
Accounts receivable from related parties(2,602)(4,946)
Inventories(569)(725)
Prepayments and other assets3,159 (223)
Trade and other payables(28,743)281 
Payables to related parties 2,292 2,262 
Income tax payable(205)152 
Other liabilities531 312 
Net cash provided by operating activities45,287 37,648 
INVESTING ACTIVITIES
Capital expenditures(10,257)(4,430)
Purchase of intangibles(77)(30)
Proceeds from the sale of assets, net24 
Property damage insurance proceeds7,979 — 
Net cash used in investing activities(2,352)(4,436)
FINANCING ACTIVITIES
Repayments of debt(2,750)(2,525)
Repurchase of ordinary shares(42,558)— 
Principal payments on finance lease obligations(107)(99)
Net cash used in financing activities(45,415)(2,624)
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS(2,480)30,588 
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, BEGINNING OF THE PERIOD$283,945 $293,577 
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, END OF THE PERIOD$281,465 $324,165 
RECONCILIATION OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH
Cash and cash equivalents$281,465 $299,802 
Restricted cash— 24,363 
TOTAL CASH, CASH EQUIVALENTS AND RESTRICTED CASH$281,465 $324,165 
The accompanying Notes form an integral part of the Condensed Consolidated Financial Statements.
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Playa Hotels & Resorts N.V.
Condensed Consolidated Statements of Cash Flows (continued)
($ in thousands)
(unaudited)
Three Months Ended March 31,
20232022
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid for interest$21,406 $18,221 
Cash paid for income taxes, net$1,427 $32 
SUPPLEMENTAL DISCLOSURES OF NON-CASH ACTIVITIES
Capital expenditures incurred but not yet paid$873 $696 
Intangible assets capitalized but not yet paid$— $45 
Par value of vested restricted share awards$122 $152 
The accompanying Notes form an integral part of the Condensed Consolidated Financial Statements.
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Playa Hotels & Resorts N.V.
Notes to the Condensed Consolidated Financial Statements
(unaudited)
Note 1. Organization, operations and basis of presentation
Background
Playa Hotels & Resorts N.V. (“Playa” or the “Company”) is a leading owner, operator and developer of all-inclusive resorts in prime beachfront locations in popular vacation destinations. We own and/or manage a portfolio of 26 resorts located in Mexico, the Dominican Republic and Jamaica. Unless otherwise indicated or the context requires otherwise, references in our condensed consolidated financial statements (our “Condensed Consolidated Financial Statements”) to “we,” “our,” “us” and similar expressions refer to Playa and its subsidiaries.
Basis of preparation, presentation and measurement
Our Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information. Certain information and disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. Accordingly, these unaudited interim Condensed Consolidated Financial Statements should be read in conjunction with our Consolidated Financial Statements as of and for the year ended December 31, 2022, included in our Annual Report on Form 10-K, filed with the Securities and Exchange Commission (the “SEC”) on February 23, 2023 (the “Annual Report”).
In our opinion, the unaudited interim Condensed Consolidated Financial Statements have been prepared on the same basis as the annual Consolidated Financial Statements and include all adjustments, consisting of only normal recurring adjustments, necessary for fair presentation. Results for the comparative prior periods have been reclassified to conform to the current period presentation.
The results of operations for the three months ended March 31, 2023 are not necessarily indicative of the results of operations to be expected for the full year ending December 31, 2023. All dollar amounts (other than per share amounts) in the following disclosures are in thousands of United States dollars, unless otherwise indicated.
Note 2. Significant accounting policies
New accounting pronouncements recently issued or effective were not applicable to the Company or are not expected to have a material impact on the Condensed Consolidated Financial Statements.
Note 3. Revenue

The following tables present our revenues disaggregated by geographic segment (refer to discussion of our reportable segments in Note 15) ($ in thousands):
Three Months Ended March 31, 2023
Yucatán
Peninsula
Pacific
Coast
Dominican
Republic
JamaicaOtherTotal
Package revenue$81,287 $36,803 $59,602 $55,876 $— $233,568 
Non-package revenue9,700 4,747 9,167 9,867 564 34,045 
The Playa Collection— — — — 726 726 
Management fees38 — — — 1,891 1,929 
Cost reimbursements— — — 1,337 2,197 3,534 
Total revenue$91,025 $41,550 $68,769 $67,080 $5,378 $273,802 
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Three Months Ended March 31, 2022
Yucatán
Peninsula
Pacific
Coast
Dominican
Republic
JamaicaOtherTotal
Package revenue(1)
$61,537 $26,223 $60,863 $38,192 $— $186,815 
Non-package revenue(1)(2)
8,841 3,621 8,846 7,934 212 29,454 
The Playa Collection(2)
— — — — 296 296 
Management fees30 — — — 1,027 1,057 
Cost reimbursements— — — 998 954 1,952 
Total revenue$70,408 $29,844 $69,709 $47,124 $2,489 $219,574 
________
(1)Includes $2.7 million of on-property room upgrade revenue that was reclassified from non-package revenue to package revenue to conform with current period presentation.
(2)Includes $0.3 million that was reclassified from non-package revenue to The Playa Collection to confirm with current period presentation.

Contract assets and liabilities

We do not have any material contract assets as of March 31, 2023 and December 31, 2022 other than trade and other receivables on our Condensed Consolidated Balance Sheet. Our receivables are primarily the result of contracts with customers, which are reduced by an allowance for doubtful accounts that reflects our estimate of amounts that will not be collected.

We record contract liabilities when cash payments are received or due in advance of guests staying at our resorts, which are presented as advance deposits (see Note 14) within trade and other payables on our Condensed Consolidated Balance Sheet. Our advanced deposits are generally recognized as revenue within one year.
Note 4. Property and equipment
The balance of property and equipment, net is as follows ($ in thousands):
As of March 31,As of December 31,
20232022
Property and equipment, gross
Land, buildings and improvements$1,766,926 $1,765,130 
Fixtures and machinery (1)
88,824 88,333 
Furniture and other fixed assets215,876 213,005 
Construction in progress14,315 10,293 
Total property and equipment, gross2,085,941 2,076,761 
Accumulated depreciation(558,753)(540,194)
Total property and equipment, net$1,527,188 $1,536,567 
________
(1) Includes the gross balance of our finance lease right-of-use assets, which was $6.3 million as of March 31, 2023 and December 31, 2022.
Depreciation expense for property and equipment was $18.8 million and $19.1 million for the three months ended March 31, 2023 and 2022, respectively.
Hurricane Fiona
On September 19, 2022, Hurricane Fiona, a Category 1 hurricane, made landfall on the eastern coast of the Dominican Republic and caused non-structural damage to several of our resorts. Our insurance policies provide coverage for business interruption, including lost profits, and reimbursement for costs related to the property damages and losses we have incurred.
We received property damage insurance proceeds of $8.0 million and business interruption proceeds of $5.6 million related to Hurricane Fiona during the three months ended March 31, 2023. We received an additional $2.2 million of property damage and business interruption proceeds in April 2023. We expect to receive the remaining proceeds in 2023.
The property we manage in the Dominican Republic, Sanctuary Cap Cana, also sustained damage from Hurricane Fiona and was temporarily closed in late September for necessary clean-up and repairs. The resort reopened on January 20, 2023.
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Lessor contracts
We rent certain real estate to third parties for office and retail space within our resorts. Our lessor contracts are considered operating leases and generally have a contractual term of one to three years. The following table presents our rental income for the three months ended March 31, 2023 and 2022 ($ in thousands):
Three Months Ended March 31,
Leases20232022
Operating lease income (1)
$950 $1,226 
________
(1) Our operating lease income, which is recorded within non-package revenue in the Condensed Consolidated Statements of Operations, includes variable lease revenue which is typically calculated as a percentage of our tenant’s net sales.
Note 5. Income taxes
We file tax returns for our entities in key jurisdictions including Mexico, the Dominican Republic, Jamaica, the United States, and the Netherlands. We are domiciled in the Netherlands and our Dutch subsidiaries are subject to a Dutch general tax rate of 25.8%. Our other operating subsidiaries are subject to tax rates up to 30% in the jurisdictions in which they are domiciled.
All of our outstanding Advance Pricing Agreements (“APAs”) for our Dominican Republic entities expired as of December 31, 2021. We are currently in the process of finalizing the terms of our APAs, which we expect to complete before the end of 2023. Our estimated annual effective tax rate calculation reflects the terms of the APAs that are expected to apply for the year ending December 31, 2023.
We had no uncertain tax positions or unrecognized tax benefits as of March 31, 2023. We expect no significant changes in unrecognized tax benefits over the next twelve months.
We regularly assess the realizability of our deferred tax assets by evaluating historical and projected future operating results, the reversal of existing temporary differences, taxable income in permitted carry back years, and the availability of tax planning strategies. As of March 31, 2023, a valuation allowance has been maintained as a reserve on a portion of our net deferred tax assets due to the uncertainty of realization of our loss carry forwards and other deferred tax assets. If our operating results continue to improve and our projections show continued utilization of tax attributes, we may consider that as significant positive evidence and our future reassessment may result in the determination that all or a portion of the valuation allowance is no longer required. The exact timing and amount of the valuation allowance releases are ultimately contingent upon the level of profitability achieved in future periods.
Note 6. Related party transactions
Relationship with Hyatt and AMResorts
Hyatt Hotels Corporation (“Hyatt”) is considered a related party due to its ownership of our ordinary shares by its affiliated entities. We pay Hyatt fees associated with the franchise agreements of our resorts operating under the all-ages Hyatt Ziva and adults-only Hyatt Zilara brands and receive reimbursements for guests that pay for their stay using the World of Hyatt® guest loyalty program.
Hyatt also owns Apple Leisure Group (“ALG”), the brand management platform AMResorts, and various tour operators and travel agencies. We previously paid AMResorts and its affiliates, as operators of the Jewel Punta Cana and Jewel Palm Beach through December 20, 2022 and January 6, 2023, respectively, management and marketing fees, and sold all-inclusive packages through ALG’s tour operators and travel agencies.
Relationship with Sagicor
Sagicor Financial Corporation Limited and its affiliated entities (collectively “Sagicor”) is considered a related party due to its ownership of our ordinary shares and representation on our Board of Directors. We pay Sagicor for employee insurance coverage at one of our Jamaica properties. Sagicor is also a part owner of the Jewel Grande Montego Bay Resort & Spa and compensates us as manager of the property.
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Relationship with Davidson Kempner Capital Management L.P.
Davidson Kempner Capital Management L.P. (“DKCM”) is the investment manager of multiple affiliated funds and is considered a related party due to the DKCM funds’ ownership of our ordinary shares. An affiliate of DKCM was also a lender of $25.0 million in aggregate principal of our 2022 Term Loan (as defined in Note 11) as of December 31, 2022.
Relationship with HG Vora Capital Management, LLC
HG Vora Capital Management, LLC is considered a related party due to its ownership of our ordinary shares and was a lender of $13.5 million and $42.5 million in aggregate principal of the 2022 Term Loan as of March 31, 2023 and December 31, 2022, respectively.
Lease with our Chief Executive Officer
One of our offices is owned by our Chief Executive Officer and we sublease the space at that location from a third party.
Transactions with related parties
Transactions between us and related parties during the three months ended March 31, 2023 and 2022 were as follows ($ in thousands):
Three Months Ended March 31,
Related PartyTransaction20232022
Revenues
ALGPackage revenue$— $5,874 
Sagicor
Cost reimbursements(1)
$1,477 $1,103 
Expenses
Hyatt
Franchise fees(2)
$9,954 $7,413 
Sagicor
Insurance premiums(2)
$320 $279 
Chief Executive Officer
Lease expense(3)
$196 $188 
DKCM
Interest expense(4)
$— $5,405 
AMResorts
Management fees(2)
$41 $1,112 
AMResorts
Marketing fees(3)
$37 $1,083 
________
(1)Equivalent amount included as reimbursed costs in the Condensed Consolidated Statements of Operations.
(2)Included in direct expense in the Condensed Consolidated Statements of Operations with the exception of certain immaterial fees associated with the Hyatt franchise agreements, which are included in selling, general, and administrative expense.
(3)Included in selling, general, and administrative expense in the Condensed Consolidated Statements of Operations.
(4)Includes interest expense and amortization of deferred financing costs and discounts.
Note 7. Commitments and contingencies
We are involved in various claims and lawsuits arising in the normal course of business, including proceedings involving tort and other general liability claims, and workers’ compensation and other employee claims. Most occurrences involving liability and claims of negligence are covered by insurance with solvent insurance carriers. We recognize a liability when we believe the loss is probable and reasonably estimable. We currently believe that the ultimate outcome of such lawsuits and proceedings will not, individually or in the aggregate, have a material effect on our Condensed Consolidated Financial Statements.
The Dutch corporate income tax act provides the option of a fiscal unity, which is a consolidated tax regime wherein the profits and losses of group companies can be offset against each other. With the exception of Playa Hotels & Resorts N.V., our Dutch companies file as a fiscal unity. Playa Resorts Holding B.V. is the head of our Dutch fiscal unity and is jointly and severally liable for the tax liabilities of the fiscal unity as a whole.
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Note 8. Ordinary shares
On February 9, 2023, our Board of Directors authorized a $200.0 million share repurchase program, pursuant to which we may repurchase our outstanding ordinary shares as market conditions and our liquidity warrant. The new program replaced our $100.0 million repurchase program announced in September 2022. The repurchase program is subject to certain limitations under Dutch law, including the existing repurchase authorization granted by our shareholders. Repurchases may be made from time to time in the open market, in privately negotiated transactions or by other means (including Rule 10b5-1 trading plans). Depending on market conditions and other factors, these repurchases may be commenced or suspended from time to time without prior notice. During the three months ended March 31, 2023, we repurchased 4,974,132 ordinary shares under the programs at an average price of $8.17 per share. As of March 31, 2023, we had approximately $169.2 million remaining under our $200.0 million share repurchase program.
As of March 31, 2023, our ordinary share capital consisted of 154,402,852 ordinary shares outstanding, which have a par value of €0.10 per share. In addition, 4,893,900 restricted shares and performance share awards and 32,658 restricted share units were outstanding under the 2017 Plan (as defined in Note 9). The holders of restricted shares and performance share awards are entitled to vote, but not dispose of, such shares until they vest. The holders of restricted share units are neither entitled to vote nor dispose of such shares until they vest.
Note 9. Share-based compensation
We adopted our 2017 Omnibus Incentive Plan (the “2017 Plan”) to attract and retain independent directors, executive officers and other key employees and service providers. As of March 31, 2023, there were 907,941 shares available for future grants under the 2017 Plan.
Restricted share awards consist of restricted shares and restricted share units that are granted to eligible employees, executives, and board members and consist of ordinary shares (or the right to receive ordinary shares).
A summary of our restricted share awards from January 1, 2023 to March 31, 2023 is as follows:
Number of SharesWeighted-Average Grant Date Fair Value
Unvested balance at January 1, 20232,288,821 $6.94 
Granted1,744,579 6.77 
Vested(1,148,476)6.91 
Forfeited(6,716)6.95 
Unvested balance at March 31, 20232,878,208 $6.85 
Performance share awards consist of ordinary shares that may become earned and vested at the end of a three-year performance period based on the achievement of performance targets adopted by our Compensation Committee. Our performance shares have market conditions where 50% of the performance share awards will vest based on the total shareholder return (“TSR”) of our ordinary shares relative to those of our peer group and 50% will vest based on the compound annual growth rate of the price of our ordinary shares. The peer shareholder return component may vest between 0% and 150% of target, with the award capped at 100% of target should Playa’s TSR be negative. The growth rate component may vest up to 100% of target.
The table below summarizes the key inputs used in the Monte-Carlo simulation to determine the grant date fair value of our performance share awards ($ in thousands):
Performance Award Grant DatePercentage of Total AwardGrant Date Fair Value by Component
Volatility (1)
Interest
Rate (2)
Dividend Yield
January 18, 2023
Peer Shareholder Return50 %$2,751 71.82 %3.70 %— %
Growth Rate50 %$2,194 71.82 %3.70 %— %
________
(1) Expected volatility was determined based on our historical share prices.
(2) The risk-free rate was based on U.S. Treasury zero coupon issues with a remaining term equal to the remaining term of the measurement period.
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A summary of our performance share awards from January 1, 2023 to March 31, 2023 is as follows:
Number of SharesWeighted-Average Grant Date Fair Value
Unvested balance at January 1, 20231,329,123 $6.05 
Granted719,227 6.88 
Unvested balance at March 31, 20232,048,350 $6.34 
Note 10. Earnings per share
Basic and diluted earnings or loss per share (“EPS”) are as follows ($ in thousands, except share data):
Three Months Ended March 31,
20232022
Numerator
Net income$42,719 $42,747 
Denominator
Denominator for basic EPS - weighted-average number of shares outstanding157,314,177 165,743,382 
Effect of dilutive securities
Unvested performance share awards952,494 401,903 
Unvested restricted share awards505,782 742,844 
Denominator for diluted EPS - adjusted weighted-average number of shares outstanding158,772,453 166,888,129 
EPS - Basic$0.27 $0.26 
EPS - Diluted$0.27 $0.26 

