Playa Hotels & Resorts - 10-Q quarterly report FY2022 Q3

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

___________________________________________________

FORM 10-Q

_______________________________________________


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

For quarterly period ended September 30, 2022


☐			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 October 31, 2022, there were 162,387,308 shares of the registrant’s ordinary shares, €0.10 par value, outstanding.

Table of Contents


Playa Hotels & Resorts N.V. TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION
		Page
Item 1.	Financial Statements (unaudited)
	Condensed Consolidated Balance Sheets as of September 30, 2022 and December 31, 2021	1
	Condensed Consolidated Statements of Operations for the three and nine months ended Sept e mber 30, 2022 and 2021	2
	Condensed Consolidated Statements of Comprehensive Income (Loss) for the three and nine months ended September 30, 2022 and 2021	3
	Condensed Consolidated Statements of Shareholders' Equity for the three and nine months ended September 30, 2022 and 2021	4
	Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2022 and 2021	6
	Notes to the Condensed Consolidated Financial Statements	8
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	25
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	56
Item 4.	Controls and Procedures	57
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	58
Item 1A.	Risk Factors	58
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	58
Item 3.	Defaults Upon Senior Securities	59
Item 4.	Mine Safety Disclosures	59
Item 5.	Other Information	59
Item 6.	Exhibits	59

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Playa Hotels & Resorts N.V.

Condensed Consolidated Balance Sheets

($ in thousands, except share data)

(unaudited)


	As of September 30,		As of December 31,
	2022		2021
ASSETS
Cash and cash equivalents	$	371,688	$	270,088
Restricted cash	—		23,489
Trade and other receivables, net	47,792		45,442
Insurance recoverable	41,315		—
Accounts receivable from related parties	5,164		7,981
Inventories	19,007		18,076
Prepayments and other assets	43,209		38,640
Property and equipment, net	1,547,595		1,584,574
Derivative financial instruments	4,979		—
Goodwill, net	61,654		61,654
Other intangible assets	6,843		7,632

Total assets	$	2,149,246	$	2,057,576
LIABILITIES AND SHAREHOLDERS' EQUITY
Trade and other payables	$	217,911	$	160,222
Payables to related parties	5,417		5,050
Income tax payable	345		828
Debt	913,111		944,847
Related party debt	196,569		194,472
Derivative financial instruments	—		22,543
Other liabilities	30,471		29,882
Deferred tax liabilities	71,692		68,898
Total liabilities	1,435,516		1,426,742
Commitments and contingencies (see Note 7)
Shareholders' equity
Ordinary shares (par value €0.10; 500,000,000 shares authorized, 168,240,253 shares issued and 165,058,318 shares outstanding as of September 30, 2022 and 166,646,284 shares issued and 164,438,280 shares outstanding as of December 31, 2021)	18,696		18,518
Treasury shares (at cost, 3,181,935 shares as of September 30, 2022 and 2,208,004 shares as of December 31, 2021)	(22,470)		(16,697)
Paid-in capital	1,186,245		1,177,380
Accumulated other comprehensive loss	(10,088)		(18,671)
Accumulated deficit	(458,653)		(529,696)
Total shareholders' equity	713,730		630,834
Total liabilities and shareholders' equity	$	2,149,246	$	2,057,576

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

Table of Contents

Playa Hotels & Resorts N.V.

Condensed Consolidated Statements of Operations

($ in thousands, except share data)

(unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Revenue
Package	$	171,126	$	124,331	$	535,917	$	293,005
Non-package	29,874		25,211		99,492		60,808
Management fees	786		673		3,186		1,469
Cost reimbursements	2,836		1,072		6,868		2,554
Total revenue	204,622		151,287		645,463		357,836
Direct and selling, general and administrative expenses
Direct	117,333		90,788		343,298		230,543
Selling, general and administrative	51,686		32,055		130,403		85,273
Depreciation and amortization	19,502		19,927		58,630		60,827
Reimbursed costs	2,836		1,072		6,868		2,554
Impairment loss	—		—		—		24,011
Loss (gain) on sale of assets	2		(4)		11		644
Direct and selling, general and administrative expenses	191,359		143,838		539,210		403,852
Operating income (loss)	13,263		7,449		106,253		(46,016)
Interest expense	(17,832)		(19,047)		(39,892)		(56,164)
Other income (expense)	2,608		587		7,850		(747)
Net (loss) income before tax	(1,961)		(11,011)		74,211		(102,927)
Income tax (provision) benefit	(268)		(1,360)		(3,168)		13,043
Net (loss) income	$	(2,229)	$	(12,371)	$	71,043	$	(89,884)

(Loss) earnings per share
Basic	$	(0.01)	$	(0.08)	$	0.43	$	(0.55)
Diluted	$	(0.01)	$	(0.08)	$	0.43	$	(0.55)
Weighted average number of shares outstanding during the period - Basic	165,979,839		164,218,262		165,873,539		163,067,561
Weighted average number of shares outstanding during the period - Diluted	165,979,839		164,218,262		167,124,242		163,067,561

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

Table of Contents

Playa Hotels & Resorts N.V.

Condensed Consolidated Statements of Comprehensive Income (Loss)

($ in thousands)

(unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Net (loss) income	$	(2,229)	$	(12,371)	$	71,043	$	(89,884)
Other comprehensive income, net of taxes
Gain on interest rate swaps	2,958		2,958		8,778		8,778
Release of foreign currency translation reserve related to sale of Capri Resort	—		—		—		140
Pension obligation gain (loss)	155		38		(195)		(55)
Total other comprehensive income	3,113		2,996		8,583		8,863
Comprehensive income (loss)	$	884	$	(9,375)	$	79,626	$	(81,021)

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

Table of Contents

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 Loss		Accumulated Deficit		Total
	Shares	Amount		Shares	Amount
Balance at December 31, 2020	134,571,290	$	14,871	2,198,796	$	(16,642)	$	1,030,148	$	(30,949)	$	(436,606)	$	560,822
Cumulative effect of accounting changes, net of tax	—	—		—	—		—		—		(3,408)		(3,408)
Balance at January 1, 2021	134,571,290	$	14,871	2,198,796	$	(16,642)	$	1,030,148	$	(30,949)	$	(440,014)	$	557,414
Net loss	—	—		—	—		—		—		(69,745)		(69,745)
Other comprehensive income	—	—		—	—		—		2,883		—		2,883
Share-based compensation, net of tax withholdings	708,285	87		9,208	(55)		3,092		—		—		3,124
Equity issuance, net	28,750,000	3,512		—	—		134,204		—		—		137,716
Balance at March 31, 2021	164,029,575	$	18,470	2,208,004	$	(16,697)	$	1,167,444	$	(28,066)	$	(509,759)	$	631,392
Net loss	—	—		—	—		—		—		(7,768)		(7,768)
Other comprehensive income	—	—		—	—		—		2,984		—		2,984
Share-based compensation	180,300	22		—	—		3,428		—		—		3,450
Balance at June 30, 2021	164,209,875	$	18,492	2,208,004	$	(16,697)	$	1,170,872	$	(25,082)	$	(517,527)	$	630,058
Net loss	—	—		—	—		—		—		(12,371)		(12,371)
Other comprehensive income	—	—		—	—		—		2,996		—		2,996
Share-based compensation	10,864	1		—	—		3,269		—		—		3,270
Balance at September 30, 2021	164,220,739	$	18,493	2,208,004	$	(16,697)	$	1,174,141	$	(22,086)	$	(529,898)	$	623,953

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Playa Hotels & Resorts N.V.

Condensed Consolidated Statements of Shareholders' Equity (continued)

($ in thousands, except share data)

(unaudited)


	Ordinary Shares			Treasury Shares			Paid-In Capital		Accumulated Other Comprehensive Loss		Accumulated Deficit		Total
	Shares	Amount		Shares	Amount
Balance at December 31, 2021	164,438,280	$	18,518	2,208,004	$	(16,697)	$	1,177,380	$	(18,671)	$	(529,696)	$	630,834
Net income	—	—		—	—		—		—		42,747		42,747
Other comprehensive income	—	—		—	—		—		2,660		—		2,660
Share-based compensation	1,339,787	152		—	—		3,204		—		—		3,356
Balance at March 31, 2022	165,778,067	$	18,670	2,208,004	$	(16,697)	$	1,180,584	$	(16,011)	$	(486,949)	$	679,597
Net income	—	—		—	—		—		—		30,525		30,525
Other comprehensive income	—	—		—	—		—		2,810		—		2,810
Share-based compensation	251,784	26		—	—		2,884		—		—		2,910
Balance at June 30, 2022	166,029,851	$	18,696	2,208,004	$	(16,697)	$	1,183,468	$	(13,201)	$	(456,424)	$	715,842
Net loss	—	—		—	—		—		—		(2,229)		(2,229)
Other comprehensive income	—	—		—	—		—		3,113		—		3,113
Share-based compensation	2,398	—		—	—		2,777		—		—		2,777
Repurchase of ordinary shares	(973,931)	—		973,931	(5,773)		—		—		—		(5,773)
Balance at September 30, 2022	165,058,318	$	18,696	3,181,935	$	(22,470)	$	1,186,245	$	(10,088)	$	(458,653)	$	713,730

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

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Playa Hotels & Resorts N.V.

