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Playa Hotels & Resorts N.V. - Quarter Report: 2023 September (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 September 30, 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 October 31, 2023, there were 138,454,910 shares of the registrant’s ordinary shares, €0.10 par value, outstanding.


Table of Contents

Playa Hotels & Resorts N.V.
TABLE OF CONTENTS
   
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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 September 30,As of December 31,
20232022
ASSETS
Cash and cash equivalents$184,408 $283,945 
Trade and other receivables, net66,554 62,946 
Insurance recoverable10,110 34,191 
Accounts receivable from related parties7,597 8,806 
Inventories20,370 20,046 
Prepayments and other assets59,620 44,177 
Property and equipment, net1,507,068 1,536,567 
Derivative financial instruments11,026 3,510 
Goodwill, net61,654 61,654 
Other intangible assets5,675 6,556 
Deferred tax assets6,862 7,422 
Total assets$1,940,944 $2,069,820 
LIABILITIES AND SHAREHOLDERS’ EQUITY
Trade and other payables$172,492 $231,652 
Payables to related parties10,482 6,852 
Income tax payable 601 990 
Debt1,062,046 1,065,453 
Other liabilities34,380 30,685 
Deferred tax liabilities71,765 69,326 
Total liabilities1,351,766 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 140,637,412 shares outstanding as of September 30, 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, 28,786,568 shares as of September 30, 2023 and 10,046,996 shares as of December 31, 2022)
(214,572)(62,953)
Paid-in capital1,198,919 1,189,090 
Accumulated other comprehensive income (loss)6,151 (6,985)
Accumulated deficit(420,142)(472,990)
Total shareholders’ equity 589,178 664,862 
Total liabilities and shareholders’ equity $1,940,944 $2,069,820 
The accompanying Notes form an integral part of the Condensed Consolidated Financial Statements.
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Playa Hotels & Resorts N.V.
Condensed Consolidated Statements of Operations
($ in thousands, except share data)
(unaudited)
Three Months Ended September 30,Nine Months Ended September 30,
2023202220232022
Revenue
Package$182,425 $173,691 $624,349 $543,738 
Non-package24,984 26,593 91,589 89,793 
The Playa Collection1,051 517 2,605 1,211 
Management fees1,369 786 5,420 3,186 
Cost reimbursements2,785 2,836 9,327 6,868 
Other revenues531 199 1,697 667 
Total revenue213,145 204,622 734,987 645,463 
Direct and selling, general and administrative expenses
Direct126,356 117,333 387,930 343,298 
Selling, general and administrative48,826 51,686 141,567 130,403 
Depreciation and amortization22,548 19,502 61,055 58,630 
Reimbursed costs2,785 2,836 9,327 6,868 
Loss on sale of assets17 11 
Business interruption insurance recoveries(47)— (542)— 
Gain on insurance proceeds(919)— (4,713)— 
Direct and selling, general and administrative expenses199,555 191,359 594,641 539,210 
Operating income13,590 13,263 140,346 106,253 
Interest expense(26,552)(17,832)(82,337)(39,892)
Other (expense) income(350)2,608 (321)7,850 
Net (loss) income before tax(13,312)(1,961)57,688 74,211 
Income tax benefit (provision)2,808 (268)(4,840)(3,168)
Net (loss) income$(10,504)$(2,229)$52,848 $71,043 
(Loss) earnings per share
Basic$(0.07)$(0.01)$0.35 $0.43 
Diluted$(0.07)$(0.01)$0.34 $0.43 
Weighted average number of shares outstanding during the period - Basic145,469,906 165,979,839 151,536,334 165,873,539 
Weighted average number of shares outstanding during the period - Diluted145,469,906 165,979,839 153,606,281 167,124,242 
The accompanying Notes form an integral part of the Condensed Consolidated Financial Statements.
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Playa Hotels & Resorts N.V.
Condensed Consolidated Statements of Comprehensive (Loss) Income
($ in thousands)
(unaudited)
Three Months Ended September 30,Nine Months Ended September 30,
2023202220232022
Net (loss) income$(10,504)$(2,229)$52,848 $71,043 
Other comprehensive income, net of taxes
Gain on interest rate swaps2,111 2,958 13,564 8,778 
Pension obligation (loss) gain(5)155 (428)(195)
Total other comprehensive income2,106 3,113 13,136 8,583 
Comprehensive (loss) income$(8,398)$884 $65,984 $79,626 
The accompanying Notes form an integral part of the Condensed Consolidated Financial Statements.
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Playa Hotels & Resorts N.V.
Condensed Consolidated Statements of Shareholders’ Equity
($ in thousands, except share data)
(unaudited)
Ordinary SharesTreasury SharesPaid-In CapitalAccumulated Other
Comprehensive (Loss) Income
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 
Net income— — — — — — 20,633 20,633 
Other comprehensive income— — — — — 8,353 — 8,353 
Share-based compensation— — — — 3,442 — — 3,442 
Repurchase of ordinary shares(3,752,415)— 3,752,415 (34,159)— — — (34,159)
Balance at June 30, 2023150,650,437 $18,822 18,773,543 $(138,002)$1,195,576 $4,045 $(409,638)$670,803 
Net loss— — — — — — (10,504)(10,504)
Other comprehensive income— — — — — 2,106 — 2,106 
Share-based compensation— — — — 3,343 — — 3,343 
Repurchase of ordinary shares(10,013,025)— 10,013,025 (76,570)— — — (76,570)
Balance at September 30, 2023140,637,412 $18,822 28,786,568 $(214,572)$1,198,919 $6,151 $(420,142)$589,178 

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Playa Hotels & Resorts N.V.
Condensed Consolidated Statements of Shareholders’ Equity (continued)
($ 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 
Net income— — — — — — 30,525 30,525 
Other comprehensive income— — — — — 2,810 — 2,810 
Share-based compensation251,784 26 — — 2,884 — — 2,910 
Balance at June 30, 2022166,029,851 $18,696 2,208,004 $(16,697)$1,183,468 $(13,201)$(456,424)$715,842 
Net loss— — — — — — (2,229)(2,229)
Other comprehensive income— — — — — 3,113 — 3,113 
Share-based compensation2,398 — — — 2,777 — — 2,777 
Repurchase of ordinary shares(973,931)— 973,931 (5,773)— — — (5,773)
Balance at September 30, 2022165,058,318 $18,696 3,181,935 $(22,470)$1,186,245 $(10,088)$(458,653)$713,730 

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)
Nine Months Ended September 30,
20232022
CASH FLOWS FROM OPERATING ACTIVITIES
Net income$52,848 $71,043 
Adjustments to reconcile net income to net cash from operating activities
Depreciation and amortization61,055 58,630 
Amortization of debt discount and issuance costs5,168 3,097 
Share-based compensation9,951 9,043 
Loss (gain) on derivative financial instruments6,048 (18,744)
Deferred income taxes2,999 2,794 
Loss on sale of assets17 11 
Amortization of key money(579)(1,031)
Provision for (recovery of) doubtful accounts663 (1,152)
Other313 445 
Changes in assets and liabilities:
Trade and other receivables, net(4,320)(1,149)
Insurance recoverable6,273 (41,315)
Accounts receivable from related parties1,209 2,817 
Inventories(332)(1,013)
Prepayments and other assets(11,471)(4,430)
Trade and other payables(57,885)56,225 
Payables to related parties 3,630 367 
Income tax payable(389)(483)
Other liabilities(33)1,587 
Net cash provided by operating activities75,165 136,742 
INVESTING ACTIVITIES
Capital expenditures(30,480)(21,566)
Purchase of intangibles(190)(209)
Proceeds from the sale of assets, net22 32 
Property damage insurance proceeds17,808 — 
Net cash used in investing activities(12,840)(21,743)
FINANCING ACTIVITIES
Repayments of debt(8,250)(32,438)
Repurchase of ordinary shares(153,287)(4,152)
Principal payments on finance lease obligations(325)(298)
Net cash used in financing activities(161,862)(36,888)
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS(99,537)78,111 
CASH AND CASH EQUIVALENTS, BEGINNING OF THE PERIOD$283,945 $293,577 
CASH AND CASH EQUIVALENTS, END OF THE PERIOD$184,408 $371,688 
The accompanying Notes form an integral part of the Condensed Consolidated Financial Statements.
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Playa Hotels & Resorts N.V.
Condensed Consolidated Statements of Cash Flows (continued)
($ in thousands)
(unaudited)
Nine Months Ended September 30,
20232022
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid for interest, net of interest capitalized$71,494 $55,049 
Cash paid for income taxes, net$3,065 $1,106 
SUPPLEMENTAL DISCLOSURES OF NON-CASH ACTIVITIES
Capital expenditures incurred but not yet paid$1,895 $824 
Repurchase of ordinary shares not yet settled$— $1,621 
Intangible assets capitalized but not yet paid$— $114 
Right-of-use assets obtained in exchange for new operating lease liabilities$4,155 $— 
Par value of vested restricted share awards$122 $178 
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 and nine months ended September 30, 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
Cloud Computing Arrangements
We capitalize application development stage costs associated with cloud computing arrangements (CCAs). Capitalized implementation costs are included in prepayments and other assets in our Condensed Consolidated Balance Sheets. Amortization is calculated on a straight-line basis over the term of the hosting arrangement and is included in selling, general and administrative expenses in our Condensed Consolidated Statements of Operations.
Accounting standards
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.
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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 September 30, 2023
Yucatán
Peninsula
Pacific
Coast
Dominican
Republic
JamaicaOtherTotal
Package revenue$59,956 $27,234 $49,564 $45,671 $— $182,425 
Non-package revenue7,623 2,935 7,661 6,765 — 24,984 
The Playa Collection— — — — 1,051 1,051 
Management fees40 — — — 1,329 1,369 
Cost reimbursements— — — 1,257 1,528 2,785 
Other revenues— — — — 531 531 
Total revenue$67,619 $30,169 $57,225 $53,693 $4,439 $213,145 
Three Months Ended September 30, 2022
Yucatán
Peninsula
Pacific
Coast
Dominican
Republic
JamaicaOtherTotal
Package revenue (1)
$59,667 $28,106 $46,911 $39,007 $— $173,691 
Non-package revenue (1)(2)(3)
7,999 3,094 8,319 7,181 — 26,593 
The Playa Collection (2)
— — — — 517 517 
Management fees35 — — — 751 786 
Cost reimbursements— — — 1,256 1,580 2,836 
Other revenues (3)
— — — — 199 199 
Total revenue$67,701 $31,200 $55,230 $47,444 $3,047 $204,622 
Nine Months Ended September 30, 2023
Yucatán
Peninsula
Pacific
Coast
Dominican
Republic
Jamaica
Other
Total
Package revenue$208,992 $97,823 $164,723 $152,811 $— $624,349 
Non-package revenue26,859 12,679 26,695 25,356 — 91,589 
The Playa Collection— — — — 2,605 2,605 
Management fees118 — — — 5,302 5,420 
Cost reimbursements— — — 3,864 5,463 9,327 
Other revenues— — — — 1,697 1,697 
Total revenue$235,969 $110,502 $191,418 $182,031 $15,067 $734,987 
Nine Months Ended September 30, 2022
Yucatán
Peninsula
Pacific
Coast
Dominican
Republic
JamaicaOtherTotal
Package revenue (1)
$183,102 $84,301 $161,338 $114,997 $— $543,738 
Non-package revenue (1)(2)(3)
26,868 11,147 28,508 23,270 — 89,793 
The Playa Collection (2)
— — — — 1,211 1,211 
Management fees97 — — — 3,089 3,186 
Cost reimbursements— — — 3,386 3,482 6,868 
Other revenues (3)
— — — — 667 667 
Total revenue$210,067 $95,448 $189,846 $141,653 $8,449 $645,463 
________
(1)Includes $2.5 million and $7.8 million of on-property room upgrade revenue for the quarter-to-date and year-to-date periods, respectively, that was reclassified from non-package revenue to package revenue to conform with current period presentation.
(2)Includes $0.5 million and $1.2 million that was reclassified from non-package revenue to The Playa Collection for the quarter-to-date and year-to-date periods, respectively, to conform with current period presentation.
(3)Includes $0.2 million and $0.7 million that was reclassified from non-package revenue to other revenues for the quarter-to-date and year-to-date periods, respectively, to conform with current period presentation.