We had no anti-dilutive unvested performance share awards for the three months ended March 31, 2023. For the three months ended March 31, 2022, unvested performance share awards in the amount of 187,500 shares were not included in the computation of diluted EPS as their effect would have been anti-dilutive. The performance targets of our unvested performance share awards were partially achieved as of March 31, 2023 and 2022.

For the three months ended March 31, 2023 and 2022, we had no anti-dilutive unvested restricted share awards.

On March 12, 2022, all of our outstanding warrants expired and had no impact on diluted EPS for three months ended March 31, 2022.
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Note 11. Debt
Our debt consists of the following ($ in thousands):
Outstanding Balance as of
Interest RateMaturity DateMarch 31, 2023December 31, 2022
Senior Secured Credit Facilities
Revolving Credit Facility (1)
    SOFR + 3.50% (1)
January 5, 2028$— $— 
2022 Term Loan (2)
SOFR + 4.25%
January 5, 20291,097,250 1,100,000 
Total Senior Secured Credit Facilities (at stated value)1,097,250 1,100,000 
Unamortized discount(30,955)(32,428)
Unamortized debt issuance costs(7,454)(7,776)
Total Senior Secured Credit Facilities, net$1,058,841 $1,059,796 
Financing lease obligations$5,550 $5,657 
Total debt, net$1,064,391 $1,065,453 
________
(1)Undrawn balances bear interest between 0.25% to 0.50% depending on certain leverage ratios. We had an available balance of $225.0 million as of March 31, 2023 and December 31, 2022. Interest is incurred on any outstanding balance based on the Secured Overnight Financing Rate (“SOFR”) plus a margin ranging from 3.25% to 3.75%, depending on our consolidated secured net leverage ratio.
(2)The effective interest rate for the 2022 Term Loan was 8.99% and 8.58% as of March 31, 2023 and December 31, 2022, respectively.
Second Restatement Agreement
On December 16, 2022, we entered into the Second Restatement Agreement to amend and restate our Senior Secured Credit Facility to consist of (i) a $225.0 million revolving line of credit with a maturity date of January 5, 2028 (the “Revolving Credit Facility”) and (ii) a $1.1 billion term loan with a maturity of January 5, 2029 (the “2022 Term Loan” and collectively with the Revolving Credit Facility, the “2022 Senior Secured Credit Facility”).
The 2022 Term Loan bears interest at SOFR plus a margin of 4.25% (where the applicable SOFR rate has a 0.50% floor). The Revolving Credit Facility bears interest at SOFR plus a margin ranging from 3.25% to 3.75%, in each case, depending on the level of our consolidated secured net leverage ratio in effect from time to time.
Financial maintenance covenants
We were in compliance with all applicable covenants as of March 31, 2023. A summary of our applicable covenants and restrictions is as follows:
DebtCovenant Terms
2022 Senior Secured Credit Facility
We are subject to a total net leverage ratio of 5.20x if we have more than 35% drawn on the Revolving Credit Facility.
Note 12. Derivative financial instruments
Our two interest rate swaps previously mitigated the interest rate risk inherent to our floating rate debt that was tied to the London Interbank Offered Rate (“LIBOR”). The interest rate swaps were not for trading purposes and had fixed notional values of $200.0 million and $600.0 million. The fixed rate paid by us was 2.85% and the variable rate received reset monthly to the one-month LIBOR rate. The interest rate swaps matured on March 31, 2023.

Our interest rate swaps were designated as cash flow hedges, but were deemed ineffective due to the decrease in interest rates. All changes in fair value were recognized through interest expense in the Condensed Consolidated Statements of Operations through maturity.

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The following tables present the effect of our interest rate swaps, net of tax, in the Condensed Consolidated Statements of Comprehensive Income and Condensed Consolidated Statements of Operations for the three months ended March 31, 2023 and 2022 ($ in thousands):
20232022
AOCI from our cash flow hedges as of January 1$2,895 $14,632 
Change in fair value— — 
Reclassification from AOCI to interest expense(2,895)(2,894)
OCI related to our cash flow hedges for the three months ended March 31(2,895)(2,894)
AOCI from our cash flow hedges as of March 31$ $11,738 
Derivative Instruments for Ineffective HedgesFinancial Statement ClassificationThree Months Ended March 31,
20232022
Interest rate swaps (1)
Interest expense$3,013 $(5,715)
________
(1) Includes the loss or (gain) from the change in fair value of our interest rate swaps and the cash interest paid or received for the monthly settlements of the derivative.
The following tables present the effect of our interest rate swaps in the Condensed Consolidated Balance Sheet as of March 31, 2023 and December 31, 2022 ($ in thousands):
Derivative Assets for Ineffective HedgesFinancial Statement ClassificationAs of March 31,As of December 31,
20232022
Interest rate swapsDerivative financial instruments$— $3,510 

Derivative financial instruments expose us to credit risk in the event of non-performance by the counterparty under the terms of the interest rate swaps. We incorporate these counterparty credit risks in our fair value measurements (see Note 13) and believe we minimize this credit risk by transacting with major creditworthy financial institutions.
Note 13. Fair value of financial instruments
The objective of a fair value measurement is to estimate the price at which an orderly transaction to sell the asset or to transfer the liability would take place between market participants at the measurement date under current market conditions. U.S. GAAP establishes a hierarchical disclosure framework, which prioritizes and ranks the level of observability of inputs used in measuring fair value as follows:
Level 1: Unadjusted quoted prices in active markets for identical assets or liabilities.
Level 2: Unadjusted quoted prices for similar assets or liabilities in active markets, or unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or inputs other than quoted prices that are observable for the asset or liability.
Level 3: Inputs are unobservable and reflect our judgments about assumptions that market participants would use in pricing an asset or liability.
We believe the carrying value of our financial instruments, excluding our debt, approximate their fair values as of March 31, 2023 and December 31, 2022. We did not have any Level 3 instruments during any of the periods presented in our Condensed Consolidated Financial Statements.
We did not have any financial assets and liabilities measured at fair value on a recurring basis as of March 31, 2023. The following table presents our fair value hierarchy for our financial assets and liabilities measured at fair value on a recurring basis as of and December 31, 2022 ($ in thousands):
Financial AssetsDecember 31, 2022Level 1Level 2Level 3
Fair value measurements on a recurring basis
Interest rate swap$3,510 $— $3,510 $— 
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The following tables present our fair value hierarchy for our financial liabilities not measured at fair value as of March 31, 2023 and December 31, 2022 ($ in thousands):
Carrying Value
Fair Value
As of March 31, 2023Level 1
Level 2
Level 3
Financial liabilities not recorded at fair value
2022 Term Loan$1,058,841 $— $— $1,110,079 
Carrying ValueFair Value
As of December 31, 2022Level 1Level 2Level 3
Financial liabilities not recorded at fair value
2022 Term Loan$1,059,796 $— $— $1,114,860 
The following table summarizes the valuation techniques used to estimate the fair value of our financial instruments measured at fair value on a recurring basis and our financial instruments not measured at fair value:
Valuation Technique
Financial instruments recorded at fair value
Interest rate swaps
The fair value of the interest rate swaps is estimated based on the expected future cash flows by incorporating the notional amount of the swaps, the contractual period to maturity, and observable market-based inputs, including interest rate curves. The fair value also incorporates credit valuation adjustments to appropriately reflect nonperformance risk. The fair value of our interest rate swaps is largely dependent on forecasted LIBOR as of the measurement date. If, in subsequent periods, forecasted LIBOR exceeds 2.85% we will recognize a gain and future cash inflows. Conversely, if forecasted LIBOR falls below 2.85% in subsequent periods we will recognize a loss and future cash outflows.
Financial instruments not recorded at fair value
2022 Term LoanThe fair value of our 2022 Term Loan is estimated using cash flow projections over the remaining contractual period by applying market forward rates and discounting back at the appropriate discount rate.
Revolving Credit FacilityThe valuation technique of our Revolving Credit Facility is consistent with our 2022 Term Loan. The fair value of the Revolving Credit Facility generally approximates its carrying value as the expected term is significantly shorter in duration.
Note 14. Other balance sheet items
Trade and other receivables, net
The following summarizes the balances of trade and other receivables, net as of March 31, 2023 and December 31, 2022 ($ in thousands):
As of March 31,As of December 31,
20232022
Gross trade and other receivables (1)
$74,620 $63,396 
Allowance for doubtful accounts(352)(450)
Total trade and other receivables, net$74,268 $62,946 
________
(1) The opening balance as of January 1, 2022 was $47.4 million.