Condensed Consolidated Statements of Cash Flows

($ in thousands)

(unaudited)


	Nine Months Ended September 30,
	2022		2021
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)	$	71,043	$	(89,884)
Adjustments to reconcile net income (loss) to net cash from operating activities
Depreciation and amortization	58,630		60,827
Amortization of debt discount and issuance costs	3,097		3,078
Share-based compensation	9,043		9,899
Gain on derivative financial instruments	(18,744)		(6,425)
Impairment loss	—		24,011
Deferred income taxes	2,794		(14,123)
Loss on sale of assets	11		644
Amortization of key money	(1,031)		(404)
Recovery of doubtful accounts	(1,152)		(210)
Other	445		641
Changes in assets and liabilities:
Trade and other receivables, net	(1,149)		(14,337)
Insurance recoverable	(41,315)		—
Accounts receivable from related parties	2,817		(593)
Inventories	(1,013)		(1,741)
Prepayments and other assets	(4,430)		8,578
Trade and other payables	56,225		10,320
Payables to related parties	367		(3,556)
Income tax payable	(483)		(226)
Other liabilities	1,587		(533)
Net cash provided by (used in) operating activities	136,742		(14,034)
INVESTING ACTIVITIES
Capital expenditures	(21,566)		(11,727)
Purchase of intangibles	(209)		(212)
Proceeds from the sale of assets, net	32		88,904
Net cash (used in) provided by investing activities	(21,743)		76,965
FINANCING ACTIVITIES
Proceeds from ordinary shares, net of issuance costs	—		137,716
Repayments of debt	(32,438)		(31,954)
Repayments of debt from related parties	—		(681)
Repayments of borrowings on revolving credit facility	—		(84,667)
Repurchase of ordinary shares	(4,152)		—
Repurchase of ordinary shares for tax withholdings	—		(55)
Principal payments on finance lease obligations	(298)		(67)
Net cash (used in) provided by financing activities	(36,888)		20,292
INCREASE IN CASH AND CASH EQUIVALENTS	78,111		83,223
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, BEGINNING OF THE PERIOD	$	293,577	$	172,860
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, END OF THE PERIOD	$	371,688	$	256,083
RECONCILIATION OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH
Cash and cash equivalents	$	371,688	$	231,460
Restricted cash	—		24,623
TOTAL CASH, CASH EQUIVALENTS AND RESTRICTED CASH	$	371,688	$	256,083

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

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Playa Hotels & Resorts N.V.

Condensed Consolidated Statements of Cash Flows (continued)

($ in thousands)

(unaudited)


	Nine Months Ended September 30,
	2022		2021
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid for interest	$	55,049	$	58,485
Cash paid for income taxes, net	$	1,106	$	2,042
SUPPLEMENTAL DISCLOSURES OF NON-CASH ACTIVITIES
Capital expenditures incurred but not yet paid	$	824	$	1,575
Repurchase of ordinary shares not yet settled	$	1,621	$	—
Intangible assets capitalized but not yet paid	$	114	$	109
Right-of-use assets obtained in exchange for new operating lease liabilities	$	—	$	262
Par value of vested restricted share awards	$	178	$	110

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

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Playa Hotels & Resorts N.V.

Notes to the Condensed Consolidated Financial Statements

(unaudited)

Note 1. Organization, operations and basis of presentation

Background

Playa Hotels & Resorts N.V. (“Playa” or the “Company”) is a leading owner, operator and developer of all-inclusive resorts in prime beachfront locations in popular vacation destinations. We own and/or manage a portfolio of 25 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, 2021, included in our Annual Report on Form 10-K, filed with the Securities and Exchange Commission (the “SEC”) on February 24, 2022 (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.

The results of operations for the three and nine months ended September 30, 2022 are not necessarily indicative of the results of operations to be expected for the full year ending December 31, 2022. 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

Share repurchase program and treasury shares

From time to time, our Board of Directors (the “Board”) may authorize repurchases of our outstanding ordinary shares. Shares repurchased under Board-authorized repurchase programs are currently held in treasury for general corporate purposes. Treasury shares are accounted for on the trade date under the cost method and recorded as treasury shares on the Condensed Consolidated Balance Sheet as a reduction to shareholders' equity.

Standards adopted

Standard

Description

Date of Adoption

Effect on the Financial Statements or Other Significant Matters

Accounting Standards Update (“ASU”) No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting

ASU No. 2021-01, Reference Rate Reform (Topic 848): Scope

The amendments in this update provide optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met.

January 2022

The adoption of ASU No. 2020-04 and ASU 2021-01 in January 2022 had no impact on our Condensed Consolidated Financial Statements for the three and nine months ended September 30, 2022, as we have not modified our variable rate debt that is priced using a spread over one-month London Interbank Offered Rate (“LIBOR”).

Additionally, our interest rate swaps mature on March 31, 2023, prior to the anticipated discontinuation of the one-month LIBOR rate on June 30, 2023. We do not expect to modify our interest rate swap contracts prior to their maturity date.

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Note 3. Revenue

The following tables present our revenues disaggregated by geographic segment (refer to discussion of our reportable segments in Note 15) ($ in thousands):


	Three Months Ended September 30, 2022
	Yucatán Peninsula		Pacific Coast		Dominican Republic		Jamaica		Other		Total
Package revenue	$	58,588	$	27,891	$	45,953	$	38,696	$	(2)	$	171,126
Non-package revenue(1)	9,078		3,309		9,277		7,493		717		29,874
Management fees	35		—		—		—		751		786
Cost reimbursements	—		—		—		1,256		1,580		2,836
Total revenue	$	67,701	$	31,200	$	55,230	$	47,445	$	3,046	$	204,622


	Three Months Ended September 30, 2021
	Yucatán Peninsula		Pacific Coast		Dominican Republic		Jamaica		Other		Total
Package revenue	$	43,993	$	19,874	$	35,131	$	25,333	$	—	$	124,331
Non-package revenue	8,813		2,794		7,701		5,671		232		25,211
Management fees	—		—		—		—		673		673
Cost reimbursements	—		—		—		789		283		1,072
Total revenue	$	52,806	$	22,668	$	42,832	$	31,793	$	1,188	$	151,287


	Nine Months Ended September 30, 2022
	Yucatán Peninsula		Pacific Coast		Dominican Republic		Jamaica		Other		Total
Package revenue	$	180,114	$	83,559	$	158,050	$	114,196	$	(2)	$	535,917
Non-package revenue(1)	29,856		11,889		31,796		24,071		1,880		99,492
Management fees	97		—		—		—		3,089		3,186
Cost reimbursements	—		—		—		3,386		3,482		6,868
Total revenue	$	210,067	$	95,448	$	189,846	$	141,653	$	8,449	$	645,463


	Nine Months Ended September 30, 2021
	Yucatán Peninsula		Pacific Coast		Dominican Republic		Jamaica		Other		Total
Package revenue	$	111,378	$	45,167	$	80,512	$	55,948	$	—	$	293,005
Non-package revenue	22,637		7,603		17,137		12,705		726		60,808
Management fees	—		—		—		—		1,469		1,469
Cost reimbursements	—		—		—		1,970		584		2,554
Total revenue	$	134,015	$	52,770	$	97,649	$	70,623	$	2,779	$	357,836

________

(1) Non-package revenue within Other includes licensing, marketing and other support fees earned from The Playa Collection, which is a third-party owned and operated membership program. Our revenues from The Playa Collection were $0.6 million and $1.3 million for the three and nine months ended September 30, 2022, respectively.

Contract assets and liabilities

We do not have any material contract assets as of September 30, 2022 and December 31, 2021 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 September 30,		As of December 31,
	2022		2021
Property and equipment, gross
Land, buildings and improvements	$	1,762,849	$	1,759,837
Fixtures and machinery (1)	85,165		84,264
Furniture and other fixed assets	209,630		205,141
Construction in progress	12,092		3,781
Total property and equipment, gross	2,069,736		2,053,023
Accumulated depreciation	(522,141)		(468,449)
Total property and equipment, net	$	1,547,595	$	1,584,574

________

(1) Includes the gross balance of our financing lease right-of-use assets, which was $6.3 million as of September 30, 2022 and December 31, 2021.

Depreciation expense was $19.1 million and $19.6 million for the three months ended September 30, 2022 and 2021, respectively, and $57.5 million and $59.8 million for the nine months ended September 30, 2022 and 2021, respectively.

Hurricane Fiona

On September 19, 2022, Hurricane Fiona, a Category 1 hurricane, made landfall on the eastern coast of the Dominican Republic and caused non-structural damage to the Hyatt Ziva and Hyatt Zilara Cap Cana, Hilton La Romana All-Inclusive Resort, Dreams Punta Cana and Dreams Palm Beach resorts. The Hyatt Ziva and Hyatt Zilara Cap Cana and Hilton La Romana All-Inclusive Resort were temporarily closed in late September for necessary clean-up and repairs and are expected to reopen in the fourth quarter of 2022. Our insurance policies provide coverage for business interruption, including lost profits, and reimbursement for costs related to the property damages and losses we have incurred.

As a result of Hurricane Fiona, we expect to incur $50.2 million of clean-up and repair expenses and losses on the write off of property and equipment and inventory, which were offset with our expected property damage insurance recoveries of $41.3 million. The net expense due to property damage is recorded within selling, general and administrative expense in the Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2022. We expect to receive our insurance proceeds for our property damage and business interruption claims in late 2022 and early 2023.

Our managed property in the Dominican Republic, Sanctuary Cap Cana, also sustained damage from Hurricane Fiona and was temporarily closed in late September for necessary clean-up and repairs. We expect the resort to reopen in the first quarter of 2023.

Sale of Capri Resort

On March 31, 2021, we entered into an agreement to sell our equity interest in the Capri Resort, which was reported within our Yucatán Peninsula reportable segment, for $55.0 million in cash consideration. Upon entering into the agreement, we classified the resort and related deferred tax liabilities as held for sale and recorded an impairment loss of $24.0 million based on the sale price.

On June 24, 2021, we completed the sale, received total cash consideration of $55.2 million, after customary closing costs, and recognized a loss of $0.5 million within loss (gain) on sale of assets in the Condensed Consolidated Statements of Operations. We utilized 50% of the Capri Resort's net proceeds of $24.4 million, after deducting incremental expenses, to repay a portion of our Term Loan on June 29, 2021. Any remaining net proceeds, after deducting capital expenditures incurred across our portfolio for up to 18 months following the sale, are required to be used to repay our Term Loan and Term A3 Loan in December 2022.