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Contract assets and liabilities

We do not have any material contract assets as of September 30, 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 September 30,As of December 31,
20232022
Property and equipment, gross
Land, buildings and improvements$1,766,132 $1,765,130 
Fixtures and machinery (1)
90,612 88,333 
Furniture and other fixed assets221,325 213,005 
Construction in progress22,696 10,293 
Total property and equipment, gross2,100,765 2,076,761 
Accumulated depreciation(593,697)(540,194)
Total property and equipment, net$1,507,068 $1,536,567 
________
(1) Includes the gross balance of our finance lease right-of-use assets, which was $6.3 million as of September 30, 2023 and December 31, 2022.
Depreciation expense for property and equipment was $22.2 million and $19.1 million for the three months ended September 30, 2023 and 2022, respectively, and $60.0 million and $57.5 million for the nine months ended September 30, 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 $17.8 million and business interruption proceeds of $12.2 million related to Hurricane Fiona during the nine months ended September 30, 2023.
The property we manage in the Dominican Republic, Sanctuary Cap Cana, also sustained damage from Hurricane Fiona and was temporarily closed in late September 2022 for necessary clean-up and repairs. The resort reopened on January 20, 2023.
Lessor contracts
We rent certain real estate to third parties for office and retail space within our resorts. Our lessor contracts are considered operating leases and generally have a contractual term of one to three years. The following table presents our rental income for the three and nine months ended September 30, 2023 and 2022 ($ in thousands):
Three Months Ended September 30,Nine Months Ended September 30,
Leases2023202220232022
Operating lease income (1)
$1,007 $1,045 $3,058 $3,347 
________
(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.
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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 of 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 new 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 September 30, 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 September 30, 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.
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 Term Loan due 2029 (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 $42.5 million in aggregate principal of the Term Loan due 2029 (as defined in Note 11) as of December 31, 2022.
Lease with our Chief Executive Officer
One of our offices is owned by our Chief Executive Officer and we sublease the space at that location from a third party.
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Transactions with related parties
Transactions between us and related parties during the three and nine months ended September 30, 2023 and 2022 were as follows ($ in thousands):
Three Months Ended September 30,Nine Months Ended September 30,
Related PartyTransaction2023202220232022
Revenues
ALGPackage revenue$— $3,899 $— $14,724 
Sagicor
Cost reimbursements(1)
$1,258 $1,355 $4,005 $3,775 
Expenses
Hyatt
Franchise fees(2)
$7,531 $7,205 $26,794 $22,420 
Sagicor
Insurance premiums(2)
$396 $264 $1,093 $798 
Chief Executive Officer
Lease expense(3)
$186 $192 $535 $572 
DKCM
Interest expense(4)
$— $5,613 $— $16,490 
AMResorts
Management fees(2)
$— $779 $41 $2,763 
AMResorts
Marketing fees(3)
$— $909 $37 $2,964 
________
(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.
In 2015, the local taxing authorities in Mexico challenged $3.4 million of value added tax (“VAT”) receivable that was recognized in connection with the renovation of the Hyatt Ziva Cancún. During the second quarter of 2022, the tax authorities ruled in our favor resulting in receipt of the VAT and an additional $6.2 million for interest and inflation since the date the VAT refund was requested. The gain of $6.2 million is reported within other (expense) income in the Condensed Consolidated Statements of Operations for the nine months ended September 30, 2022.
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 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 September 30, 2023, we repurchased 10,013,025 ordinary shares under the program at an average price of $7.65 per share. As of September 30, 2023, we had approximately $58.5 million remaining under our $200.0 million share repurchase program.
As of September 30, 2023, our ordinary share capital consisted of 140,637,412 ordinary shares outstanding, which have a par value of €0.10 per share. In addition, 4,809,339 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
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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. On May 11, 2023, our shareholders approved an amendment to the 2017 Plan to increase the number of ordinary shares authorized and available for grant from 12,000,000 shares to 24,000,000 shares. As of September 30, 2023, there were 12,992,502 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 September 30, 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(91,277)6.89 
Unvested balance at September 30, 20232,793,647 $6.85 
Performance share awards consist of ordinary shares that may become earned and vested at the end of a three-year performance period based on the achievement of performance targets adopted by our Compensation Committee. Our performance shares have market conditions where 50% of the performance share awards will vest based on the total shareholder return (“TSR”) of our ordinary shares relative to those of our peer group and 50% will vest based on the compound annual growth rate of the price of our ordinary shares. The peer shareholder return component may vest between 0% and 150% of target, with the award capped at 100% of target should Playa’s TSR be negative. The growth rate component may vest up to 100% of target.
The table below summarizes the key inputs used in the Monte-Carlo simulation to determine the grant date fair value of our performance share awards ($ 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.
A summary of our performance share awards from January 1, 2023 to September 30, 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 September 30, 20232,048,350 $6.34 
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Note 10. Earnings per share
Basic and diluted earnings or loss per share (“EPS”) are as follows ($ in thousands, except share data):
Three Months Ended September 30,Nine Months Ended September 30,
2023202220232022
Numerator
Net (loss) income$(10,504)$(2,229)$52,848 $71,043 
Denominator
Denominator for basic EPS - weighted-average number of shares outstanding145,469,906 165,979,839 151,536,334 165,873,539 
Effect of dilutive securities
Unvested performance share awards— — 1,196,199 500,859 
Unvested restricted share awards— — 873,748 749,844 
Denominator for diluted EPS - adjusted weighted-average number of shares outstanding145,469,906 165,979,839 153,606,281 167,124,242 
EPS - Basic$(0.07)$(0.01)$0.35 $0.43 
EPS - Diluted$(0.07)$(0.01)$0.34 $0.43 

For the three months ended September 30, 2023 and 2022, unvested performance share awards in the amounts of 2,048,350 and 1,329,123 shares, respectively, were not included in the computation of diluted EPS as their effect would have been anti-dilutive. For the nine months ended September 30, 2022, unvested performance share awards in the amounts of 187,500 shares were not included in the computation of diluted EPS as their effect would have been anti-dilutive. We had no anti-dilutive unvested performance share awards for the nine months ended September 30, 2023. The performance targets of our unvested performance share awards were partially achieved as of September 30, 2023 and 2022.

For the three months ended September 30, 2023 and 2022, unvested restricted share awards of 2,793,647 and 2,327,120 shares, respectively, were not included in the computation of diluted EPS as their effect would have been anti-dilutive. We had no anti-dilutive unvested restricted share awards for the nine months ended September 30, 2023 and 2022.
Note 11. Debt
Our debt consists of the following ($ in thousands):
Outstanding Balance as of
Interest RateMaturity DateSeptember 30, 2023December 31, 2022
Senior Secured Credit Facilities
Revolving Credit Facility (1)
SOFR + 3.50%
January 5, 2028$— $— 
Term Loan due 2029 (2)
SOFR + 4.25%
January 5, 20291,091,750 1,100,000 
Total Senior Secured Credit Facilities (at stated value)1,091,750 1,100,000 
Unamortized discount(28,237)(32,428)
Unamortized debt issuance costs(6,800)(7,776)
Total Senior Secured Credit Facilities, net$1,056,713 $1,059,796 
Financing lease obligations$5,333 $5,657 
Total debt, net$1,062,046 $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 September 30, 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 Term Loan due 2029 was 9.58% and 8.58% as of September 30, 2023 and December 31, 2022, respectively.
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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 “Term Loan due 2029” and collectively with the Revolving Credit Facility, the “Senior Secured Credit Facility”).
The Term Loan due 2029 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 September 30, 2023. A summary of our applicable covenants and restrictions is as follows:
DebtCovenant Terms
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
We have entered into interest rate swaps to mitigate the interest rate risk inherent to our floating rate debt. Our interest rate swaps outstanding during the three and nine months ended September 30, 2023 and 2022 are as follows:
Notional AmountInterest Rate ReceivedFixed Rate PaidEffective DateMaturity Date
Designated as Cash Flow Hedges
$275 millionOne-month SOFR4.05%April 15, 2023April 15, 2025
$275 millionOne-month SOFR3.71%April 15, 2023April 15, 2026
Not Designated as Hedging Instrument (1)
$800 millionOne-month LIBOR2.85%March 29, 2018March 31, 2023
________
(1) Our LIBOR-based interest rate swaps were designated as cash flow hedges in March 2019, but were deemed ineffective in February 2020 due to the decrease in interest rates.

The following tables present the effect of our interest rate swaps, net of tax, in the Condensed Consolidated Statements of Comprehensive (Loss) Income and Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 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)
AOCI from our cash flow hedges as of March 31 11,738 
Change in fair value(9,874)— 
Reclassification from AOCI to interest expense1,316 (2,926)
AOCI from our cash flow hedges as of June 30(8,558)8,812 
Change in fair value(4,054)— 
Reclassification from AOCI to interest expense1,943 (2,958)
AOCI from our cash flow hedges as of September 30 (1)
$(10,669)$5,854 
________
(1) As of September 30, 2023, the total amount expected to be reclassified from AOCI to interest expense during the next twelve months is $7.7 million.
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Derivative Financial Instruments Financial Statement ClassificationThree Months Ended September 30,Nine Months Ended September 30,
2023202220232022
Designated as Cash Flow Hedges
Interest rate swapsInterest expense$(1,943)$— $(3,259)$— 
Not Designated as Hedging Instruments
Interest rate swaps (1)
Interest expense$— $16 $3,013 $(7,776)
________
(1) Includes the loss or (gain) from the change in fair value of our interest rate swaps and the cash interest paid or received for the monthly settlements of the derivative.
The following tables present the effect of our interest rate swaps in the Condensed Consolidated Balance Sheet as of September 30, 2023 and December 31, 2022 ($ in thousands):
Derivative Financial InstrumentsFinancial Statement ClassificationAs of September 30,As of December 31,
20232022
Designated as Cash Flow Hedges
Interest rate swapsDerivative financial instruments$11,026 $— 
Not Designated as Hedging Instruments
Interest rate swapsDerivative financial instruments$— $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 September 30, 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.
The following table presents our fair value hierarchy for our financial assets measured at fair value on a recurring basis as of September 30, 2023 and December 31, 2022 ($ in thousands):
Financial AssetsSeptember 30, 2023Level 1Level 2Level 3
Fair value measurements on a recurring basis
Interest rate swaps$11,026 $— $11,026 $— 