We have not experienced any significant write-offs to our accounts receivable during the three months ended March 31, 2023 and 2022.
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Prepayments and other assets
The following summarizes the balances of prepayments and other assets as of March 31, 2023 and December 31, 2022 ($ in thousands):
As of March 31,As of December 31,
20232022
Advances to suppliers$10,237 $12,683 
Prepaid income taxes10,735 11,809 
Prepaid other taxes (1)
4,465 4,539 
Operating lease right-of-use assets2,791 2,968 
Key money6,670 6,735 
Other assets6,060 5,443 
Total prepayments and other assets$40,958 $44,177 
________
(1) Includes recoverable value-added tax, general consumption tax, and other sales tax accumulated by our Mexico, Jamaica, Dutch and Dominican Republic entities.
Goodwill
We recognized no goodwill impairment losses on our reporting units nor any additions to goodwill during the three months ended March 31, 2023. The gross carrying values and accumulated impairment losses of goodwill by reportable segment (refer to discussion of our reportable segments in Note 15) as of March 31, 2023 and December 31, 2022 are as follows ($ in thousands):
Yucatán PeninsulaPacific CoastDominican RepublicJamaicaTotal
Gross carrying value$51,731 $— $— $35,879 $87,610 
Accumulated impairment losses(6,168)— — (19,788)(25,956)
Net carrying value$45,563 $ $ $16,091 $61,654 
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Other intangible assets
Other intangible assets as of March 31, 2023 and December 31, 2022 consisted of the following ($ in thousands):
As of March 31,As of December 31,
20232022
Gross carrying value
Casino and other licenses (1)
$875 $875 
Management contract1,900 1,900 
Enterprise resource planning system6,375 6,375 
Other4,602 4,499 
Total gross carrying value13,752 13,649 
Accumulated amortization
Management contract(451)(428)
Enterprise resource planning system(2,997)(2,771)
Other(4,011)(3,894)
Total accumulated amortization(7,459)(7,093)
Net carrying value
Casino and other licenses (1)
875 875 
Management contract1,449 1,472 
Enterprise resource planning system 3,378 3,604 
Other591 605 
Total net carrying value$6,293 $6,556 
________
(1) Our casino and other licenses have indefinite lives. Accordingly, there is no associated amortization expense or accumulated amortization.
Amortization expense for intangible assets was $0.4 million for the three months ended March 31, 2023 and 2022.
Trade and other payables
The following summarizes the balances of trade and other payables as of March 31, 2023 and December 31, 2022 ($ in thousands):
As of March 31,As of December 31,
20232022
Trade payables$27,743 $28,422 
Advance deposits (1)
74,953 83,262 
Withholding and other taxes payable23,115 31,111 
Interest payable4,112 3,996 
Payroll and related accruals20,771 29,273 
Accrued expenses and other payables (2)
50,000 55,588 
Total trade and other payables$200,694 $231,652 
________
(1) The opening balance as of January 1, 2022 was $62.6 million.
(2) As of March 31, 2023, accrued expenses and other payables include $25.3 million of unpaid clean up and repair expenses related to Hurricane Fiona.
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Other liabilities
The following summarizes the balances of other liabilities as of March 31, 2023 and December 31, 2022 ($ in thousands):
As of March 31,As of December 31,
20232022
Pension obligation (1)
$9,043 $7,777 
Operating lease liabilities3,286 3,472 
Unfavorable ground lease liability1,830 1,857 
Key money15,104 15,362 
Other1,886 2,217 
Total other liabilities$31,149 $30,685 
________
(1) For the three months ended March 31, 2023 and 2022, the service cost component of net periodic pension cost was $0.3 million and $0.2 million, respectively, and the non-service cost components were $0.9 million and $0.4 million, respectively.
Note 15. Business segments
We consider each one of our owned resorts to be an operating segment, none of which meets the threshold for a reportable segment. We also allocate resources and assess operating performance based on individual resorts. Our operating segments meet the aggregation criteria and thus, we report four separate reportable segments by geography: (i) Yucatán Peninsula, (ii) Pacific Coast, (iii) Dominican Republic and (iv) Jamaica.
Our operating segments are components of the business that are managed discretely and for which discrete financial information is reviewed regularly by our Chief Executive Officer, Chief Financial Officer and Chief Operating Officer, all of whom represent our chief operating decision maker (“CODM”). Financial information for each reportable segment is reviewed by the CODM to assess performance and make decisions regarding the allocation of resources. For the three months ended March 31, 2023 and 2022, we have excluded the immaterial amounts of management fees, cost reimbursements, The Playa Collection and other from our segment reporting.
The performance of our business is evaluated primarily on adjusted earnings before interest expense, income tax provision, and depreciation and amortization expense (“Adjusted EBITDA”) and the performance of our segments is evaluated on Adjusted EBITDA before corporate expenses and management fee revenue (“Owned Resort EBITDA”). Adjusted EBITDA and Owned Resort EBITDA should not be considered alternatives to net income or other measures of financial performance or liquidity derived in accordance with U.S. GAAP.
We define Adjusted EBITDA as net income, determined in accordance with U.S. GAAP, for the periods presented, before interest expense, income tax provision, and depreciation and amortization expense, further adjusted to exclude the following items: (a) loss on sale of assets; (b) other income (expense); (c) repairs from hurricanes and tropical storms; (d) share-based compensation; (e) other tax expense; and (f) transaction expenses. Adjusted EBITDA includes corporate expenses, which are overhead costs that are essential to support the operation of the Company, including the operations and development of our resorts.
There are limitations to using financial measures such as Adjusted EBITDA and Owned Resort EBITDA. For example, other companies in our industry may define Adjusted EBITDA differently than we do. As a result, it may be difficult to use Adjusted EBITDA or similarly named financial measures that other companies publish to compare the performance of those companies to our performance. Because of these limitations, Adjusted EBITDA should not be considered as a measure of the income or loss generated by our business or discretionary cash available for investment in our business and investors should carefully consider our U.S. GAAP results presented in our Condensed Consolidated Financial Statements.
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The following table presents segment Owned Net Revenue, defined as total revenue less compulsory tips paid to employees, cost reimbursements, management fees and other miscellaneous revenue not derived from segment operations, and a reconciliation to total revenue for the three months ended March 31, 2023 and 2022 ($ in thousands):
Three Months Ended March 31,
20232022
Owned net revenue
Yucatán Peninsula$88,748 $68,629 
Pacific Coast40,515 29,104 
Dominican Republic68,769 69,664 
Jamaica62,977 44,264 
Segment owned net revenue261,009 211,661 
Other564 211 
Management fees1,929 1,057 
The Playa Collection726 296 
Cost reimbursements3,534 1,952 
Compulsory tips6,040 4,397 
Total revenue$273,802 $219,574 
The following table presents segment Owned Resort EBITDA, Adjusted EBITDA and a reconciliation to net income for the three months ended March 31, 2023 and 2022 ($ in thousands):
Three Months Ended March 31,
20232022
Owned Resort EBITDA
Yucatán Peninsula$37,936 $29,458 
Pacific Coast17,523 12,544 
Dominican Republic26,849 28,377 
Jamaica27,081 17,158 
Segment Owned Resort EBITDA109,389 87,537 
Other corporate(13,555)(11,947)
The Playa Collection726 296 
Management fees1,929 1,057 
Adjusted EBITDA98,489 76,943 
Interest expense(29,666)(9,168)
Depreciation and amortization(19,191)(19,500)
Loss on sale of assets(13)— 
Other income (expense)232 (514)
Repairs from hurricanes and tropical storms861 — 
Share-based compensation(3,166)(3,356)
Other tax expense— (240)
Transaction expenses(863)(191)
Non-service cost components of net periodic pension cost (1)
852 387 
Net income before tax47,535 44,361 
Income tax provision(4,816)(1,614)
Net income$42,719 $42,747 
________
(1) Represents the non-service cost components of net periodic pension cost or benefit recorded within other income (expense) in the Condensed Consolidated Statements of Operations. We include these costs in calculating Adjusted EBITDA as they are considered part of our ongoing resort operations.
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The following table presents segment property and equipment, gross and a reconciliation to total property and equipment, net as of March 31, 2023 and December 31, 2022 ($ in thousands):
As of March 31,As of December 31,
20232022
Segment property and equipment, gross
Yucatán Peninsula$678,578 $676,218 
Pacific Coast292,316 291,372 
Dominican Republic694,314 690,181 
Jamaica415,180 413,563 
Total segment property and equipment, gross2,080,388 2,071,334 
Corporate property and equipment, gross5,553 5,427 
Accumulated depreciation(558,753)(540,194)
Total property and equipment, net$1,527,188 $1,536,567 

The following table presents segment capital expenditures and a reconciliation to total capital expenditures for the three months ended March 31, 2023 and 2022 ($ in thousands):
Three Months Ended March 31,
20232022
Segment capital expenditures
Yucatán Peninsula$2,741 $1,265 
Pacific Coast946 1,152 
Dominican Republic3,895 946 
Jamaica1,806 985 
Total segment capital expenditures (1)
9,388 4,348 
Corporate126 52 
Total capital expenditures (1)
$9,514 $4,400 
________
(1) Represents gross additions to property and equipment.
Note 16. Subsequent events
In preparing the interim Condensed Consolidated Financial Statements, we have evaluated subsequent events through May 4, 2023, which is the date the financial statements were issued.
During the period from April 1, 2023 through April 30, 2023, we purchased 2,147,034 ordinary shares at an average price of $9.29 per share. As of April 30, 2023, we had $149.3 million remaining under our $200.0 million share repurchase program.
Effective April 15, 2023, we entered into two interest rate swaps to mitigate the floating interest rate risk on our 2022 Term Loan, which incurs interest based on SOFR. The interest rate swaps each have a fixed notional amount of $275.0 million and are not for trading purposes. The fixed rates paid by us on the interest rate swaps are 4.05% and 3.71%, and the variable rate received resets monthly to the one-month SOFR rate. The interest rate swaps mature on April 15, 2025 and April 15, 2026, respectively.
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Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of Playa Hotels & Resorts N.V.’s (“Playa”) financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements (our “Condensed Consolidated Financial Statements”) and the notes related thereto which are included in “Item 1. Financial Statements” of this Quarterly Report on Form 10-Q. Unless the context otherwise requires, “we,” “us,” “our” and the “Company” refer to Playa and its subsidiaries.

Cautionary Note Regarding Forward-Looking Statements
This quarterly report contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements reflect our current expectations and projections about future events at the time, and thus involve uncertainty and risk. The words “believe,” “expect,” “anticipate,” “will,” “could,” “would,” “should,” “may,” “plan,” “estimate,” “intend,” “predict,” “potential,” “continue,” and the negatives of these words and other similar expressions generally identify forward looking statements. Forward-looking statements are subject to various factors that could cause actual outcomes or results to differ materially from those indicated in these statements, including the risks described under the sections entitled “Risk Factors” of our Annual Report on Form 10-K, filed with the SEC on February 23, 2023 and in this Quarterly Report on Form 10-Q, as such factors may be updated from time to time in our periodic filings with the SEC, which are accessible on the SEC’s website at www.sec.gov. These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this release and in our filings with the SEC. The following factors, among others, could also cause actual results and future events to differ materially from those set forth or contemplated in the forward-looking statements:
general economic uncertainty and the effect of general economic conditions, including inflation, rising interest rates and a potential economic recession, on consumer discretionary spending and the lodging industry in particular;
the popularity of the all-inclusive resort model, particularly in the luxury segment of the resort market;
changes in economic, social or political conditions in the regions we operate, including changes in perception of public-safety, changes in unemployment rates and labor force availability, and changes in the supply of rooms from competing resorts;
the success and continuation of our relationships with Hyatt Hotels Corporation (“Hyatt”), Hilton Worldwide Holdings, Inc. (“Hilton”), and Wyndham Hotels & Resorts, Inc. (“Wyndham”);
the volatility of currency exchange rates;
the success of our branding or rebranding initiatives with our current portfolio and resorts that may be acquired in the future;
our failure to successfully complete acquisition, expansion, repair and renovation projects in the timeframes and at the costs and returns anticipated;
changes we may make in timing and scope of our development and renovation projects;
significant increases in construction and development costs;
significant increases in utilities, labor or other resort costs;
our ability to obtain and maintain financing arrangements on attractive terms or at all;
our ability to obtain and maintain ample liquidity to fund operations and service debt;
the impact of and changes in governmental regulations or the enforcement thereof, tax laws and rates, accounting guidance and similar matters in regions in which we operate;
the ability of our guests to reach our resorts given government mandated travel restrictions, such as those related to COVID-19, or airline service/capacity issues, as well as changes in demand for our resorts resulting from government mandated safety protocols and/or health concerns, including those related to COVID-19;
the effectiveness of our internal controls and our corporate policies and procedures;
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changes in personnel and availability of qualified personnel;
extreme weather events, such as hurricanes, floods and extreme heat waves, which may increase in frequency and severity as a result of climate change, and other natural disasters;
public health crises, such as a resurgence of COVID-19 or the outbreak of other contagious diseases;
dependence on third parties to provide Internet, telecommunications and network connectivity to our data centers;
the volatility of the market price and liquidity of our ordinary shares and other of our securities; and
the increasingly competitive environment in which we operate.
 