Sale of Dreams Puerto Aventuras

On February 5, 2021, we completed the sale of the Dreams Puerto Aventuras. Upon closing, we received total cash consideration of $34.3 million, after customary closing costs. The net proceeds from the sale, after deducting incremental expenses and capital expenditures incurred across our portfolio for up to 24 months following the sale, will be used to repay our Term Loan and Term A3 Loan in February 2023.

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Lessor contracts

We rent certain real estate to third parties for office and retail space within our resorts. Our lessor contracts are considered operating leases and generally have a contractual term of one to three years. The following table presents our rental income for the three and nine months ended September 30, 2022 and 2021 ($ in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
Leases	2022		2021		2022		2021
Operating lease income (1)	$	1,045	$	796	$	3,347	$	2,189

________

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

All of our outstanding Advanced Pricing Agreements (“APAs”) for our Dominican Republic entities expired as of December 31, 2021. We are currently in the process of renegotiating the terms of our APAs and expect that the terms will be finalized before the end of 2022. This is reflected in our estimated annual effective tax rate calculation.

We had no uncertain tax positions or unrecognized tax benefits as of September 30, 2022. We expect no significant changes in unrecognized tax benefits over the next twelve months.

We regularly assess the realizability of our deferred tax assets by evaluating historical and projected future operating results, the reversal of existing temporary differences, taxable income in permitted carry back years, and the availability of tax planning strategies. As of September 30, 2022, a valuation allowance has been maintained as a reserve on substantially all of our net deferred tax assets due to the uncertainty of realization of our loss carry forwards and other deferred tax assets. If our operating results continue to improve and our projections show continued utilization of tax attributes, we may consider that as significant positive evidence and our future reassessment may result in the determination that all or a portion of the valuation allowance is no longer required. The exact timing and amount of the valuation allowance releases are ultimately contingent upon the level of profitability achieved in future periods.

Note 6. Related party transactions

Relationship with Hyatt and AMResorts

Hyatt Hotels Corporation (“Hyatt”) is considered a related party due to its ownership of our ordinary shares by its affiliated entities. Hyatt also had representation on our Board of Directors until August 18, 2021. We pay Hyatt fees associated with the franchise agreements of our resorts operating under the all-ages Hyatt Ziva and adults-only Hyatt Zilara brands and receive reimbursements for guests that pay for their stay using the World of Hyatt® guest loyalty program.

Hyatt also owns Apple Leisure Group (“ALG”), the brand management platform AMResorts, and various tour operators and travel agencies. We pay AMResorts and its affiliates, as operators of two of our resorts, management and marketing fees, and sell all-inclusive packages through ALG’s tour operators and travel agencies.

Relationship with Sagicor

Sagicor Financial Corporation Limited and its affiliated entities (collectively “Sagicor”) is considered a related party due to its ownership of our ordinary shares and representation on our Board of Directors. We pay Sagicor for employee insurance coverage at one of our Jamaica properties. Sagicor is also a part owner of the Jewel Grande Montego Bay Resort & Spa and compensates us as manager of the property.

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Relationship with Davidson Kempner Capital Management L.P.

Davidson Kempner Capital Management L.P. (“DKCM”) is the investment manager of multiple affiliated funds and is considered a related party due to the DKCM funds’ ownership of our ordinary shares. The affiliated funds managed by DKCM are also the lenders to our Property Loan and Additional Credit Facility, which consists of our Term A1, Term A2 and Term A3 loans (see Note 11). We pay DKCM periodic interest payments related to the outstanding debt.

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 and nine months ended September 30, 2022 and 2021 were as follows ($ in thousands):


		Three Months Ended September 30,				Nine Months Ended September 30,
Related Party	Transaction	2022		2021		2022		2021
Revenues
ALG	Package revenue	$	3,899	$	—	$	14,724	$	—
Sagicor	Cost reimbursements(1)	$	1,355	$	926	$	3,775	$	2,214
Expenses
Hyatt	Franchise fees(2)	$	7,205	$	5,310	$	22,420	$	13,285
Sagicor	Insurance premiums(2)	$	264	$	213	$	798	$	571
Chief Executive Officer	Lease expense(3)	$	192	$	189	$	572	$	605
DKCM	Interest expense(4)	$	5,613	$	5,563	$	16,490	$	16,434
AMResorts	Management fees(2)	$	779	$	—	$	2,763	$	—
AMResorts	Marketing fees(3)	$	909	$	—	$	2,964	$	—

________

(1)Equivalent amount included as reimbursed costs in the Condensed Consolidated Statements of Operations.

(2)Included in direct expense in the Condensed Consolidated Statements of Operations with the exception of certain immaterial fees associated with the Hyatt franchise agreements, which are included in selling, general, and administrative expense.

(3)Included in selling, general, and administrative expense in the Condensed Consolidated Statements of Operations.

(4)Includes interest expense and amortization of deferred financing costs and discounts.

Note 7. Commitments and contingencies

We are involved in various claims and lawsuits arising in the normal course of business, including proceedings involving tort and other general liability claims, and workers’ compensation and other employee claims. Most occurrences involving liability and claims of negligence are covered by insurance with solvent insurance carriers. We recognize a liability when we believe the loss is probable and reasonably estimable. We currently believe that the ultimate outcome of such lawsuits and proceedings will not, individually or in the aggregate, have a material effect on our Condensed Consolidated Financial Statements.

The Dutch corporate income tax act provides the option of a fiscal unity, which is a consolidated tax regime wherein the profits and losses of group companies can be offset against each other. With the exception of Playa Dominican Resort B.V., Playa Romana B.V., Playa Romana Mar B.V. and Playa Hotels & Resorts N.V., our Dutch companies file as a fiscal unity. Playa Resorts Holding B.V. is the head of our Dutch fiscal unity and is jointly and severally liable for the tax liabilities of the fiscal unity as a whole.

In 2015, the local taxing authorities in Mexico challenged $3.4 million of value added tax (“VAT”) receivable that was recognized in connection with the renovation of the Hyatt Ziva Cancún. During the second quarter of 2022, the tax authorities ruled in our favor resulting in receipt of the VAT and an additional $6.2 million for interest and inflation since the date the VAT refund was requested. The gain of $6.2 million is reported within other income (expense) in the Condensed Consolidated Statements of Operations for the nine months ended September 30, 2022.

In 2019, an appeal was filed by the Mexican Energy Regulatory Commission against the electricity rates that were charged to certain of our resorts in Mexico. During the third quarter of 2022, we received a favorable outcome resulting in the receipt of $4.3 million, of which $0.6 million related to VAT. The gain of $3.7 million is reported within other income (expense) in the Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2022.

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Note 8. Ordinary shares

In December 2018, our Board established a $100.0 million share repurchase program, pursuant to which we may repurchase our outstanding ordinary shares as market conditions and our liquidity warrant. Our Board reauthorized and renewed the repurchase authorization in September 2022 so that there was again $100.0 million available under the program. The repurchase program is subject to certain limitations under Dutch law, including the existing repurchase authorization granted by our shareholders. Repurchases may be made from time to time in the open market, in privately negotiated transactions or by other means (including Rule 10b5-1 trading plans). Depending on market conditions and other factors, these repurchases may be commenced or suspended from time to time without prior notice. During the three months ended September 30, 2022, we repurchased 973,931 ordinary shares under the program at an average price of $5.93 per share. As of September 30, 2022, we had approximately $94.2 million remaining under our share repurchase program.

As of September 30, 2022, our ordinary share capital consisted of 165,058,318 ordinary shares outstanding, which have a par value of €0.10 per share. In addition, 3,630,917 restricted shares and performance share awards and 25,326 restricted share units were outstanding under the 2017 Plan (as defined in Note 9). The holders of restricted shares and performance share awards are entitled to vote, but not dispose of, such shares until they vest. The holders of restricted share units are neither entitled to vote nor dispose of such shares until they vest.

Note 9. Share-based compensation

We adopted our 2017 Omnibus Incentive Plan (the “2017 Plan”) to attract and retain independent directors, executive officers and other key employees and service providers. As of September 30, 2022, there were 3,541,789 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, 2022 to September 30, 2022 is as follows:


	Number of Shares	Weighted-Average Grant Date Fair Value
Unvested balance at January 1, 2022	3,006,791	$	6.50
Granted	1,034,850	8.20
Vested	(1,577,548)	6.88
Forfeited	(136,973)	7.54
Unvested balance at September 30, 2022	2,327,120	$	6.94

Performance share awards consist of ordinary shares that may become earned and vested at the end of a three year performance period based on the achievement of performance targets adopted by our Compensation Committee. Our performance shares have market conditions where 50% of the performance share awards will vest based on the total shareholder return (“TSR”) of our ordinary shares relative to those of our peer group and 50% will vest based on the compound annual growth rate of the price of our ordinary shares. The peer shareholder return component may vest between 0% and 150% of target, with the award capped at 100% of target should Playa's TSR be negative. The growth rate component may vest up to 100% of target.

The table below summarizes the key inputs used in the Monte-Carlo simulation to determine the grant date fair value of our performance share awards ($ in thousands):


Performance Award Grant Date	Percentage of Total Award		Grant Date Fair Value by Component		Volatility (1)		Interest Rate (2)		Dividend Yield
January 4, 2022
Peer Shareholder Return	50	%	$	1,689	67.79	%	1.01	%	—	%
Growth Rate	50	%	$	1,346	67.79	%	1.01	%	—	%

________

(1) Expected volatility was determined based on our historical share prices.

(2) The risk-free rate was based on U.S. Treasury zero coupon issues with a remaining term equal to the remaining term of the measurement period.