Financial AssetsDecember 31, 2022Level 1Level 2Level 3
Fair value measurements on a recurring basis
Interest rate swaps$3,510 $— $3,510 $— 
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The following tables present our fair value hierarchy for our financial liabilities not measured at fair value as of September 30, 2023 and December 31, 2022 ($ in thousands):
Carrying Value
Fair Value
As of September 30, 2023Level 1
Level 2
Level 3
Financial liabilities not recorded at fair value
Term Loan due 2029$1,056,713 $— $— $1,123,155 
Carrying ValueFair Value
As of December 31, 2022Level 1Level 2Level 3
Financial liabilities not recorded at fair value
Term Loan due 2029$1,059,796 $— $— $1,114,860 
The following table summarizes the valuation techniques used to estimate the fair value of our financial instruments measured at fair value on a recurring basis and our financial instruments not measured at fair value:
Valuation Technique
Financial instruments recorded at fair value
Interest rate swapsThe fair value of the interest rate swaps is estimated based on the expected future cash flows by incorporating the notional amount of the swaps, the contractual period to maturity, and observable market-based inputs, including interest rate curves. The fair value also incorporates credit valuation adjustments to appropriately reflect nonperformance risk. The fair value of our interest rate swaps is largely dependent on forecasted SOFR as of the measurement date. If, in subsequent periods, forecasted SOFR exceeds the fixed rates we pay on our interest rate swaps, we will recognize a gain and future cash inflows. Conversely, if forecasted SOFR falls below the fixed rates we pay on our interest rate swaps in subsequent periods, we will recognize a loss and future cash outflows.
Financial instruments not recorded at fair value
Term Loan due 2029The fair value of our Term Loan due 2029 is estimated using cash flow projections over the remaining contractual period by applying market forward rates and discounting back at the appropriate discount rate.
Revolving Credit FacilityThe valuation technique of our Revolving Credit Facility is consistent with our Term Loan due 2029. The fair value of the Revolving Credit Facility generally approximates its carrying value as the expected term is significantly shorter in duration.
Note 14. Other balance sheet items
Trade and other receivables, net
The following summarizes the balances of trade and other receivables, net as of September 30, 2023 and December 31, 2022 ($ in thousands):
As of September 30,As of December 31,
20232022
Gross trade and other receivables (1)
$67,198 $63,396 
Allowance for doubtful accounts(644)(450)
Total trade and other receivables, net$66,554 $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 and nine months ended September 30, 2023 and 2022.
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Prepayments and other assets
The following summarizes the balances of prepayments and other assets as of September 30, 2023 and December 31, 2022 ($ in thousands):
As of September 30,As of December 31,
20232022
Advances to suppliers$23,595 $12,683 
Prepaid income taxes11,563 11,809 
Prepaid other taxes (1)
4,139 4,539 
Operating lease right-of-use assets6,605 2,968 
Key money6,541 6,735 
Other assets7,177 5,443 
Total prepayments and other assets$59,620 $44,177 
________
(1) Includes recoverable value-added tax, general consumption tax, and other sales tax accumulated by our Mexico, Jamaica, Dutch and Dominican Republic entities.
Goodwill
We recognized no goodwill impairment losses on our reporting units nor any additions to goodwill during the three and nine months ended September 30, 2023. The gross carrying values and accumulated impairment losses of goodwill by reportable segment (refer to discussion of our reportable segments in Note 15) as of September 30, 2023 and December 31, 2022 are as follows ($ 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 $61,654 
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Other intangible assets
Other intangible assets as of September 30, 2023 and December 31, 2022 consisted of the following ($ in thousands):
As of September 30,As of December 31,
20232022
Gross carrying value
Casino and other licenses (1)
$875 $875 
Management contract1,900 1,900 
Enterprise resource planning system6,352 6,375 
Other4,738 4,499 
Total gross carrying value13,865 13,649 
Accumulated amortization
Management contract(499)(428)
Enterprise resource planning system(3,447)(2,771)
Other(4,244)(3,894)
Total accumulated amortization(8,190)(7,093)
Net carrying value
Casino and other licenses (1)
875 875 
Management contract1,401 1,472 
Enterprise resource planning system 2,905 3,604 
Other494 605 
Total net carrying value$5,675 $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 September 30, 2023 and 2022 and $1.1 million for the nine months ended September 30, 2023 and 2022.
Trade and other payables
The following summarizes the balances of trade and other payables as of September 30, 2023 and December 31, 2022 ($ in thousands):
As of September 30,As of December 31,
20232022
Trade payables$17,826 $28,422 
Advance deposits (1)
67,287 83,262 
Withholding and other taxes payable14,880 31,111 
Interest payable3,788 3,996 
Payroll and related accruals28,360 29,273 
Accrued expenses and other payables (2)
40,351 55,588 
Total trade and other payables$172,492 $231,652 
________
(1) The opening balance as of January 1, 2022 was $62.6 million.
(2) As of September 30, 2023 and December 31, 2022, accrued expenses and other payables includes approximately $18.0 million and $29.7 million, respectively, of unpaid clean up and repair expenses related to Hurricane Fiona. As of December 31, 2022, accrued expenses and other payables includes approximately $1.7 million related to share repurchases not yet settled.
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Other liabilities
The following summarizes the balances of other liabilities as of September 30, 2023 and December 31, 2022 ($ in thousands):
As of September 30,As of December 31,
20232022
Pension obligation (1)(2)
$9,963 $7,777 
Operating lease liabilities7,091 3,472 
Unfavorable ground lease liability1,775 1,857 
Key money14,589 15,362 
Other962 2,217 
Total other liabilities$34,380 $30,685 
________
(1) For the three months ended September 30, 2023 and 2022, the service cost component of net periodic pension cost was $0.3 million and $0.2 million, respectively. For the nine months ended September 30, 2023 and 2022, the service cost component was $0.9 million and $0.6 million, respectively.
(2) For the three months ended September 30, 2023 and 2022, the non-service cost components of net periodic pension benefit (cost) were $0.2 million and ($0.2) million, respectively. For the nine months ended September 30, 2023 and 2022, the non-service cost components were $1.5 million and $0.7 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 and nine months ended September 30, 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 benefit (provision), and depreciation and amortization expense (“Adjusted EBITDA”) and the performance of our segments is evaluated on Adjusted EBITDA before corporate expenses, The Playa Collection revenue and management fee revenue (“Owned Resort EBITDA”). Adjusted EBITDA and Owned Resort EBITDA should not be considered alternatives to net (loss) income or other measures of financial performance or liquidity derived in accordance with U.S. GAAP.
We define Adjusted EBITDA as net (loss) income, determined in accordance with U.S. GAAP, for the periods presented, before interest expense, income tax benefit (provision), and depreciation and amortization expense, further adjusted to exclude the following items: (a) loss on sale of assets; (b) other (expense) income; (c) repairs from hurricanes and tropical storms; (d) share-based compensation; and (e) 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 and nine months ended September 30, 2023 and 2022 ($ in thousands):
Three Months Ended September 30,Nine Months Ended September 30,
2023202220232022
Owned net revenue
Yucatán Peninsula$65,138 $65,594 $228,777 $204,200 
Pacific Coast29,236 30,301 107,527 92,901 
Dominican Republic57,142 55,190 191,038 189,714 
Jamaica49,838 43,759 170,233 131,781 
Segment owned net revenue201,354 194,844 697,575 618,596 
Other revenues531 199 1,697 667 
Management fees1,369 786 5,420 3,186 
The Playa Collection1,051 517 2,605 1,211 
Cost reimbursements2,785 2,836 9,327 6,868 
Compulsory tips6,055 5,440 18,363 14,935 
Total revenue$213,145 $204,622 $734,987 $645,463 
The following table presents segment Owned Resort EBITDA, Adjusted EBITDA and a reconciliation to net (loss) income for the three and nine months ended September 30, 2023 and 2022 ($ in thousands):
Three Months Ended September 30,Nine Months Ended September 30,
2023202220232022
Owned Resort EBITDA
Yucatán Peninsula$16,844 $21,617 $79,107 $77,049 
Pacific Coast7,947 10,512 40,353 36,966 
Dominican Republic12,673 14,014 61,501 63,138 
Jamaica15,333 11,267 64,337 40,567 
Segment Owned Resort EBITDA52,797 57,410 245,298 217,720 
Other corporate(14,706)(13,839)(42,201)(38,596)
The Playa Collection1,051 517 2,605 1,211 
Management fees1,369 786 5,420 3,186 
Adjusted EBITDA40,511 44,874 211,122 183,521 
Interest expense(26,552)(17,832)(82,337)(39,892)
Depreciation and amortization(22,548)(19,502)(61,055)(58,630)
Loss on sale of assets(6)(2)(17)(11)
Other (expense) income(350)2,608 (321)7,850 
Repairs from hurricanes and tropical storms(77)(8,850)815 (8,850)
Share-based compensation(3,343)(2,777)(9,951)(9,043)
Transaction expenses(742)(582)(2,107)(1,384)
Non-service cost components of net periodic pension (benefit) cost (1)
(205)102 1,539 650 
Net (loss) income before tax(13,312)(1,961)57,688 74,211 
Income tax benefit (provision)2,808 (268)(4,840)(3,168)
Net (loss) income$(10,504)$(2,229)$52,848 $71,043 
________
(1) Represents the non-service cost components of net periodic pension cost or benefit recorded within other (expense) income in the Condensed Consolidated Statements of Operations. We include these costs in calculating Adjusted EBITDA as they are considered part of our ongoing resort operations.
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The following table presents segment property and equipment, gross and a reconciliation to total property and equipment, net as of September 30, 2023 and December 31, 2022 ($ in thousands):
As of September 30,As of December 31,
20232022
Segment property and equipment, gross
Yucatán Peninsula$680,029 $676,218 
Pacific Coast299,576 291,372 
Dominican Republic697,368 690,181 
Jamaica418,009 413,563 
Total segment property and equipment, gross2,094,982 2,071,334 
Corporate property and equipment, gross5,783 5,427 
Accumulated depreciation(593,697)(540,194)
Total property and equipment, net$1,507,068 $1,536,567 

The following table presents segment capital expenditures and a reconciliation to total capital expenditures for the nine months ended September 30, 2023 and 2022 ($ in thousands):
Nine Months Ended September 30,
20232022
Segment capital expenditures
Yucatán Peninsula$8,754 $6,870 
Pacific Coast8,652 3,817 
Dominican Republic7,775 6,249 
Jamaica5,138 3,999 
Total segment capital expenditures (1)
30,319 20,935 
Corporate377 570 
Total capital expenditures (1)
$30,696 $21,505 
________
(1) Represents gross additions to property and equipment.
Note 16. Subsequent events
During the period from October 1, 2023 through October 31, 2023, we purchased 2,182,502 ordinary shares at an average price of $7.09 per share. As of October 31, 2023, we had $43.0 million remaining under our $200.0 million share repurchase program.
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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 (including sustained elevated interest rates) and a potential economic recession, on consumer discretionary spending and the lodging industry in particular;
changes in consumer preferences, including the popularity of the all-inclusive resort model, particularly in the luxury segment of the resort market, and the popularity of tropical beach-front vacations compared other vacation options or destinations;
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 other infectious disease outbreaks, or airline service/capacity issues, as well as changes in demand for our
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resorts resulting from government-mandated safety protocols and/or health concerns, including those related to COVID-19 or other infectious diseases;
the effectiveness of our internal controls and our corporate policies and procedures;
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 September 30, 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 September 30, 2023, we generated a net loss of $10.5 million, Total Revenue of $213.1 million, Net Package RevPAR of $269.50 and Adjusted EBITDA of $40.5 million. For the three months ended September 30, 2022, we generated a net loss of $2.2 million, Total Revenue of $204.6 million, Net Package RevPAR of $257.08 and Adjusted EBITDA of $44.9 million.
For the nine months ended September 30, 2023, we generated net income of $52.8 million, Total Revenue of $735.0 million, Net Package RevPAR of $312.16 and Adjusted EBITDA of $211.1 million. For the nine months ended September 30, 2022, we generated net income of $71.0 million, Total Revenue of $645.5 million, Net Package RevPAR of $272.37 and Adjusted EBITDA of $183.5 million.
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Our Portfolio of Resorts
As of September 30, 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 VallartaNuevo 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 Financial Corporation Limited 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 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 2024.
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Results of Operations
Three Months Ended September 30, 2023 and 2022
The following table summarizes our results of operations on a consolidated basis for the three months ended September 30, 2023 and 2022 ($ in thousands):
Three Months Ended September 30,
Increase / Decrease
20232022
Change
% Change
Revenue
Package$182,425 $173,691 $8,734 5.0 %
Non-package24,984 26,593 (1,609)(6.1)%
The Playa Collection1,051 517 534 103.3 %
Management fees1,369 786 583 74.2 %
Cost reimbursements2,785 2,836 (51)(1.8)%
Other revenues531 199 332 166.8 %
Total revenue213,145 204,622 8,523 4.2 %
Direct and selling, general and administrative expenses
Direct126,356 117,333 9,023 7.7 %
Selling, general and administrative48,826 51,686 (2,860)(5.5)%
Depreciation and amortization22,548 19,502 3,046 15.6 %
Reimbursed costs2,785 2,836 (51)(1.8)%
Loss on sale of assets200.0 %
Business interruption insurance recoveries(47)— (47)(100.0)%
Gain on insurance proceeds(919)— (919)(100.0)%
Direct and selling, general and administrative expenses199,555 191,359 8,196 4.3 %
Operating income13,590 13,263 327 2.5 %
Interest expense(26,552)(17,832)(8,720)(48.9)%
Other (expense) income(350)2,608 (2,958)(113.4)%
Net loss before tax(13,312)(1,961)(11,351)(578.8)%
Income tax benefit (provision)2,808 (268)3,076 1,147.8 %
Net loss$(10,504)$(2,229)$(8,275)(371.2)%
The tables below set forth information for our total 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 September 30, 2023 excludes the Hilton La Romana All-Inclusive Resort and the Hyatt Ziva and Hyatt Zilara Cap Cana, which were closed the last 12 days of the three months ended September 30, 2022 to expedite necessary clean up and repair work as a result of Hurricane Fiona.
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Total Portfolio
Three Months Ended September 30,
Increase / Decrease
20232022Change % Change
Occupancy70.7 %73.8 %(3.1)pts(4.2)%
Net Package ADR$381.41 $348.58 $32.83 9.4 %
Net Package RevPAR$269.50 $257.08 $12.42 4.8 %
($ in thousands)
Net Package Revenue(1)
$176,634 $168,494 $8,140 4.8 %
Net Non-package Revenue(1)
24,720 26,350 (1,630)(6.2)%
The Playa Collection Revenue1,051 517 534 103.3 %
Management Fee Revenue1,369 786 583 74.2 %
Other Revenues531 199 332 166.8 %
Total Net Revenue204,305 196,346 7,959 4.1 %
Adjusted EBITDA$40,511 $44,874 $(4,363)(9.7)%
Adjusted EBITDA Margin19.8 %22.9 %(3.1)pts(13.5)%
________
(1)For the three months ended September 30, 2022, includes $2.5 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 September 30,
Increase / Decrease
20232022Change % Change
Occupancy71.2 %76.6 %(5.4)pts(7.0)%
Net Package ADR$368.29 $340.61 $27.68 8.1 %
Net Package RevPAR$262.12 $261.01 $1.11 0.4 %
($ in thousands)
Net Package Revenue(1)
$135,046 $134,473 $573 0.4 %
Net Non-package Revenue(1)
18,573 20,652 (2,079)(10.1)%
The Playa Collection Revenue1,051 517 534 103.3 %
Management Fee Revenue1,369 786 583 74.2 %
Other Revenues531 199 332 166.8 %
Total Net Revenue156,570 156,627 (57)0.0 %
Adjusted EBITDA$24,468 $33,570 $(9,102)(27.1)%
Adjusted EBITDA Margin15.6 %21.4 %(5.8)pts(27.1)%

Total Revenue and Total Net Revenue

Our Total Revenue for the three months ended September 30, 2023 increased $8.5 million, or 4.2%, compared to the three months ended September 30, 2022.

