Playa Hotels & Resorts 10Q 2024 Q1 Quarterly report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

___________________________________________________

FORM 10-Q

_______________________________________________


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

For quarterly period ended March 31, 2024


☐			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)




The	Netherlands	98-1346104
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification Number)

Nieuwezijds Voorburgwal 104

1012 SG

Amsterdam,

the

Netherlands

Not 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 Class	Trading Symbol(s)	Name of Each Exchange on Which Registered
Ordinary Shares, €0.10 par value	PLYA	The 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 filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

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

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

As of April 30, 2024, there were 133,180,720 shares of the registrant’s ordinary shares, €0.10 par value, outstanding.

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Playa Hotels & Resorts N.V. TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION
		Page
Item 1.	Financial Statements (unaudited)
	Condensed Consolidated Balance Sheets as of March 3 1 , 202 4 and December 31, 20 23	1
	Condensed Consolidated Statements of Operations for the three months ended March 3 1 , 202 4 and 20 23	2
	Condensed Consolidated Statements of Comprehensive Income for the three months ended March 3 1 , 202 4 and 202 3	3
	Condensed Consolidated Statements of Shareholders’ Equity for the three months ended March 31 , 202 4 and 202 3	4
	Condensed Consolidated Statements of Cash Flows for the three months ended March 31 , 202 4 and 202 3	5
	Notes to the Condensed Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	43
Item 4.	Controls and Procedures	44
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	45
Item 1A.	Risk Factors	45
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	45
Item 3.	Defaults Upon Senior Securities	45
Item 4.	Mine Safety Disclosures	45
Item 5.	Other Information	45
Item 6.	Exhibits	46

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PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Playa Hotels & Resorts N.V.

Condensed Consolidated Balance Sheets

($ in thousands, except share data)

(unaudited)


	As of March 31,		As of December 31,
	2024		2023
ASSETS
Cash and cash equivalents	$	285,342	$	272,520
Trade and other receivables, net	82,222		74,762
Insurance recoverable	11,058		9,821
Accounts receivable from related parties	6,423		5,861
Inventories	18,690		19,963
Prepayments and other assets	49,711		54,294
Property and equipment, net	1,407,248		1,415,572
Derivative financial instruments	9,707		2,966
Goodwill, net	60,642		60,642
Other intangible assets	3,441		4,357
Deferred tax assets	12,514		12,967
Total assets	$	1,946,998	$	1,933,725
LIABILITIES AND SHAREHOLDERS’ EQUITY
Trade and other payables	$	176,716	$	196,432
Payables to related parties	11,710		10,743
Income tax payable	12,608		11,592
Debt	1,060,158		1,061,376
Other liabilities	33,930		33,970
Deferred tax liabilities	64,891		64,815
Total liabilities	1,360,013		1,378,928
Commitments and contingencies (see Note 7)
Shareholders’ equity
Ordinary shares (par value €0.10; 500,000,000 shares authorized, 172,016,422 shares issued and 135,040,042 shares outstanding as of March 31, 2024 and 169,423,980 shares issued and 136,081,891 shares outstanding as of December 31, 2023)	19,104		18,822
Treasury shares (at cost, 36,976,380 shares as of March 31, 2024 and 33,342,089 shares as of December 31, 2023)	(280,787)		(248,174)
Paid-in capital	1,205,652		1,202,175
Accumulated other comprehensive income	7,813		1,112
Accumulated deficit	(364,797)		(419,138)
Total shareholders’ equity	586,985		554,797
Total liabilities and shareholders’ equity	$	1,946,998	$	1,933,725

The accompanying Notes form an integral part of the Condensed Consolidated Financial Statements.

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Playa Hotels & Resorts N.V.

Condensed Consolidated Statements of Operations

($ in thousands, except share data)

(unaudited)


	Three Months Ended March 31,
		2024		2023
Revenue
Package		$	259,629	$	233,568
Non-package		34,143		33,481
The Playa Collection		1,020		726
Management fees		2,534		1,929
Cost reimbursements		2,889		3,534
Other revenues		420		564
Total revenue		300,635		273,802
Direct and selling, general and administrative expenses
Direct		137,979		128,968
Selling, general and administrative		51,219		45,127
Depreciation and amortization		18,672		19,191
Reimbursed costs		2,889		3,534
(Gain) loss on sale of assets		(36)		13
Business interruption insurance recoveries		(17)		—
Gain on insurance proceeds		(370)		—
Direct and selling, general and administrative expenses		210,336		196,833
Operating income		90,299		76,969
Interest expense		(23,128)		(29,666)
Other (expense) income		(793)		232
Net income before tax		66,378		47,535
Income tax provision		(12,037)		(4,816)
Net income		$	54,341	$	42,719

Earnings per share
Basic		$	0.40	$	0.27
Diluted		$	0.39	$	0.27
Weighted average number of shares outstanding during the period - Basic		136,651,696		157,314,177
Weighted average number of shares outstanding during the period - Diluted		138,009,859		158,772,453

The accompanying Notes form an integral part of the Condensed Consolidated Financial Statements.

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Playa Hotels & Resorts N.V.

Condensed Consolidated Statements of Comprehensive Income

($ in thousands)

(unaudited)


	Three Months Ended March 31,
		2024		2023
Net income		$	54,341	$	42,719
Other comprehensive income, net of taxes
Gain on derivative financial instruments		6,750		2,895
Pension obligation loss		(49)		(218)
Total other comprehensive income		6,701		2,677
Comprehensive income		$	61,042	$	45,396

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 Shares			Treasury Shares			Paid-In Capital		Accumulated Other Comprehensive Income		Accumulated Deficit		Total
	Shares	Amount		Shares	Amount
Balance at December 31, 2023	136,081,891	$	18,822	33,342,089	$	(248,174)	$	1,202,175	$	1,112	$	(419,138)	$	554,797
Net income	—	—		—	—		—		—		54,341		54,341
Other comprehensive income	—	—		—	—		—		6,701		—		6,701
Share-based compensation, net of tax withholdings	2,579,278	282		13,164	(109)		3,477		—		—		3,650
Repurchase of ordinary shares	(3,621,127)	—		3,621,127	(32,504)		—		—		—		(32,504)
Balance at March 31, 2024	135,040,042	$	19,104	36,976,380	$	(280,787)	$	1,205,652	$	7,813	$	(364,797)	$	586,985


	Ordinary Shares			Treasury Shares			Paid-In Capital		Accumulated Other Comprehensive Loss		Accumulated Deficit		Total
	Shares	Amount		Shares	Amount
Balance at December 31, 2022	158,228,508	$	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 compensation	1,148,476	122		—	—		3,044		—		—		3,166
Repurchase of ordinary shares	(4,974,132)	—		4,974,132	(40,890)		—		—		—		(40,890)
Balance at March 31, 2023	154,402,852	$	18,822	15,021,128	$	(103,843)	$	1,192,134	$	(4,308)	$	(430,271)	$	672,534

The accompanying Notes form an integral part of the Condensed Consolidated Financial Statements.

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Playa Hotels & Resorts N.V.

Condensed Consolidated Statements of Cash Flows

($ in thousands)

(unaudited)


	Three Months Ended March 31,
	2024		2023
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	54,341	$	42,719
Adjustments to reconcile net income to net cash from operating activities
Depreciation and amortization	18,672		19,191
Amortization of debt discount and issuance costs	1,648		1,795
Share-based compensation	3,759		3,166
Loss on derivative financial instruments	9		6,405
Deferred income taxes	529		3,826
(Gain) loss on sale of assets	(36)		13
Amortization of key money	(192)		(193)
Provision for doubtful accounts	491		81
Other	153		198
Changes in assets and liabilities:
Trade and other receivables, net	(7,951)		(11,403)
Insurance recoverable	(1,237)		5,626
Accounts receivable from related parties	(562)		(2,602)
Inventories	1,273		(569)
Prepayments and other assets	5,393		3,159
Trade and other payables	(21,692)		(28,743)
Payables to related parties	967		2,292
Income tax payable	1,016		(205)
Other liabilities	196		531
Net cash provided by operating activities	56,777		45,287
INVESTING ACTIVITIES
Capital expenditures	(9,953)		(10,257)
Purchase of intangibles	(79)		(77)
Payment of key money	(485)		—
Proceeds from the sale of assets, net	71		3
Property damage insurance proceeds	—		7,979
Net cash used in investing activities	(10,446)		(2,352)
FINANCING ACTIVITIES

Repayments of debt	(2,750)		(2,750)


Repurchase of ordinary shares	(30,534)		(42,558)
Principal payments on finance lease obligations	(116)		(107)
Repurchase of ordinary shares for tax withholdings	(109)		—
Net cash used in financing activities	(33,509)		(45,415)
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	12,822		(2,480)
CASH AND CASH EQUIVALENTS, BEGINNING OF THE PERIOD	$	272,520	$	283,945
CASH AND CASH EQUIVALENTS, END OF THE PERIOD	$	285,342	$	281,465

The accompanying Notes form an integral part of the Condensed Consolidated Financial Statements.

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Playa Hotels & Resorts N.V.

Condensed Consolidated Statements of Cash Flows (continued)

($ in thousands)

(unaudited)


	Three Months Ended March 31,
	2024		2023
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid for interest, net of interest capitalized	$	21,038	$	21,406
Cash paid for income taxes, net	$	11,381	$	1,427
SUPPLEMENTAL DISCLOSURES OF NON-CASH ACTIVITIES
Capital expenditures incurred but not yet paid	$	1,894	$	873
Repurchase of ordinary shares not yet settled	$	1,970	$	—


Par value of vested restricted share awards	$	282	$	122

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”), through its subsidiaries, 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 24 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, 2023, included in our Annual Report on Form 10-K, filed with the Securities and Exchange Commission (the “SEC”) on February 22, 2024 (the “Annual Report”).

In our opinion, the unaudited interim Condensed Consolidated Financial Statements have been prepared on the same basis as the annual Consolidated Financial Statements and include all adjustments, consisting of only normal recurring adjustments, necessary for fair presentation. Results for the comparative prior periods have been reclassified to conform to the current period presentation.

The results of operations for the three months ended March 31, 2024 are not necessarily indicative of the results of operations to be expected for the full year ending December 31, 2024. 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

Derivative financial instruments

Derivative financial instruments are initially recorded at fair value on the date on which a derivative contract is entered into and are subsequently remeasured to fair value at period end. Changes in the fair value of a derivative contract that is qualified, designated and highly effective as a cash flow hedge are recorded in total other comprehensive income in our Condensed Consolidated Statements of Comprehensive Income and reclassified into earnings in our Condensed Consolidated Statements of Operations in the same period or periods during which the hedged transaction occurs. If a derivative contract does not meet these criteria, then the total change in fair value is recognized in earnings. Cash flows from a derivative financial instrument that is classified as a cash flow hedge are recorded in the same category as the cash flows from the items being hedged in the Condensed Consolidated Statements of Cash Flows.