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A summary of our performance share awards from January 1, 2022 to September 30, 2022 is as follows:


	Number of Shares	Weighted-Average Grant Date Fair Value
Unvested balance at January 1, 2022	1,027,519	$	5.18
Granted	374,998	8.10
Vested	(16,421)	4.34
Forfeited	(56,973)	4.34
Unvested balance at September 30, 2022	1,329,123	$	6.05

Note 10. Earnings per share

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


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Numerator
Net (loss) income	$	(2,229)	$	(12,371)	$	71,043	$	(89,884)
Denominator
Denominator for basic EPS - weighted-average number of shares outstanding	165,979,839		164,218,262		165,873,539		163,067,561
Effect of dilutive securities
Unvested performance share awards	—		—		500,859		—
Unvested restricted share awards	—		—		749,844		—
Denominator for diluted EPS - adjusted weighted-average number of shares outstanding	165,979,839		164,218,262		167,124,242		163,067,561

EPS - Basic	$	(0.01)	$	(0.08)	$	0.43	$	(0.55)
EPS - Diluted	$	(0.01)	$	(0.08)	$	0.43	$	(0.55)

For the three and nine months ended September 30, 2022, unvested performance share awards in the amounts of 1,329,123 and 187,500 shares, respectively, were not included in the computation of diluted EPS as their effect would have been anti-dilutive. For the three and nine months ended September 30, 2021, unvested performance share awards of 1,027,519 were not included in the computation of diluted EPS as their effect would have been anti-dilutive. The performance targets of our unvested performance share awards were partially achieved as of September 30, 2022 and 2021.

For the three months ended September 30, 2022, unvested restricted share awards of 2,327,120 were not included in the computation of diluted EPS as their effect would have been anti-dilutive. We had no anti-dilutive unvested restricted share awards for the nine months ended September 30, 2022. For the three and nine months ended September 30, 2021, unvested restricted share awards of 3,225,332 were not included in the computation of diluted EPS as their effect would have been anti-dilutive.

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Note 11. Debt

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


			Outstanding Balance as of
	Interest Rate	Maturity Date	September 30, 2022		December 31, 2021
Senior Secured Credit Facilities
Revolving Credit Facility (1)	LIBOR + 4.00%	January 27, 2024	$	—	$	—
Term Loan (2)	LIBOR + 2.75%	April 27, 2024	909,430		941,868
Term A1 Loan	11.4777%	April 27, 2024	35,000		35,000
Term A2 Loan	11.4777%	April 27, 2024	31,000		31,000
Term A3 Loan (3)	LIBOR + 3.00%	April 27, 2024	27,319		27,319
Total Senior Secured Credit Facilities (at stated value)			1,002,749		1,035,187
Unamortized discount			(778)		(1,153)
Unamortized debt issuance costs			(2,853)		(4,207)
Total Senior Secured Credit Facilities, net			$	999,118	$	1,029,827

Property Loan
Property Loan (at stated value)	9.25%	July 1, 2025	$	110,000	$	110,000
Unamortized discount			(2,459)		(3,107)
Unamortized debt issuance costs			(2,738)		(3,459)
Total Property Loan, net			$	104,803	$	103,434

Financing lease obligations			$	5,759	$	6,058

Total debt, net			$	1,109,680	$	1,139,319

________

(1)Undrawn balances bear interest between 0.25% to 0.5% depending on certain leverage ratios. We had an available balance of $68.0 million and $85.0 million as of September 30, 2022 and December 31, 2021, respectively.

(2)One-month LIBOR is subject to a 1.0% floor. The effective interest rate was 5.87% and 3.75% as of September 30, 2022 and December 31, 2021, respectively. Our two interest rate swaps fix LIBOR at 2.85% on $800.0 million of our Term Loan (see Note 12).

(3)One-month LIBOR is subject to a 1.0% floor. The effective interest rate was 5.50% and 4.00% as of September 30, 2022 and December 31, 2021, respectively.

On May 20, 2022, we repaid $24.9 million of the outstanding balance on our Term Loan in addition to our quarterly principal payments as a result of the sale of the Jewel Dunn’s River Beach Resort & Spa and Jewel Runaway Bay Beach Resort & Waterpark in May 2020. The repayment represented 100% of the net proceeds from the sale, after deducting incremental expenses and capital expenditures incurred across our portfolio for 24 months following the sale.

Financial maintenance covenants

We were in compliance with all applicable covenants as of September 30, 2022. 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 4.75x if we have more than 35% drawn on the Revolving Credit Facility.
Term A1 Loan						Same terms as the Senior Secured Credit Facility.
Term A2 Loan						No applicable debt covenants.
Term A3 Loan						No applicable debt covenants.
Property Loan						No applicable debt covenants other than the requirement to maintain a cash reserve until the Properties achieve a debt service coverage ratio of 1.50x for two consecutive quarters.

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During the second quarter of 2022, our restricted cash balance related to our Property Loan was released into unrestricted cash as the Hyatt Ziva and Hyatt Zilara Cap Cana and Hilton Rose Hall Resort & Spa properties achieved the required debt service coverage ratio for two consecutive quarters. We had no restricted cash as of September 30, 2022.

Note 12. Derivative financial instruments

Our two interest rate swaps mitigate the interest rate risk inherent to our floating rate debt, including the Revolving Credit Facility and Term Loan. The interest rate swaps are not for trading purposes and have fixed notional values of $200.0 million and $600.00 million. The fixed rate paid by us is 2.85% and the variable rate received resets monthly to the one-month LIBOR rate, which results in us fixing LIBOR at 2.85% on $800.0 million of our Term Loan. The interest rate swaps mature on March 31, 2023.

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

The following tables present the effect of our interest rate swaps, net of tax, in the Condensed Consolidated Statements of Comprehensive Income (Loss) and Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2022 and 2021 ($ in thousands):


	2022		2021
AOCI from our cash flow hedges as of January 1	$	14,632	$	26,369
Change in fair value	—		—
Reclassification from AOCI to interest expense	(2,894)		(2,894)
OCI related to our cash flow hedges for the three months ended March 31	(2,894)		(2,894)
Change in fair value	—		—
Reclassification from AOCI to interest expense	(2,926)		(2,926)
OCI related to our cash flow hedges for the three months ended June 30	(2,926)		(2,926)
Change in fair value	—		—
Reclassification from AOCI to interest expense	(2,958)		(2,958)
OCI related to our cash flow hedges for the three months ended September 30	(2,958)		(2,958)
AOCI from our cash flow hedges as of September 30 (1)	$	5,854	$	17,591

________

(1) As of September 30, 2022, the total amount expected to be reclassified from AOCI to interest expense during the remaining six month term is $5.9 million, which represents prior losses recognized in AOCI when our interest rate swaps were deemed effective hedges.


Derivative Instruments for Ineffective Hedges	Financial Statement Classification	Three Months Ended September 30,				Nine Months Ended September 30,
		2022		2021		2022		2021
Interest rate swaps (1)	Interest expense	$	16	$	3,807	$	(7,776)	$	10,209

________

(1) Includes the loss or (gain) from the change in fair value of our interest rate swaps and the cash interest paid for the monthly settlements of the derivative.

The following tables present the effect of our interest rate swaps in the Condensed Consolidated Balance Sheet as of September 30, 2022 and December 31, 2021 ($ in thousands):


Derivative Assets for Ineffective Hedges	Financial Statement Classification	As of September 30,		As of December 31,
		2022		2021
Interest rate swaps	Derivative financial instruments	$	4,979	$	—


Derivative Liabilities for Ineffective Hedges	Financial Statement Classification	As of September 30,		As of December 31,
		2022		2021
Interest rate swaps	Derivative financial instruments	$	—	$	22,543

Derivative financial instruments expose us to credit risk in the event of non-performance by the counterparty under the terms of the interest rate swaps. We incorporate these counterparty credit risks in our fair value measurements (see Note 13) and believe we minimize this credit risk by transacting with major creditworthy financial institutions.

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Note 13. Fair value of financial instruments

The objective of a fair value measurement is to estimate the price at which an orderly transaction to sell the asset or to transfer the liability would take place between market participants at the measurement date under current market conditions. U.S. GAAP establishes a hierarchical disclosure framework, which prioritizes and ranks the level of observability of inputs used in measuring fair value as follows:

•Level 1: Unadjusted quoted prices in active markets for identical assets or liabilities.

•Level 2: Unadjusted quoted prices for similar assets or liabilities in active markets, or unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or inputs other than quoted prices that are observable for the asset or liability.

•Level 3: Inputs are unobservable and reflect our judgments about assumptions that market participants would use in pricing an asset or liability.

We believe the carrying value of our financial instruments, excluding our debt, approximate their fair values as of September 30, 2022 and December 31, 2021. 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 and liabilities measured at fair value on a recurring basis as of September 30, 2022 and December 31, 2021 ($ in thousands):


Financial Assets	September 30, 2022		Level 1		Level 2		Level 3
Fair value measurements on a recurring basis
Interest rate swaps	$	4,979	$	—	$	4,979	$	—


Financial Liabilities	December 31, 2021		Level 1		Level 2		Level 3
Fair value measurements on a recurring basis
Interest rate swap	$	22,543	$	—	$	22,543	$	—

The following tables present our fair value hierarchy for our financial liabilities not measured at fair value as of September 30, 2022 and December 31, 2021 ($ in thousands):


	Carrying Value		Fair Value
	As of September 30, 2022		Level 1		Level 2		Level 3
Financial liabilities not recorded at fair value
Term Loan	$	907,351	$	—	$	—	$	876,294
Term A1 Loan	34,422		—		—		35,400
Term A2 Loan	30,488		—		—		31,355
Term A3 Loan	26,857		—		—		26,424
Property Loan	104,803		—		—		110,829
Total liabilities	$	1,103,921	$	—	$	—	$	1,080,302


	Carrying Value		Fair Value
	As of December 31, 2021		Level 1		Level 2		Level 3
Financial liabilities not recorded at fair value
Term Loan	$	938,788	$	—	$	—	$	924,917
Term A1 Loan	34,151		—		—		35,598
Term A2 Loan	30,248		—		—		31,530
Term A3 Loan	26,640		—		—		27,006
Property Loan	103,434		—		—		111,593
Total liabilities	$	1,133,261	$	—	$	—	$	1,130,644

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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
Interest rate swaps						The fair value of the interest rate swaps is estimated based on the expected future cash flows by incorporating the notional amount of the swaps, the contractual period to maturity, and observable market-based inputs, including interest rate curves. The fair value also incorporates credit valuation adjustments to appropriately reflect nonperformance risk. The fair value of our interest rate swaps is largely dependent on forecasted LIBOR as of the measurement date. If, in subsequent periods, forecasted LIBOR exceeds 2.85% we will recognize a gain and future cash inflows. Conversely, if forecasted LIBOR falls below 2.85% in subsequent periods we will recognize a loss and future cash outflows.
Financial instruments not recorded at fair value
Term Loans and Property Loan						The fair value of our Term Loans and Property Loan are 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 Loans. The fair value of the Revolving Credit Facility generally approximates its carrying value as the expected term is significantly shorter in duration.