Our Total Net Revenue for the three months ended September 30, 2023 increased $8.0 million, or 4.1%, compared to the three months ended September 30, 2022. The increase was due to the following:
an increase in Net Package ADR of 9.4% driven by the ongoing recovery in the Jamaican segment; partially offset by
a decrease in Net Non-package Revenue of $1.6 million, or 6.2%;
Excluding Jewel Punta Cana and Jewel Palm Beach, as we transitioned the management of the resorts to us from a third-party resulting in a slower ramp since we were unable to make up ground after missing the key summer selling season, and closed the Jewel Palm Beach for the majority of the first quarter, Net Non-package Revenue decreased $0.4 million, or 1.9%, compared to the three months ended September 30, 2022, mainly driven by a decrease in meetings, incentives, conventions and events (“MICE”) groups.
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a decrease in Occupancy of 3.1 percentage points as a result of lower occupancies at Jewel Punta Cana and Jewel Palm Beach.
Excluding Jewel Punta Cana and Jewel Palm Beach, Occupancy decreased 0.4 percentage points compared to the three months ended September 30, 2022, mainly as a result of increased demand for European travel destinations from American sourced guests.
Adjusted EBITDA
Our Adjusted EBITDA for the three months ended September 30, 2023 decreased $4.4 million, or 9.7%, compared to the three months ended September 30, 2022.
Excluding Jewel Punta Cana and Jewel Palm Beach, Adjusted EBITDA increased $1.5 million compared to the three months ended September 30, 2022 and was negatively impacted by $7.8 million due to the appreciation of the Mexican Peso and includes a $1.0 million benefit from business interruption insurance proceeds and recoverable expenses related to Hurricane Fiona in the Dominican Republic during the second half of 2022. Adjusted EBITDA was also negatively impacted by increased insurance premiums and utilities expenses compared to the three months ended September 30, 2022.
Our Adjusted EBITDA Margin for the three months ended September 30, 2023 decreased 3.1 percentage points, or 13.5%, compared to the three months ended September 30, 2022. Adjusted EBITDA Margin was negatively impacted by 390 basis points due to the appreciation of the Mexican Peso and positively impacted by 50 basis points from business interruption insurance proceeds and recoverable expenses compared to the three months ended September 30, 2022. Excluding these impacts, our Adjusted EBITDA Margin would have been 23.2%, an increase of 0.3 percentage points compared to the three months ended September 30, 2022.
The following table shows a reconciliation of Net Package Revenue and Net Non-package Revenue to Total Revenue for the three months ended September 30, 2023 and 2022 ($ in thousands):
Three Months Ended September 30,Increase/Decrease
20232022Change % Change
Net Package Revenue
Comparable Net Package Revenue$135,046 $134,473 $573 0.4 %
Non-comparable Net Package Revenue41,588 34,021 7,567 22.2 %
Net Package Revenue176,634 168,494 8,140 4.8 %
Net Non-package Revenue
Comparable Net Non-package Revenue18,573 20,652 (2,079)(10.1)%
Non-comparable Net Non-package Revenue6,147 5,698 449 7.9 %
Net Non-package Revenue24,720 26,350 (1,630)(6.2)%
The Playa Collection Revenue1,051 517 534 103.3 %
Management Fee Revenue1,369 786 583 74.2 %
Other Revenues531 199 332 166.8 %
Total Net Revenue
Comparable Total Net Revenue156,570 156,627 (57)0.0 %
Non-comparable Total Net Revenue47,735 39,719 8,016 20.2 %
Total Net Revenue204,305 196,346 7,959 4.1 %
Compulsory tips6,055 5,440 615 11.3 %
Cost Reimbursements2,785 2,836 (51)(1.8)%
Total revenue$213,145 $204,622 $8,523 4.2 %
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Direct Expenses
The following table shows a reconciliation of our direct expenses to Net Direct Expenses for the three months ended September 30, 2023 and 2022 ($ in thousands):
Three Months Ended September 30,Increase/Decrease
20232022Change % Change
Direct expenses$126,356 $117,333 $9,023 7.7 %
Less: compulsory tips6,055 5,440 615 11.3 %
Net Direct Expenses$120,301 $111,893 $8,408 7.5 %
Our direct expenses include resort expenses, such as food and beverage, salaries and wages, utilities and other ongoing operational expenses. Direct operating expenses fluctuate based on various factors, including changes in Occupancy, labor costs, utilities, repair and maintenance costs and licenses 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.
Our Net Direct Expenses were $120.3 million, or 58.9% of Total Net Revenue, for the three months ended September 30, 2023 and $111.9 million, or 57.0% of Total Net Revenue, for the three months ended September 30, 2022. Net Direct Expenses for the three months ended September 30, 2023 increased $8.4 million, or 7.5%, compared to the three months ended September 30, 2022 primarily due to the following:
appreciation of the Mexican Peso compared to the three months ended September 30, 2022, which impacts the majority of our expenses but primarily increased labor and food and beverage expenses during the three months ended September 30, 2023;
increased labor and related expenses as a result of union-negotiated and government-mandated wage and benefit increases compared to the three months ended September 30, 2022; partially offset by
a decrease in occupancy-related expenses due to lower occupancy across the majority of our portfolio.
Net Direct Expenses consists of the following ($ in thousands):
Total Portfolio
Three Months Ended September 30,Increase/Decrease
20232022Change % Change
Food and beverages$27,616 $27,268 $348 1.3 %
Guest costs4,944 6,515 (1,571)(24.1)%
Salaries and wages49,035 39,117 9,918 25.4 %
Repairs and maintenance5,588 6,534 (946)(14.5)%
Utilities and sewage13,125 12,743 382 3.0 %
Licenses and property taxes1,004 640 364 56.9 %
Incentive and management fees— 779 (779)(100.0)%
Franchise fees9,840 9,553 287 3.0 %
Transportation and travel expenses1,798 1,417 381 26.9 %
Laundry and cleaning expenses1,801 1,709 92 5.4 %
Property and equipment rental expense1,013 936 77 8.2 %
Entertainment expenses and decoration2,705 2,795 (90)(3.2)%
Office supplies286 379 (93)(24.5)%
Other operational expenses1,546 1,508 38 2.5 %
Total Net Direct Expenses$120,301 $111,893 $8,408 7.5 %
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Comparable Portfolio
Three Months Ended September 30,Increase/Decrease
20232022Change % Change
Food and beverages$21,040 $21,325 $(285)(1.3)%
Guest costs3,672 4,791 (1,119)(23.4)%
Salaries and wages41,016 32,070 8,946 27.9 %
Repairs and maintenance4,716 5,661 (945)(16.7)%
Utilities and sewage9,668 9,866 (198)(2.0)%
Licenses and property taxes680 452 228 50.4 %
Incentive and management fees— 779 (779)(100.0)%
Franchise fees7,094 7,333 (239)(3.3)%
Transportation and travel expenses1,005 808 197 24.4 %
Laundry and cleaning expenses1,360 1,339 21 1.6 %
Property and equipment rental expense437 474 (37)(7.8)%
Entertainment expenses and decoration2,219 2,389 (170)(7.1)%
Office supplies205 303 (98)(32.3)%
Other operational expenses1,247 1,028 219 21.3 %
Total Net Direct Expenses$94,359 $88,618 $5,741 6.5 %
Selling, General and Administrative Expenses
Our selling, general and administrative expenses for the three months ended September 30, 2023 decreased $2.9 million, or 5.5%, compared to the three months ended September 30, 2022. The decrease was primarily driven by a $7.8 million decrease in property selling, general and administrative expenses primarily related to repair and clean-up expenses associated with Hurricane Fiona incurred in the third quarter of 2022, which was partially offset by a $3.5 million increase in insurance expense due to higher insurance premiums. We also experienced a $0.6 million increase in share-based compensation expense due to an increase in the fair value of restricted and performance share awards granted in 2023 and a $0.5 million increase in the provision for doubtful accounts.
Depreciation and Amortization Expense    
Our depreciation and amortization expense for the three months ended September 30, 2023 increased $3.0 million, or 15.6%, compared to the three months ended September 30, 2022 due to accelerated depreciation recorded on asset disposals at Hyatt Zilara Cancún and ongoing renovations of the Hyatt Ziva Puerto Vallarta and Hyatt Ziva Los Cabos.
Gain on Insurance Proceeds
Our gain on insurance proceeds for the three months ended September 30, 2023 increased $0.9 million, or 100.0%, compared to the three months ended September 30, 2022 as a result of business interruption insurance proceeds received in 2023 related to the temporary closure of two of our resorts in the Dominican Republic due to Hurricane Fiona in the second half of 2022. We had no gain on insurance proceeds during the three months ended September 30, 2022.
Interest Expense
Our interest expense for the three months ended September 30, 2023 increased $8.7 million, or 48.9%, compared to the three months ended September 30, 2022. The increase in interest expense was driven primarily by an $11.7 million increase from our $1.1 billion term loan issued in the December 2022 debt refinancing (the “Term Loan due 2029”), which incurs interest based on SOFR plus a margin of 4.25%, and a $1.3 million increase related to a favorable change in fair value of our prior LIBOR-based interest rate swaps recognized during the three months ended September 30, 2022. We did not recognize any changes in fair value of our prior LIBOR-based interest rate swaps during the three months ended September 30, 2023 as these interest rate swaps matured on March 31, 2023. Additionally, our SOFR-based interest rate swaps effective in April 2023 meet the criteria for hedge accounting and therefore, changes in fair value are recognized through other comprehensive income. These increases were partially offset by a $4.9 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.
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Cash interest paid was $24.3 million for the three months ended September 30, 2023, representing a $6.3 million, or 34.6% increase as compared to the three months ended September 30, 2022. The increase was primarily driven by an $11.1 million increase in cash interest paid for our Term Loan due 2029. This increase was partially offset by a $4.9 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.
Income Tax Provision
For the three months ended September 30, 2023, our income tax benefit was $2.8 million, compared to a $0.3 million income tax provision for the three months ended September 30, 2022. The decrease of $3.1 million was primarily driven by a $2.3 million decreased tax provision associated with lower pre-tax book income from our taxpaying entities and a $1.3 million decreased tax provision associated with favorable foreign exchange rate fluctuations on our deferred tax liabilities, primarily at our Mexico and Dominican Republic entities, which was partially offset by a $0.5 million increased tax provision associated with the APA tax expense for our Dominican Republic entities.
Results of Operations
Nine Months Ended September 30, 2023 and 2022
The following table summarizes our results of operations on a consolidated basis for the nine months ended September 30, 2023 and 2022 ($ in thousands):
Nine Months Ended September 30,
Increase / Decrease
20232022
Change
% Change
Revenue
Package$624,349 $543,738 $80,611 14.8 %
Non-package91,589 89,793 1,796 2.0 %
The Playa Collection2,605 1,211 1,394 115.1 %
Management fees5,420 3,186 2,234 70.1 %
Cost reimbursements9,327 6,868 2,459 35.8 %
Other revenues1,697 667 1,030 154.4 %
Total revenue734,987 645,463 89,524 13.9 %
Direct and selling, general and administrative expenses
Direct387,930 343,298 44,632 13.0 %
Selling, general and administrative141,567 130,403 11,164 8.6 %
Depreciation and amortization61,055 58,630 2,425 4.1 %
Reimbursed costs9,327 6,868 2,459 35.8 %
Loss on sale of assets17 11 54.5 %
Business interruption insurance recoveries(542)— (542)(100.0)%
Gain on insurance proceeds(4,713)— (4,713)(100.0)%
Direct and selling, general and administrative expenses594,641 539,210 55,431 10.3 %
Operating income140,346 106,253 34,093 32.1 %
Interest expense(82,337)(39,892)(42,445)(106.4)%
Other (expense) income(321)7,850 (8,171)(104.1)%
Net income before tax57,688 74,211 (16,523)(22.3)%
Income tax provision(4,840)(3,168)(1,672)(52.8)%
Net income$52,848 $71,043 $(18,195)(25.6)%
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.
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Our comparable portfolio for the nine months ended September 30, 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, the Hilton La Romana All-Inclusive Resort and the Hyatt Ziva and Hyatt Zilara Cap Cana which were closed the last 12 days of the nine months ended September 30, 2022 to expedite necessary clean up and repair work as a result of Hurricane Fiona.
Total Portfolio
Nine Months Ended September 30,
Increase / Decrease
20232022Change % Change
Occupancy71.7 %73.7 %(2.0)pts(2.7)%
Net Package ADR$435.67 $369.33 $66.34 18.0 %
Net Package RevPAR$312.16 $272.37 $39.79 14.6 %
($ in thousands)
Net Package Revenue(1)
$607,098 $529,716 $77,382 14.6 %
Net Non-package Revenue(1)
90,477 88,880 1,597 1.8 %
The Playa Collection Revenue2,605 1,211 1,394 115.1 %
Management Fee Revenue5,420 3,186 2,234 70.1 %
Other Revenues1,697 667 1,030 154.4 %
Total Net Revenue707,297 623,660 83,637 13.4 %
Adjusted EBITDA$211,122 $183,521 $27,601 15.0 %
Adjusted EBITDA Margin29.8 %29.4 %0.4 pts1.4 %
________
(1)For the nine months ended September 30, 2022, includes $7.8 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
Nine Months Ended September 30,
Increase / Decrease
20232022Change % Change
Occupancy73.3 %74.1 %(0.8)pts(1.1)%
Net Package ADR$442.99 $379.59 $63.40 16.7 %
Net Package RevPAR$324.62 $281.35 $43.27 15.4 %
($ in thousands)
Net Package Revenue$451,966 $391,715 $60,251 15.4 %
Net Non-package Revenue65,635 65,307 328 0.5 %
The Playa Collection Revenue2,605 1,211 1,394 115.1 %
Management Fee Revenue5,420 3,186 2,234 70.1 %
Other Revenues1,697 667 1,030 154.4 %
Total Net Revenue527,323 462,086 65,237 14.1 %
Adjusted EBITDA$142,994 $126,846 $16,148 12.7 %
Adjusted EBITDA Margin27.1 %27.5 %(0.4)pts(1.5)%
Total Revenue and Total Net Revenue
Our Total Revenue for the nine months ended September 30, 2023 increased $89.5 million, or 13.9%, compared to the nine months ended September 30, 2022.
Our Total Net Revenue for the nine months ended September 30, 2023 increased $83.6 million, or 13.4%, compared to the nine months ended September 30, 2022. The increase was due to the following:
an increase in Net Package ADR of 18.0% as a result of:
a higher MICE group contribution to our guest mix; and
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a benefit from the reduced occupancy levels at Jewel Punta Cana as well as Jewel Palm Beach, which was closed the majority of the first quarter, as we transitioned the management of the resorts to us from a third-party resulting in a slower ramp since we were unable to make up ground after missing the key summer selling season. Excluding these resorts, Net Package ADR increased 14.5%.
an increase in Net Non-package Revenue of $1.6 million, or 1.8%, despite a $3.6 million decrease due to the expiration of our Extended Stay Program late in the second quarter of 2022 as COVID-19-related travel restrictions were no longer in effect. Net Non-package Revenue also was impacted by a $5.7 million drag from Jewel Punta Cana and Jewel Palm Beach compared to the nine months ended September 30, 2022; partially offset by
a decrease in Occupancy of 2.0 percentage points as a result of Jewel Punta Cana and Jewel Palm Beach.
Excluding Jewel Punta Cana and Jewel Palm Beach, Occupancy increased 4.1 percentage points compared to the nine months ended September 30, 2022.
Adjusted EBITDA
Our Adjusted EBITDA for the nine months ended September 30, 2023 increased $27.6 million, or 15.0%, compared to the nine months ended September 30, 2022. Adjusted EBITDA for the nine months ended September 30, 2023 was negatively impacted by $18.8 million due to the appreciation of the Mexican Peso and includes a $5.3 million benefit from business interruption proceeds and recoverable expenses related to Hurricane Fiona that impacted the Dominican Republic in the second half of 2022. Adjusted EBITDA was also negatively impacted by increased insurance premiums and utilities expenses compared to the nine months ended September 30, 2022.
Our Adjusted EBITDA Margin for the nine months ended September 30, 2023 increased 0.4 percentage points, or 1.4%, compared to the nine months ended September 30, 2022. Adjusted EBITDA Margin was negatively impacted by 270 basis points due to the appreciation of the Mexican Peso and positively impacted by 80 basis points from business interruption proceeds and recoverable expenses compared to the nine months ended September 30, 2022. Excluding these impacts, Adjusted EBITDA Margin would have been 31.8%, an increase of 2.4 percentage points compared to the nine months ended September 30, 2022.
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The following table shows a reconciliation of comparable Net Package Revenue and Net Non-package Revenue to Total Revenue for the nine months ended September 30, 2023 and 2022 ($ in thousands):
Nine Months Ended September 30,Increase/Decrease
20232022Change % Change
Net Package Revenue
Comparable Net Package Revenue$451,966 $391,715 $60,251 15.4 %
Non-comparable Net Package Revenue155,132 138,001 17,131 12.4 %
Net Package Revenue607,098 529,716 77,382 14.6 %
Net Non-package Revenue
Comparable Net Non-package Revenue65,635 65,307 328 0.5 %
Non-comparable Net Non-package Revenue24,842 23,573 1,269 5.4 %
Net Non-package Revenue90,477 88,880 1,597 1.8 %
The Playa Collection Revenue2,605 1,211 1,394 115.1 %
Management Fee Revenue5,420 3,186 2,234 70.1 %
Other Revenues1,697 667 1,030 154.4 %
Total Net Revenue
Comparable Total Net Revenue527,323 462,086 65,237 14.1 %
Non-comparable Total Net Revenue179,974 161,574 18,400 11.4 %
Total Net Revenue707,297 623,660 83,637 13.4 %
Compulsory tips18,363 14,935 3,428 23.0 %
Cost Reimbursements9,327 6,868 2,459 35.8 %
Total revenue$734,987 $645,463 $89,524 13.9 %
Direct Expenses
The following table shows a reconciliation of our direct expenses to Net Direct Expenses for the nine months ended September 30, 2023 and 2022 ($ in thousands):
Nine Months Ended September 30,Increase/Decrease
20232022Change % Change
Direct expenses$387,930 $343,298 $44,632 13.0 %
Less: compulsory tips18,363 14,935 3,428 23.0 %
Net Direct Expenses$369,567 $328,363 $41,204 12.5 %
Our direct expenses include resort expenses, such as food and beverage, salaries and wages, utilities and other ongoing operational expenses. Direct operating expenses fluctuate based on various factors, including changes in Occupancy, labor costs, utilities, repair and maintenance costs and licenses 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.
Our Net Direct Expenses were $369.6 million, or 52.3%, of Total Net Revenue for the nine months ended September 30, 2023 and $328.4 million, or 52.7%, of Total Net Revenue for the nine months ended September 30, 2022. Net Direct Expenses for the nine months ended September 30, 2023 increased $41.2 million, or 12.5%, compared to the nine months ended September 30, 2022. Net Direct Expenses at our comparable properties increased $33.9 million, or 14.0%, compared to the nine months ended September 30, 2022 primarily due to the following:
appreciation of the Mexican Peso compared to the nine months ended September 30, 2022, which impacts the majority of our expenses but primarily increased labor and food and beverage expenses during the nine months ended September 30, 2023;
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increased labor and related expenses as a result of union-negotiated and government-mandated wage and benefit increases compared to the nine months ended September 30, 2022; partially offset by
a decrease in guest costs due to the expiration of our Extended Stay Program late in the second quarter of 2022 as COVID-19-related travel restrictions were no longer in effect;
a decrease in incentive and management fees due to the transition of management of the Jewel Punta Cana and Jewel Palm Beach to us from a third-party; and
a decrease in occupancy-related expenses for our Dominican Republic segment due to lower occupancy at Jewel Palm Beach and Jewel Punta Cana.
Net Direct Expenses consists of the following ($ in thousands):    
Total Portfolio
Nine Months Ended September 30,Increase/Decrease
20232022Change % Change
Food and beverages$85,145 $78,711 $6,434 8.2 %
Guest costs16,507 22,102 (5,595)(25.3)%
Salaries and wages145,261 114,684 30,577 26.7 %
Repairs and maintenance17,702 17,134 568 3.3 %
Utilities and sewage35,664 35,178 486 1.4 %
Licenses and property taxes2,707 1,853 854 46.1 %
Incentive and management fees41 2,763 (2,722)(98.5)%
Franchise fees36,201 29,886 6,315 21.1 %
Transportation and travel expenses5,295 4,103 1,192 29.1 %
Laundry and cleaning expenses5,317 4,647 670 14.4 %
Property and equipment rental expense4,922 4,071 851 20.9 %
Entertainment expenses and decoration9,169 8,102 1,067 13.2 %
Office supplies1,009 1,014 (5)(0.5)%
Other operational expenses4,627 4,115 512 12.4 %
Total Net Direct Expenses$369,567 $328,363 $41,204 12.5 %
Comparable Portfolio
Nine Months Ended September 30,Increase/Decrease
20232022Change % Change
Food and beverages$61,645 $56,238 $5,407 9.6 %
Guest costs10,647 14,891 (4,244)(28.5)%
Salaries and wages116,057 89,141 26,916 30.2 %
Repairs and maintenance14,338 14,010 328 2.3 %
Utilities and sewage24,631 24,642 (11)0.0 %
Licenses and property taxes1,729 1,275 454 35.6 %
Incentive and management fees— 1,556 (1,556)(100.0)%
Franchise fees26,205 22,291 3,914 17.6 %
Transportation and travel expenses2,501 1,935 566 29.3 %
Laundry and cleaning expenses3,847 3,396 451 13.3 %
Property and equipment rental expense1,977 1,822 155 8.5 %
Entertainment expenses and decoration7,407 6,752 655 9.7 %
Office supplies686 709 (23)(3.2)%
Other operational expenses3,410 2,569 841 32.7 %
Total Net Direct Expenses$275,080 $241,227 $33,853 14.0 %
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Selling, General and Administrative Expenses
Our selling, general and administrative expenses for the nine months ended September 30, 2023 increased $11.2 million, or 8.6%, compared to the nine months ended September 30, 2022. The increase was primarily driven by a $7.3 million increase in insurance expense driven by higher insurance premiums for the current year, a $2.3 million increase in travel agent and tour operator commissions expense and a $1.8 million increase in the provision for doubtful accounts due to the reversal of expense during the nine months ended September 30, 2022 following the economic recovery from the COVID-19 pandemic.
Depreciation and Amortization Expense
Our depreciation and amortization expense for the nine months ended September 30, 2023 increased $2.4 million, or 4.1%, compared to the nine months ended September 30, 2022, due to accelerated depreciation recorded on asset disposals at Hyatt Zilara Cancún and ongoing renovations of the Hyatt Ziva Puerto Vallarta and Hyatt Ziva Los Cabos.
Gain on Insurance Proceeds
Our gain on insurance proceeds for the nine months ended September 30, 2023 increased $4.7 million, or 100.0%, compared to the nine months ended September 30, 2022 as a result of business interruption insurance proceeds received in 2023 related to the temporary closure of two of our resorts in the Dominican Republic due to Hurricane Fiona in the second half of 2022. We had no gain on insurance proceeds during the nine months ended September 30, 2022.
Interest Expense
Our interest expense for the nine months ended September 30, 2023 increased $42.4 million, or 106.4%, compared to the nine months ended September 30, 2022. The increase in interest expense was driven primarily by a $29.7 million of additional interest from the Term Loan due 2029, which incurs interest based on SOFR plus a margin of 4.25%. The increase was also due to a $25.0 million increase related to an unfavorable change in fair value of our prior LIBOR-based interest rate swaps, which matured on March 31, 2023. Our SOFR-based interest rate swaps effective in April 2023 meet the criteria for hedge accounting and therefore, changes in fair value are recognized through other comprehensive income. These increases were partially offset by a $14.4 million decrease in interest expense due to the repayment of the entire outstanding balance of the Additional Credit Facility and Property Loan in December 2022 in connection with the December 2022 debt refinancing.
Cash interest paid was $71.5 million for the nine months ended September 30, 2023, representing a $16.5 million, or 30.0% increase as compared to the nine months ended September 30, 2022. The increase was primarily driven by a $30.2 million increase in cash interest paid for our Term Loan due 2029. This increase was partially offset by a $14.4 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.
Income Tax Provision
For the nine months ended September 30, 2023, our income tax provision was $4.8 million, compared to a $3.2 million income tax provision for the nine months ended September 30, 2022. The increase in our income tax provision of $1.6 million was primarily driven by an additional $2.0 million of expense due to unfavorable foreign exchange rate fluctuations, primarily at our Mexico and Dominican Republic entities, $0.8 million associated with the APA tax expense for our Dominican Republic entities, and $0.4 million due to changes in valuation allowances, which was partially offset by a $2.0 million decrease due to lower pre-tax book income for our taxpaying entities compared to the nine months ended September 30, 2022.
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
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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.
“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 and nine months ended September 30, 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, Management Fee Revenue, The Playa Collection revenue and Other revenues. “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 (loss) income.
“Net Direct Expenses” represents direct expenses, net of compulsory tips paid to employees.
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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 Net 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 Package 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
Losses or gains on sales of assets
Share-based compensation
Other tax expense
Transaction expenses
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.
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“Owned Resort EBITDA” represents Adjusted EBITDA before corporate expenses, The Playa Collection revenue 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, 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.
For a reconciliation of EBITDA, Adjusted EBITDA and Owned Resort EBITDA to net (loss) income 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.
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Our comparable portfolio for the three months ended September 30, 2023 excludes the Hilton La Romana All-Inclusive Resort and the Hyatt Ziva and Hyatt Zilara Cap Cana which were closed the last 12 days of the three months ended September 30, 2022 to expedite necessary clean up and repair work as a result of Hurricane Fiona.
Our comparable portfolio for the nine months ended September 30, 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, and the Hilton La Romana All-Inclusive Resort and the Hyatt Ziva and Hyatt Zilara Cap Cana which were closed the last 12 days of the nine months ended September 30, 2022 to expedite necessary clean up and repair work as a result of Hurricane Fiona.
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, 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 September 30, 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 September 30, 2023 and 2022 ($ in thousands):
Three Months Ended September 30,
Increase / Decrease
20232022Change % Change
Owned Net Revenue
Yucatán Peninsula$65,138 $65,594 $(456)(0.7)%
Pacific Coast29,236 30,301 (1,065)(3.5)%
Dominican Republic57,142 55,190 1,952 3.5 %
Jamaica49,838 43,759 6,079 13.9 %
Segment Owned Net Revenue201,354 194,844 6,510 3.3 %
Other revenues531 199 332 166.8 %
The Playa Collection1,051 517 534 103.3 %
Management fees1,369 786 583 74.2 %
Total Net Revenue$204,305 $196,346 $7,959 4.1 %
Three Months Ended September 30,
Increase / Decrease
20232022Change % Change
Owned Resort EBITDA
Yucatán Peninsula$16,844 $21,617 $(4,773)(22.1)%
Pacific Coast7,947 10,512 (2,565)(24.4)%
Dominican Republic12,673 14,014 (1,341)(9.6)%
Jamaica15,333 11,267 4,066 36.1 %
Segment Owned Resort EBITDA52,797 57,410 (4,613)(8.0)%
Other corporate(14,706)(13,839)(867)(6.3)%
The Playa Collection1,051 517 534 103.3 %
Management fees1,369 786 583 74.2 %
Total Adjusted EBITDA$40,511 $44,874 $(4,363)(9.7)%