Standards not yet adopted

Standard

Description

Date of Adoption

Effect on the Financial Statements or Other Significant Matters

ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures

The amendments in this update improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses.

Annual periods beginning after December 15, 2023

We are in the process of evaluating the impact of ASU No. 2023-07 on the Condensed Consolidated Financial Statements with respect to our segment disclosures.

ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures

The amendments in this update require that public business entities on an annual basis (i) disclose specific categories in the rate reconciliation and (ii) provide additional information for reconciling items that meet a quantitative threshold.

Annual periods beginning after December 15, 2024

We are in the process of evaluating the impact of ASU No. 2023-09 on the Condensed Consolidated Financial Statements with respect to our income tax disclosures.

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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 March 31, 2024
	Yucatán Peninsula		Pacific Coast		Dominican Republic		Jamaica		Other		Total
Package revenue	$	88,062	$	39,638	$	72,213	$	59,716	$	—	$	259,629
Non-package revenue	10,794		5,916		9,508		7,925		—		34,143
The Playa Collection	—		—		—		—		1,020		1,020
Management fees	39		—		—		—		2,495		2,534
Cost reimbursements	—		—		—		1,095		1,794		2,889
Other revenues	—		—		—		—		420		420
Total revenue	$	98,895	$	45,554	$	81,721	$	68,736	$	5,729	$	300,635


	Three Months Ended March 31, 2023
	Yucatán Peninsula		Pacific Coast		Dominican Republic		Jamaica		Other		Total
Package revenue	$	81,287	$	36,803	$	59,602	$	55,876	$	—	$	233,568
Non-package revenue (1)	9,700		4,747		9,167		9,867		—		33,481
The Playa Collection	—		—		—		—		726		726
Management fees	38		—		—		—		1,891		1,929
Cost reimbursements	—		—		—		1,337		2,197		3,534
Other revenues (1)	—		—		—		—		564		564
Total revenue	$	91,025	$	41,550	$	68,769	$	67,080	$	5,378	$	273,802

________

(1)Includes $0.6 million that was reclassified from non-package revenue to other revenues to conform with current period presentation.

Contract assets and liabilities

We do not have any material contract assets as of March 31, 2024 and December 31, 2023 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.

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Note 4. Property and equipment

The balance of property and equipment, net is as follows ($ in thousands):


	As of March 31,		As of December 31,
	2024		2023
Property and equipment, gross
Land, buildings and improvements	$	1,648,338	$	1,646,452
Fixtures and machinery (1)	87,539		86,717
Furniture and other fixed assets	205,476		203,639
Construction in progress	25,402		22,077
Total property and equipment, gross	1,966,755		1,958,885
Accumulated depreciation	(559,507)		(543,313)
Total property and equipment, net	$	1,407,248	$	1,415,572

________

(1) Includes the gross balance of our finance lease right-of-use assets, which was $6.3 million as of March 31, 2024 and December 31, 2023.

Depreciation expense for property and equipment was $17.7 million and $18.8 million for the three months ended March 31, 2024 and 2023, respectively.

For the three months ended March 31, 2024, we capitalized $0.3 million of interest expense on qualifying assets using the weighted-average interest rate of our debt. We did not capitalize any interest expense for the three months ended March 31, 2023.

Hurricane Fiona

We received business interruption proceeds of $0.4 million during the three months ended March 31, 2024 related to the impact of Hurricane Fiona in September 2022. We received an additional $1.2 million of business interruption insurance proceeds in April and May 2024 and expect to receive the remaining proceeds in 2024.

Lessor contracts

We rent certain real estate to third parties for office and retail space within our resorts. Our lessor contracts are considered operating leases and generally have a contractual term of one to three years. The following table presents our rental income for the three months ended March 31, 2024 and 2023 ($ in thousands):


	Three Months Ended March 31,
Leases		2024		2023
Operating lease income (1)		$	1,186	$	950

________

(1) Our operating lease income, which is recorded within non-package revenue in the Condensed Consolidated Statements of Operations, includes variable lease revenue which is typically calculated as a percentage of our tenant’s net sales.

Note 5. Income taxes

We file tax returns for our entities in key jurisdictions including Mexico, the Dominican Republic, Jamaica, the United States, and the Netherlands. We are domiciled in the Netherlands and our Dutch subsidiaries are subject to a Dutch general tax rate of 25.8%. Our other operating subsidiaries are subject to tax rates of up to 30% in the jurisdictions in which they are domiciled.

The Netherlands enacted the Dutch Minimum Tax Act 2024 in December 2023. The Dutch Minimum Tax Act 2024 implements measures to ensure that large multinational groups of companies pay a minimum corporate tax rate of 15% in accordance with the European Union's Pillar 2 Directive. As we are incorporated in the Netherlands, we were subject to certain provisions of the Dutch Minimum Tax Act 2024 beginning January 1, 2024. The adoption of the Dutch Minimum Tax Act 2024 resulted in $12.0 million of additional income tax expense incurred in the Netherlands for the three months ended March 31, 2024, which increased our effective tax rate (“ETR”) by 18.2%. As a result, our ETR was 18.1% for the three months ended March 31, 2024 compared to 10.1% for the three months ended March 31, 2023.

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An Advance Pricing Agreement (“APA”) for Playa Dominican Resort B.V. was approved in March 2024 and is effective January 1, 2022 through December 31, 2025. We are in the process of finalizing new APAs for Playa Cana B.V. and Playa Romana Mar B.V., which expired as of December 31, 2021. We expect the APAs to be completed before the end of 2024, as the APA terms for the general hotel association have already been approved. Our estimated annual effective tax rate calculation reflects the terms of the APAs that are expected to apply for the year ending December 31, 2024.

We had no uncertain tax positions or unrecognized tax benefits as of March 31, 2024. We expect no significant changes in unrecognized tax benefits over the next twelve months.

We regularly assess the realizability of our deferred tax assets by evaluating historical and projected future operating results, the reversal of existing temporary differences, taxable income in permitted carry back years, and the availability of tax planning strategies. As of March 31, 2024, 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

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.

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 (our “Board”). 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.

Lease with our Chief Executive Officer

One of our offices is owned by our Chief Executive Officer and we sublease the space at that location from a third party.

Transactions with related parties

Transactions between us and related parties during the three months ended March 31, 2024 and 2023 were as follows ($ in thousands):


		Three Months Ended March 31,
Related Party	Transaction		2024		2023
Revenues
Sagicor	Cost reimbursements(1)		$	1,095	$	1,477
Expenses
Hyatt	Franchise fees(2)		$	11,299	$	9,954
Sagicor	Insurance premiums(2)		$	394	$	320
Chief Executive Officer	Lease expense(3)		$	153	$	196
AMResorts	Management fees(2)		$	—	$	41
AMResorts	Marketing fees(3)		$	—	$	37

________

(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.

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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.

Note 8. Ordinary shares

Our Board previously 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 March 31, 2024, we repurchased 3,621,127 ordinary shares under the program at an average price of $8.98 per share. As of March 31, 2024, we had approximately $163.9 million remaining under the $200.0 million share repurchase program.

As of March 31, 2024, our ordinary share capital consisted of 135,040,042 ordinary shares outstanding, which have a par value of €0.10 per share. In addition, 5,075,907 restricted shares and performance share awards and 36,272 restricted share units were outstanding under the 2017 Plan (as defined in Note 9). The holders of restricted shares and performance share awards are entitled to vote, but not to 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. As of March 31, 2024, there were 10,054,397 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, 2024 to March 31, 2024 is as follows:


	Number of Shares	Weighted-Average Grant Date Fair Value
Unvested balance at January 1, 2024	2,733,532	$	6.84
Granted	1,456,506	8.03
Vested	(1,417,634)	6.61
Forfeited	(19,156)	7.25
Unvested balance at March 31, 2024	2,753,248	$	7.59

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 either 25% or 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 either 50% or 75% 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 200% 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.

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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 Date	Percentage of Total Award		Grant Date Fair Value by Component		Volatility (1)		Interest Rate (2)		Dividend Yield
January 17, 2024
Peer Shareholder Return	50	%	$	2,915	39.05	%	4.09	%	—	%
Growth Rate	50	%	$	2,066	39.05	%	4.09	%	—	%
February 8, 2024
Growth Rate	100	%	$	4,369	38.21	%	4.20	%	—	%

________

(1) Expected volatility was determined based on Playa’s 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, 2024 to March 31, 2024 is as follows:


	Number of Shares	Weighted-Average Grant Date Fair Value
Unvested balance at January 1, 2024	2,048,350	$	6.34
Granted	1,509,519	7.39
Vested	(1,174,808)	5.38
Forfeited	(24,130)	6.01
Unvested balance at March 31, 2024	2,358,931	$	7.35

Note 10. Earnings per share

Basic and diluted earnings per share (“EPS”) are as follows ($ in thousands, except share data):


	Three Months Ended March 31,
		2024		2023
Numerator
Net income		$	54,341	$	42,719
Denominator
Denominator for basic EPS - weighted-average number of shares outstanding		136,651,696		157,314,177
Effect of dilutive securities
Unvested performance share awards		747,783		952,494
Unvested restricted share awards		610,380		505,782
Denominator for diluted EPS - adjusted weighted-average number of shares outstanding		138,009,859		158,772,453

EPS - Basic		$	0.40	$	0.27
EPS - Diluted		$	0.39	$	0.27

For the three months ended March 31, 2024 and 2023, we had no anti-dilutive unvested performance share awards. The performance targets of our unvested performance share awards were partially achieved as of March 31, 2024 and 2023.

For the three months ended March 31, 2024 and 2023, we had no anti-dilutive unvested restricted share awards.

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Note 11. Debt

Our debt consists of the following ($ in thousands):


			Outstanding Balance as of
	Interest Rate	Maturity Date	March 31, 2024		December 31, 2023
Senior Secured Credit Facilities
Revolving Credit Facility (1)	SOFR + 3.50%	January 5, 2028	$	—	$	—
Term Loan due 2029 (2)	SOFR + 3.25%	January 5, 2029	1,086,250		1,089,000
Total Senior Secured Credit Facilities (at stated value)			1,086,250		1,089,000
Unamortized discount			(25,139)		(26,466)
Unamortized debt issuance costs			(6,059)		(6,380)
Total Senior Secured Credit Facilities, net			$	1,055,052	$	1,056,154

Financing lease obligations			$	5,106	$	5,222

Total debt, net			$	1,060,158	$	1,061,376

________

(1)We had an available balance on our Revolving Credit Facility of $225.0 million as of March 31, 2024 and December 31, 2023.