While forward-looking statements reflect our good faith beliefs, they are not guarantees of future performance. The Company disclaims any obligation to publicly update or revise any forward-looking statement to reflect changes in underlying assumptions or factors, new information, data or methods, future events or other changes after the date of this quarterly report, except as required by applicable law. You should not place undue reliance on any forward-looking statements, which are based only on information currently available to us (or to third parties making the forward-looking statements).
Overview
Playa is a leading owner, operator and developer of all-inclusive resorts in prime beachfront locations in popular vacation destinations in Mexico and the Caribbean. As of March 31, 2023, Playa owned and/or managed a total portfolio consisting of 26 resorts (9,756 rooms) located in Mexico, Jamaica, and the Dominican Republic:
In Mexico, we own and manage the Hyatt Zilara Cancún, Hyatt Ziva Cancún, Wyndham Alltra Cancún, Wyndham Alltra Playa del Carmen, Hilton Playa del Carmen All-Inclusive Resort, Hyatt Ziva Puerto Vallarta, and Hyatt Ziva Los Cabos;
In Jamaica, we own and manage the Hyatt Zilara Rose Hall, Hyatt Ziva Rose Hall, Hilton Rose Hall Resort & Spa, Jewel Grande Montego Bay Resort & Spa, and Jewel Paradise Cove Beach Resort & Spa;
In the Dominican Republic, we own and manage the Hilton La Romana All-Inclusive Family Resort, the Hilton La Romana All-Inclusive Adult Resort, Hyatt Zilara Cap Cana, Hyatt Ziva Cap Cana, Jewel Palm Beach, and Jewel Punta Cana; and
We also manage nine resorts on behalf of third-party owners.
Playa’s strategy is to leverage its globally recognized brand partnerships and proprietary in-house direct booking capabilities to capitalize on the growing popularity of the all-inclusive resort model and reach first-time all-inclusive resort consumers in a cost-effective manner. We believe that this strategy should position us to generate attractive returns for our shareholders, build lasting relationships with our guests, and enhance the lives of our associates and the communities in which we operate.
For the three months ended March 31, 2023, we generated net income of $42.7 million, Total Revenue of $273.8 million, Net Package RevPAR of $355.27 and Adjusted EBITDA of $98.5 million. For the three months ended March 31, 2022, we generated net income of $42.7 million, Total Revenue of $219.6 million, Net Package RevPAR of $285.00 and Adjusted EBITDA of $76.9 million.

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Our Portfolio of Resorts
As of March 31, 2023, the following table presents an overview of our resorts and is organized by our four geographic business segments: the Yucatán Peninsula, the Pacific Coast, the Dominican Republic and Jamaica.
Name of Resort 
Location 
Brand and Type 
Operator 
Year Built; Significant RenovationsRooms
Owned Resorts
Yucatán Peninsula    
Hyatt Ziva CancúnCancún, MexicoHyatt Ziva (all ages)Playa1975; 1980; 1986; 2002; 2015547
Hyatt Zilara CancúnCancún, MexicoHyatt Zilara (adults-only)Playa2006; 2009; 2013; 2017310
Wyndham Alltra CancúnCancún, MexicoWyndham (all ages)Playa1985; 2009; 2017458
Hilton Playa del Carmen All-Inclusive ResortPlaya del Carmen, MexicoHilton (adults-only)Playa2002; 2009; 2019524
Wyndham Alltra Playa del CarmenPlaya del Carmen, MexicoWyndham (adults-only)Playa1996; 2006; 2012; 2017287
Pacific Coast    
Hyatt Ziva Los CabosCabo San Lucas, MexicoHyatt Ziva (all ages)Playa2007; 2009; 2015591
Hyatt Ziva Puerto VallartaPuerto Vallarta, MexicoHyatt Ziva (all ages)Playa1969; 1990; 2002; 2009; 2014; 2017335
Dominican Republic    
Hilton La Romana All-Inclusive ResortLa Romana, Dominican RepublicHilton (adults-only)Playa1997; 2008; 2019356
Hilton La Romana All-Inclusive ResortLa Romana, Dominican RepublicHilton (all ages)Playa1997; 2008; 2019418
Jewel Palm BeachPunta Cana,
Dominican Republic
Jewel (all ages)
    Playa (1)
1994; 2008500
Jewel Punta CanaPunta Cana,
Dominican Republic
Jewel (all ages)Playa2004620
Hyatt Ziva Cap CanaCap Cana,
Dominican Republic
Hyatt Ziva (all ages)Playa2019375
Hyatt Zilara Cap CanaCap Cana,
Dominican Republic
Hyatt Zilara (adults-only)Playa2019375
Jamaica
Hyatt Ziva Rose HallMontego Bay, JamaicaHyatt Ziva (all ages)Playa2000; 2014; 2017276
Hyatt Zilara Rose HallMontego Bay, JamaicaHyatt Zilara (adults-only)Playa2000; 2014; 2017344
Hilton Rose Hall Resort & SpaMontego Bay, JamaicaHilton (all ages)Playa1974; 2008; 2017495
Jewel Paradise Cove Beach Resort & SpaRunaway Bay, JamaicaJewel (adults-only)Playa2013225
Jewel Grande Montego Bay Resort & Spa (2)
Montego Bay, JamaicaJewel (all ages)Playa2016; 201788
Total Rooms Owned7,124
Managed Resorts (3)
Sanctuary Cap CanaPunta Cana,
Dominican Republic
The Luxury Collection by Marriott (adults-only)Playa2008; 2015; 2018324
Jewel Grande Montego Bay Resort & SpaMontego Bay, JamaicaJewel (condo-hotel)Playa2016; 2017129
The Yucatán Playa del Carmen All-Inclusive ResortPlaya del Carmen, MexicoTapestry Collection by Hilton (adults-only)Playa201260
Hyatt Ziva Riviera CancúnRiviera Maya, MexicoHyatt Ziva (all ages)Playa2008; 2021438
Hyatt Zilara Riviera MayaRiviera Maya, MexicoHyatt Zilara (adults-only)Playa2003; 2022291
Seadust Cancún Family Resort (4)
Cancún, MexicoSeadust (all ages)Playa2006; 2022502
Kimpton Hacienda Tres Ríos Resort, Spa & Nature Park (5)
Playa del Carmen, MexicoKimpton (all ages)Playa2008; 2023255
Wyndham Alltra Riviera NayaritNuevo Vallarta, MexicoWyndham (all ages)Playa2009; 2022229
Wyndham Alltra Samaná (6)
Samaná, Dominican RepublicWyndham (all ages)Playa1994; 1998; 2004; 2023404
Total Rooms Operated2,632
Total Rooms Owned and Operated  9,756
________
(1) Prior to January 6, 2023, this resort was managed by AMResorts and operated under the Dreams brand.
(2) Represents an 88-unit tower and spa owned by us. We manage the majority of the units within the remaining two condo-hotel towers owned by Sagicor that comprise the Jewel Grande Montego Bay Resort & Spa.
(3) Owned by a third party.
(4) We entered into a management agreement to operate this resort during the second quarter of 2022 and commenced operations in February 2023.
(5) We entered into a management agreement to operate this resort during the second quarter of 2022. The resort is currently undergoing renovations and we expect to commence operations in early 2024.
(6) We entered into a management agreement to operate this resort during the first quarter of 2023. The resort is currently undergoing renovations and we expect to commence operations in the third quarter of 2023.
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Results of Operations
Three Months Ended March 31, 2023 and 2022
The following table summarizes our results of operations on a consolidated basis for the three months ended March 31, 2023 and 2022 ($ in thousands):
Three Months Ended March 31,
Increase / Decrease
20232022
Change
% Change
Revenue
Package$233,568 $186,815 $46,753 25.0 %
Non-package34,045 29,454 4,591 15.6 %
The Playa Collection726 296 430 145.3 %
Management fees1,929 1,057 872 82.5 %
Cost reimbursements3,534 1,952 1,582 81.0 %
Total revenue273,802 219,574 54,228 24.7 %
Direct and selling, general and administrative expenses
Direct128,968 106,840 22,128 20.7 %
Selling, general and administrative45,127 37,239 7,888 21.2 %
Depreciation and amortization19,191 19,500 (309)(1.6)%
Reimbursed costs3,534 1,952 1,582 81.0 %
Loss on sale of assets13 — 13 100.0 %
Direct and selling, general and administrative expenses196,833 165,531 31,302 18.9 %
Operating income76,969 54,043 22,926 42.4 %
Interest expense(29,666)(9,168)(20,498)(223.6)%
Other income (expense)232 (514)746 145.1 %
Net income before tax47,535 44,361 3,174 7.2 %
Income tax provision(4,816)(1,614)(3,202)(198.4)%
Net income$42,719 $42,747 $(28)(0.1)%
The tables below set forth information for our total portfolio and comparable portfolio with respect to our Occupancy, Net Package ADR, Net Package RevPAR, Net Package Revenue, Net Non-package Revenue, Management Fee Revenue, Total Net Revenue, Adjusted EBITDA and Adjusted EBITDA Margin. For a description of these operating metrics and non-U.S. GAAP measures, see “Key Indicators of Financial and Operating Performance” below. For discussion of Adjusted EBITDA and reconciliation to the most comparable U.S. GAAP financial measures, see “Key Indicators of Financial and Operating Performance” and “Non-U.S. GAAP Financial Measures” below.
Our comparable portfolio for the three months ended March 31, 2023 excludes the Jewel Palm Beach, which was closed for a majority of the first quarter of 2023 as we transitioned the management of the resort to us from a third-party.
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Total Portfolio
Three Months Ended March 31,
Increase / Decrease
20232022Change % Change
Occupancy70.8 %72.4 %(1.6)pts(2.2)%
Net Package ADR$501.64 $393.90 $107.74 27.4 %
Net Package RevPAR$355.27 $285.00 $70.27 24.7 %
($ in thousands)
Net Package Revenue(1)
$227,786 $182,730 $45,056 24.7 %
Net Non-package Revenue(1)
33,787 29,142 4,645 15.9 %
The Playa Collection Revenue726 296 430 145.3 %
Management Fee Revenue1,929 1,057 872 82.5 %
Total Net Revenue264,228 213,225 51,003 23.9 %
Adjusted EBITDA$98,489 $76,943 $21,546 28.0 %
Adjusted EBITDA Margin37.3 %36.1 %1.2 pts3.3 %
________
(1)For the three months ended March 31, 2022, includes $2.7 million of on-property room upgrade revenue that was reclassified from non-package revenue to package revenue to conform with current period presentation.
Comparable Portfolio
Three Months Ended March 31,
Increase / Decrease
20232022Change% Change
Occupancy75.8 %71.9 %3.9 pts5.4 %
Net Package ADR$502.68 $409.48 $93.20 22.8 %
Net Package RevPAR$381.06 $294.23 $86.83 29.5 %
($ in thousands)
Net Package Revenue$227,174 $175,412 $51,762 29.5 %
Net Non-package Revenue33,715 28,102 5,613 20.0 %
The Playa Collection Revenue726 296 430 145.3 %
Management Fee Revenue1,929 1,057 872 82.5 %
Total Net Revenue263,544 204,867 58,677 28.6 %
Adjusted EBITDA$100,917 $74,653 $26,264 35.2 %
Adjusted EBITDA Margin38.3 %36.4 %1.9 pts5.2 %
    
Total Revenue and Total Net Revenue

Our Total Revenue for the three months ended March 31, 2023 increased $54.2 million, or 24.7%, compared to the three months ended March 31, 2022.