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 September 30, 2023 and 2022 for the total segment portfolio:
Three Months Ended September 30,
Increase / Decrease
20232022
Change
% Change 
Occupancy73.9 %77.0 %(3.1)pts(4.0)%
Net Package ADR$399.10 $383.56 $15.54 4.1 %
Net Package RevPAR$294.84 $295.38 $(0.54)(0.2)%
($ in thousands)
Net Package Revenue(1)
$57,668 $57,774 $(106)(0.2)%
Net Non-package Revenue(1)
7,470 7,820 (350)(4.5)%
Owned Net Revenue65,138 65,594 (456)(0.7)%
Owned Resort EBITDA$16,844 $21,617 $(4,773)(22.1)%
Owned Resort EBITDA Margin25.9 %33.0 %(7.1)pts(21.5)%
________
(1)For the three months ended September 30, 2022, includes $1.1 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 September 30, 2023 decreased $0.5 million, or 0.7%, compared to the three months ended September 30, 2022 and was driven by:
a decrease in Occupancy of 3.1 percentage points driven by a lower MICE group contribution to our guest mix and demand for European travel destinations from American sourced guests;
a decrease in Net Non-package Revenue of $0.4 million, or 4.5%, compared to the three months ended September 30, 2022;
Net Non-package Revenue per sold room decreased 0.4%, primarily driven by a lower MICE group contribution to our guest mix; partially offset by
an increase in Net Package ADR of 4.1%.
Segment Owned Resort EBITDA. Our Owned Resort EBITDA for the three months ended September 30, 2023 decreased $4.8 million, or 22.1%, compared to the three months ended September 30, 2022. The decrease was largely due to a $5.5 million impact as a result of the appreciation of the Mexican Peso, union-negotiated and government-mandated wage and benefit increases and increases in insurance premiums compared to the three months ended September 30, 2022.
Our Owned Resort EBITDA Margin for the three months ended September 30, 2023 was 25.9%, a decrease of 7.1 percentage points compared to the three months ended September 30, 2022. Owned Resort EBITDA Margin was negatively impacted by 840 basis points due to the appreciation of the Mexican Peso and by 230 basis points from increases in labor and related expenses, which were partially due to union-negotiated and government-mandated wage and benefit increases compared to the three months ended September 30, 2022. Excluding the impact from the appreciation of the Mexican Peso, Owned Resort EBITDA Margin for the three months ended September 30, 2023 would have been 34.3%, an increase of 1.3 percentage points compared to the three months ended September 30, 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 September 30, 2023 and 2022 for the total segment portfolio:
Three Months Ended September 30,
Increase / Decrease
20232022Change % Change
Occupancy64.5 %72.3 %(7.8)pts(10.8)%
Net Package ADR$478.83 $442.88 $35.95 8.1 %
Net Package RevPAR$309.05 $320.10 $(11.05)(3.5)%
($ in thousands)
Net Package Revenue(1)
$26,328 $27,270 $(942)(3.5)%
Net Non-package Revenue(1)
2,908 3,031 (123)(4.1)%
Owned Net Revenue29,236 30,301 (1,065)(3.5)%
Owned Resort EBITDA$7,947 $10,512 $(2,565)(24.4)%
Owned Resort EBITDA Margin27.2 %34.7 %(7.5)pts(21.6)%
________
(1)For the three months ended September 30, 2022, includes $0.2 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.
Segment Owned Net Revenue. Our Owned Net Revenue for the three months ended September 30, 2023 decreased $1.1 million, or 3.5%, compared to the three months ended September 30, 2022 and was driven by:
a decrease in Occupancy of 7.8 percentage points, driven by ongoing renovations at the two resorts in this segment and an increase in demand for European travel destinations from American sourced guests;
a decrease in Net Non-package Revenue of $0.1 million, or 4.1%, primarily driven by a lower MICE group contribution to our guest mix;
Net Non-package Revenue per sold room increased 7.4%;
an increase in Net Package ADR of 8.1%.
Segment Owned Resort EBITDA. Our Owned Resort EBITDA for the three months ended September 30, 2023 decreased $2.6 million, or 24.4%, compared to the three months ended September 30, 2022. Owned Resort EBITDA compared to the three months ended September 30, 2022 was negatively impacted by $2.4 million due to the appreciation of the Mexican Peso, increases in labor and related expenses, which were due to union-negotiated and government-mandated wage and benefit increases, and increases in insurance premiums and energy costs.
Our Owned Resort EBITDA Margin for the three months ended September 30, 2023 was 27.2%, a decrease of 7.5 percentage points compared to the three months ended September 30, 2022. Owned Resort EBITDA Margin was negatively impacted by 800 basis points due to the appreciation of the Mexican Peso and by 250 basis points from increases in labor and related expenses, which were partially due to union-negotiated and government-mandated wage and benefit increases compared to the three months ended September 30, 2022. Excluding the impact from the appreciation of the Mexican Peso, Owned Resort EBITDA Margin would have been 35.2%, an increase of 0.5 percentage points compared to the three months ended September 30, 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 September 30, 2023 and 2022 for the total segment portfolio:
Total Portfolio
Three Months Ended September 30,
Increase / Decrease
20232022Change % Change
Occupancy66.4 %70.7 %(4.3)pts(6.1)%
Net Package ADR$306.69 $272.53 $34.16 12.5 %
Net Package RevPAR$203.76 $192.69 $11.07 5.7 %
($ in thousands)
Net Package Revenue(1)
$49,565 $46,871 $2,694 5.7 %
Net Non-package Revenue(1)
7,577 8,319 (742)(8.9)%
Owned Net Revenue57,142 55,190 1,952 3.5 %
Owned Resort EBITDA$12,673 $14,014 $(1,341)(9.6)%
Owned Resort EBITDA Margin22.2 %25.4 %(3.2)pts(12.6)%
________
(1)For the three months ended September 30, 2022, includes $0.9 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 (2)
Three Months Ended September 30,
Increase / Decrease
20232022Change % Change
Occupancy63.3 %81.0 %(17.7)pts(21.9)%
Net Package ADR$122.36 $154.05 $(31.69)(20.6)%
Net Package RevPAR$77.41 $124.71 $(47.30)(37.9)%
($ in thousands)
Net Package Revenue(1)
$7,977 $12,850 $(4,873)(37.9)%
Net Non-package Revenue(1)
1,430 2,621 (1,191)(45.4)%
Owned Net Revenue9,407 15,471 (6,064)(39.2)%
Owned Resort EBITDA$(3,370)$2,710 $(6,080)(224.4)%
Owned Resort EBITDA Margin(35.8)%17.5 %(53.3)pts(304.6)%
________
(2)For the three months ended September 30, 2023, our comparable portfolio excludes the Hilton La Romana All-Inclusive Resort and the Hyatt Ziva and Hyatt Zilara Cap Cana which were closed the last 12 days of the three months ended September 30, 2022 to expedite necessary clean up and repair work as a result of Hurricane Fiona.
Segment Owned Net Revenue. Our Owned Net Revenue for the three months ended September 30, 2023 increased $2.0 million, or 3.5%, compared to the three months ended September 30, 2022. The increase was due to the following:
an increase in Net Package ADR of 12.5%; partially offset by
a decrease in Occupancy of 4.3 percentage points as a result of lower occupancies at Jewel Punta Cana and Jewel Palm Beach due to the transition of management. Excluding these resorts, Occupancy increased 5.6 percentage points compared to the three months ended September 30, 2022, when we experienced reduced occupancy as a result of Hurricane Fiona. The increase was partially offset by higher demand for European travel destinations from American sourced guests; and
a decrease in Net Non-package Revenue of $0.7 million, or 8.9%, compared to the three months ended September 30, 2022.
Net Non-package Revenue per sold room decreased 3.1% compared to the three months ended September 30, 2022, which was primarily due to a decrease in Net Non-package Revenue at Jewel Punta Cana and Jewel Palm Beach during
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the three months ended September 30, 2023. Excluding these resorts, Net Non-package Revenue increased 7.9%, and Net Non-package Revenue per sold room decreased 0.9%.
Our Comparable Owned Net Revenue for the three months ended September 30, 2023 decreased $6.1 million due to the transition of management of the Jewel Punta Cana and Jewel Palm Beach that resulted in lower occupancies compared to the three months ended September 30, 2022.
Segment Owned Resort EBITDA. Our Owned Resort EBITDA for the three months ended September 30, 2023 decreased $1.3 million, or 9.6%, compared to the three months ended September 30, 2022.
Excluding Jewel Punta Cana and Jewel Palm Beach, Owned Resort EBITDA increased $4.7 million compared to the three months ended September 30, 2022, and includes a $1.0 million benefit from business interruption insurance proceeds and recoverable expenses related to Hurricane Fiona in the Dominican Republic during the second half of 2022. This increase was partially offset by increased insurance premiums and utilities expenses compared to the three months ended September 30, 2022.
Our Owned Resort EBITDA Margin for the three months ended September 30, 2023 was 22.2%, a decrease of 3.2 percentage points compared to the three months ended September 30, 2022, and includes a negative impact of 1,140 basis points due to reduced Occupancy at Jewel Punta Cana and Jewel Palm Beach, partially offset by a favorable impact of 170 basis points from business interruption proceeds and recoverable expenses related to Hurricane Fiona. Excluding the aforementioned business interruption benefit and the drag from the two Jewel properties, Owned Resort EBITDA Margin for the three months ended September 30, 2023 was 31.6%, an increase of 3.1 percentage points compared to the three months ended September 30, 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 September 30, 2023 and 2022 for the total segment portfolio:
Three Months Ended September 30,
Increase / Decrease
20232022Change % Change
Occupancy77.6 %75.5 %2.1 pts2.8 %
Net Package ADR$422.23 $368.81 $53.42 14.5 %
Net Package RevPAR$327.86 $278.43 $49.43 17.8 %
($ in thousands)
Net Package Revenue(1)
$43,073 $36,579 $6,494 17.8 %
Net Non-package Revenue(1)
6,765 7,180 (415)(5.8)%
Owned Net Revenue49,838 43,759 6,079 13.9 %
Owned Resort EBITDA$15,333 $11,267 $4,066 36.1 %
Owned Resort EBITDA Margin30.8 %25.7 %5.1 pts19.8 %
________
(1)For the three months ended September 30, 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 September 30, 2023 increased $6.1 million, or 13.9%, compared to the three months ended September 30, 2022. The increase was due to the following:
ongoing recovery in this segment during the third quarter of 2023, which resulted in a 2.1 percentage point increase in Occupancy and a 14.5% increase in Net Package ADR despite a lower MICE group contribution to our guest mix; partially offset by
a decrease in Net Non-package Revenue of $0.4 million, or 5.8%, compared to the three months ended September 30, 2022.
Net Non-package Revenue per sold room decreased 8.4% as a result of a lower MICE group contribution to our guest mix.
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Segment Owned Resort EBITDA. Our Owned Resort EBITDA for the three months ended September 30, 2023 increased $4.1 million, or 36.1%, compared to the three months ended September 30, 2022. The increase was a result of Net Package ADR and Occupancy growth and a decrease in energy prices, which offset pressure on wages and benefit related expenses and increased insurance premiums compared to the three months ended September 30, 2022.
Our Owned Resort EBITDA Margin for the three months ended September 30, 2023 increased 5.1 percentage points, or 19.8%, compared to the three months ended September 30, 2022. Owned Resort EBITDA Margin was positively impacted by 160 basis points due to a decline in utilities expenses and energy prices compared to the three months ended September 30, 2022.
Segment Results
Nine Months Ended September 30, 2023 and 2022
We evaluate our business segment operating performance using segment Owned Net Revenue and segment Owned Resort EBITDA. The following tables summarize segment Owned Net Revenue and segment Owned Resort EBITDA for the nine months ended September 30, 2023 and 2022 ($ in thousands):
Nine Months Ended September 30,
Increase / Decrease
20232022
Change
% Change 
Owned Net Revenue
Yucatán Peninsula$228,777 $204,200 $24,577 12.0 %
Pacific Coast107,527 92,901 14,626 15.7 %
Dominican Republic191,038 189,714 1,324 0.7 %
Jamaica170,233 131,781 38,452 29.2 %
Segment Owned Net Revenue697,575 618,596 78,979 12.8 %
Other1,697 667 1,030 154.4 %
The Playa Collection2,605 1,211 1,394 115.1 %
Management Fee Revenue5,420 3,186 2,234 70.1 %
Total Net Revenue$707,297 $623,660 $83,637 13.4 %
Nine Months Ended September 30,
Increase / Decrease
20232022
Change
% Change
Owned Resort EBITDA
Yucatán Peninsula$79,107 $77,049 $2,058 2.7 %
Pacific Coast40,353 36,966 3,387 9.2 %
Dominican Republic61,501 63,138 (1,637)(2.6)%
Jamaica64,337 40,567 23,770 58.6 %
Segment Owned Resort EBITDA245,298 217,72027,578 12.7 %
Other corporate(42,201)(38,596)(3,605)(9.3)%
The Playa Collection2,605 1,211 1,394 115.1 %
Management Fee Revenue5,420 3,186 2,234 70.1 %
Total Adjusted EBITDA$211,122 $183,521 $27,601 15.0 %