Note 14. Other balance sheet items

Trade and other receivables, net

The following summarizes the balances of trade and other receivables, net as of September 30, 2022 and December 31, 2021 ($ in thousands):


	As of September 30,		As of December 31,
	2022		2021
Gross trade and other receivables (1)	$	48,118	$	47,382
Allowance for doubtful accounts	(326)		(1,940)
Total trade and other receivables, net	$	47,792	$	45,442

________

(1) The opening balance as of January 1, 2021 was $28.3 million.

We have not experienced any significant write-offs to our accounts receivable during the three and nine months ended September 30, 2022 and 2021.

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Prepayments and other assets

The following summarizes the balances of prepayments and other assets as of September 30, 2022 and December 31, 2021 ($ in thousands):


	As of September 30,		As of December 31,
	2022		2021
Advances to suppliers	$	16,300	$	8,327
Prepaid income taxes	11,559		11,101
Prepaid other taxes (1)	4,568		7,995
Operating lease right-of-use assets	3,170		3,766
Key money	2,295		2,376
Other assets	5,317		5,075
Total prepayments and other assets	$	43,209	$	38,640

________

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

Goodwill

We recognized no goodwill impairment losses on our reporting units nor any additions to goodwill during the three and nine months ended September 30, 2022. The gross carrying values and accumulated impairment losses of goodwill by reportable segment (refer to discussion of our reportable segments in Note 15) as of September 30, 2022 and December 31, 2021 are as follows ($ in thousands):


	Yucatán Peninsula		Pacific Coast		Dominican Republic		Jamaica		Total
Gross carrying value	$	51,731	$	—	$	—	$	35,879	$	87,610
Accumulated impairment losses	(6,168)		—		—		(19,788)		(25,956)
Net carrying value	$	45,563	$	—	$	—	$	16,091	$	61,654

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Other intangible assets

Other intangible assets as of September 30, 2022 and December 31, 2021 consisted of the following ($ in thousands):


	As of September 30,		As of December 31,
	2022		2021
Gross carrying value
Casino and other licenses (1)	$	875	$	875
Management contract	1,900		1,900
Enterprise resource planning system	6,520		6,402
Other	4,273		4,073
Total gross carrying value	13,568		13,250

Accumulated amortization
Management contract	(404)		(333)
Enterprise resource planning system	(2,548)		(1,895)
Other	(3,773)		(3,390)
Total accumulated amortization	(6,725)		(5,618)

Net carrying value
Casino and other licenses (1)	875		875
Management contract	1,496		1,567
Enterprise resource planning system	3,972		4,507
Other	500		683
Total net carrying value	$	6,843	$	7,632

________

(1) Our casino and other licenses have indefinite lives. Accordingly, there is no associated amortization expense or accumulated amortization.

Amortization expense for intangible assets was $0.4 million and $0.3 million for the three months ended September 30, 2022 and 2021, respectively, and $1.1 million and $1.0 million for the nine months ended September 30, 2022 and 2021, respectively.

Trade and other payables

The following summarizes the balances of trade and other payables as of September 30, 2022 and December 31, 2021 ($ in thousands):


	As of September 30,		As of December 31,
	2022		2021
Trade payables	$	17,986	$	23,843
Advance deposits (1)	68,089		62,644
Withholding and other taxes payable	34,715		32,655
Interest payable	148		99
Payroll and related accruals	25,642		23,998
Accrued expenses and other payables(2)	71,331		16,983
Total trade and other payables	$	217,911	$	160,222

________

(1) The opening balance as of January 1, 2021 was $29.7 million.

(2) As of September 30, 2022, accrued expenses and other payables includes approximately $1.6 million related to share repurchases not yet settled and $49.6 million of unpaid clean up and repair expenses related to Hurricane Fiona.

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Other liabilities

The following summarizes the balances of other liabilities as of September 30, 2022 and December 31, 2021 ($ in thousands):


	As of September 30,		As of December 31,
	2022		2021
Pension obligation (1)(2)	$	7,138	$	5,990
Operating lease liabilities	3,683		4,298
Unfavorable ground lease liability	1,885		1,967
Key money	15,619		16,731
Other	2,146		896
Total other liabilities	$	30,471	$	29,882

________

(1) The service cost component of net periodic pension cost was $0.2 million for the three months ended September 30, 2022 and 2021. The service cost component of net periodic pension cost was $0.6 million for the nine months ended September 30, 2022 and 2021. The costs are recorded within direct expense in the Condensed Consolidated Statements of Operations.

(2) For the three months ended September 30, 2022 and 2021, the non-service cost components of net periodic pension cost were $0.2 million and nominal, respectively. For the nine months ended September 30, 2022 and 2021, the non-service cost components were $0.7 million and $0.5 million, respectively. The costs are recorded within other income (expense) in the Condensed Consolidated Statements of Operations.

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 present four separate reportable segments by geography: (i) Yucatán Peninsula, (ii) Pacific Coast, (iii) Dominican Republic and (iv) Jamaica. For the three and nine months ended September 30, 2022 and 2021, we have excluded the immaterial amounts of management fees, cost reimbursements and other from our segment reporting.

Our operating segments are components of the business which 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.

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

We define Adjusted EBITDA as net (loss) income, determined in accordance with U.S. GAAP, for the periods presented, before interest expense, income tax (provision) benefit, and depreciation and amortization expense, further adjusted to exclude the following items: (a) impairment loss; (b) loss (gain) on sale of assets; (c) other income (expense); (d) repairs from hurricanes and tropical storms; (e) share-based compensation; (f) other tax expense; (g) transaction expenses; (h) contract termination costs and (i) severance 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 and a reconciliation to total revenue for the three and nine months ended September 30, 2022 and 2021 ($ in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Owned net revenue
Yucatán Peninsula	$	65,594	$	51,209	$	204,200	$	129,879
Pacific Coast	30,301		21,982		92,901		51,117
Dominican Republic	55,190		42,794		189,714		97,563
Jamaica	43,759		29,502		131,781		65,358
Segment owned net revenue (1)	194,844		145,487		618,596		343,917
Other	716		232		1,878		726
Management fees	786		673		3,186		1,469
Cost reimbursements	2,836		1,072		6,868		2,554
Compulsory tips	5,440		3,823		14,935		9,170
Total revenue	$	204,622	$	151,287	$	645,463	$	357,836

________

(1) Segment owned net revenue represents total revenue less compulsory tips paid to employees, cost reimbursements, management fees and other miscellaneous revenue not derived from segment operations.

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The following table presents segment Owned Resort EBITDA, Adjusted EBITDA and a reconciliation to net (loss) income for the three and nine months ended September 30, 2022 and 2021 ($ in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Owned Resort EBITDA
Yucatán Peninsula	$	21,617	$	17,518	$	77,049	$	37,714
Pacific Coast	10,512		6,429		36,966		13,992
Dominican Republic	14,014		11,267		63,138		20,859
Jamaica	11,267		5,632		40,567		6,924
Segment Owned Resort EBITDA	57,410		40,846		217,720		79,489
Other corporate (1)	(13,322)		(9,749)		(37,385)		(28,778)
Management fees	786		673		3,186		1,469
Adjusted EBITDA	44,874		31,770		183,521		52,180
Interest expense	(17,832)		(19,047)		(39,892)		(56,164)
Depreciation and amortization	(19,502)		(19,927)		(58,630)		(60,827)
Impairment loss	—		—		—		(24,011)
(Loss) gain on sale of assets	(2)		4		(11)		(644)
Other income (expense)	2,608		587		7,850		(747)
Repairs from hurricanes and tropical storms	(8,850)		(435)		(8,850)		(435)
Share-based compensation	(2,777)		(3,270)		(9,043)		(9,899)
Other tax expense	—		(67)		—		(228)
Transaction expenses	(582)		(210)		(1,384)		(928)
Contract termination costs	—		(400)		—		(400)
Severance expense	—		—		—		(1,287)
Non-service cost components of net periodic pension cost (benefit) (2)	102		(16)		650		463
Net (loss) income before tax	(1,961)		(11,011)		74,211		(102,927)
Income tax (provision) benefit	(268)		(1,360)		(3,168)		13,043
Net (loss) income	$	(2,229)	$	(12,371)	$	71,043	$	(89,884)

________

(1) Other corporate includes revenue generated by The Playa Collection of $0.6 million and $1.3 million for the three and nine months ended September 30, 2022, respectively.

(2) Represents the non-service cost components of net periodic pension cost or benefit recorded within other income (expense) in the Condensed Consolidated Statements of Operations. We include these costs in calculating Adjusted EBITDA as they are considered part of our ongoing resort operations.

The following table presents segment property and equipment, gross and a reconciliation to total property and equipment, net as of September 30, 2022 and December 31, 2021 ($ in thousands):


	As of September 30,		As of December 31,
	2022		2021
Segment property and equipment, gross
Yucatán Peninsula	$	673,447	$	667,618
Pacific Coast	290,570		288,309
Dominican Republic	688,664		684,187
Jamaica	411,700		408,107
Total segment property and equipment, gross	2,064,381		2,048,221
Corporate property and equipment, gross	5,355		4,802
Accumulated depreciation	(522,141)		(468,449)
Total property and equipment, net	$	1,547,595	$	1,584,574

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The following table presents segment capital expenditures and a reconciliation to total capital expenditures for the nine months ended September 30, 2022 and 2021 ($ in thousands):


	Nine Months Ended September 30,
	2022		2021
Segment capital expenditures
Yucatán Peninsula	$	6,870	$	2,709
Pacific Coast	3,817		536
Dominican Republic	6,249		1,874
Jamaica	3,999		3,288
Total segment capital expenditures (1)	20,935		8,407
Corporate	570		256
Total capital expenditures (1)	$	21,505	$	8,663

________

(1) Represents gross additions to property and equipment.