Our Total Net Revenue for the three months ended March 31, 2023 increased $51.0 million, or 23.9%, compared to the three months ended March 31, 2022. The increase was due to the following:
a 27.4% increase in Net Package ADR as a result of:
a higher meetings, incentives, conventions and events (“MICE”) group contribution to our guest mix; and
a benefit from the lower mix of rooms sold at Jewel Punta Cana and the closure of Jewel Palm Beach for the majority of the three months ended March 31, 2023, as we transitioned management to us from a third-party. Excluding these resorts, Net Package ADR increased 17.1%.
Net Non-package Revenue for the three months ended March 31, 2023 increased $4.6 million, or 15.9%, compared to the three months ended March 31, 2022 despite a decrease of $2.0 million compared to the three months ended March 31, 2022 due to the expiration of our Extended Stay Program in late 2022 as COVID-19-related travel restrictions were no longer in effect.
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the above increases were partially offset by a decrease in Occupancy of 1.6 percentage points as a result of reduced Occupancy at the Jewel Punta Cana and Jewel Palm Beach due to the transition of management to us from a third-party. The Jewel Palm Beach was also closed for the majority of the first quarter in 2023 as a result of this transition.
The following table shows a reconciliation of Net Package Revenue, Net Non-package Revenue and Management Fee Revenue to Total Revenue for the three months ended March 31, 2023 and 2022 ($ in thousands):
Three Months Ended March 31,Increase/Decrease
20232022Change % Change
Net Package Revenue
Comparable Net Package Revenue$227,174 $175,412 $51,762 29.5 %
Non-comparable Net Package Revenue612 7,318 (6,706)(91.6)%
Net Package Revenue227,786 182,730 45,056 24.7 %
Net Non-package Revenue
Comparable Net Non-package Revenue33,715 28,102 5,613 20.0 %
Non-comparable Net Non-package Revenue72 1,040 (968)(93.1)%
Net Non-package Revenue33,787 29,142 4,645 15.9 %
The Playa Collection Revenue
Comparable The Playa Collection Revenue726 296 430 145.3 %
Non-comparable The Playa Collection Revenue— — — — %
The Playa Collection Revenue726 296 430 145.3 %
Management Fee Revenue
Comparable Management Fee Revenue1,929 1,057 872 82.5 %
Non-comparable Management Fee Revenue— — — — %
Management Fee Revenue1,929 1,057 872 82.5 %
Total Net Revenue
Comparable Total Net Revenue263,544 204,867 58,677 28.6 %
Non-comparable Total Net Revenue684 8,358 (7,674)(91.8)%
Total Net Revenue264,228 213,225 51,003 23.9 %
Compulsory tips6,040 4,397 1,643 37.4 %
Cost Reimbursements3,534 1,952 1,582 81.0 %
Total revenue$273,802 $219,574 $54,228 24.7 %
Direct Expenses
The following table shows a reconciliation of our direct expenses to Net Direct Expenses for the three months ended March 31, 2023 and 2022 ($ in thousands):
Three Months Ended March 31,Increase/Decrease
20232022Change % Change
Direct expenses$128,968 $106,840 $22,128 20.7 %
Less: compulsory tips6,040 4,397 1,643 37.4 %
Net Direct Expenses$122,928 $102,443 $20,485 20.0 %
Our direct expenses include resort expenses, such as food and beverage, salaries and wages, utilities and other ongoing operational expenses. Our Net Direct Expenses were $122.9 million, or 46.5% of Total Net Revenue, for the three months ended March 31, 2023 and $102.4 million, or 48.0% of Total Net Revenue, for the three months ended March 31, 2022. Direct operating expenses fluctuate based on various factors, including changes in Occupancy, labor costs, utilities, repair and maintenance costs and
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license and property taxes. Management fees and franchise fees, which are computed as a percentage of revenue, increase or decrease as a result of changes in revenues.
Net Direct Expenses for the three months ended March 31, 2023 increased $20.5 million, or 20.0%, compared to the three months ended March 31, 2022. Net Direct Expenses at our comparable properties increased $23.3 million, or 23.9%, compared to the three months ended March 31, 2022 primarily due to the following:
increased operating expenses associated with higher Occupancy levels for our comparable portfolio as a result of the corresponding recovery in our operations compared to the three months ended March 31, 2022, during which time occupancies were negatively affected by the Omicron variant and COVID-19 related travel restrictions; and
appreciation of the Mexican Peso compared to the three months ended March 31, 2022, which primarily impacted labor and food and beverage expenses for the three months ended March 31, 2023.
Net Direct Expenses consists of the following ($ in thousands):
Total Portfolio
Three Months Ended March 31,Increase/Decrease
20232022Change % Change
Food and beverages$28,487 $24,240 $4,247 17.5 %
Guest costs5,715 7,601 (1,886)(24.8)%
Salaries and wages47,195 35,878 11,317 31.5 %
Repairs and maintenance5,955 4,588 1,367 29.8 %
Utilities and sewage10,557 10,317 240 2.3 %
Licenses and property taxes881 795 86 10.8 %
Incentive and management fees41 1,112 (1,071)(96.3)%
Franchise / license fees13,518 10,139 3,379 33.3 %
Transportation and travel expenses1,655 1,302 353 27.1 %
Laundry and cleaning expenses1,653 1,406 247 17.6 %
Property and equipment rental expense2,173 1,306 867 66.4 %
Entertainment expenses and decoration3,144 2,376 768 32.3 %
Office supplies352 299 53 17.7 %
Other operational expenses1,602 1,084 518 47.8 %
Total Net Direct Expenses$122,928 $102,443 $20,485 20.0 %
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Comparable portfolio
Three Months Ended March 31,Increase/Decrease
20232022Change % Change
Food and beverages$28,344 $23,007 $5,337 23.2 %
Guest costs5,574 7,260 (1,686)(23.2)%
Salaries and wages45,898 34,186 11,71234.3 %
Repairs and maintenance5,693 4,343 1,35031.1 %
Utilities and sewage10,184 9,601 5836.1 %
Licenses and property taxes866 690 17625.5 %
Incentive and management fees— 613 (613)(100.0)%
Franchise / license fees13,518 10,139 3,37933.3 %
Transportation and travel expenses1,597 1,179 41835.5 %
Laundry and cleaning expenses1,634 1,353 28120.8 %
Property and equipment rental expense2,164 1,274 89069.9 %
Entertainment expenses and decoration3,137 2,309 82835.9 %
Office supplies349 271 7828.8 %
Other operational expenses1,537 992 54554.9 %
Total Net Direct Expenses$120,495 $97,217 $23,278 23.9 %
Selling, General and Administrative Expenses
Our selling, general and administrative expenses for the three months ended March 31, 2023 increased $7.9 million, or 21.2%, compared to the three months ended March 31, 2022. The increase was primarily driven by higher levels of Occupancy for our comparable portfolio which resulted in a $2.0 million increase in travel agent and tour operator commissions expenses, a $1.3 million increase in credit card commissions, and a $0.8 million increase in advertising expenses. We also experienced a $1.6 million increase in corporate personnel costs and a $0.8 million increase in insurance expenses as a result of higher insurance premiums.
Depreciation and Amortization Expense
Our depreciation and amortization expense for the three months ended March 31, 2023 decreased $0.3 million, or 1.6%, compared to the three months ended March 31, 2022 as we did not add or dispose of significant balances of property and equipment in either period.
Interest Expense
Our interest expense for the three months ended March 31, 2023 increased $20.5 million, or 223.6%, compared to the three months ended March 31, 2022. The increase in interest expense was driven primarily by a $17.5 million increase related to an unfavorable change in fair value of our interest rate swaps and a $6.8 million increase from our $1.1 billion term loan issued in the December 2022 debt refinancing (the “2022 Term Loan”), which incurs interest based on SOFR plus a margin of 4.25%. These increases were partially offset by a $4.7 million decrease in interest expense due to the repayment of the entire outstanding balance of our former additional senior secured credit facility (the “Additional Credit Facility”) and our former property loan agreement (the “Property Loan”) in December 2022 in connection with the December 2022 debt refinancing.
Cash interest paid was $21.4 million for the three months ended March 31, 2023, representing a $3.2 million, or 17.5% increase as compared to the three months ended March 31, 2022. The increase in cash interest paid was primarily driven by a $6.6 million increase from our 2022 Term Loan. This increase was partially offset by a $3.9 million decrease in cash interest paid due to the repayment of the entire outstanding balance of our Additional Credit Facility and Property Loan in connection with our December 2022 debt refinancing.
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Income Tax Provision
For the three months ended March 31, 2023, our income tax provision was $4.8 million, compared to a $1.6 million income tax provision for the three months ended March 31, 2022. The increase of $3.2 million was primarily driven by a $0.5 million increased tax provision associated with higher pre-tax book income from our taxpaying entities as a result of the corresponding recovery in our operations compared to the three months ended March 31, 2022, during which time our results were negatively affected by the Omicron variant and COVID-19 related travel restrictions, a $1.6 million increased tax provision associated with unfavorable foreign exchange rate fluctuations, primarily at our Mexico entities, and a $0.4 million increased tax provision associated with 2022 tax true-ups recorded for our Dominican Republic entities based on the expected APA tax rates.
Key Indicators of Financial and Operating Performance
We use a variety of financial and other information to monitor the financial and operating performance of our business. Some of this is financial information prepared in accordance with U.S. GAAP, while other information, though financial in nature, is not prepared in accordance with U.S. GAAP. For reconciliations of non-U.S. GAAP financial measures to the most comparable U.S. GAAP financial measure, see “Non-U.S. GAAP Financial Measures.” Our management also uses other information that is not financial in nature, including statistical information and comparative data that are commonly used within the lodging industry to evaluate the financial and operating performance of our portfolio. Our management uses this information to measure the performance of our segments and consolidated portfolio. We use this information for planning and monitoring our business, as well as in determining management and employee compensation. These key indicators include:
Net Package Revenue
Net Non-package Revenue
Owned Net Revenue
Management Fee Revenue
Total Net Revenue
Occupancy
Net Package ADR
Net Package RevPAR
Net Direct Expenses
EBITDA
Adjusted EBITDA
Adjusted EBITDA Margin
Owned Resort EBITDA
Owned Resort EBITDA Margin
Comparable Non-U.S. GAAP Measures
Net Package Revenue, Net Non-package Revenue, Owned Net Revenue, Management Fee Revenue, Cost Reimbursements, Total Net Revenue and Net Direct Expenses
“Net Package Revenue” is derived from the sale of all-inclusive packages, which include room accommodations and premium room upgrades, food and beverage services, and entertainment activities, net of compulsory tips paid to employees. Government mandated compulsory tips in the Dominican Republic are not included in this adjustment, as they are already excluded from revenue. Revenue is recognized, net of discounts and rebates, when the rooms are occupied and/or the relevant services have been rendered. Advance deposits received from guests are deferred and included in trade and other payables until the rooms are occupied and/or the relevant services have been rendered, at which point the revenue is recognized.
“Net Non-package Revenue” includes revenue associated with premium services and amenities that are not included in net package revenue, such as dining experiences, wines and spirits, and spa packages, net of compulsory tips paid to employees. Government mandated compulsory tips in the Dominican Republic are not included in this adjustment, as they are already excluded from revenue. Net Non-package Revenue is recognized after the completion of the sale when the product or service is transferred to the customer. Food and beverage revenue not included in a guest's all-inclusive package is recognized when the goods are consumed.
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“Owned Net Revenue” represents Net Package Revenue and Net Non-package Revenue. Owned Net Revenue represents a key indicator to assess the overall performance of our business and analyze trends, such as consumer demand, brand preference and competition. In analyzing our Owned Net Revenues, our management differentiates between Net Package Revenue and Net Non-package Revenue. Guests at our resorts purchase packages at stated rates, which include room accommodations, food and beverage services and entertainment activities, in contrast to other lodging business models, which typically only include the room accommodations in the stated rate. The amenities at all-inclusive resorts typically include a variety of buffet and á la carte restaurants, bars, activities, and shows and entertainment throughout the day.
“Management Fee Revenue” is derived from fees earned for managing resorts owned by third-parties. The fees earned are typically composed of a base fee, which is computed as a percentage of resort revenue, and an incentive fee, which is computed as a percentage of resort profitability. Management Fee Revenue was a minor contributor to our operating results for the three months ended March 31, 2023 and 2022, but we expect Management Fee Revenue to be a more relevant indicator to assess the overall performance of our business in the future to the extent we are successful in entering into more management contracts.
“Total Net Revenue” represents Net Package Revenue, Net Non-package Revenue and Management Fee Revenue. “Cost Reimbursements” is excluded from Total Net Revenue as it is not considered a key indicator of financial and operating performance. Cost Reimbursements is derived from the reimbursement of certain costs incurred by Playa on behalf of resorts managed by Playa and owned by third parties. This revenue is fully offset by reimbursable costs and has no net impact on operating income or net income.
“Net Direct Expenses” represents direct expenses, net of compulsory tips paid to employees.
Occupancy
“Occupancy” represents the total number of rooms sold for a period divided by the total number of rooms available during such period. The total number of rooms available excludes any rooms considered “Out of Order” due to renovation or a temporary problem rendering them inadequate for occupancy for an extended period of time. Occupancy is a useful measure of the utilization of a resort’s total available capacity and can be used to gauge demand at a specific resort or group of properties during a given period. Occupancy levels also enable us to optimize Net Package ADR (as defined below) by increasing or decreasing the stated rate for our all-inclusive packages as demand for a resort increases or decreases.
Net Package ADR
“Net Package ADR” represents total Net Package Revenue for a period divided by the total number of rooms sold during such period. Net Package ADR trends and patterns provide useful information concerning the pricing environment and the nature of the guest base of our portfolio or comparable portfolio, as applicable. Net Package ADR is a commonly used performance measure in the all-inclusive segment of the lodging industry and is commonly used to assess the stated rates that guests are willing to pay through various distribution channels.
Net Package RevPAR
“Net Package RevPAR” is the product of Net Package ADR and the average daily occupancy percentage. Net Package RevPAR does not reflect the impact of non-package revenue. Although Net Package RevPAR does not include this additional revenue, it generally is considered the key performance statistic in the all-inclusive segment of the lodging industry to identify trend information with respect to net room revenue produced by our portfolio or comparable portfolio, as applicable, and to evaluate operating performance on a consolidated basis or a regional basis, as applicable.
EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin, Owned Resort EBITDA, and Owned Resort EBITDA Margin
We define EBITDA, a non-U.S. GAAP financial measure, as net income or loss, determined in accordance with U.S. GAAP, for the period presented before interest expense, income tax and depreciation and amortization expense. EBITDA and Adjusted EBITDA (as defined below) include corporate expenses, which are overhead costs that are essential to support the operation of the Company, including the operations and development of our resorts. We define Adjusted EBITDA, a non-U.S. GAAP financial measure, as EBITDA further adjusted to exclude the following items:
Other miscellaneous non-operating income or expense
Pre-opening expense
Share-based compensation
Other tax expense
Transaction expenses
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Severance expense for employee terminations resulting from non-recurring or unusual events, such as the departure of an executive officer or the disposition of a resort
Gains from property damage insurance proceeds (i.e., property damage insurance proceeds in excess of repair and clean up costs incurred)
Repairs from hurricanes and tropical storms (i.e., significant repair and clean up costs incurred which are not offset by property damage insurance proceeds)
Loss on extinguishment of debt
Other items which may include, but are not limited to the following: contract termination fees; gains or losses from legal settlements; and impairment losses.