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 nine months ended September 30, 2023 and 2022 for the total segment portfolio:
Nine Months Ended September 30,
Increase / Decrease
20232022
Change
% Change 
Occupancy78.1 %74.6 %3.5 pts4.7 %
Net Package ADR$446.69 $410.94 $35.75 8.7 %
Net Package RevPAR$348.89 $306.76 $42.13 13.7 %
($ in thousands)
Net Package Revenue (1)
$202,498 $178,045 $24,453 13.7 %
Net Non-package Revenue (1)
26,279 26,155 124 0.5 %
Owned Net Revenue228,777 204,200 24,577 12.0 %
Owned Resort EBITDA$79,107 $77,049 $2,058 2.7 %
Owned Resort EBITDA Margin34.6 %37.7 %(3.1)pts(8.2)%
________
(1)For the nine months ended September 30, 2022, includes $3.0 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 nine months ended September 30, 2023 increased $24.6 million, or 12.0%, compared to the nine months ended September 30, 2022. The increase was due to the following:
an increase in Occupancy of 3.5 percentage points driven by an increase in guests sourced from Mexico and Canada;
an increase in Net Package ADR of 8.7%, which is partially driven by a higher MICE group contribution to our guest mix; and
an increase in Net Non-package Revenue of $0.1 million, or 0.5%.
Net Non-package Revenue per sold room decreased 4.0% due to a decrease of $1.0 million from the expiration of our Extended Stay Program late in the second quarter of 2022 as COVID-19-related travel restrictions were no longer in effect. Excluding this impact, Net Non-package Revenue per sold room was flat compared to the nine months ended September 30, 2022.
Segment Owned Resort EBITDA. Our Owned Resort EBITDA for the nine months ended September 30, 2023 increased $2.1 million, or 2.7%, compared to the nine months ended September 30, 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 a negative impact of $13.0 million due to the appreciation of the Mexican Peso as well as increases in labor and related expenses, which were partially due to union-negotiated and government-mandated wage and benefit increases, as well as increases in insurance premiums and utilities expenses compared to the nine months ended September 30, 2022.
Our Owned Resort EBITDA Margin for the nine months ended September 30, 2023 was 34.6%, a decrease of 3.1 percentage points compared to the nine months ended September 30, 2022. Owned Resort EBITDA Margin was negatively impacted by 570 basis points due to the appreciation of the Mexican Peso and by 270 basis points due to increases in labor and related expenses, which were partially due to union-negotiated and government-mandated wage and benefit increases compared to the nine months ended September 30, 2022. Excluding the impact from the appreciation of the Mexican Peso, Owned Resort EBITDA Margin would have been 40.3%, an increase of 2.6 percentage points compared to the nine months ended September 30, 2022.
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Pacific Coast
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 Pacific Coast segment for the nine months ended September 30, 2023 and 2022 for the total segment portfolio:
Nine Months Ended September 30,
Increase / Decrease
20232022Change % Change
Occupancy71.8 %71.4 %0.4 pts0.6 %
Net Package ADR$523.16 $453.76 $69.40 15.3 %
Net Package RevPAR$375.80 $324.18 $51.62 15.9 %
($ in thousands)
Net Package Revenue (1)
$95,000 $81,953 $13,047 15.9 %
Net Non-package Revenue (1)
12,527 10,948 1,579 14.4 %
Owned Net Revenue107,527 92,901 14,626 15.7 %
Owned Resort EBITDA$40,353 $36,966 $3,387 9.2 %
Owned Resort EBITDA Margin37.5 %39.8 %(2.3)pts(5.8)%
________
(1)For the nine months ended September 30, 2023, includes $0.7 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 nine months ended September 30, 2023 increased $14.6 million, or 15.7%, compared to the nine months ended September 30, 2022. The increase was due to the following:
an increase in Occupancy of 0.4 percentage points compared to the nine months ended September 30, 2022, driven by an increase in guests sourced from Mexico, partially offset by a decrease in guests sourced from the United States;
an increase in Net Package ADR of 15.3%; and
an increase in Net Non-package Revenue of $1.6 million, or 14.4%.
Net Non-package Revenue per sold room increased 13.8% despite a decrease of $0.7 million due to the expiration of our Extended Stay Program late in the second quarter of 2022 as COVID-19-related travel restrictions were no longer in effect. Excluding this impact, Net Non-package Revenue per sold room increased 21.6% compared to the nine months ended September 30, 2022 as a result of a higher MICE group contribution to our guest mix.
Segment Owned Resort EBITDA. Our Owned Resort EBITDA for the nine months ended September 30, 2023 increased $3.4 million, or 9.2%, compared to the nine months ended September 30, 2022. Owned Resort EBITDA compared to the nine months ended September 30, 2022 was negatively impacted by $5.6 million due to the appreciation of the Mexican Peso, increases in labor and related expenses, partially due to union-negotiated and government-mandated wage and benefit increases, and increases in insurance premiums and energy costs.
Our Owned Resort EBITDA Margin for the nine months ended September 30, 2023 was 37.5%, a decrease of 2.3 percentage points compared to the nine months ended September 30, 2022. Owned Resort EBITDA Margin was negatively impacted by 520 basis points due to the appreciation of the Mexican Peso and by 280 basis points due to increases in labor and related expenses, which were partially due to union-negotiated and government-mandated wage and benefit increases compared to the nine months ended September 30, 2022. Excluding the impact from the appreciation of the Mexican Peso, Owned Resort EBITDA Margin would have been 42.7%, an increase of 2.9 percentage points compared to the nine months ended September 30, 2022.