Note 16. Subsequent events

In preparing the interim Condensed Consolidated Financial Statements, we have evaluated subsequent events through November 3, 2022, which is the date the financial statements were issued.

On October 12, 2022, we paid $4.5 million of key money to the owner of one of our managed resorts.

During the period from October 1, 2022 through October 31, 2022, we purchased 2,671,010 shares at an average price of $5.73 per share. As of October 31, 2022, we had $78.9 million remaining under our 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 24, 2022 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. Currently, one of the most significant factors that could cause actual outcomes to differ materially from our forward-looking statements is the adverse effects of the current COVID-19 pandemic on our financial condition, results of operations and prospects, which include the airlines that service the locations where we own resorts, the short and longer-term demand for travel, the global economy and the local economies where we own resorts, and the financial markets. As a result of the COVID-19 pandemic, we experienced severely reduced occupancy levels at our resorts in 2020 and 2021 compared to historic levels, and the continued or worsening effects of the pandemic may again result in reduced occupancies. The extent to which the COVID-19 pandemic will continue to impact us and consumer behavior will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the scope, severity and duration of the pandemic, continuing resurgences of the virus and its variants, the government actions taken to contain the pandemic or mitigate its impact, and the continuing effectiveness and uptake of vaccines and treatment therapies. Our business and profitability may also be adversely impacted to the extent high inflation and interest rates adversely impact macroeconomic conditions. 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 and rising interest rates, on consumer discretionary spending and the lodging industry in particular;

•the popularity of the all-inclusive resort model, particularly in the luxury segment of the resort market;

•changes in economic, social or political conditions in the regions we operate, including changes in perception of public-safety, changes in unemployment rates and labor force availability, and changes in the supply of rooms from competing resorts;

•the success and continuation of our relationships with Hyatt Hotels Corporation (“Hyatt”), Hilton Worldwide Holdings, Inc. (“Hilton”), and Wyndham Hotels & Resorts, Inc. (“Wyndham”);

•the volatility of currency exchange rates;

•uncertainty regarding the ongoing conflict between Russia and Ukraine and the related impacts on inflation, supply chains and macroeconomic conditions;

•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 acquisitions, expansions, 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;

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•our ability to obtain and maintain ample liquidity to fund operations and service debt;

•the impact of and changes in governmental regulations or the enforcement thereof, tax laws and rates, accounting guidance and similar matters in regions in which we operate;

•the ability of our guests to reach our resorts given government mandated travel restrictions or airline service/capacity issues, as well as changes in demand for our resorts resulting from government mandated safety protocols and/or health concerns;

•the effectiveness of our internal controls and our corporate policies and procedures;

•changes in personnel and availability of qualified personnel;

•extreme weather events, such as hurricanes, floods and extreme heat waves, which may increase in frequency and severity as a result of climate change, and other natural disasters;

•outbreak of widespread contagious diseases other than COVID-19;

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

•the volatility of the market price and liquidity of our ordinary shares and other of our securities; and

•the increasingly competitive environment in which we operate.

While forward-looking statements reflect our good faith beliefs, they are not guarantees of future performance. The Company disclaims any obligation to publicly update or revise any forward-looking statement to reflect changes in underlying assumptions or factors, new information, data or methods, future events or other changes after the date of this quarterly report, except as required by applicable law. You should not place undue reliance on any forward-looking statements, which are based only on information currently available to us (or to third parties making the forward-looking statements).

Overview

Playa is a leading owner, operator and developer of all-inclusive resorts in prime beachfront locations in popular vacation destinations in Mexico and the Caribbean. As of September 30, 2022, Playa owned and/or managed a total portfolio consisting of 25 resorts (9,352 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 Resort, the Hilton La Romana All-Inclusive Adult Resort, Hyatt Zilara Cap Cana and Hyatt Ziva Cap Cana; and

•We own two resorts in the Dominican Republic that are managed by a third-party. We also manage eight resorts on behalf of third-party owners, one of which is currently closed for renovations but expected to open in late 2022.

Playa’s strategy is to leverage its globally recognized brand partnerships and proprietary in-house direct booking capabilities to capitalize on the growing popularity of the all-inclusive resort model and reach first-time all-inclusive consumers in a cost-effective manner. We believe that this strategy should position us to generate attractive returns for our shareholders, build lasting relationships with our guests, and enhance the lives of our associates and the communities in which we operate.

For the three months ended September 30, 2022, we generated a net loss of $2.2 million, Total Revenue of $204.6 million, Net Package RevPAR of $253.17 and Adjusted EBITDA of $44.9 million. For the three months ended September 30, 2021, during which time our operations were negatively impacted by the effects of COVID-19, we generated a net loss of $12.4 million, Total Revenue of $151.3 million, Net Package RevPAR of $184.19 and Adjusted EBITDA of $31.8 million.

For the nine months ended September 30, 2022, we generated net income of $71.0 million, Total Revenue of $645.5 million, Net Package RevPAR of $268.35 and Adjusted EBITDA of $183.5 million. For the nine months ended September 30, 2021, during which time our operations were negatively impacted by the effects of COVID-19, we generated a net loss of $89.9 million, Total Revenue of $357.8 million, Net Package RevPAR of $141.66 and Adjusted EBITDA of $52.2 million.

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Our Portfolio of Resorts

As of September 30, 2022, 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

Dreams Palm Beach

Punta Cana,
Dominican Republic

Dreams (all ages)

AMResorts

1994; 2008

500

Dreams Punta Cana

Punta Cana,
Dominican Republic

Dreams (all ages)

AMResorts

2004

620

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

7,124

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

Hyatt Ziva Riviera Cancún

Riviera Maya, Mexico

Hyatt Ziva (all ages)

Playa

2008; 2021

438

Hyatt Zilara Riviera Maya (3)

Riviera Maya, Mexico

Hyatt Zilara (adults-only)

Playa

2003; 2022

291

Seadust Cancún Family Resort (4)

Cancún, Mexico

Seadust (all ages)

Playa

2006; 2022

502

Kimpton Hacienda Tres Ríos Resort, Spa & Nature Park (5)

Playa del Carmen, Mexico

Kimpton (all ages)

Playa

2008; 2023

255

Wyndham Alltra Riviera Nayarit (6)

Nuevo Vallarta, Mexico

Wyndham (all ages)

Playa

2009; 2022

229

Total Rooms Operated

2,228

Total Rooms Owned and Operated

9,352

________

(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 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 first quarter of 2021. The resort is currently closed for renovations but is expected to open in late 2022.

(4) We entered into a management agreement to operate this resort during the second quarter of 2022 and we expect to commence operations in the first quarter of 2023.

(5) We entered into a management agreement to operate this resort during the second quarter of 2022. The resort is currently undergoing renovations and we expect to commence operations in early 2024.

(6) We entered into a management agreement to operate this resort in the third quarter of 2022 and commenced operations in October 2022.

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Results of Operations

Three Months Ended September 30, 2022 and 2021

The following table summarizes our results of operations on a consolidated basis for the three months ended September 30, 2022 and 2021 ($ in thousands):


	Three Months Ended September 30,				Increase / Decrease
	2022		2021		Change		% Change
Revenue
Package	$	171,126	$	124,331	$	46,795	37.6	%
Non-package	29,874		25,211		4,663		18.5	%
Management fees	786		673		113		16.8	%
Cost reimbursements	2,836		1,072		1,764		164.6	%
Total revenue	204,622		151,287		53,335		35.3	%
Direct and selling, general and administrative expenses
Direct	117,333		90,788		26,545		29.2	%
Selling, general and administrative	51,686		32,055		19,631		61.2	%
Depreciation and amortization	19,502		19,927		(425)		(2.1)	%
Reimbursed costs	2,836		1,072		1,764		164.6	%

Loss (gain) on sale of assets	2		(4)		6		150.0	%
Direct and selling, general and administrative expenses	191,359		143,838		47,521		33.0	%
Operating income	13,263		7,449		5,814		78.1	%
Interest expense	(17,832)		(19,047)		1,215		6.4	%
Other income	2,608		587		2,021		344.3	%
Net loss before tax	(1,961)		(11,011)		9,050		82.2	%
Income tax provision	(268)		(1,360)		1,092		80.3	%
Net loss	$	(2,229)	$	(12,371)	$	10,142	82.0	%

The tables below set forth information for our total portfolio and comparable portfolio with respect to our Occupancy, Net Package ADR, Net Package RevPAR, Net Package Revenue, Net Non-package Revenue, Management Fee Revenue, Total Net Revenue, Adjusted EBITDA and Adjusted EBITDA Margin. For a description of these operating metrics and non-U.S. GAAP measures, see “Key Indicators of Financial and Operating Performance” below. For discussion of Adjusted EBITDA and reconciliation to the most comparable U.S. GAAP financial measures, see “Key Indicators of Financial and Operating Performance” and “Non-U.S. GAAP Financial Measures” below.

Our comparable portfolio for the three months ended September 30, 2022 excludes the Hilton La Romana All-Inclusive Resort and Hyatt Ziva and Hyatt Zilara Cap Cana which were closed the last twelve days of the third quarter to expedite necessary clean up and repair work as a result of Hurricane Fiona.