(2)The effective interest rate for the Term Loan due 2029 was 8.58% and 8.59% as of March 31, 2024 and December 31, 2023, respectively.

Financial maintenance covenants

We were in compliance with all applicable covenants as of March 31, 2024. A summary of our applicable covenants and restrictions is as follows:


Debt						Covenant 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

Interest rate swaps

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 months ended March 31, 2024 and 2023 are as follows:

Notional Amount

Interest Rate Received

Fixed Rate Paid

Effective Date

Maturity Date

Designated as Cash Flow Hedges

$275 million

One-month SOFR

4.05%

April 15, 2023

April 15, 2025

$275 million

One-month SOFR

3.71%

April 15, 2023

April 15, 2026

Not Designated as Hedging Instrument (1)

$800 million

One-month LIBOR

2.85%

March 29, 2018

March 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.

Foreign currency forward contracts

We have entered into foreign currency forward contracts to mitigate the risk of foreign exchange fluctuations on certain direct expenses, such as salaries and wages and food and beverage costs, which are denominated in Mexican Pesos. As of March 31, 2024, the total outstanding notional amount of the forward contracts was $78.7 million, or $1.4 billion Mexican Pesos, which will be settled monthly with maturity dates between April 2024 and December 2024.

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Quantitative disclosures about derivative financial instruments

The following tables present the effect of our derivative financial instruments, net of tax, in the Condensed Consolidated Statements of Comprehensive Income and Condensed Consolidated Statements of Operations for the three months ended March 31, 2024 and 2023 ($ in thousands):


	Three Months Ended March 31,
	2024				2023
	Interest rate swaps(1)		Foreign currency forwards(2)		Interest rate swaps
Change in fair value	$	(5,852)	$	(2,868)	$	—
Reclassification from AOCI to the income statement	$	2,024	$	(54)	$	(2,895)

________

(1) Amounts are reclassified from AOCI to interest expense. As of March 31, 2024, the total amount expected to be reclassified during the next twelve months is $5.6 million.

(2) Amounts are reclassified from AOCI to direct expenses. As of March 31, 2024, the total amount expected to be reclassified during the next twelve months is $2.9 million.


Derivative Financial Instruments	Financial Statement Classification	Three Months Ended March 31,
			2024		2023
Designated as Cash Flow Hedges
Interest rate swaps	Interest expense		$	(2,024)	$	—
Foreign currency forwards	Direct expenses		$	(180)	$	—
Not Designated as Hedging Instruments
Interest rate swaps(1)	Interest expense		$	—	$	3,013

________

(1) Includes the loss 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 table presents the effect of our derivative financial instruments in the Condensed Consolidated Balance Sheet as of March 31, 2024 and December 31, 2023 ($ in thousands):


Derivative Financial Instruments	Financial Statement Classification	As of March 31,		As of December 31,
		2024		2023
Designated as Cash Flow Hedges
Interest rate swaps	Derivative financial instruments	$	6,785	$	2,966
Foreign currency forwards	Derivative financial instruments	$	2,922	$	—

Derivative financial instruments expose us to credit risk in the event of non-performance by the counterparty under the terms of each instrument. 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.

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We believe the carrying value of our financial instruments, excluding our debt, approximate their fair values as of March 31, 2024 and December 31, 2023. We did not have any Level 3 instruments during any of the periods presented in our Condensed Consolidated Financial Statements.

The following tables present our fair value hierarchy for our financial assets measured at fair value on a recurring basis as of March 31, 2024 and December 31, 2023 ($ in thousands):


Financial Assets	March 31, 2024		Level 1		Level 2		Level 3
Fair value measurements on a recurring basis
Interest rate swaps	$	6,785	$	—	$	6,785	$	—
Foreign currency forwards	$	2,922	$	—	$	2,922	$	—


Financial Assets	December 31, 2023		Level 1		Level 2		Level 3
Fair value measurements on a recurring basis
Interest rate swaps	$	2,966	$	—	$	2,966	$	—

The following tables present our fair value hierarchy for our financial liabilities not measured at fair value as of March 31, 2024 and December 31, 2023 ($ in thousands):


	Carrying Value		Fair Value
	As of March 31, 2024		Level 1		Level 2		Level 3
Financial liabilities not recorded at fair value
Term Loan due 2029	$	1,055,052	$	—	$	—	$	1,102,108


	Carrying Value		Fair Value
	As of December 31, 2023		Level 1		Level 2		Level 3
Financial liabilities not recorded at fair value
Term Loan due 2029	$	1,056,154	$	—	$	—	$	1,097,081

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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
Foreign currency forwards						The fair value of the foreign currency forwards is estimated based on the expected future cash flows by incorporating the notional amount of the forward contract, the maturity date of the contract, and observable inputs including spot rates, forward rates, and interest rate curves (including discount factors). The fair value also incorporates credit valuation adjustments to appropriately reflect nonperformance risk. The fair value is largely dependent on prevailing foreign currency forward rates as of the measurement date and maturing on the maturity dates of any existing forwards. If, in subsequent periods, any prevailing foreign currency forward rate differs from the corresponding contracted foreign currency rate, we will recognize a gain or loss.
Interest rate swaps						The fair value of the interest rate swaps is estimated based on the expected future cash flows by incorporating the notional amount of the swaps, the contractual period to maturity, and observable market-based inputs, including interest rate curves. The fair value also incorporates credit valuation adjustments to appropriately reflect nonperformance risk. The fair value of our interest rate swaps is largely dependent on forecasted 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 2029						The 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 Facility						The 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 March 31, 2024 and December 31, 2023 ($ in thousands):


	As of March 31,		As of December 31,
	2024		2023
Gross trade and other receivables (1)	$	82,656	$	75,051
Allowance for doubtful accounts	(434)		(289)
Total trade and other receivables, net	$	82,222	$	74,762

________

(1) The opening balance as of January 1, 2023 was $63.4 million.

We have not experienced any significant write-offs to our accounts receivable during the three months ended March 31, 2024 and 2023.

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Prepayments and other assets

The following summarizes the balances of prepayments and other assets as of March 31, 2024 and December 31, 2023 ($ in thousands):


	As of March 31,		As of December 31,
	2024		2023
Advances to suppliers	$	13,391	$	18,213
Prepaid income taxes	12,540		11,510
Prepaid other taxes (1)	4,606		5,641
Operating lease right-of-use assets	6,243		6,426
Key money	6,896		6,475
Other assets	6,035		6,029
Total prepayments and other assets	$	49,711	$	54,294

________

(1) Includes recoverable value-added tax, general consumption tax, and other sales tax accumulated by our Mexico, Jamaica, Dutch and Dominican Republic entities.

Goodwill

We recognized no goodwill impairment losses on our reporting units nor any additions to goodwill during the three months ended March 31, 2024. The gross carrying values and accumulated impairment losses of goodwill by reportable segment (refer to discussion of our reportable segments in Note 15) as of March 31, 2024 and December 31, 2023 are as follows ($ in thousands):


	Yucatán Peninsula		Pacific Coast		Dominican Republic		Jamaica		Total
Gross carrying value	$	51,731	$	—	$	—	$	33,879	$	85,610
Accumulated impairment losses	(6,168)		—		—		(18,800)		(24,968)
Net carrying value	$	45,563	$	—	$	—	$	15,079	$	60,642

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Other intangible assets

Other intangible assets as of March 31, 2024 and December 31, 2023 consisted of the following ($ in thousands):


	As of March 31,		As of December 31,
	2024		2023
Gross carrying value
Casino and other licenses (1)	$	628	$	607
Management contract	1,900		1,900
Enterprise resource planning system	6,352		6,352
Other	4,732		4,674
Total gross carrying value	13,612		13,533

Accumulated amortization
Management contract	(546)		(523)
Enterprise resource planning system	(5,250)		(4,349)
Other	(4,375)		(4,304)
Total accumulated amortization	(10,171)		(9,176)

Net carrying value
Casino and other licenses (1)	628		607
Management contract	1,354		1,377
Enterprise resource planning system	1,102		2,003
Other	357		370
Total net carrying value	$	3,441	$	4,357

________

(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 $1.0 million and $0.4 million for the three months ended March 31, 2024 and 2023, respectively.

Trade and other payables

The following summarizes the balances of trade and other payables as of March 31, 2024 and December 31, 2023 ($ in thousands):


	As of March 31,		As of December 31,
	2024		2023
Trade payables	$	26,374	$	25,929
Advance deposits (1)	69,054		80,506
Withholding and other taxes payable	15,747		15,164
Interest payable	2,853		2,603
Payroll and related accruals	25,183		31,466
Accrued expenses and other payables (2)	37,505		40,764
Total trade and other payables	$	176,716	$	196,432

________

(1) The opening balance as of January 1, 2023 was $83.3 million.

(2) As of March 31, 2024 and December 31, 2023, accrued expenses and other payables includes $10.1 million and $16.8 million, respectively, of unpaid clean up and repair expenses related to Hurricane Fiona. As of March 31, 2024, accrued expenses and other payables also includes $2.0 million related to share repurchases not yet settled.

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Other liabilities

The following summarizes the balances of other liabilities as of March 31, 2024 and December 31, 2023 ($ in thousands):


	As of March 31,		As of December 31,
	2024		2023
Pension obligation (1)	$	10,396	$	9,980
Operating lease liabilities	6,811		6,973
Unfavorable ground lease liability	1,721		1,748
Key money	14,073		14,331
Other	929		938
Total other liabilities	$	33,930	$	33,970

________

(1) For the three months ended March 31, 2024 and 2023, the service cost component of net periodic pension cost was $0.4 million and $0.3 million, respectively, and the non-service cost components were $0.3 million and $0.9 million, respectively.

Note 15. Business segments

We consider each one of our owned resorts to be an operating segment, none of which meets the threshold for a reportable segment. We also allocate resources and assess operating performance based on individual resorts. Our operating segments meet the aggregation criteria and thus, we report four separate reportable segments by geography: (i) Yucatán Peninsula, (ii) Pacific Coast, (iii) Dominican Republic and (iv) Jamaica.

Our operating segments are components of the business that are managed discretely and for which discrete financial information is reviewed regularly by our Chief Executive Officer, Chief Financial Officer and Chief Operating Officer, all of whom represent our chief operating decision maker (“CODM”). Financial information for each reportable segment is reviewed by the CODM to assess performance and make decisions regarding the allocation of resources. For the three months ended March 31, 2024 and 2023, we have excluded the immaterial amounts of management fees, cost reimbursements, The Playa Collection revenues and other from our segment reporting.