We include the non-service cost components of net periodic pension cost or benefit recorded within other income or expense in the Condensed Consolidated Statements of Operations in our calculation of Adjusted EBITDA as they are considered part of our ongoing resort operations.
“Adjusted EBITDA Margin” represents Adjusted EBITDA as a percentage of Total Net Revenue.
“Owned Resort EBITDA” represents Adjusted EBITDA before corporate expenses and Management Fee Revenue.
“Owned Resort EBITDA Margin” represents Owned Resort EBITDA as a percentage of Owned Net Revenue.
Usefulness and Limitation of Non-U.S. GAAP Measures
We believe that each of Net Package Revenue, Net Non-package Revenue, Owned Net Revenue, Total Net Revenue, Net Package ADR, Net Package RevPAR and Net Direct Expenses are all useful to investors as they more accurately reflect our operating results by excluding compulsory tips. These tips have a margin of zero and do not represent our operating results.
We also believe that Adjusted EBITDA is useful to investors for two principal reasons. First, we believe Adjusted EBITDA assists investors in comparing our performance over various reporting periods on a consistent basis by removing from our operating results the impact of items that do not reflect our core operating performance. For example, changes in foreign exchange rates (which are the principal driver of changes in other income or expense), and expenses related to capital raising, strategic initiatives and other corporate initiatives, such as expansion into new markets (which are the principal drivers of changes in transaction expenses), are not indicative of the operating performance of our resorts. The other adjustments included in our definition of Adjusted EBITDA relate to items that occur infrequently and therefore would obstruct the comparability of our operating results over reporting periods. For example, revenue from insurance policies, other than business interruption insurance policies, is infrequent in nature, and we believe excluding these expense and revenue items permits investors to better evaluate the core operating performance of our resorts over time. We believe Adjusted EBITDA Margin provides our investors a useful measurement of operating profitability for the same reasons we find Adjusted EBITDA useful.
The second principal reason that we believe Adjusted EBITDA is useful to investors is that it is considered a key performance indicator by our board of directors (our “Board”) and management. In addition, the compensation committee of our Board determines a portion of the annual variable compensation for certain members of our management, including our executive officers, based, in part, on consolidated Adjusted EBITDA. We believe that Adjusted EBITDA is useful to investors because it provides investors with information utilized by our Board and management to assess our performance and may (subject to the limitations described below) enable investors to compare the performance of our portfolio to our competitors.
We believe that Owned Resort EBITDA and Owned Resort EBITDA Margin are useful to investors as they allow investors to measure resort-level performance and profitability by excluding expenses not directly tied to our resorts, such as corporate expenses, and excluding ancillary revenues not derived from our resorts, such as management fee revenue. We believe Owned Resort EBITDA is also helpful to investors that use it in estimating the value of our resort portfolio. Management uses these measures to monitor property-level performance and profitability.
Our non-U.S. GAAP financial measures are not substitutes for revenue, net income or any other measure determined in accordance with U.S. GAAP. There are limitations to the utility of non-U.S. GAAP financial measures, such as Adjusted EBITDA. For example, other companies in our industry may define Adjusted EBITDA differently than we do. As a result, it may be difficult to use Adjusted EBITDA or similarly named non-U.S. GAAP financial measures that other companies publish to compare the performance of those companies to our performance. Because of these limitations, our non-U.S. GAAP financial measures should not be considered as a measure of the income or loss generated by our business or discretionary cash available for investment in our business, and investors should carefully consider our U.S. GAAP results presented.
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For a reconciliation of EBITDA, Adjusted EBITDA and Owned Resort EBITDA to net income (loss) as computed under U.S. GAAP, see “Non-U.S. GAAP Financial Measures.”
Comparable Non-U.S. GAAP Measures
We believe that presenting Adjusted EBITDA, Owned Resort EBITDA, Total Net Revenue, Net Package Revenue, Net Non-package Revenue and Net Direct Expenses on a comparable basis is useful to investors because these measures include only the results of resorts owned and in operation for the entirety of the periods presented and thereby eliminate disparities in results due to the acquisition or disposition of resorts or the impact of resort closures or re-openings in connection with redevelopment or renovation projects. As a result, we believe these measures provide more consistent metrics for comparing the performance of our operating resorts. We calculate Comparable Adjusted EBITDA, Comparable Owned Resort EBITDA, Comparable Total Net Revenue, Comparable Net Package Revenue and Comparable Net Non-package Revenue as the total amount of each respective measure less amounts attributable to non-comparable resorts, by which we mean resorts that were not owned or in operation during some or all of the relevant reporting period.
Our comparable portfolio for the three months ended March 31, 2023 excludes the Jewel Palm Beach, which was closed for a majority of the first quarter of 2023 as we transitioned the management of the resort to us from a third-party.
A reconciliation of net income as computed under U.S. GAAP to Comparable Adjusted EBITDA is presented in “Non-U.S. GAAP Financial Measures,” below. For a reconciliation of Comparable Net Package Revenue, Comparable Net Non-package Revenue, Comparable Management Fee Revenue and Comparable Total Net Revenue to total revenue as computed under U.S. GAAP, see “Results of Operations.”
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Segment Results
Three Months Ended March 31, 2023 and 2022
We evaluate our business segment operating performance using segment Owned Net Revenue and segment Owned Resort EBITDA. The following tables summarize segment Owned Net Revenue and segment Owned Resort EBITDA for the three months ended March 31, 2023 and 2022 ($ in thousands):
Three Months Ended March 31,
Increase / Decrease
20232022Change % Change
Owned Net Revenue
Yucatán Peninsula$88,748 $68,629 $20,119 29.3 %
Pacific Coast40,515 29,104 11,411 39.2 %
Dominican Republic68,769 69,664 (895)(1.3)%
Jamaica62,977 44,264 18,713 42.3 %
Segment Owned Net Revenue261,009 211,661 49,348 23.3 %
Other564 211 353 167.3 %
The Playa Collection726 296 430 145.3 %
Management fees1,929 1,057 872 82.5 %
Total Net Revenue$264,228 $213,225 $51,003 23.9 %
Three Months Ended March 31,
Increase / Decrease
20232022Change % Change
Owned Resort EBITDA
Yucatán Peninsula$37,936 $29,458 $8,478 28.8 %
Pacific Coast17,523 12,544 4,979 39.7 %
Dominican Republic26,849 28,377 (1,528)(5.4)%
Jamaica27,081 17,158 9,923 57.8 %
Segment Owned Resort EBITDA109,389 87,537 21,852 25.0 %
Other corporate(13,555)(11,947)(1,608)(13.5)%
The Playa Collection726 296 430 145.3 %
Management fees1,929 1,057 872 82.5 %
Total Adjusted EBITDA$98,489 $76,943 $21,546 28.0 %

For a reconciliation of segment Owned Net Revenue and segment Owned Resort EBITDA to total revenue and net income, respectively, each as computed under U.S. GAAP, see Note 15 to our Condensed Consolidated Financial Statements.
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Yucatán Peninsula
The following tables set forth information with respect to our Occupancy, Net Package ADR, Net Package RevPAR, Net Package Revenue, Net Non-package Revenue, Owned Net Revenue, Owned Resort EBITDA and Owned Resort EBITDA Margin for our Yucatán Peninsula segment for the three months ended March 31, 2023 and 2022 for the total segment portfolio:
Three Months Ended March 31,
Increase / Decrease
20232022
Change
% Change 
Occupancy83.8 %71.9 %11.9 pts16.6 %
Net Package ADR$494.08 $436.51 $57.57 13.2 %
Net Package RevPAR$414.21 $313.83 $100.38 32.0 %
($ in thousands)
Net Package Revenue(1)
$79,254 $60,048 $19,206 32.0 %
Net Non-package Revenue(1)
9,494 8,581 913 10.6 %
Owned Net Revenue88,748 68,629 20,119 29.3 %
Owned Resort EBITDA$37,936 $29,458 $8,478 28.8 %
Owned Resort EBITDA Margin42.7 %42.9 %(0.2)pts(0.5)%
________
(1)For the three months ended March 31, 2022, includes $1.0 million of on-property room upgrade revenue that was reclassified from net non-package revenue to net package revenue to conform with current period presentation.
Segment Owned Net Revenue. Our Owned Net Revenue for the three months ended March 31, 2023 increased $20.1 million, or 29.3%, compared to the three months ended March 31, 2022. The increase was due to the following:
an increase in Occupancy of 11.9 percentage points compared to the three months ended March 31, 2022, driven by an increase in demand from Canadian, Mexican and United States sourced guests;
a 13.2% increase in Net Package ADR as a result of a higher MICE group contribution to our guest mix; and
an increase in Net Non-package Revenue of $0.9 million, or 10.6%, compared to the three months ended March 31, 2022. Net Non-package Revenue includes a decrease of $0.7 million due to the expiration of our Extended Stay Program in late 2022 as COVID-19-related travel restrictions were no longer in effect. Excluding this impact, Net Non-package Revenue per sold room increased 2.7% compared to the three months ended March 31, 2022.
Segment Owned Resort EBITDA. Our Owned Resort EBITDA for the three months ended March 31, 2023 increased $8.5 million, or 28.8%, compared to the three months ended March 31, 2022. The increase was a result of leveraging a majority of our direct expenses given the Net Package ADR growth, which was partially offset by Occupancy-related increases in resort operating expenses, union-negotiated wage and benefit increases, and a negative impact from the appreciation of the Mexican Peso compared to the three months ended March 31, 2022.
Owned Resort EBITDA Margin for the three months ended March 31, 2023 was 42.7%, a decrease of 0.2 percentage points compared to the three months ended March 31, 2022. Owned Resort EBITDA Margin was negatively impacted by 370 basis points due to the appreciation of the Mexican Peso compared to the three months ended March 31, 2022. Excluding the impact of foreign exchange rate appreciation, Owned Resort EBITDA Margin would have been 46.4%, an increase of 3.5 percentage points compared to the three months ended March 31, 2022.

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Pacific Coast
The following table sets forth information with respect to our Occupancy, Net Package ADR, Net Package RevPAR, Net Package Revenue, Net Non-package Revenue, Owned Net Revenue, Owned Resort EBITDA and Owned Resort EBITDA Margin for our Pacific Coast segment for the three months ended March 31, 2023 and 2022 for the total segment portfolio:
Three Months Ended March 31,
Increase / Decrease
20232022Change % Change
Occupancy79.3 %66.6 %12.7 pts19.1 %
Net Package ADR$541.73 $459.90 $81.83 17.8 %
Net Package RevPAR$429.80 $306.41 $123.39 40.3 %
($ in thousands)
Net Package Revenue(1)
$35,820 $25,535 $10,285 40.3 %
Net Non-package Revenue(1)
4,695 3,569 1,126 31.5 %
Owned Net Revenue40,515 29,104 11,411 39.2 %
Owned Resort EBITDA$17,523 $12,544 $4,979 39.7 %
Owned Resort EBITDA Margin43.3 %43.1 %0.2 pts0.5 %
________
(1)For the three months ended March 31, 2022, includes $0.3 million of on-property room upgrade revenue that was reclassified from net non-package revenue to net package revenue to conform with current period presentation.
Segment Owned Net Revenue. Our Owned Net Revenue for the three months ended March 31, 2023 increased $11.4 million, or 39.2%, compared to the three months ended March 31, 2022. The increase was due to the following:
an increase in Occupancy of 12.7 percentage points compared to the three months ended March 31, 2022, driven by an increase in demand from Mexican and Canadian sourced guests;
a 17.8% increase in Net Package ADR as a result of a higher MICE group contribution to our guest mix; and
an increase in Net Non-package Revenue of $1.1 million, or 31.5%, compared to the three months ended March 31, 2022. Net Non-package Revenue includes a decrease of $0.4 million due to the expiration of our Extended Stay Program in late 2022 as COVID-19-related travel restrictions were no longer in effect. Excluding this impact, Net Non-package Revenue per sold room increased 23.2% compared to the three months ended March 31, 2022.
Segment Owned Resort EBITDA. Our Owned Resort EBITDA for the three months ended March 31, 2023 increased $5.0 million, or 39.7%, compared to the three months ended March 31, 2022. The increase was a result of leveraging a majority of our direct expenses given the Net Package ADR growth, which was partially offset by Occupancy-related increases in resort operating expenses, union-negotiated wage and benefit increases, and a negative impact from the appreciation of the Mexican Peso compared to the three months ended March 31, 2022.
Owned Resort EBITDA Margin for the three months ended March 31, 2023 was 43.3%, an increase of 0.2 percentage points compared to three months ended March 31, 2022. Owned Resort EBITDA Margin was negatively impacted by 350 basis points due to the appreciation of the Mexican Peso compared to the three months ended March 31, 2022. Excluding the impact of foreign exchange rate appreciation, Owned Resort EBITDA Margin would have been 46.8%, an increase of 3.7 percentage points compared to the three months ended March 31, 2022.