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Total Portfolio


	Three Months Ended September 30,						Increase / Decrease
	2022			2021			Change			% Change
Occupancy	73.8		%	59.3		%	14.5		pts	24.5	%
Net Package ADR	$	343.28		$	310.65		$	32.63		10.5	%
Net Package RevPAR	$	253.17		$	184.19		$	68.98		37.5	%
	($ in thousands)
Net Package Revenue	$	165,930		$	120,717		$	45,213		37.5	%
Net Non-package Revenue	29,630			25,002			4,628			18.5	%
Management Fee Revenue	786			673			113			16.8	%
Total Net Revenue	196,346			146,392			49,954			34.1	%
Adjusted EBITDA	$	44,874		$	31,770		$	13,104		41.2	%
Adjusted EBITDA Margin	22.9		%	21.7		%	1.2		pts	5.5	%

Comparable Portfolio


	Three Months Ended September 30,						Increase / Decrease
	2022			2021			Change			% Change
Occupancy	76.6		%	60.3		%	16.3		pts	27.0	%
Net Package ADR	$	335.48		$	301.60		$	33.88		11.2	%
Net Package RevPAR	$	257.08		$	181.80		$	75.28		41.4	%
	($ in thousands)
Net Package Revenue	$	132,447		$	93,665		$	38,782		41.4	%
Net Non-package Revenue	23,394			19,553			3,841			19.6	%
Management Fee Revenue	786			673			113			16.8	%
Total Net Revenue	156,627			113,891			42,736			37.5	%
Adjusted EBITDA	$	33,570		$	21,299		$	12,271		57.6	%
Adjusted EBITDA Margin	21.4		%	18.7		%	2.7		pts	14.4	%

Total Revenue and Total Net Revenue

Our Total Revenue for the three months ended September 30, 2022 increased $53.3 million, or 35.3%, compared to the three months ended September 30, 2021.

Our Total Net Revenue for the three months ended September 30, 2022 increased $50.0 million, or 34.1%, compared to the three months ended September 30, 2021. The increase was due to the following:

•a 10.5% increase in Net Package ADR as a result of a higher meetings, incentives, conventions and events (“MICE”) group contribution to our guest mix and the ongoing leisure travel recovery and pricing discipline to coincide with investments in guest satisfaction at our resorts;

•continued strength in Net Non-package Revenue spend per guest driven by improvements in our product offering across our resorts; and

•an incremental $3.71 favorable Net Package ADR impact compared to the three months ended September 30, 2021 as a result of the change in billing methodology of an online travel agency (“OTA”), which requires Playa to present this revenue gross of commissions under U.S. GAAP. Excluding this adjustment, Net Package ADR would have been $339.57.

Compared to the same period in 2019, for our current comparable portfolio of resorts, which excludes the Hilton La Romana All-Inclusive Resort, Hyatt Ziva and Hyatt Zilara Cap Cana, Dreams Puerto Aventuras, Capri Resort, Jewel Dunn’s River Beach Resort & Spa and Jewel Runaway Bay Beach Resort & Waterpark, Comparable Net Package ADR for the three months ended September 30, 2022 increased by $97.48, or 41.0%. Excluding the aforementioned adjustment for the OTA billing methodology, the increase would have been $83.88, or 35.2%.

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The following table shows a reconciliation of Net Package Revenue, Net Non-package Revenue and Management Fee Revenue to Total Revenue for the three months ended September 30, 2022 and 2021 ($ in thousands):


	Three Months Ended September 30,				Increase/Decrease
	2022		2021		Change		% Change
Net Package Revenue
Comparable Net Package Revenue	$	132,447	$	93,665	$	38,782	41.4	%
Non-comparable Net Package Revenue	33,483		27,052		6,431		23.8	%
Net Package Revenue	$	165,930	$	120,717	$	45,213	37.5	%

Net Non-package Revenue
Comparable Net Non-package Revenue	23,394		19,553		3,841		19.6	%
Non-comparable Net Non-package Revenue	6,236		5,449		787		14.4	%
Net Non-package Revenue	29,630		25,002		4,628		18.5	%

Management Fee Revenue
Comparable Management Fee Revenue	786		673		113		16.8	%
Non-comparable Management Fee Revenue	—		—		—		—	%
Management Fee Revenue	786		673		113		16.8	%

Total Net Revenue
Comparable Total Net Revenue	156,627		113,891		42,736		37.5	%
Non-comparable Total Net Revenue	39,719		32,501		7,218		22.2	%
Total Net Revenue	196,346		146,392		49,954		34.1	%
Compulsory tips	5,440		3,823		1,617		42.3	%
Cost Reimbursements	2,836		1,072		1,764		164.6	%
Total revenue	$	204,622	$	151,287	$	53,335	35.3	%

Direct Expenses

The following table shows a reconciliation of our direct expenses to Net Direct Expenses for the three months ended September 30, 2022 and 2021 ($ in thousands):


	Three Months Ended September 30,				Increase/Decrease
	2022		2021		Change		% Change
Direct expenses	$	117,333	$	90,788	$	26,545	29.2	%
Less: compulsory tips	5,440		3,823		1,617		42.3	%
Net Direct Expenses	$	111,893	$	86,965	$	24,928	28.7	%

Our direct expenses include resort expenses, such as food and beverage, salaries and wages, utilities and other ongoing operational expenses. Our Net Direct Expenses were $111.9 million, or 57.0% of Total Net Revenue, for the three months ended September 30, 2022 and $87.0 million, or 59.4% of Total Net Revenue, for the three months ended September 30, 2021. Direct operating expenses fluctuate based on various factors, including changes in occupancy, labor costs, utilities, repair and maintenance costs and license and property taxes. Management fees and franchise fees, which are computed as a percentage of revenue, increase or decrease as a result of changes in revenues.

Net Direct Expenses for the three months ended September 30, 2022 increased $24.9 million, or 28.7%, compared to the three months ended September 30, 2021. As a percentage of Owned Net Revenue, Net Direct Expenses decreased to 57.4%, compared to 59.8% for the three months ended September 30, 2021. Net Direct Expenses at our comparable properties increased $19.8 million, or 28.8%, compared to the three months ended September 30, 2021 primarily due to the following:

•Increased operating expenses associated with higher occupancy levels as a result of the corresponding recovery in our operations compared to the three months ended September 30, 2021;

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•An increase in food and beverage expenses on a per guest basis, driven by our initiative to deliver an exceptional customer experience across our portfolio and higher food and beverage prices; and

•An increase in utilities expenses driven by a global rise in energy prices.

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

Total Portfolio


	Three Months Ended September 30,				Increase/Decrease
	2022		2021		Change		% Change

Food and beverages	$	27,268	$	19,782	$	7,486	37.8	%
Guest costs	6,515		7,185		(670)		(9.3)	%
Salaries and wages	39,117		31,053		8,064		26.0	%
Repairs and maintenance	6,534		4,545		1,989		43.8	%
Utilities and sewage	12,743		9,727		3,016		31.0	%
Licenses and property taxes	640		663		(23)		(3.5)	%
Incentive and management fees	779		373		406		108.8	%
Franchise / license fees	9,553		7,527		2,026		26.9	%
Transportation and travel expenses	1,417		1,132		285		25.2	%
Laundry and cleaning expenses	1,709		1,360		349		25.7	%
Property and equipment rental expense	936		699		237		33.9	%
Entertainment expenses and decoration	2,795		1,838		957		52.1	%
Office supplies	379		296		83		28.0	%
Other operational expenses	1,508		785		723		92.1	%
Total Net Direct Expenses	$	111,893	$	86,965	$	24,928	28.7	%

Comparable portfolio


	Three Months Ended September 30,				Increase/Decrease
	2022		2021		Change		% Change

Food and beverages	$	21,325	$	14,971	$	6,354	42.4	%
Guest costs	4,791		5,314		(523)		(9.8)	%
Salaries and wages	32,070		25,903		6,167		23.8	%
Repairs and maintenance	5,661		3,932		1,729		44.0	%
Utilities and sewage	9,866		7,300		2,566		35.2	%
Licenses and property taxes	452		504		(52)		(10.3)	%
Incentive and management fees	779		373		406		108.8	%
Franchise / license fees	7,333		5,975		1,358		22.7	%
Transportation and travel expenses	808		684		124		18.1	%
Laundry and cleaning expenses	1,339		1,064		275		25.8	%
Property and equipment rental expense	474		351		123		35.0	%
Entertainment expenses and decoration	2,389		1,589		800		50.3	%
Office supplies	303		237		66		27.8	%
Other operational expenses	1,028		603		425		70.5	%
Total Net Direct Expenses	$	88,618	$	68,800	$	19,818	28.8	%

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Selling, General and Administrative Expenses

Our selling, general and administrative expenses for the three months ended September 30, 2022 increased $19.6 million, or 61.2%, compared to the three months ended September 30, 2021. The higher levels of occupancy from the ongoing recovery at our resorts during the three months ended September 30, 2022 resulted in a $2.7 million increase in commissions expenses, a $2.1 million increase in advertising expenses, and a $1.5 million increase in credit card commissions. In addition, we had a $3.0 million increase in corporate personnel costs and a $0.8 million increase in professional fees. The increase in commissions expenses includes an additional $2.5 million that was a result of a change in billing methodology of an OTA, which requires Playa to present the commissions on a gross basis under U.S. GAAP. We also incurred $8.9 million of estimated clean up and repair expenses related to Hurricane Fiona in the third quarter of 2022 which are not expected to be offset by property damage insurance proceeds.

Depreciation and Amortization Expense

Our depreciation and amortization expense for the three months ended September 30, 2022 decreased $0.4 million, or 2.1%, compared to the three months ended September 30, 2021.

Interest Expense

Our interest expense for the three months ended September 30, 2022 decreased $1.2 million, or 6.4%, compared to the three months ended September 30, 2021. The decrease in interest expense was driven primarily by a $1.8 million reduction in the interest expense on our Senior Secured Credit Facility due to the effect of our interest rate swaps, partially offset by a $0.5 million decreased benefit over the period related to the change in fair value of our interest rate swaps.

Cash interest paid was $18.1 million for the three months ended September 30, 2022, representing a $1.7 million, or 8.6% decrease as compared to the three months ended September 30, 2021. The decrease in cash interest paid was primarily driven by a $1.8 million reduction in the interest paid on our Senior Secured Credit Facility due to the effect of our interest rate swaps, as interest rates moved closer to our 1.0% LIBOR floor during the three months ended September 30, 2022.