The performance of our business is evaluated primarily on adjusted earnings before interest expense, income tax provision, and depreciation and amortization expense (“Adjusted EBITDA”) and the performance of our segments is evaluated on Adjusted EBITDA before corporate expenses, The Playa Collection revenue and management fees (“Owned Resort EBITDA”). Adjusted EBITDA and Owned Resort EBITDA should not be considered alternatives to net income or other measures of financial performance or liquidity derived in accordance with U.S. GAAP.

We define Adjusted EBITDA as net income, determined in accordance with U.S. GAAP, for the periods presented, before interest expense, income tax provision, and depreciation and amortization expense, further adjusted to exclude the following items: (a) (gain) 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, The Playa Collection revenue, and other miscellaneous revenue not derived from segment operations, and a reconciliation to total revenue for the three months ended March 31, 2024 and 2023 ($ in thousands):


	Three Months Ended March 31,
		2024		2023
Owned net revenue
Yucatán Peninsula		$	95,988	$	88,748
Pacific Coast		44,296		40,515
Dominican Republic		81,612		68,769
Jamaica		64,642		62,977
Segment owned net revenue		286,538		261,009
Other revenues		420		564
Management fees		2,534		1,929
The Playa Collection		1,020		726
Cost reimbursements		2,889		3,534
Compulsory tips		7,234		6,040
Total revenue		$	300,635	$	273,802

The following table presents segment Owned Resort EBITDA, Adjusted EBITDA and a reconciliation to net income for the three months ended March 31, 2024 and 2023 ($ in thousands):


	Three Months Ended March 31,
		2024		2023
Owned Resort EBITDA
Yucatán Peninsula		$	40,053	$	37,936
Pacific Coast		19,141		17,523
Dominican Republic		37,770		26,849
Jamaica		27,076		27,081
Segment Owned Resort EBITDA		124,040		109,389
Other corporate		(14,122)		(13,555)
The Playa Collection		1,020		726
Management fees		2,534		1,929
Adjusted EBITDA		113,472		98,489
Interest expense		(23,128)		(29,666)
Depreciation and amortization		(18,672)		(19,191)

Gain (loss) on sale of assets		36		(13)
Other (expense) income		(793)		232
Repairs from hurricanes and tropical storms		—		861
Share-based compensation		(3,759)		(3,166)

Transaction expenses		(1,037)		(863)
Non-service cost components of net periodic pension cost (1)		259		852
Net income before tax		66,378		47,535
Income tax provision		(12,037)		(4,816)
Net income		$	54,341	$	42,719

________

(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 March 31, 2024 and December 31, 2023 ($ in thousands):


	As of March 31,		As of December 31,
	2024		2023
Segment property and equipment, gross
Yucatán Peninsula	$	683,966	$	683,073
Pacific Coast	308,271		305,588
Dominican Republic	542,700		541,629
Jamaica	425,382		422,772
Total segment property and equipment, gross	1,960,319		1,953,062
Corporate property and equipment, gross	6,436		5,823
Accumulated depreciation	(559,507)		(543,313)
Total property and equipment, net	$	1,407,248	$	1,415,572

The following table presents segment capital expenditures and a reconciliation to total capital expenditures for the three months ended March 31, 2024 and 2023 ($ in thousands):


	Three Months Ended March 31,
	2024		2023
Segment capital expenditures
Yucatán Peninsula	$	2,021	$	2,741
Pacific Coast	2,528		946
Dominican Republic	1,554		3,895
Jamaica	3,175		1,806
Total segment capital expenditures (1)	9,278		9,388
Corporate	874		126
Total capital expenditures (1)	$	10,152	$	9,514

________

(1) Represents gross additions to property and equipment.

Note 16. Subsequent events

During the period from April 1, 2024 through April 30, 2024, we purchased 1,859,322 ordinary shares at an average price of $9.36 per share. As of April 30, 2024, we had $146.5 million remaining under our $200.0 million share repurchase program.

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Item 2. Management’s 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 22, 2024 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, elevated interest rates and worsening global economic conditions or low levels of economic growth, 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 to 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 (including expected increases in our corporate tax rate pursuant to the Dutch Minimum Tax Act 2024), 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 public health crises, or airline service/capacity issues, as well as changes in demand for our resorts

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resulting from government-mandated safety protocols and/or health concerns, including those related to COVID-19 or other public health crises;

•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, tsunamis, tornados, floods and extreme heat waves, which may increase in frequency and severity as a result of climate change, and other natural or man-made disasters such as droughts, wildfires or oil spills;

•dependence on third parties to provide Internet, telecommunications and network connectivity to our data centers;

•cybersecurity incidents and information technology failures;

•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, through its subsidiaries, is a leading owner, operator and developer of all-inclusive resorts in prime beachfront locations in popular vacation destinations in Mexico and the Caribbean. As of March 31, 2024, Playa owned and/or managed a total portfolio consisting of 24 resorts (9,027 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, and Jewel Palm Beach; and

•We also manage seven resorts on behalf of third-party owners.

Playa currently owns and/or manages resorts under the following brands: Hyatt Zilara, Hyatt Ziva, Hilton All-Inclusive, Tapestry Collection by Hilton, Wyndham Alltra, Seadust, Kimpton, Jewel Resorts and The Luxury Collection. Playa leverages years of all-inclusive resort operating expertise and relationships with globally recognized hospitality brands to provide a best-in-class experience and exceptional value to guests, while building a direct relationship to improve customer acquisition cost and drive repeat business.

For the three months ended March 31, 2024, we generated net income of $54.3 million, Total Revenue of $300.6 million, Net Package RevPAR of $427.17 and Adjusted EBITDA of $113.5 million. For the three months ended March 31, 2023, we generated net income of $42.7 million, Total Revenue of $273.8 million, Net Package RevPAR of $355.27 and Adjusted EBITDA of $98.5 million.

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Our Portfolio of Resorts

As of March 31, 2024, 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 Renovations

Rooms

Owned Resorts

Yucatán Peninsula

Hyatt Ziva Cancún

Cancún, Mexico

Hyatt Ziva (all ages)

Playa

1975; 1980; 1986; 2002; 2015

547

Hyatt Zilara Cancún

Cancún, Mexico

Hyatt Zilara (adults-only)

Playa

2006; 2009; 2013; 2017

310

Wyndham Alltra Cancún

Cancún, Mexico

Wyndham (all ages)

Playa

1985; 2009; 2017

458

Hilton Playa del Carmen All-Inclusive Resort

Playa del Carmen, Mexico

Hilton (adults-only)

Playa

2002; 2009; 2019

524

Wyndham Alltra Playa del Carmen

Playa del Carmen, Mexico

Wyndham (adults-only)

Playa

1996; 2006; 2012; 2017

287

Pacific Coast

Hyatt Ziva Los Cabos

Cabo San Lucas, Mexico

Hyatt Ziva (all ages)

Playa

2007; 2009; 2015

591

Hyatt Ziva Puerto Vallarta

Puerto Vallarta, Mexico

Hyatt Ziva (all ages)

Playa

1969; 1990; 2002; 2009; 2014; 2017

335

Dominican Republic

Hilton La Romana All-Inclusive Resort

La Romana, Dominican Republic

Hilton (adults-only)

Playa

1997; 2008; 2019

356

Hilton La Romana All-Inclusive Resort

La Romana, Dominican Republic

Hilton (all ages)

Playa

1997; 2008; 2019

418

Jewel Palm Beach

Punta Cana,
Dominican Republic

Jewel (all ages)

Playa

1994; 2008

500

Hyatt Ziva Cap Cana

Cap Cana,
Dominican Republic

Hyatt Ziva (all ages)

Playa

2019

375

Hyatt Zilara Cap Cana

Cap Cana,
Dominican Republic

Hyatt Zilara (adults-only)

Playa

2019

375

Jamaica

Hyatt Ziva Rose Hall

Montego Bay, Jamaica

Hyatt Ziva (all ages)

Playa

2000; 2014; 2017

276

Hyatt Zilara Rose Hall

Montego Bay, Jamaica

Hyatt Zilara (adults-only)

Playa

2000; 2014; 2017

344

Hilton Rose Hall Resort & Spa

Montego Bay, Jamaica

Hilton (all ages)

Playa

1974; 2008; 2017

495

Jewel Paradise Cove Beach Resort & Spa

Runaway Bay, Jamaica

Jewel (adults-only)

Playa

2013

225

Jewel Grande Montego Bay Resort & Spa (1)

Montego Bay, Jamaica

Jewel (all ages)

Playa

2016; 2017

Total Rooms Owned

6,504

Managed Resorts (2)

Sanctuary Cap Cana

Punta Cana,
Dominican Republic

The Luxury Collection by Marriott (adults-only)

Playa

2008; 2015; 2018

324

Jewel Grande Montego Bay Resort & Spa

Montego Bay, Jamaica

Jewel (condo-hotel)

Playa

2016; 2017

129

The Yucatán Playa del Carmen All-Inclusive Resort

Playa del Carmen, Mexico

Tapestry Collection by Hilton (adults-only)

Playa

2012

Seadust Cancún Family Resort

Cancún, Mexico

Seadust (all ages)

Playa

2006; 2022

502

Kimpton Hacienda Tres Ríos Resort, Spa & Nature Park (3)

Playa del Carmen, Mexico

Kimpton (all ages)

Playa

2008; 2023

255

Wyndham Alltra Vallarta

Nuevo Vallarta, Mexico

Wyndham (all ages)

Playa

2009; 2022

229

Wyndham Alltra Samaná (4)

Samaná, Dominican Republic

Wyndham (all ages)

Playa

1994; 1998; 2004; 2023

404

Jewel Punta Cana (5)

Punta Cana,
Dominican Republic

Jewel (all ages)

Playa

2004

620

Total Rooms Operated

2,523

Total Rooms Owned and Operated

9,027

________

(1) 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.

(2) Owned by a third party.

(3) 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 late 2024.

(4) We entered into a management agreement to operate this resort during the first quarter of 2023. We commenced operations in March 2024.

(5) In connection with the resort's sale in December 2023, we entered into a management agreement to operate this resort. The resort is currently closed for renovations and we expect to commence operations in late 2024.