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Dominican Republic
The following table sets forth information with respect to our Occupancy, Net Package ADR, Net Package RevPAR, Net Package Revenue, Net Non-package Revenue, Owned Net Revenue, Owned Resort EBITDA and Owned Resort EBITDA Margin for our Dominican Republic segment for the three months ended March 31, 2023 and 2022 for the total segment portfolio and comparable segment portfolio:
Total Portfolio
Three Months Ended March 31,
Increase / Decrease
20232022Change % Change
Occupancy51.1 %77.3 %(26.2)pts(33.9)%
Net Package ADR$490.55 $330.61 $159.94 48.4 %
Net Package RevPAR$250.47 $255.58 $(5.11)(2.0)%
($ in thousands)
Net Package Revenue(1)
$59,602 $60,818 $(1,216)(2.0)%
Net Non-package Revenue(1)
9,167 8,846 321 3.6 %
Owned Net Revenue68,769 69,664 (895)(1.3)%
Owned Resort EBITDA$26,849 $28,377 $(1,528)(5.4)%
Owned Resort EBITDA Margin39.0 %40.7 %(1.7)pts(4.2)%
________
(1)For the three months ended March 31, 2022, includes $1.2 million of on-property room upgrade revenue that was reclassified from net non-package revenue to net package revenue to conform with current period presentation.
Comparable Portfolio
Three Months Ended March 31,
Increase / Decrease
20232022Change % Change
Occupancy61.8 %76.9 %(15.1)pts(19.6)%
Net Package ADR$494.31 $360.44 133.8737.1 %
Net Package RevPAR$305.71 $277.26 28.4510.3 %
($ in thousands)
Net Package Revenue$58,990 $53,500 5,49010.3 %
Net Non-package Revenue9,095 7,806 1,28916.5 %
Owned Net Revenue68,085 61,306 6,77911.1 %
Owned Resort EBITDA$29,277 $26,087 3,19012.2 %
Owned Resort EBITDA Margin43.0 %42.6 %0.4 pts0.9 %
Segment Comparable Owned Net Revenue. Our Comparable Owned Net Revenue for the three months ended March 31, 2023 increased $6.8 million, or 11.1%, compared to the three months ended March 31, 2022. The increase was due to the following:
a 37.1% increase in Comparable Net Package ADR due to a lower mix of sold rooms at the Jewel Punta Cana during the three months ended March 31, 2023, when we transitioned management to us from a third-party. Excluding this resort, Net Package ADR increased 20.1%;
a decrease in Occupancy of 15.1 percentage points compared to the three months ended March 31, 2022 as a result of reduced Occupancy at the Jewel Punta Cana, as we transitioned the management of the resort to us from a third-party; and
an increase in Comparable Net Non-package Revenue of $1.3 million, or 16.5%, compared to the three months ended March 31, 2022. Comparable Net Non-package Revenue includes:
a decrease of $0.5 million due to the expiration of our Extended Stay Program in late 2022 as COVID-19-related travel restrictions were no longer in effect.
a decrease in Net Non-package Revenue as a result of reduced Occupancy at the Jewel Punta Cana during the three months ended March 31, 2023. Excluding this resort, Net Non-package Revenue increased 39.6%.
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Segment Comparable Owned Resort EBITDA. Our Comparable Owned Resort EBITDA for the three months ended March 31, 2023 increased $3.2 million, or 12.2%, compared to the three months ended March 31, 2022. The increase was a result of leveraging a majority of our direct expenses given the Net Package ADR growth as compared to the three months ended March 31, 2022. Excluding Jewel Punta Cana, Comparable Owned Resort EBITDA for the three months ended March 31, 2023 increased 38.4% compared to the three months ended March 31, 2022.
Comparable Owned Resort EBITDA Margin for the three months ended March 31, 2023 was 43.0%, an increase of 0.4 percentage points compared to the three months ended March 31, 2022. Comparable Owned Resort EBITDA Margin was negatively impacted by 530 basis points due to reduced Occupancy at the Jewel Punta Cana. Excluding this resort, Comparable Owned Resort EBITDA Margin for the three months ended March 31, 2023 was 48.3%, an increase of 2.8 percentage points compared to the three months ended March 31, 2022.
Jamaica
The following table sets forth information with respect to our Occupancy, Net Package ADR, Net Package RevPAR, Net Package Revenue, Net Non-package Revenue, Owned Net Revenue, Owned Resort EBITDA and Owned Resort EBITDA Margin for our Jamaica segment for the three months ended March 31, 2023 and 2022 for the total segment portfolio:
Three Months Ended March 31,
Increase / Decrease
20232022Change % Change
Occupancy82.5 %67.6 %14.9 pts22.0 %
Net Package ADR$500.78 $418.26 $82.52 19.7 %
Net Package RevPAR$413.24 $282.67 $130.57 46.2 %
($ in thousands)
Net Package Revenue(1)
$53,110 $36,329 $16,781 46.2 %
Net Non-package Revenue(1)
9,867 7,935 1,932 24.3 %
Owned Net Revenue62,977 44,264 18,713 42.3 %
Owned Resort EBITDA$27,081 $17,158 $9,923 57.8 %
Owned Resort EBITDA Margin43.0 %38.8 %4.2 pts10.8 %
________
(1)For the three months ended March 31, 2022, includes $0.3 million of on-property room upgrade revenue that was reclassified from net non-package revenue to net package revenue to conform with current period presentation.
Segment Owned Net Revenue. Our Owned Net Revenue for the three months ended March 31, 2023 increased $18.7 million, or 42.3%, compared to the three months ended March 31, 2022. The increase was due to the following:
an increase in Occupancy of 14.9 percentage points compared to the three months ended March 31, 2022, driven by an increase in demand from United States and Canadian sourced guests;
a 19.7% increase in Net Package ADR as a result of a higher MICE group contribution to our guest mix; and
an increase in Net Non-package Revenue of $1.9 million, or 24.3%, compared to the three months ended March 31, 2022. Net Non-package Revenue includes a decrease of $0.6 million due to the expiration of our Extended Stay Program in late 2022 as COVID-19-related travel restrictions were no longer in effect. Excluding this impact, Net Non-package Revenue per sold room increased 9.5% compared to the three months ended March 31, 2022.
Segment Owned Resort EBITDA. Our Owned Resort EBITDA for the three months ended March 31, 2023 increased $9.9 million, or 57.8%, compared to the three months ended March 31, 2022. The increase was a result of leveraging a majority of our direct expenses given the Net Package ADR growth, partially offset by Occupancy-related increases in resort operating expenses compared to the three months ended March 31, 2022.
Owned Resort EBITDA Margin for the three months ended March 31, 2023 increased 4.2 percentage points, or 10.8%, compared to the three months ended March 31, 2022. Owned Resort EBITDA Margin was negatively impacted by 110 basis points due to the timing of sales and marketing expenses and franchise fees compared to the three months ended March 31, 2022.
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Non-U.S. GAAP Financial Measures
Reconciliation of Net Income to Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization)
The following is a reconciliation of our U.S. GAAP net income to EBITDA, Adjusted EBITDA, Owned Resort EBITDA and Comparable Owned Resort EBITDA for the three months ended March 31, 2023 and 2022 ($ in thousands):
Three Months Ended March 31,
20232022
Net income$42,719 $42,747 
Interest expense29,666 9,168 
Income tax provision4,816 1,614 
Depreciation and amortization19,191 19,500 
EBITDA96,392 73,029 
Other (income) expense (a)
(232)514 
Share-based compensation3,166 3,356 
Transaction expense (b)
863 191 
Other tax expense (c)
— 240 
Repairs from hurricanes and tropical storms (d)
(861)— 
Loss on sale of assets13 — 
Non-service cost components of net periodic benefit(852)(387)
Adjusted EBITDA98,489 76,943 
Other corporate (e)
13,555 11,947 
The Playa Collection(726)(296)
Management fees(1,929)(1,057)
Owned Resort EBITDA109,389 87,537 
Less: Non-comparable Owned Resort EBITDA(2,428)2,290 
Comparable Owned Resort EBITDA(f)
$111,817 $85,247 
________
(a)    Represents changes in foreign exchange and other miscellaneous non-operating expenses or income.
(b)    Represents expenses incurred in connection with corporate initiatives, such as: system implementations, debt refinancing costs; other capital raising efforts; and strategic initiatives, such as the launch of a new resort or possible expansion into new markets.
(c)    Relates primarily to a Dominican Republic asset tax, which is an alternative tax to income tax in the Dominican Republic. We eliminate this expense from Adjusted EBITDA because it is substantially similar to the income tax provision or benefit we eliminate from EBITDA.
(d)    Includes significant repair and clean-up expenses incurred from natural events which are not expected to be offset by property damage insurance proceeds. It does not include repair and clean-up costs from natural events that are not considered significant. For the three months ended March 31, 2023, represents a decrease in the expected repair and clean-up expenses for the Jewel Punta Cana related to the impact of Hurricane Fiona.
(e)    For the three months ended March 31, 2023 and 2022, represents corporate salaries and benefits of $9.7 million for 2023 and $8.3 million for 2022, professional fees of $1.9 million for 2023 and $1.9 million for 2022, corporate rent and insurance of $1.0 million for 2023 and $1.0 million for 2022, and corporate travel, software licenses, board fees and other miscellaneous corporate expenses of $1.0 million for 2023 and $0.7 million for 2022.
(f)    Our comparable portfolio for the three months ended March 31, 2023 excludes the Jewel Palm Beach, which was closed for a majority of the first quarter of 2023 as we transitioned the management of the resort to us from a third-party.
Seasonality
The seasonality of the lodging industry and the location of our resorts in Mexico, Jamaica and Dominican Republic have historically resulted in the greatest demand for our resorts occurring between mid-December and April of each year, yielding higher occupancy levels and package rates during this period. This seasonality in demand has resulted in predictable fluctuations in revenue, results of operations, and liquidity, which are consistently higher during the first quarter of each year than in successive quarters.
Inflation
We have experienced an elevated level of inflationary pressure on our direct resort expenses since the beginning of 2022. Inflation effects were experienced mostly through higher labor costs, food and beverage prices, and utility costs. Although we experienced some improvement during 2023, we expect that costs will likely remain elevated at least through the first half of 2023, but could continue for longer. While we, like most operators of lodging properties, have the ability to adjust room rates to reflect the effects of inflation, competitive pricing pressures may limit our ability to raise room rates to fully offset inflationary cost increases.
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Liquidity and Capital Resources
Our net cash provided by operating activities for the three months ended March 31, 2023 was $45.3 million, representing a significant increase over the three months ended March 31, 2022. We believe that our sources of cash, which consist of available cash and cash from operations, together with the available borrowing capacity under our Revolving Credit Facility and our access to the capital markets, will be adequate to meet our cash requirements, including our contractual obligations, over the next twelve months and beyond.
Sources of Cash
As of March 31, 2023, we had $281.5 million of available cash, as compared to $283.9 million as of December 31, 2022. Our primary short-term cash needs are paying operating expenses, maintaining our resorts, and servicing our outstanding indebtedness. We expect to meet our short-term liquidity requirements generally through our existing cash balances, net cash provided by operations, equity issuances or short-term borrowings under our Revolving Credit Facility.
Further, we had no restricted cash balance as of March 31, 2023. As of April 30, 2022, we had approximately $266.9 million of available cash and also had $225.0 million available on our Revolving Credit Facility, which does not mature until January 2028.
We expect to meet our long-term liquidity requirements generally through the sources of cash available for short-term needs, net cash provided by operations, as well as equity or debt issuances or proceeds from the potential disposal of assets.
Cash Requirements
Our expected material cash requirements for the remainder of 2023 and thereafter consist of (i) contractually obligated expenditures, including payments of principal and interest; (ii) other essential expenditures, including operating expenses and maintenance of our resorts; and (iii) opportunistic expenditures, including possible property developments, expansions, renovations, repositioning and rebranding projects, potential acquisitions, the repayment of indebtedness and discretionary repurchases of our securities.
As of March 31, 2023, there have been no significant changes to our “Contractual Obligations” table in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report. As of March 31, 2023, we had $85.6 million of scheduled contractual obligations remaining in 2023 which we expect to pay with available cash.
We are continuing to monitor our liquidity and we may pursue additional sources of liquidity as needed. The availability of additional liquidity options will depend on the economic and financial environment, our credit, our historical and projected financial and operating performance and continued compliance with financial covenants. If operating conditions do not continue to improve, whether as a result of a resurgence of COVID-19 or for other reasons, such as inflation, we may not be able to maintain our current liquidity position or access additional sources of liquidity at acceptable terms or at all.
Financing Strategy
We intend to use other financing sources that may be available to us from time to time, including financing from banks, institutional investors or other lenders, such as bridge loans, letters of credit, joint ventures and other arrangements. Future financings may be unsecured or may be secured by mortgages or other interests in our assets. In addition, we may issue publicly or privately placed debt or equity securities. When possible and desirable, we will seek to replace short-term financing with long-term financing. We may use the proceeds from any financings to refinance existing indebtedness, to finance resort projects or acquisitions or for general working capital or other purposes.
Our indebtedness may be recourse, non-recourse or cross-collateralized and may be fixed rate or variable rate. If the indebtedness is non-recourse, the obligation to repay such indebtedness will generally be limited to the particular resort or resorts pledged to secure such indebtedness. In addition, we may invest in resorts subject to existing loans secured by mortgages or similar liens on the resorts or may refinance resorts acquired on a leveraged basis.
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Recent Transactions Affecting Our Liquidity and Capital Resources
The following table summarizes our net cash provided by or used in operating activities, investing activities and financing activities for the periods indicated and should be read in conjunction with our Condensed Consolidated Statements of Cash Flows and accompanying notes thereto ($ in thousands):
Three Months Ended March 31,
20232022
Net cash provided by operating activities$45,287 $37,648 
Net cash used in investing activities$(2,352)$(4,436)
Net cash used in financing activities$(45,415)$(2,624)
(Decrease) increase in cash, cash equivalents, and restricted cash$(2,480)$30,588 
Cash Flows from Operating Activities
Our net cash from operating activities is generated primarily from operating income of our resorts. For the three months ended March 31, 2023, our net cash provided by operating activities was $45.3 million. For the three months ended March 31, 2022, our net cash provided by operating activities was $37.6 million.
Cash Flows from Investing Activities
Our net cash used in investing activities was $2.4 million for the three months ended March 31, 2023 compared to $4.4 million for the three months ended March 31, 2022.
Activity for the three months ended March 31, 2023:
Purchases of property and equipment of $10.3 million, primarily for maintenance related expenditures; and
Property damage insurance proceeds related to the impacts of Hurricane Fiona of $8.0 million.
Activity for the three months ended March 31, 2022:
Purchases of property and equipment of $4.4 million.
Capital Expenditures
We maintain each of our properties in good repair and condition and in conformity with applicable laws and regulations, franchise and license agreements and management agreements. Capital expenditures made to extend the service life or increase the capacity of our assets, including expenditures for the replacement, improvement or expansion of existing capital assets (i.e., maintenance capital expenditures), differ from ongoing repair and maintenance expense items, which do not in our judgment extend the service life or increase the capacity of assets and are charged to expense as incurred. From time to time, certain of our resorts may be undergoing renovations as a result of our decision to upgrade portions of the resorts, such as guestrooms, public space, meeting space, gyms, spas and/or restaurants, in order to better compete with other resorts in our markets.