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Dominican Republic
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 Dominican Republic segment for the nine months ended September 30, 2023 and 2022 for the total segment portfolio and comparable segment portfolio:
Total Portfolio
Nine Months Ended September 30,
Increase / Decrease
20232022Change % Change
Occupancy61.4 %74.2 %(12.8)pts(17.3)%
Net Package ADR$371.51 $301.15 $70.36 23.4 %
Net Package RevPAR$228.21 $223.34 $4.87 2.2 %
($ in thousands)
Net Package Revenue (1)
$164,723 $161,206 $3,517 2.2 %
Net Non-package Revenue (1)
26,315 28,508 (2,193)(7.7)%
Owned Net Revenue191,038 189,714 1,324 0.7 %
Owned Resort EBITDA$61,501 $63,138 $(1,637)(2.6)%
Owned Resort EBITDA Margin32.2 %33.3 %(1.1)pts(3.3)%
________
(1)For the nine months ended September 30, 2022, includes $3.3 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.
Comparable Portfolio (2)
Nine Months Ended September 30,Increase / Decrease
20232022Change % Change
Occupancy41.5 %78.6 %(37.1)pts(47.2)%
Net Package ADR$136.66 $174.45 $(37.79)(21.7)%
Net Package RevPAR$56.66 $137.10 $(80.44)(58.7)%
($ in thousands)
Net Package Revenue $9,591 $23,205 $(13,614)(58.7)%
Net Non-package Revenue1,473 4,935 (3,462)(70.2)%
Owned Net Revenue11,064 28,140 (17,076)(60.7)%
Owned Resort EBITDA$(6,627)$6,463 $(13,090)(202.5)%
Owned Resort EBITDA Margin(59.9)%23.0 %(82.9)pts(360.4)%
________
(2)For the nine months ended September 30, 2023, our comparable portfolio excludes 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, and the Hilton La Romana All-Inclusive Resort and the Hyatt Ziva and Hyatt Zilara Cap Cana.
Segment Owned Net Revenue. Our Owned Net Revenue for the nine months ended September 30, 2023 increased $1.3 million, or 0.7%, compared to the nine months ended September 30, 2022. The increase was due to the following:
an increase in Net Package ADR of 23.4% which was partially due to a lower mix of sold rooms at Jewel Punta Cana and Jewel Palm Beach, which had significantly lower ADRs compared to the other resorts in the segment during the nine months ended September 30, 2023. Excluding these resorts, Net Package ADR increased 17.3%; partially offset by
a decrease in Occupancy of 12.8 percentage points as a result of significantly reduced Occupancy at Jewel Punta Cana and Jewel Palm Beach. Excluding these resorts, Occupancy increased 4.0 percentage points; and
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a decrease in Net Non-package Revenue of $2.2 million, or 7.7%.
Net Non-package Revenue per sold room increased 11.4%, which includes:
a decrease as a result of reduced Occupancy at Jewel Punta Cana and Jewel Palm Beach during the nine months ended September 30, 2023 due to the transition of management. Excluding these resorts, Net Non-package Revenue increased 17.4%; and
a decrease of $0.8 million due to the expiration of our Extended Stay Program at the end of the second quarter of 2022 as COVID-19-related travel restrictions were no longer in effect. Excluding this impact and the drag from the two Jewel properties, Net Non-package Revenue per sold room increased 15.9% compared to the nine months ended September 30, 2022, driven by a higher MICE group contribution to our guest mix.
Our Comparable Owned Net Revenue for the nine months ended September 30, 2023 decreased $17.1 million due to the transition of management of the Jewel Punta Cana that resulted in lower occupancies compared to the nine months ended September 30, 2022.
Segment Owned Resort EBITDA. Our Owned Resort EBITDA for the nine months ended September 30, 2023 decreased $1.6 million, or 2.6%, compared to the nine months ended September 30, 2022.
Excluding Jewel Punta Cana and Jewel Palm Beach, Owned Resort EBITDA increased $22.0 million compared to the nine months ended September 30, 2022 due to lower energy prices that were partially offset by increased insurance premiums. Owned Resort EBITDA includes a $5.3 million benefit from business interruption proceeds and recoverable expenses received during the nine months ended September 30, 2023 related to Hurricane Fiona that impacted the Dominican Republic in the second half of 2022. Excluding the aforementioned business interruption benefit and the drag from the two Jewel properties, Owned Resort EBITDA increased $16.7 million, or 32.1%, compared to the nine months ended September 30, 2022.
Our Owned Resort EBITDA Margin for the nine months ended September 30, 2023 was 32.2%, a decrease of 1.1 percentage points compared to the nine months ended September 30, 2022. Excluding the aforementioned business interruption benefit and the drag from the two Jewel properties, Owned Resort EBITDA Margin for the nine months ended September 30, 2023 was 40.2%, an increase of 2.7 percentage points compared to the nine months ended September 30, 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 nine months ended September 30, 2023 and 2022 for the total segment portfolio:
Nine Months Ended September 30,
Increase / Decrease
20232022Change% Change
Occupancy80.8 %73.1 %7.7 pts10.5 %
Net Package ADR$459.66 $380.64 $79.02 20.8 %
Net Package RevPAR$371.63 $278.35 $93.28 33.5 %
($ in thousands)
Net Package Revenue (1)
$144,877 $108,512 $36,365 33.5 %
Net Non-package Revenue (1)
25,356 23,269 2,087 9.0 %
Owned Net Revenue170,233 131,781 38,452 29.2 %
Owned Resort EBITDA$64,337 $40,567 $23,770 58.6 %
Owned Resort EBITDA Margin37.8 %30.8 %7.0 pts22.7 %
________
(1)For the nine months ended September 30, 2022, includes $0.8 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 nine months ended September 30, 2023 increased $38.5 million, or 29.2%, compared to the nine months ended September 30, 2022. The increase was due to the following:
an increase in Occupancy of 7.7 percentage points, driven by an increase in guests sourced from the United States following the ongoing recovery in the segment;
an increase in Net Package ADR of 20.8%; and
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an increase in Net Non-package Revenue of $2.1 million, or 9.0%, despite a decrease of $1.0 million due to the expiration of our Extended Stay Program late in the second quarter of 2022 as COVID-19-related travel restrictions were no longer in effect.
Excluding this impact, Net Non-package Revenue increased 13.8%, a 3.0% increase per sold room compared to the nine months ended September 30, 2022, partially driven by an increase in group sales.
Segment Owned Resort EBITDA. Our Owned Resort EBITDA for the nine months ended September 30, 2023 increased $23.8 million, or 58.6%, compared to the nine months ended September 30, 2022. The increase was a result of Net Package ADR and Occupancy growth that enabled the segment to expand margins and offset pressure on wages and benefit related expenses and a decline in energy prices, partially offset by increases in insurance premiums compared to the nine months ended September 30, 2022.
Our Owned Resort EBITDA Margin for the nine months ended September 30, 2023 increased 7.0 percentage points, or 22.7%, compared to the nine months ended September 30, 2022. Owned Resort EBITDA Margin was positively impacted by 80 basis points due to a decline in utilities expenses and energy prices compared to the nine months ended September 30, 2022.
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Non-U.S. GAAP Financial Measures
Reconciliation of Net Income to Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization)
The following is a reconciliation of our U.S. GAAP net (loss) income to EBITDA, Adjusted EBITDA, Owned Resort EBITDA and Comparable Owned Resort EBITDA for the three and nine months ended September 30, 2023 and 2022 ($ in thousands):
Three Months Ended September 30,Nine Months Ended September 30,
2023202220232022
Net (loss) income$(10,504)$(2,229)$52,848 $71,043 
Interest expense26,552 17,832 82,337 39,892 
Income tax (benefit) provision(2,808)268 4,840 3,168 
Depreciation and amortization22,548 19,502 61,055 58,630 
EBITDA35,788 35,373 201,080 172,733 
Other expense (income) (a)
350 (2,608)321 (7,850)
Share-based compensation3,343 2,777 9,951 9,043 
Transaction expense (b)
742 582 2,107 1,384 
Repairs from hurricanes and tropical storms (c)
77 8,850 (815)8,850 
Loss on sale of assets17 11 
Non-service cost components of net periodic pension benefit (cost)205 (102)(1,539)(650)
Adjusted EBITDA40,511 44,874 211,122 183,521 
Other corporate (d)(e)
14,706 13,839 42,201 38,596 
The Playa Collection(1,051)(517)(2,605)(1,211)
Management fees(1,369)(786)(5,420)(3,186)
Owned Resort EBITDA52,797 57,410 245,298 217,720 
Less: Non-comparable Owned Resort EBITDA16,043 11,304 68,128 56,675 
Comparable Owned Resort EBITDA(f)(g)
$36,754 $46,106 $177,170 $161,045 
________
(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)    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 and nine months ended September 30, 2023, represents changes in the expected repair and clean-up expenses for the Jewel Punta Cana related to the impact of Hurricane Fiona.
(d)    For the three months ended September 30, 2023 and 2022, represents corporate salaries and benefits of $10.3 million for 2023 and $8.8 million for 2022, professional fees of $2.4 million for 2023 and $2.8 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 $1.2 million for 2022.
(e)    For the nine months ended September 30, 2023 and 2022, represents corporate salaries and benefits of $30.0 million for 2023 and $25.9 million for 2022, professional fees of $6.2 million for 2023 and $6.7 million for 2022, corporate rent and insurance of $2.9 million for 2023 and $3.0 million for 2022, and corporate travel, software licenses, board fees and other miscellaneous corporate expenses of $3.1 million for 2023 and $3.0 million for 2022.
(f)    Our comparable portfolio for the three months ended September 30, 2023 excludes the Hilton La Romana All-Inclusive Resort and the Hyatt Ziva and Hyatt Zilara Cap Cana which were closed the last 12 days of the three months ended September 30, 2022 to expedite necessary clean up and repair work as a result of Hurricane Fiona.
(g)    Our comparable portfolio for the nine months ended September 30, 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, and the Hilton La Romana All-Inclusive Resort and the Hyatt Ziva and Hyatt Zilara Cap Cana which were closed the last 12 days of the three months ended September 30, 2022 to expedite necessary clean up and repair work as a result of Hurricane Fiona.
Seasonality
The seasonality of the lodging industry and the location of our resorts in Mexico, Jamaica and the 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 inflationary pressures may remain elevated for the remainder of 2023 and into 2024,
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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.
Liquidity and Capital Resources
Our net cash provided by operating activities for the nine months ended September 30, 2023 was $75.2 million. 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 September 30, 2023, we had $184.4 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 September 30, 2023. As of October 31, 2023, we had approximately $172.9 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 September 30, 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 on Form 10-K for the year ended December 31, 2022, filed with the SEC on February 23, 2023. As of September 30, 2023, we had $27.8 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 decline or are materially adversely impacted, 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):
Nine Months Ended September 30,
20232022
Net cash provided by operating activities$75,165 $136,742 
Net cash used in investing activities$(12,840)$(21,743)
Net cash used in financing activities$(161,862)$(36,888)
(Decrease) increase in cash and cash equivalents$(99,537)$78,111 
Cash Flows from Operating Activities
Our net cash from operating activities is generated primarily from operating income of our resorts. For the nine months ended September 30, 2023, our net cash provided by operating activities was $75.2 million compared to $136.7 million for the nine months ended September 30, 2022.
Cash Flows from Investing Activities
Our net cash used in investing activities was $12.8 million for the nine months ended September 30, 2023 compared to $21.7 million for the nine months ended September 30, 2022.
Activity for the nine months ended September 30, 2023:
Purchases of property and equipment of $30.5 million, consisting of maintenance capital expenditures as well as renovation costs of the Hyatt Ziva Puerto Vallarta and Hyatt Ziva Los Cabos; and
Property damage insurance proceeds related to the impacts of Hurricane Fiona in the Dominican Republic of $17.8 million.
Activity for the nine months ended September 30, 2022:
Purchases of property and equipment of $21.6 million, primarily for maintenance related expenditures.
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 $161.9 million for the nine months ended September 30, 2023 compared to $36.9 million for the nine months ended September 30, 2022.
Activity for the nine months ended September 30, 2023:
Principal payments on our Term Loan due 2029 of $8.3 million; and
Repurchases of ordinary shares of $153.3 million.
Activity for the nine months ended September 30, 2022:
Principal payments on our prior Term Loan of $32.4 million, which included a $24.9 million mandatory repayment as a result of the sale of the Jewel Dunn’s River Beach Resort & Spa and Jewel Runaway Bay Beach Resort & Waterpark in May 2020 as well as our quarterly principal payments; and
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Repurchases of ordinary shares of $4.2 million.
Critical Accounting 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 involve a 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. We currently use two interest rate swaps (see Note 12 of our Condensed Consolidated Financial Statements) to manage our exposure to this risk. As of September 30, 2023, 50% of our outstanding indebtedness bore interest at floating rates, as our Term Loan due 2029 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 $5.5 million annually, assuming the balance outstanding under our Revolving Credit Facility remained at $0 million.
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 $5.5 million annually, assuming the balance outstanding under our Revolving Credit Facility remained at $0 million.
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 nine months ended September 30, 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 73.6% of our resort-level operating expenses for the nine months ended September 30, 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 September 30, 2023 would have impacted our Owned Resort EBITDA by approximately $8.2 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 September 30, 2023 would have impacted our Owned Resort EBITDA by approximately $5.1 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 September 30, 2023 would have impacted our Owned Resort EBITDA by approximately $4.2 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 September 30, 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 September 30, 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)
July 1, 2023 to July 31, 20232,933,971 $8.21 2,933,971 $110,989 
August 1, 2023 to August 31, 20234,688,426 7.44 4,688,426 76,115 
September 1, 2023 to September 30, 20232,390,628 7.36 2,390,628 58,515 
Total10,013,025 $7.65 10,013,025 $58,515 
________
(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, 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.
During the three months ended September 30, 2023, no director or officer of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.
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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 September 30, 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 (Loss) 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)
* Filed herewith
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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:November 2, 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:November 2, 2023By: /s/ Ryan Hymel
   Ryan Hymel
Chief Financial Officer
   (Principal Financial Officer)