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Results of Operations

Three Months Ended March 31, 2024 and 2023

The following table summarizes our results of operations on a consolidated basis for the three months ended March 31, 2024 and 2023 ($ in thousands):


	Three Months Ended March 31,				Increase / Decrease
	2024		2023		Change		% Change
Revenue
Package	$	259,629	$	233,568	$	26,061	11.2	%
Non-package	34,143		33,481		662		2.0	%
The Playa Collection	1,020		726		294		40.5	%
Management fees	2,534		1,929		605		31.4	%
Cost reimbursements	2,889		3,534		(645)		(18.3)	%
Other revenues	420		564		(144)		(25.5)	%
Total revenue	300,635		273,802		26,833		9.8	%
Direct and selling, general and administrative expenses
Direct	137,979		128,968		9,011		7.0	%
Selling, general and administrative	51,219		45,127		6,092		13.5	%
Depreciation and amortization	18,672		19,191		(519)		(2.7)	%
Reimbursed costs	2,889		3,534		(645)		(18.3)	%

(Gain) loss on sale of assets	(36)		13		(49)		(376.9)	%
Business interruption insurance recoveries	(17)		—		(17)		(100.0)	%
Gain on insurance proceeds	(370)		—		(370)		(100.0)	%
Direct and selling, general and administrative expenses	210,336		196,833		13,503		6.9	%
Operating income	90,299		76,969		13,330		17.3	%
Interest expense	(23,128)		(29,666)		6,538		22.0	%
Other (expense) income	(793)		232		(1,025)		(441.8)	%
Net income before tax	66,378		47,535		18,843		39.6	%
Income tax provision	(12,037)		(4,816)		(7,221)		(149.9)	%
Net income	$	54,341	$	42,719	$	11,622	27.2	%

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 March 31, 2024 excludes Jewel Palm Beach, which was closed for a majority of the first quarter of 2023 as we transitioned management of the resort to us from a third-party, and Jewel Punta Cana, which was sold in December 2023.

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Total Portfolio


	Three Months Ended March 31,						Increase / Decrease
	2024			2023			Change			% Change
Occupancy	85.1		%	70.8		%	14.3		pts	20.2	%
Net Package ADR	$	502.12		$	501.64		$	0.48		0.1	%
Net Package RevPAR	$	427.17		$	355.27		$	71.90		20.2	%
	($ in thousands)
Net Package Revenue	$	252,829		$	227,786		$	25,043		11.0	%
Net Non-package Revenue	33,709			33,223			486			1.5	%
The Playa Collection Revenue	1,020			726			294			40.5	%
Management Fee Revenue	2,534			1,929			605			31.4	%
Other Revenues	420			564			(144)			(25.5)	%
Total Net Revenue	290,512			264,228			26,284			9.9	%
Adjusted EBITDA	$	113,472		$	98,489		$	14,983		15.2	%
Adjusted EBITDA Margin	39.1		%	37.3		%	1.8		pts	4.8	%

Comparable Portfolio


	Three Months Ended March 31,						Increase / Decrease
	2024			2023			Change			% Change
Occupancy	84.9		%	82.3		%	2.6		pts	3.2	%
Net Package ADR	$	530.41		$	508.02		$	22.39		4.4	%
Net Package RevPAR	$	450.33		$	417.91		$	32.42		7.8	%
	($ in thousands)
Net Package Revenue	$	246,043		$	225,824		$	20,219		9.0	%
Net Non-package Revenue	33,069			33,002			67			0.2	%
The Playa Collection Revenue	1,020			726			294			40.5	%
Management Fee Revenue	2,534			1,929			605			31.4	%
Other Revenues	420			564			(144)			(25.5)	%
Total Net Revenue	283,086			262,045			21,041			8.0	%
Adjusted EBITDA	$	112,608		$	103,770		$	8,838		8.5	%
Adjusted EBITDA Margin	39.8		%	39.6		%	0.2		pts	0.5	%

Total Revenue and Total Net Revenue

Our Total Revenue for the three months ended March 31, 2024 increased $26.8 million, or 9.8%, compared to the three months ended March 31, 2023 and our Total Net Revenue for the three months ended March 31, 2024 increased $26.3 million, or 9.9%, compared to the three months ended March 31, 2023. The increases were due to the following:

•an increase in Occupancy of 14.3 percentage points as a result of low occupancy levels at Jewel Punta Cana and the temporary closure of Jewel Palm Beach for the majority of the three months ended March 31, 2023, as management of the resort transitioned to Playa from a third-party;

•Excluding Jewel Punta Cana and Jewel Palm Beach, Occupancy increased 2.6 percentage points compared to the three months ended March 31, 2023.

•an increase in Net Package ADR of 0.1%;

•Excluding Jewel Punta Cana and Jewel Palm Beach, Net Package ADR increased 4.4%.

•an increase in Net Non-package Revenue of $0.5 million, or 1.5%.

•Excluding Jewel Punta Cana, which was sold in December 2023, and Jewel Palm Beach, Net Non-package Revenue increased $0.1 million, or 0.2%, compared to the three months ended March 31, 2023.

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Adjusted EBITDA and Adjusted EBITDA Margin

Our Adjusted EBITDA for the three months ended March 31, 2024 increased $15.0 million, or 15.2%, compared to the three months ended March 31, 2023.

•Excluding Jewel Punta Cana and Jewel Palm Beach, Adjusted EBITDA increased $8.8 million compared to the three months ended March 31, 2023. Adjusted EBITDA was negatively impacted by $4.8 million due to the appreciation of the Mexican Peso, inclusive of the impact of our foreign currency forward contracts (refer to discussion of our derivative financial instruments in Note 12), and by increased insurance premiums and labor and related expenses compared to the three months ended March 31, 2023. Adjusted EBITDA was also positively impacted by a $0.4 million benefit from business interruption insurance related to the disruption caused by Hurricane Fiona in our Dominican Republic segment in the second half of 2022.

Our Adjusted EBITDA Margin for the three months ended March 31, 2024 increased 1.8 percentage points, or 4.8%, compared to the three months ended March 31, 2023.

•Excluding Jewel Punta Cana and Jewel Palm Beach, Adjusted EBITDA Margin increased 0.2 percentage points compared to the three months ended March 31, 2023. Adjusted EBITDA Margin was negatively impacted by 160 basis points due to the appreciation of the Mexican Peso, which was partially offset by a positive impact of 10 basis points from business interruption proceeds and recoverable expenses related to Hurricane Fiona compared to the three months ended March 31, 2023. Excluding these impacts, our Adjusted EBITDA Margin would have been 40.6%, an increase of 3.3 percentage points compared to the three months ended March 31, 2023.

The following table shows a reconciliation of Net Package Revenue and Net Non-package Revenue to Total Revenue for the three months ended March 31, 2024 and 2023 ($ in thousands):


	Three Months Ended March 31,				Increase/Decrease
	2024		2023		Change		% Change
Net Package Revenue
Comparable Net Package Revenue	$	246,043	$	225,824	$	20,219	9.0	%
Non-comparable Net Package Revenue	6,786		1,962		4,824		245.9	%
Net Package Revenue	252,829		227,786		25,043		11.0	%

Net Non-package Revenue
Comparable Net Non-package Revenue	33,069		33,002		67		0.2	%
Non-comparable Net Non-package Revenue	640		221		419		189.6	%
Net Non-package Revenue	33,709		33,223		486		1.5	%




The Playa Collection Revenue	1,020		726		294		40.5	%



Management Fee Revenue	2,534		1,929		605		31.4	%



Other Revenues	420		564		(144)		(25.5)	%

Total Net Revenue
Comparable Total Net Revenue	283,086		262,045		21,041		8.0	%
Non-comparable Total Net Revenue	7,426		2,183		5,243		240.2	%
Total Net Revenue	290,512		264,228		26,284		9.9	%
Compulsory tips	7,234		6,040		1,194		19.8	%
Cost Reimbursements	2,889		3,534		(645)		(18.3)	%
Total revenue	$	300,635	$	273,802	$	26,833	9.8	%

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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 March 31, 2024 and 2023 ($ in thousands):


	Three Months Ended March 31,				Increase/Decrease
	2024		2023		Change		% Change
Direct expenses	$	137,979	$	128,968	$	9,011	7.0	%
Less: compulsory tips	7,234		6,040		1,194		19.8	%
Net Direct Expenses	$	130,745	$	122,928	$	7,817	6.4	%

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 $130.7 million, or 45.0% of Total Net Revenue, for the three months ended March 31, 2024 and $122.9 million, or 46.5% of Total Net Revenue, for the three months ended March 31, 2023. Net Direct Expenses for the three months ended March 31, 2024 increased $7.8 million, or 6.4%, compared to the three months ended March 31, 2023 primarily due to the following:

•appreciation of the Mexican Peso compared to the three months ended March 31, 2023, which impacts the majority of our expenses but primarily increased labor and food and beverage expenses during the three months ended March 31, 2024; and

•increased labor and related expenses as a result of union-negotiated and government-mandated wage and benefit increases compared to the three months ended March 31, 2023.

Net Direct Expenses consists of the following ($ in thousands):

Total Portfolio


	Three Months Ended March 31,				Increase/Decrease
	2024		2023		Change		% Change

Food and beverages	$	30,028	$	28,487	$	1,541	5.4	%
Guest costs	5,133		5,715		(582)		(10.2)	%
Salaries and wages	52,625		47,195		5,430		11.5	%
Repairs and maintenance	5,678		5,955		(277)		(4.7)	%
Utilities and sewage	11,214		10,557		657		6.2	%
Licenses and property taxes	1,010		881		129		14.6	%
Incentive and management fees	—		41		(41)		(100.0)	%
Franchise fees	15,052		13,518		1,534		11.3	%
Transportation and travel expenses	1,766		1,655		111		6.7	%
Laundry and cleaning expenses	1,725		1,653		72		4.4	%
Property and equipment rental expense	1,789		2,173		(384)		(17.7)	%
Entertainment expenses and decoration	3,117		3,144		(27)		(0.9)	%
Office supplies	284		352		(68)		(19.3)	%
Other operational expenses	1,324		1,602		(278)		(17.4)	%
Total Net Direct Expenses	$	130,745	$	122,928	$	7,817	6.4	%

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Comparable Portfolio


	Three Months Ended March 31,				Increase/Decrease
	2024		2023		Change		% Change

Food and beverages	$	28,543	$	28,344	$	199	0.7	%
Guest costs	4,969		5,574		(605)		(10.9)	%
Salaries and wages	50,705		45,898		4,807		10.5	%
Repairs and maintenance	5,481		5,693		(212)		(3.7)	%
Utilities and sewage	10,447		10,184		263		2.6	%
Licenses and property taxes	935		866		69		8.0	%

Franchise fees	15,052		13,518		1,534		11.3	%
Transportation and travel expenses	1,615		1,597		18		1.1	%
Laundry and cleaning expenses	1,639		1,634		5		0.3	%
Property and equipment rental expense	1,747		2,164		(417)		(19.3)	%
Entertainment expenses and decoration	3,022		3,137		(115)		(3.7)	%
Office supplies	268		349		(81)		(23.2)	%
Other operational expenses	1,210		1,537		(327)		(21.3)	%
Total Net Direct Expenses	$	125,633	$	120,495	$	5,138	4.3	%

Selling, General and Administrative Expenses

Our selling, general and administrative expenses for the three months ended March 31, 2024 increased $6.1 million, or 13.5%, compared to the three months ended March 31, 2023. The increase was primarily driven by a $2.7 million increase in insurance expense due to higher insurance premiums and a $1.2 million increase in property selling, general and administrative expenses. We also experienced an increase in share-based compensation expense of $0.6 million due to an increase in the number of restricted and performance share awards granted in 2024, a $0.5 million increase in travel and tour operator commissions expense corresponding with higher occupancies, a $0.4 million increase in the provision for doubtful accounts, a $0.3 million increase in professional fees and a $0.3 million increase in corporate selling, general and administrative expenses.