Cash Flows from Financing Activities
Our net cash used in financing activities was $45.4 million for the three months ended March 31, 2023 compared to $2.6 million for the three months ended March 31, 2022.
Activity for the three months ended March 31, 2023:
Principal payments on our 2022 Term Loan of $2.8 million; and
Repurchases of ordinary shares of $42.6 million.
Activity for the three months ended March 31, 2022:
Principal payments on our prior Term Loan of $2.5 million.
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Critical Accounting Policies and Estimates

Our Condensed Consolidated Financial Statements included herein have been prepared in accordance with U.S. GAAP. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts and related disclosures. A number of our significant accounting policies are critical due to the fact that they involve higher degree of judgement and estimation uncertainty and have had or are reasonably likely to have a material impact on our financial condition or results of operations. We believe our estimates, assumptions and judgments with respect to our such policies are reasonable based upon information presently available. However, actual results may differ significantly from these estimates under different assumptions, judgments or conditions, which could have a material effect on our financial position, results of operations and related disclosures.

We have discussed those estimates that we believe are critical and require the use of complex judgment in their application in our Consolidated Financial Statements included within our Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on February 23, 2023. There have been no material changes to our critical accounting policies or the methodologies or assumptions we apply under them except for those disclosed in Note 2 to our Condensed Consolidated Financial Statements.
Fair Value of Financial Instruments

Our financial instruments consist of cash and cash equivalents, restricted cash, trade and other receivables, accounts receivable from related parties, certain prepayments and other assets, trade and other payables, payables to related parties, derivative financial instruments, other liabilities including our pension obligation and debt (excluding the financing lease obligation). See Note 13, “Fair value of financial instruments,” to our Condensed Consolidated Financial Statements for more information.
Related Party Transactions
See Note 6, “Related party transactions,” to our Condensed Consolidated Financial Statements for information on these transactions.
Recent Accounting Pronouncements
See the recent accounting pronouncements in Note 2 to our Condensed Consolidated Financial Statements.
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Item 3.    Quantitative and Qualitative Disclosures About Market Risk.
In the normal course of operations, we are exposed to interest rate risk and foreign currency risk which may impact future income and cash flows.
Interest Rate Risk
The risk from market interest rate fluctuations mainly affects long-term debt bearing interest at a variable interest rate. As of March 31, 2023, 100% of our outstanding indebtedness bore interest at floating rates, as our 2022 Term Loan incurs interest based on SOFR plus a margin of 4.25%.
If market rates of interest on our floating rate debt were to increase by 1.0%, the increase in interest expense on our floating rate debt would decrease our future earnings and cash flows by approximately $11.0 million annually, assuming the balance outstanding under our Revolving Credit Facility remained at $0 million. If we included the effects of our interest rate swaps effective April 2023 (discussed below), the decrease would be approximately $5.5 million annually.
If market rates of interest on our floating rate debt were to decrease by 1.0%, the decrease in interest expense on our floating rate debt would increase our future earnings and cash flows by approximately $11.0 million annually, assuming the balance outstanding under our Revolving Credit Facility remained at $0 million. If we included the effects of our interest rate swaps effective April 2023 (discussed below), the increase would be approximately $5.5 million annually.
Our interest rate swaps, which previously mitigated risk related to LIBOR, matured on March 31, 2023. Effective April 15, 2023, we entered into two interest rate swaps to mitigate the floating interest rate risk on our 2022 Term Loan, which incurs interest based on SOFR. The interest rate swaps each have a fixed notional amount of $275.0 million and are not for trading purposes. The fixed rates paid by us on the interest rate swaps are 4.05% and 3.71%, and the variable rate received resets monthly to the one-month SOFR rate. The interest rate swaps mature on April 15, 2025 and April 15, 2026, respectively.
Foreign Currency Risk
We are exposed to exchange rate fluctuations because all of our resort investments are based in locations where the local currency is not the U.S. dollar, which is our reporting currency. For the three months ended March 31, 2023 less than 1% of our revenues were denominated in currencies other than the U.S. dollar. As a result, our revenues reported on our Condensed Consolidated Statements of Operations are affected by movements in exchange rates.
Approximately 75% of our resort-level operating expenses for the three months ended March 31, 2023 were denominated in the local currencies in the countries in which we operate. As a result, our operating expenses reported on our Condensed Consolidated Statements of Operations are affected by movements in exchange rates. The foreign currencies in which our expenses are primarily denominated are the Mexican Peso, Dominican Peso and the Jamaican Dollar.
The effect of an immediate 5% adverse change in foreign exchange rates on Mexican Peso-denominated expenses at March 31, 2023 would have impacted our Owned Resort EBITDA by approximately $2.9 million on a year-to-date basis.
The effect of an immediate 5% adverse change in foreign exchange rates on Dominican Peso-denominated expenses at March 31, 2023 would have impacted our Owned Resort EBITDA by approximately $1.7 million on a year-to-date basis.
The effect of an immediate 5% adverse change in foreign exchange rates on Jamaican Dollar-denominated expenses at March 31, 2023 would have impacted our Owned Resort EBITDA by approximately $1.4 million on a year-to-date basis.
At this time, we do not have any outstanding derivatives or other financial instruments designed to hedge our foreign currency exchange risk.
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Item 4. Controls and Procedures.

Disclosure Controls and Procedures.

We maintain a set of disclosure controls and procedures (as that term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) designed to ensure that information required to be disclosed by us in reports that we file or submit under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and that such information is accumulated and communicated to our management, including our Principal Executive Officer and Principal Financial Officer, as appropriate, to allow timely decisions regarding required disclosures. In accordance with Rule 13a-15(b) of the Exchange Act, as of the end of the period covered by this quarterly report, an evaluation was carried out under the supervision and with the participation of our management, including our Principal Executive Officer and Principal Financial Officer, of the effectiveness of our disclosure controls and procedures. Based on that evaluation, our Principal Executive Officer and Principal Financial Officer concluded that the Company’s disclosure controls and procedures, as of the end of the period covered by this Quarterly Report on Form 10-Q, were effective.

Changes in Internal Control Over Financial Reporting.

There has been no change in our internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act) during the most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
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PART II. OTHER INFORMATION
Item 1.    Legal Proceedings.

In the ordinary course of our business, we are subject to claims and administrative proceedings, none of which we believe are material or would be expected to have, individually or in the aggregate, a material adverse effect on our financial condition, cash flows or results of operations. The outcome of claims, lawsuits and legal proceedings brought against us, however, is subject to significant uncertainties. Refer to Note 7 to our financial statements included in “Item 1. Financial Statements” of this Form 10-Q for a more detailed description of such proceedings and contingencies.
Item 1A. Risk Factors.

As of March 31, 2023, there have been no material changes from the risk factors previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on February 23, 2023, which is accessible on the SEC’s website at www.sec.gov.
Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds.
(a) Unregistered Sale of Securities
None.
(b) Use of Proceeds
None.
(c) Issuer Purchases of Equity Securities
The following table sets forth information regarding our purchases of our ordinary shares during the three months ended March 31, 2023:
Total number of shares purchased
Average price paid per share(1)
Total number of shares purchased as part of publicly announced program(2)
Maximum approximate dollar value of shares that may yet be purchased under the program
($ in thousands)(2)
January 1, 2023 to January 31, 20231,541,689 $6.57 1,541,689 $43,609 
February 1, 2023 to February 28, 2023132,954 8.98 132,954 198,806 
March 1, 2023 to March 31, 20233,299,489 8.96 3,299,489 169,245 
Total4,974,132 $8.17 4,974,132 $169,245 
________
(1) The average price paid per share and maximum approximate dollar value of shares disclosed above include broker commissions.
(2) In February 2023, our Board established a new $200.0 million share repurchase program, which authorization replaced our $100.0 million repurchase authorization announced in September 2022, pursuant to which we may repurchase our outstanding ordinary shares as market conditions and our liquidity warrant. The share repurchase authorization has no expiration date. Repurchases may be made from time to time in the open market, in privately negotiated transactions or by other means (including Rule 10b5-1 trading plans). Depending on market conditions and other factors, these repurchases may be commenced or suspended from time to time without prior notice.
Item 3.    Defaults Upon Senior Securities.

None.
Item 4.    Mine Safety Disclosures.

Not applicable.
Item 5.    Other Information.

None.
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Item 6.    Exhibits.

The following exhibits are filed as part of this Form 10-Q:
Exhibit
Number
  Exhibit Description
31.1
31.2  
32.1  
32.2  
101
The following materials from Playa Hotels & Resorts N.V.’s Quarterly Report on Form 10-Q for the period ended March 31, 2023, formatted in XBRL (eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets, (ii) Condensed Consolidated Statements of Operations, (iii) Condensed Consolidated Statements of Comprehensive Income (iv) Condensed Consolidated Statements of Shareholders’ Equity, (v) Condensed Consolidated Statements of Cash Flows, and (vi) the Notes to the Condensed Consolidated Financial Statements
104Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
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SIGNATURES

    Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
  Playa Hotels & Resorts N.V.
    
Date:May 4, 2023By: /s/ Bruce D. Wardinski
   Bruce D. Wardinski
   Chairman and Chief Executive Officer
   (Principal Executive Officer)

    Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the undersigned, in his capacity as the principal financial officer of the registrant.
  Playa Hotels & Resorts N.V.
    
Date:May 4, 2023By: /s/ Ryan Hymel
   Ryan Hymel
Chief Financial Officer
   (Principal Financial Officer)