Depreciation and Amortization Expense

Our depreciation and amortization expense for the three months ended March 31, 2024 decreased $0.5 million, or 2.7%, compared to the three months ended March 31, 2023 due to the sale of Jewel Punta Cana in December 2023.

Gain on Insurance Proceeds

Our gain on insurance proceeds for the three months ended March 31, 2024 increased $0.4 million, or 100.0%, compared to the three months ended March 31, 2023 as a result of business interruption insurance proceeds received in 2024 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 March 31, 2023.

Interest Expense

Our interest expense for the three months ended March 31, 2024 decreased $6.5 million, or 22.0%, compared to the three months ended March 31, 2023. The decrease in interest expense was driven primarily by a $6.3 million decrease related to a favorable change in fair value of our prior LIBOR-based interest rate swaps recognized during the three months ended March 31, 2023. The decrease was partially offset by a $0.3 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 3.25%. 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.

Cash interest paid was $21.3 million for the three months ended March 31, 2024, representing a $0.1 million, or 0.5% decrease as compared to the three months ended March 31, 2023.

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Income Tax Provision

For the three months ended March 31, 2024, our income tax provision was $12.0 million, compared to a $4.8 million income tax provision for the three months ended March 31, 2023. The increase of $7.2 million was primarily driven by a $10.8 million increased tax provision associated with higher pre-tax book income from our taxpaying entities. This includes a $12.0 million increased tax provision for tax expense incurred in the Netherlands under the Dutch Minimum Tax Act 2024 and a $1.3 million decreased tax expense at Mexico and Jamaica entities related to lower pre-tax book income. The increases are partially offset by a $2.4 million decreased tax expense related to favorable foreign exchange rate fluctuations, primarily at our Mexico entities, a $1.3 million tax benefit recorded for the finalization of the capital gains tax due on the 2023 Jewel Punta Cana sale, and $0.3 million decreased tax expense associated with 2023 tax true-ups recorded for our Dominican Republic entities based on the expected APA tax rates.

A majority of the expected impact of the Dutch Minimum Tax Act 2024 for the year ended December 31, 2024 was recognized through our income tax provision during the three months ended March 31, 2024.

Key Indicators of Financial and Operating Performance

We use a variety of financial and other information to monitor the financial and operating performance of our business. Some of this is financial information prepared in accordance with U.S. GAAP, while other information, though financial in nature, is not prepared in accordance with U.S. GAAP. For reconciliations of non-U.S. GAAP financial measures to the most comparable U.S. GAAP financial measure, see “Non-U.S. GAAP Financial Measures.” Our management also uses other information that is not financial in nature, including statistical information and comparative data that are commonly used within the lodging industry to evaluate the financial and operating performance of our portfolio. Our management uses this information to measure the performance of our segments and consolidated portfolio. We use this information for planning and monitoring our business, as well as in determining management and employee compensation. These key indicators include:

•Net Package Revenue

•Net Non-package Revenue

•Owned Net Revenue

•Management Fee Revenue

•Total Net Revenue

•Occupancy

•Net Package ADR

•Net Package RevPAR

•Net Direct Expenses

•EBITDA

•Adjusted EBITDA

•Adjusted EBITDA Margin

•Owned Resort EBITDA

•Owned Resort EBITDA Margin

•Comparable Non-U.S. GAAP Financial 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.

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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 months ended March 31, 2024 and 2023, 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 certain 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 income. Contract termination fees, which are recorded as Other Revenues, are also excluded from Total Net Revenue as they are not an indicator of the performance of our ongoing business.

“Net Direct Expenses” represents direct expenses, net of compulsory tips paid to employees.

Occupancy

“Occupancy” represents the total number of rooms sold for a period divided by the total number of rooms available during such period. The total number of rooms available excludes any rooms considered “Out of Order” due to renovation or a temporary problem rendering them inadequate for occupancy for an extended period of time. Occupancy is a useful measure of the utilization of a resort’s total available capacity and can be used to gauge demand at a specific resort or group of properties during a given period. Occupancy levels also enable us to optimize Net Package ADR (as defined below) by increasing or decreasing the stated rate for our all-inclusive packages as demand for a resort increases or decreases.

Net Package ADR

“Net Package ADR” represents total Net Package Revenue for a period divided by the total number of rooms sold during such period. Net Package ADR trends and patterns provide useful information concerning the pricing environment and the nature of the guest base of our portfolio or comparable portfolio, as applicable. Net Package ADR is a commonly used performance measure in the all-inclusive segment of the lodging industry and is commonly used to assess the stated rates that guests are willing to pay through various distribution channels.

Net Package RevPAR

“Net Package RevPAR” is the product of Net Package ADR and the average daily occupancy percentage. Net Package RevPAR does not reflect the impact of 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 room revenue produced by our portfolio or comparable portfolio, as applicable, and to evaluate operating performance on a consolidated basis or a regional basis, as applicable.

EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin, Owned Resort EBITDA, and Owned Resort EBITDA Margin

We define EBITDA, a non-U.S. GAAP financial measure, as net income or loss, determined in accordance with U.S. GAAP, for the period presented before interest expense, income tax and depreciation and amortization expense. EBITDA and Adjusted EBITDA (as defined below) include corporate expenses, which are overhead costs that are essential to support the operation of the Company, including the operations and development of our resorts. We define Adjusted EBITDA, a non-U.S. GAAP financial measure, as EBITDA further adjusted to exclude the following items:

•Other miscellaneous non-operating income or expense

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•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.

“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, Net Package ADR, Net Package RevPAR, and Net Direct Expenses are all useful to investors as they more accurately reflect our operating results by excluding compulsory tips. These tips have a margin of zero and do not represent our operating results.

We also believe that Adjusted EBITDA is useful to investors for two principal reasons. First, we believe Adjusted EBITDA assists investors in comparing our performance over various reporting periods on a consistent basis by removing from our operating results the impact of items that do not reflect our core operating performance. For example, changes in foreign exchange rates (which are the principal driver of changes in other income or expense), and expenses related to capital raising, strategic initiatives and other corporate initiatives, such as expansion into new markets (which are the principal drivers of changes in transaction expenses), are not indicative of the operating performance of our resorts. The other adjustments included in our definition of Adjusted EBITDA relate to items that occur infrequently and therefore would obstruct the comparability of our operating results over reporting periods. For example, revenue from insurance policies, other than business interruption insurance policies, is infrequent in nature, and we believe excluding these expense and revenue items permits investors to better evaluate the core operating performance of our resorts over time. We believe Adjusted EBITDA Margin provides our investors a useful measurement of operating profitability for the same reasons we find Adjusted EBITDA useful.

The second principal reason that we believe Adjusted EBITDA is useful to investors is that it is considered a key performance indicator by our board of directors (our “Board”) and management. In addition, the compensation committee of our Board determines a portion of the annual variable compensation for certain members of our management, including our executive officers, based, in part, on consolidated Adjusted EBITDA. We believe that Adjusted EBITDA is useful to investors because it provides investors with information utilized by our Board and management to assess our performance and may (subject to the limitations described below) enable investors to compare the performance of our portfolio to our competitors.

We believe that Owned Resort EBITDA and Owned Resort EBITDA Margin are useful to investors as they allow investors to measure resort-level performance and profitability by excluding expenses not directly tied to our resorts, such as corporate expenses, and excluding ancillary revenues not derived from our resorts, such as management fee revenue. We believe Owned Resort EBITDA

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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 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.

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 March 31, 2024 and 2023

We evaluate our business segment operating performance using segment Owned Net Revenue and segment Owned Resort EBITDA. The following tables summarize segment Owned Net Revenue and segment Owned Resort EBITDA for the three months ended March 31, 2024 and 2023 ($ in thousands):


	Three Months Ended March 31,				Increase / Decrease
	2024		2023		Change		% Change
Owned Net Revenue
Yucatán Peninsula	$	95,988	$	88,748	$	7,240	8.2	%
Pacific Coast	44,296		40,515		3,781		9.3	%
Dominican Republic	81,612		68,769		12,843		18.7	%
Jamaica	64,642		62,977		1,665		2.6	%
Segment Owned Net Revenue	286,538		261,009		25,529		9.8	%
Other revenues	420		564		(144)		(25.5)	%
The Playa Collection	1,020		726		294		40.5	%
Management fees	2,534		1,929		605		31.4	%
Total Net Revenue	$	290,512	$	264,228	$	26,284	9.9	%


	Three Months Ended March 31,				Increase / Decrease
	2024		2023		Change		% Change
Owned Resort EBITDA
Yucatán Peninsula	$	40,053	$	37,936	$	2,117	5.6	%
Pacific Coast	19,141		17,523		1,618		9.2	%
Dominican Republic	37,770		26,849		10,921		40.7	%
Jamaica	27,076		27,081		(5)		0.0	%
Segment Owned Resort EBITDA	124,040		109,389		14,651		13.4	%
Other corporate	(14,122)		(13,555)		(567)		(4.2)	%
The Playa Collection	1,020		726		294		40.5	%
Management fees	2,534		1,929		605		31.4	%
Total Adjusted EBITDA	$	113,472	$	98,489	$	14,983	15.2	%

For a reconciliation of segment Owned Net Revenue and segment Owned Resort EBITDA to total revenue and net income, respectively, each as computed under U.S. GAAP, see Note 15 to our Condensed Consolidated Financial Statements.

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Yucatán Peninsula

The following tables set forth information with respect to our Occupancy, Net Package ADR, Net Package RevPAR, Net Package Revenue, Net Non-package Revenue, Owned Net Revenue, Owned Resort EBITDA and Owned Resort EBITDA Margin for our Yucatán Peninsula segment for the three months ended March 31, 2024 and 2023 for the total segment portfolio:


	Three Months Ended March 31,						Increase / Decrease
	2024			2023			Change			% Change
Occupancy	87.0		%	83.8		%	3.2		pts	3.8	%
Net Package ADR	$	507.77		$	494.08		$	13.69		2.8	%
Net Package RevPAR	$	441.54		$	414.21		$	27.33		6.6	%
	($ in thousands)
Net Package Revenue	$	85,424		$	79,254		$	6,170		7.8	%
Net Non-package Revenue	10,564			9,494			1,070			11.3	%
Owned Net Revenue	95,988			88,748			7,240			8.2	%
Owned Resort EBITDA	$	40,053		$	37,936		$	2,117		5.6	%
Owned Resort EBITDA Margin	41.7		%	42.7		%	(1.0)		pts	(2.3)	%

Segment Owned Net Revenue. Our Owned Net Revenue for the three months ended March 31, 2024 increased $7.2 million, or 8.2%, compared to the three months ended March 31, 2023 and was driven by:

•an increase in Occupancy of 3.2 percentage points;

•an increase in Net Package ADR of 2.8%; and

•an increase in Net Non-package Revenue of $1.1 million, or 11.3%.

•Net Non-package Revenue per sold room increased 6.1%, primarily driven by a higher meetings, incentives, conventions and events (“MICE”) group contribution to our guest mix.

Segment Owned Resort EBITDA. Our Owned Resort EBITDA for the three months ended March 31, 2024 increased $2.1 million, or 5.6%, compared to the three months ended March 31, 2023 and was driven by:

•an increase in Net Package ADR compared to the three months ended March 31, 2023 which allowed us to leverage a majority of our direct expenses, partially offset by

•an unfavorable impact of $3.3 million due to the appreciation of the Mexican Peso, inclusive of the impact of our foreign currency forward contracts (refer to discussion of our derivative financial instruments in Note 12);

•an increase in labor and related expenses, which were partially due to union-negotiated and government-mandated wage benefit increases; and

•an increase in insurance premiums.

•Our Owned Resort EBITDA Margin for the three months ended March 31, 2024 was 41.7%, a decrease of 1.0 percentage point compared to the three months ended March 31, 2023. Owned Resort EBITDA Margin was negatively impacted by 340 basis points due to the appreciation of the Mexican Peso and by 30 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 March 31, 2023. Excluding the impact from the appreciation of the Mexican Peso, Owned Resort EBITDA Margin for the three months ended March 31, 2024 would have been 45.1%, an increase of 2.4 percentage points compared to the three months ended March 31, 2023.

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Pacific Coast

The following table sets forth information with respect to our Occupancy, Net Package ADR, Net Package RevPAR, Net Package Revenue, Net Non-package Revenue, Owned Net Revenue, Owned Resort EBITDA and Owned Resort EBITDA Margin for our Pacific Coast segment for the three months ended March 31, 2024 and 2023 for the total segment portfolio:


	Three Months Ended March 31,						Increase / Decrease
	2024			2023			Change			% Change
Occupancy	86.7		%	79.3		%	7.4		pts	9.3	%
Net Package ADR	$	526.87		$	541.73		$	(14.86)		(2.7)	%
Net Package RevPAR	$	456.59		$	429.80		$	26.79		6.2	%
	($ in thousands)
Net Package Revenue	$	38,475		$	35,820		$	2,655		7.4	%
Net Non-package Revenue	5,821			4,695			1,126			24.0	%
Owned Net Revenue	44,296			40,515			3,781			9.3	%
Owned Resort EBITDA	$	19,141		$	17,523		$	1,618		9.2	%
Owned Resort EBITDA Margin	43.2		%	43.3		%	(0.1)		pts	(0.2)	%

Segment Owned Net Revenue. Our Owned Net Revenue for the three months ended March 31, 2024 increased $3.8 million, or 9.3%, compared to the three months ended March 31, 2023 and was driven by:

•an increase in Occupancy of 7.4 percentage points;

•an increase in Net Non-package Revenue of $1.1 million, or 24.0%, primarily driven by a higher MICE group contribution to our guest mix;

•Net Non-package Revenue per sold room increased 12.3%; partially offset by

•a decrease in Net Package ADR of 2.7%.

Segment Owned Resort EBITDA. Our Owned Resort EBITDA for the three months ended March 31, 2024 increased $1.6 million, or 9.2%, compared to the three months ended March 31, 2023 and was driven by:

•an increase in Occupancy and Net Non-package Revenue; partially offset by

•an unfavorable impact of $1.5 million due to the appreciation of the Mexican Peso, inclusive of the impact of our foreign currency forward contracts (refer to discussion of our derivative financial instruments in Note 12);

•an increase in labor and related expenses, which were partially due to union-negotiated and government-mandated wage and benefit increases; and

•an increase in insurance premiums.

•Our Owned Resort EBITDA Margin for the three months ended March 31, 2024 was 43.2%, a decrease of 0.1 percentage points compared to the three months ended March 31, 2023. Owned Resort EBITDA Margin was negatively impacted by 330 basis points due to the appreciation of the Mexican Peso and by 90 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 March 31, 2023. Excluding the impact from the appreciation of the Mexican Peso, Owned Resort EBITDA Margin would have been 46.5%, an increase of 3.2 percentage points compared to the three months ended March 31, 2023.

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Dominican Republic

The following table sets forth information with respect to our Occupancy, Net Package ADR, Net Package RevPAR, Net Package Revenue, Net Non-package Revenue, Owned Net Revenue, Owned Resort EBITDA and Owned Resort EBITDA Margin for our Dominican Republic segment for the three months ended March 31, 2024 and 2023 for the total segment portfolio:

Total Portfolio


	Three Months Ended March 31,						Increase / Decrease
	2024			2023			Change			% Change
Occupancy	83.7		%	51.1		%	32.6		pts	63.8	%
Net Package ADR	$	468.26		$	490.55		$	(22.29)		(4.5)	%
Net Package RevPAR	$	392.07		$	250.47		$	141.60		56.5	%
	($ in thousands)
Net Package Revenue	$	72,213		$	59,602		$	12,611		21.2	%
Net Non-package Revenue	9,399			9,167			232			2.5	%
Owned Net Revenue	81,612			68,769			12,843			18.7	%
Owned Resort EBITDA	$	37,770		$	26,849		$	10,921		40.7	%
Owned Resort EBITDA Margin	46.3		%	39.0		%	7.3		pts	18.7	%

Comparable Portfolio (1)


	Three Months Ended March 31,						Increase / Decrease
	2024			2023			Change			% Change
Occupancy	82.6		%	81.6		%	1.0		pts	1.2	%
Net Package ADR	$	571.09		$	514.96		$	56.13		10.9	%
Net Package RevPAR	$	471.77		$	420.24		$	51.53		12.3	%
	($ in thousands)
Net Package Revenue	$	65,427		$	57,640		$	7,787		13.5	%
Net Non-package Revenue	8,759			8,946			(187)			(2.1)	%
Owned Net Revenue	74,186			66,586			7,600			11.4	%
Owned Resort EBITDA	$	36,906		$	32,130		$	4,776		14.9	%
Owned Resort EBITDA Margin	49.7		%	48.3		%	1.4		pts	2.9	%

________

(1)For the three months ended March 31, 2024, our comparable portfolio excludes Jewel Palm Beach, which was closed for a majority of the first quarter of 2023 as we transitioned management of the resort to us from a third-party, and Jewel Punta Cana, which was sold in December 2023.

Segment Comparable Owned Net Revenue. Our Comparable Owned Net Revenue for the three months ended March 31, 2024 increased $7.6 million, or 11.4%, compared to the three months ended March 31, 2023. The increase was due to the following:

•an increase in Occupancy of 1.0 percentage point; and

•an increase in Comparable Net Package ADR of 10.9%; partially offset by

•a decrease in Comparable Net Non-package Revenue of $0.2 million, or 2.1%, compared to the three months ended March 31, 2023.

•Comparable Net Non-package Revenue per sold room decreased 4.4% compared to the three months ended March 31, 2023 driven by a lower MICE group contribution to our guest mix.

Segment Comparable Owned Resort EBITDA. Our Comparable Owned Resort EBITDA for the three months ended March 31, 2024 increased $4.8 million, or 14.9%, compared to the three months ended March 31, 2023, and includes a $0.4 million benefit from business interruption insurance proceeds and recoverable expense related to Hurricane Fiona in the Dominican Republic during the second half of 2022. The benefit was partially offset by increased insurance premiums compared to the three months ended March 31, 2023.

•Our Comparable Owned Resort EBITDA Margin for the three months ended March 31, 2024 was 49.7%, an increase of 1.4 percentage points compared to the three months ended March 31, 2023, and includes a favorable impact of 50 basis points from business interruption proceeds and recoverable expenses related to Hurricane Fiona. Excluding the aforementioned

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business interruption benefit, Comparable Owned Resort EBITDA Margin for the three months ended March 31, 2024 was 49.2%, an increase of 0.9 percentage points compared to the three months ended March 31, 2023.

Jamaica

The following table sets forth information with respect to our Occupancy, Net Package ADR, Net Package RevPAR, Net Package Revenue, Net Non-package Revenue, Owned Net Revenue, Owned Resort EBITDA and Owned Resort EBITDA Margin for our Jamaica segment for the three months ended March 31, 2024 and 2023 for the total segment portfolio:


	Three Months Ended March 31,						Increase / Decrease
	2024			2023			Change			% Change
Occupancy	83.1		%	82.5		%	0.6		pts	0.7	%
Net Package ADR	$	524.92		$	500.78		$	24.14		4.8	%
Net Package RevPAR	$	436.46		$	413.24		$	23.22		5.6	%
	($ in thousands)
Net Package Revenue	$	56,717		$	53,110		$	3,607		6.8	%
Net Non-package Revenue	7,925			9,867			(1,942)			(19.7)	%
Owned Net Revenue	64,642			62,977			1,665			2.6	%
Owned Resort EBITDA	$	27,076		$	27,081		$	(5)		0.0	%
Owned Resort EBITDA Margin	41.9		%	43.0		%	(1.1)		pts	(2.6)	%

Segment Owned Net Revenue. Our Owned Net Revenue for the three months ended March 31, 2024 increased $1.7 million, or 2.6%, compared to the three months ended March 31, 2023. The increase was due to the following:

•an increase in Occupancy of 0.6 percentage points;

•an increase in Net Package ADR of 4.8%; partially offset by

•a decrease in Net Non-package Revenue of $1.9 million, or 19.7%.

•Net Non-package Revenue per sold room decreased 21.2% as a result of a lower MICE group contribution to our guest mix.

Segment Owned Resort EBITDA. Our Owned Resort EBITDA for the three months ended March 31, 2024 was flat compared to the three months ended March 31, 2023.

•Our Owned Resort EBITDA Margin for the three months ended March 31, 2024 decreased 1.1 percentage points, or 2.6%, compared to the three months ended March 31, 2023 driven by a decrease in Net Non-package Revenue and a negative impact of 160 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 three months ended March 31, 2023.

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Non-U.S. GAAP Financial Measures

Reconciliation of Net Income to Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization)

The following is a reconciliation of our U.S. GAAP net income to EBITDA, Adjusted EBITDA, Owned Resort EBITDA and Comparable Owned Resort EBITDA for the three months ended March 31, 2024 and 2023 ($ in thousands):


	Three Months Ended March 31,
	2024		2023
Net income	$	54,341	$	42,719
Interest expense	23,128		29,666
Income tax provision	12,037		4,816
Depreciation and amortization	18,672		19,191
EBITDA	108,178		96,392
Other expense (income) (a)	793		(232)
Share-based compensation	3,759		3,166
Transaction expense (b)	1,037		863

Repairs from hurricanes and tropical storms (c)	—		(861)
(Gain) loss on sale of assets	(36)		13
Non-service cost components of net periodic pension cost	(259)		(852)
Adjusted EBITDA	113,472		98,489
Other corporate (d)	14,122		13,555
The Playa Collection	(1,020)		(726)
Management fees	(2,534)		(1,929)
Owned Resort EBITDA	124,040		109,389
Less: Non-comparable Owned Resort EBITDA	864		(5,281)
Comparable Owned Resort EBITDA(e)	$	123,176	$	114,670

________

(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.

(d) For the three months ended March 31, 2024 and 2023, represents corporate salaries and benefits of $9.8 million for 2024 and $9.7 million for 2023, professional fees of $2.1 million for 2024 and $1.9 million for 2023, corporate rent and insurance of $1.0 million for 2024 and $1.0 million for 2023, and corporate travel, software licenses, board fees and other miscellaneous corporate expenses of $1.2 million for 2024 and $1.0 million for 2023.

(e) Our comparable portfolio for the three months ended March 31, 2024 excludes Jewel Palm Beach, which was closed for a majority of the first quarter of 2023 as we transitioned management of the resort to us from a third-party, and Jewel Punta Cana, which was sold in December 2023.

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 have experienced some improvement, we expect that inflationary pressures may remain elevated through 2024, 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.

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.

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Liquidity and Capital Resources

Our net cash provided by operating activities for the three months ended March 31, 2024 was $56.8 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 March 31, 2024, we had $285.3 million of available cash, as compared to $272.5 million as of December 31, 2023. Our primary short-term cash needs are paying operating expenses, maintaining our resorts, and servicing our outstanding indebtedness. We expect to meet our short-term liquidity requirements generally through our existing cash balances, net cash provided by operations, equity issuances or short-term borrowings under our Revolving Credit Facility.

Further, we had no restricted cash balance as of March 31, 2024. As of April 30, 2024, we had approximately $275.4 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 2024 and thereafter consist of (i) contractually obligated expenditures, including payments of principal and interest; (ii) other essential expenditures, including operating expenses and maintenance of our resorts; and (iii) opportunistic expenditures, including possible property developments, expansions, renovations, repositioning and rebranding projects, potential acquisitions, the repayment of indebtedness and discretionary repurchases of our securities.

As of March 31, 2024, 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, 2023, filed with the SEC on February 22, 2024. As of March 31, 2024, we had $73.9 million of scheduled contractual obligations remaining in 2024 which we expect to pay with available cash. In addition, we estimate that we will incur between $110.0 million and $120.0 million of capital expenditures for 2024, which reflects the acceleration of renovations at the Hyatt Ziva Los Cabos.

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, we may not be able to maintain our current liquidity position or access additional sources of liquidity at acceptable terms or at all.

Financing Strategy

We intend to use other financing sources that may be available to us from time to time, including financing from banks, institutional investors or other lenders, such as bridge loans, letters of credit, joint ventures and other arrangements. Future financings may be unsecured or may be secured by mortgages or other interests in our assets. In addition, we may issue publicly or privately placed debt or equity securities. When possible and desirable, we will seek to replace short-term financing with long-term financing. We may use the proceeds from any financings to refinance existing indebtedness, to finance resort projects or acquisitions or for general working capital or other purposes.

Our indebtedness may be recourse, non-recourse or cross-collateralized and may be fixed rate or variable rate. If the indebtedness is non-recourse, the obligation to repay such indebtedness will generally be limited to the particular resort or resorts pledged to secure such indebtedness. In addition, we may invest in resorts subject to existing loans secured by mortgages or similar liens on the resorts or may refinance resorts acquired on a leveraged basis.

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Recent Transactions Affecting Our Liquidity and Capital Resources

The following table summarizes our net cash provided by or used in operating activities, investing activities and financing activities for the periods indicated and should be read in conjunction with our Condensed Consolidated Statements of Cash Flows and accompanying notes thereto ($ in thousands):


	Three Months Ended March 31,
	2024		2023
Net cash provided by operating activities	$	56,777	$	45,287
Net cash used in investing activities	$	(10,446)	$	(2,352)
Net cash used in financing activities	$	(33,509)	$	(45,415)
Increase (decrease) in cash and cash equivalents	$	12,822	$	(2,480)

Cash Flows from Operating Activities

Our net cash from operating activities is generated primarily from operating income of our resorts. For the three months ended March 31, 2024, our net cash provided by operating activities was $56.8 million compared to $45.3 million for the three months ended March 31, 2023.

Cash Flows from Investing Activities

Our net cash used in investing activities was $10.4 million for the three months ended March 31, 2024 compared to $2.4 million for the three months ended March 31, 2023.

Activity for the three months ended March 31, 2024:

•Purchases of property and equipment of $10.0 million, consisting of maintenance capital expenditures as well as renovation costs of the Hyatt Ziva Puerto Vallarta and Hyatt Ziva Los Cabos; and

•Payment of $0.5 million in key money to the owner of one of our managed resorts.

Activity for the three months ended March 31, 2023:

•Purchases of property and equipment of $10.3 million, primarily for maintenance related expenditures; and

•Property damage insurance proceeds related to the impacts of Hurricane Fiona in the Dominican Republic of $8.0 million.

Capital Expenditures

We maintain each of our properties in good repair and condition and in conformity with applicable laws and regulations, franchise and license agreements and management agreements. Capital expenditures made to extend the service life or increase the capacity of our assets, including expenditures for the replacement, improvement or expansion of existing capital assets (i.e., maintenance capital expenditures), differ from ongoing repair and maintenance expense items, which do not in our judgment extend the service life or increase the capacity of assets and are charged to expense as incurred. From time to time, certain of our resorts may be undergoing renovations as a result of our decision to upgrade portions of the resorts, such as guestrooms, public space, meeting space, gyms, spas and/or restaurants, in order to better compete with other resorts in our markets.

Cash Flows from Financing Activities

Our net cash used in financing activities was $33.5 million for the three months ended March 31, 2024 compared to $45.4 million for the three months ended March 31, 2023.

Activity for the three months ended March 31, 2024:

•Principal payments on our Term Loan due 2029 of $2.8 million; and

•Repurchases of ordinary shares of $30.5 million.

Activity for the three months ended March 31, 2023:

•Principal payments on our Term Loan due 2029 of $2.8 million; and

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•Repurchases of ordinary shares of $42.6 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, 2023, filed with the SEC on February 22, 2024. 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 March 31, 2024, 51% of our outstanding indebtedness bore interest at floating rates, as our Term Loan due 2029 incurs interest based on SOFR plus a margin of 3.25%.

•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 three months ended March 31, 2024 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 71.5% of our resort-level operating expenses for the three months ended March 31, 2024 were denominated in the local currencies in the countries in which we operate. During the first quarter of 2024, we entered into foreign currency forward contracts to hedge 50% of our estimated operating expenses that are denominated in Mexican Pesos. However, our operating expenses reported on our Condensed Consolidated Statements of Operations continue to be affected by movements in exchange rates, including the Mexican Peso, Dominican Peso and the Jamaican Dollar.

•The effect of an immediate 5% adverse change in foreign exchange rates on Mexican Peso-denominated expenses at March 31, 2024 would have impacted our Owned Resort EBITDA by approximately $1.6 million on a year-to-date basis, inclusive of the impact from our foreign currency forward contracts.

•The effect of an immediate 5% adverse change in foreign exchange rates on Dominican Peso-denominated expenses at March 31, 2024 would have impacted our Owned Resort EBITDA by approximately $1.6 million on a year-to-date basis.

•The effect of an immediate 5% adverse change in foreign exchange rates on Jamaican Dollar-denominated expenses at March 31, 2024 would have impacted our Owned Resort EBITDA by approximately $1.4 million on a year-to-date basis.

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Item 4. Controls and Procedures.

Disclosure Controls and Procedures.

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

Changes in Internal Control Over Financial Reporting.

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

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings.

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

Item 1A. Risk Factors.

As of March 31, 2024, 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, 2023, filed with the SEC on February 22, 2024, 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.

The following table sets forth information regarding our purchases of our ordinary shares under our share repurchase program during the three months ended March 31, 2024:


	Total number of shares purchased(1)	Average price paid per share(2)		Total number of shares purchased as part of publicly announced program(3)	Maximum approximate dollar value of shares that may yet be purchased under the program ($ in thousands)(3)
January 1, 2024 to January 31, 2024	1,036,182	$	8.31	1,023,018	$	187,893
February 1, 2024 to February 29, 2024	1,002,025	8.72		1,002,025	179,156
March 1, 2024 to March 31, 2024	1,596,084	9.56		1,596,084	163,894
Total	3,634,291	$	8.97	3,621,127	$	163,894

________

(1) The total number of shares purchased includes shares withheld to offset tax withholding due upon vesting of restricted share awards. We withheld 13,164 shares during January 2024.

(2) The average price paid per share and maximum approximate dollar value of shares disclosed above include broker commissions.

(3) On December 7, 2023, our Board established 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 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 March 31, 2024, 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						Certification of the Chief Executive Officer pursuant to Rules 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2						Certification of the Chief Financial Officer pursuant to Rules 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1						Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2						Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101						The following materials from Playa Hotels & Resorts N.V.’s Quarterly Report on Form 10-Q for the period ended March 31, 2024, formatted in XBRL (eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets, (ii) Condensed Consolidated Statements of Operations, (iii) Condensed Consolidated Statements of Comprehensive Income (iv) Condensed Consolidated Statements of Shareholders’ Equity, (v) Condensed Consolidated Statements of Cash Flows, and (vi) the Notes to the Condensed Consolidated Financial Statements

104						Cover 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:

May 6, 2024

By:

/s/ Bruce D. Wardinski

Bruce D. Wardinski

Chairman and Chief Executive Officer

(Principal Executive Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the undersigned, in his capacity as the principal financial officer of the registrant.

Playa Hotels & Resorts N.V.

Date:

May 6, 2024

By:

/s/ Ryan Hymel

Ryan Hymel

Chief Financial Officer

(Principal Financial Officer)

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Playa Hotels & Resorts (PLYA) 10-Q2024 Q1 Quarterly report

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