Income Tax Provision

For the three months ended September 30, 2022, our income tax provision was $0.3 million, compared to a $1.4 million income tax provision for the three months ended September 30, 2021. The decrease in our income tax provision of $1.1 million was primarily driven by:

•a $1.4 million decreased tax provision associated with lower pre-tax book income from our taxpaying entities, primarily driven by valuation allowance releases associated with current year earnings; and

•a $0.8 million decreased tax provision associated with foreign exchange rate fluctuations.

These decreases were partially offset by:

•a $0.7 million decreased tax benefit due to prior year adjustments; and

•a $0.6 million decreased tax benefit related to valuation allowances recognized for our Jamaica and Mexico entities.

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Results of Operations

Nine Months Ended September 30, 2022 and 2021

The following table summarizes our results of operations on a consolidated basis for the nine months ended September 30, 2022 and 2021 ($ in thousands):


	Nine Months Ended September 30,				Increase / Decrease
	2022		2021		Change		% Change
Revenue
Package	$	535,917	$	293,005	$	242,912	82.9	%
Non-package	99,492		60,808		38,684		63.6	%
Management fees	3,186		1,469		1,717		116.9	%
Cost reimbursements	6,868		2,554		4,314		168.9	%
Total revenue	645,463		357,836		287,627		80.4	%
Direct and selling, general and administrative expenses
Direct	343,298		230,543		112,755		48.9	%
Selling, general and administrative	130,403		85,273		45,130		52.9	%

Depreciation and amortization	58,630		60,827		(2,197)		(3.6)	%
Reimbursed costs	6,868		2,554		4,314		168.9	%
Impairment loss	—		24,011		(24,011)		(100.0)	%
Loss on sale of assets	11		644		(633)		(98.3)	%

Direct and selling, general and administrative expenses	539,210		403,852		135,358		33.5	%
Operating income (loss)	106,253		(46,016)		152,269		330.9	%
Interest expense	(39,892)		(56,164)		16,272		29.0	%
Other income (expense)	7,850		(747)		8,597		1,150.9	%
Net income (loss) before tax	74,211		(102,927)		177,138		172.1	%
Income tax (provision) benefit	(3,168)		13,043		(16,211)		(124.3)	%
Net income (loss)	$	71,043	$	(89,884)	$	160,927	179.0	%

Our comparable portfolio for the nine months ended September 30, 2022 excludes the Dreams Puerto Aventuras, which was sold in February 2021, Capri Resort, which was sold in June 2021, and Hilton La Romana All-Inclusive Resort and Hyatt Ziva and Hyatt Zilara Cap Cana which were closed the last twelve days of the third quarter 2022 to expedite necessary clean up and repair work as a result of Hurricane Fiona.

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Total Portfolio


	Nine Months Ended September 30,						Increase / Decrease
	2022			2021			Change			% Change
Occupancy	73.7		%	46.8		%	26.9		pts	57.5	%
Net Package ADR	$	363.88		$	302.83		$	61.05		20.2	%
Net Package RevPAR	$	268.35		$	141.66		$	126.69		89.4	%
	($ in thousands)
Net Package Revenue	$	521,897		$	284,414		$	237,483		83.5	%
Net Non-package Revenue	98,577			60,229			38,348			63.7	%
Management Fee Revenue	3,186			1,469			1,717			116.9	%
Total Net Revenue	623,660			346,112			277,548			80.2	%
Adjusted EBITDA	$	183,521		$	52,180		$	131,341		251.7	%
Adjusted EBITDA Margin	29.4		%	15.1		%	14.3		pts	94.7	%

Comparable Portfolio


	Nine Months Ended September 30,						Increase / Decrease
	2022			2021			Change			% Change
Occupancy	74.6		%	48.8		%	25.8		pts	52.9	%
Net Package ADR	$	354.99		$	294.95		$	60.04		20.4	%
Net Package RevPAR	$	264.79		$	144.02		$	120.77		83.9	%
	($ in thousands)
Net Package Revenue	$	404,816		$	220,182		$	184,634		83.9	%
Net Non-package Revenue	76,651			47,290			29,361			62.1	%
Management Fee Revenue	3,186			1,469			1,717			116.9	%
Total Net Revenue	484,653			268,941			215,712			80.2	%
Adjusted EBITDA	$	131,263		$	32,244		$	99,019		307.1	%
Adjusted EBITDA Margin	27.1		%	12.0		%	15.1		pts	125.8	%

Total Revenue and Total Net Revenue

Our Total Revenue for the nine months ended September 30, 2022 increased $287.6 million, or 80.4%, compared to the nine months ended September 30, 2021.

Our Total Net Revenue for the nine months ended September 30, 2022 increased $277.5 million, or 80.2%, compared to the nine months ended September 30, 2021. The increase was due to the following:

•a 20.2% increase in Net Package ADR as a result of a higher MICE group contribution to our guest mix, the ongoing leisure travel recovery, and pricing discipline to coincide with investments in guest satisfaction at our resorts;

•continued strength in Net Non-package Revenue driven by improvements in our product offering across our resorts; and

•an incremental $4.52 favorable Net Package ADR impact as a result of the change in billing methodology of an OTA, which requires Playa to present this revenue gross of commissions under U.S. GAAP. Excluding this adjustment, Net Package ADR would have been $359.37.

Compared to the same period in 2019, for our current comparable portfolio of resorts, which excludes the Hilton La Romana All-Inclusive Resort, Hyatt Ziva and Hyatt Zilara Cap Cana, Dreams Puerto Aventuras, Capri Resort, Jewel Dunn’s River Beach Resort & Spa and Jewel Runaway Bay Beach Resort & Waterpark, Comparable Net Package ADR for the nine months ended September 30, 2022 increased by $75.85, or 27.2%. Excluding the aforementioned adjustment for the OTA billing methodology, the increase would have been $64.87, or 23.2%.

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The following table shows a reconciliation of comparable Net Package Revenue, Net Non-package Revenue and Management Fee Revenue to total revenue for the nine months ended September 30, 2022 and 2021 ($ in thousands):


	Nine Months Ended September 30,				Increase/Decrease
	2022		2021		Change		% Change
Net Package Revenue
Comparable Net Package Revenue	$	404,816	$	220,182	$	184,634	83.9	%
Non-comparable Net Package Revenue	117,081		64,232		52,849		82.3	%
Net Package Revenue	521,897		284,414		237,483		83.5	%

Net Non-package Revenue
Comparable Net Non-package Revenue	76,651		47,290		29,361		62.1	%
Non-comparable Net Non-package Revenue	21,926		12,939		8,987		69.5	%
Net Non-package Revenue	98,577		60,229		38,348		63.7	%

Management Fee Revenue
Comparable Management Fee Revenue	3,186		1,469		1,717		116.9	%
Non-comparable Management Fee Revenue	—		—		—		—	%
Management Fee Revenue	3,186		1,469		1,717		116.9	%

Total Net Revenue
Comparable Total Net Revenue	484,653		268,941		215,712		80.2	%
Non-comparable Total Net Revenue	139,007		77,171		61,836		80.1	%
Total Net Revenue	623,660		346,112		277,548		80.2	%
Compulsory tips	14,935		9,170		5,765		62.9	%
Cost Reimbursements	6,868		2,554		4,314		168.9	%
Total revenue	$	645,463	$	357,836	$	287,627	80.4	%

Direct Expenses

The following table shows a reconciliation of our direct expenses to Net Direct Expenses for the nine months ended September 30, 2022 and 2021 ($ in thousands):


	Nine Months Ended September 30,				Increase/Decrease
	2022		2021		Change		% Change
Direct expenses	$	343,298	$	230,543	$	112,755	48.9	%
Less: compulsory tips	14,935		9,170		5,765		62.9	%
Net Direct Expenses	$	328,363	$	221,373	$	106,990	48.3	%

Our direct expenses include resort expenses, such as food and beverage, salaries and wages, utilities and other ongoing operational expenses. Our Net Direct Expenses were $328.4 million, or 52.7%, of Total Net Revenue for the nine months ended September 30, 2022 and $221.4 million, or 64.0%, of Total Net Revenue for the nine months ended September 30, 2021. Direct operating expenses fluctuate based on various factors, including changes in occupancy, labor costs, utilities, repair and maintenance costs and license and property taxes. Management fees and franchise fees, which are computed as a percentage of revenue, increase or decrease as a result of changes in revenue.

Net Direct Expenses for the nine months ended September 30, 2022 increased $107.0 million, or 48.3%, compared to the nine months ended September 30, 2021. As a percentage of Owned Net Revenue, Net Direct Expenses decreased to 53.1%, compared to 64.4% for the nine months ended September 30, 2021. Net Direct Expenses at our comparable properties increased $82.8 million, or 47.7%, compared to the nine months ended September 30, 2021 primarily due to the following:

•Increased operating expenses associated with higher occupancy levels as a result of the corresponding recovery in our operations compared to the nine months ended September 30, 2021;

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•An increase in food and beverage expenses on a per guest basis, driven by our initiative to deliver an exceptional customer experience across our portfolio and higher food and beverage prices; and

•An increase in utilities expenses driven by a global rise in energy prices.

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

Total Portfolio


	Nine Months Ended September 30,				Increase/Decrease
	2022		2021		Change		% Change

Food and beverages	$	78,711	$	46,594	$	32,117	68.9	%
Guest costs	22,102		17,590		4,512		25.7	%
Salaries and wages	114,684		84,477		30,207		35.8	%
Repairs and maintenance	17,134		11,468		5,666		49.4	%
Utilities and sewage	35,178		25,723		9,455		36.8	%
Licenses and property taxes	1,853		2,218		(365)		(16.5)	%
Incentive and management fees	2,763		806		1,957		242.8	%
Franchise / license fees	29,886		17,513		12,373		70.7	%
Transportation and travel expenses	4,103		3,052		1,051		34.4	%
Laundry and cleaning expenses	4,647		3,313		1,334		40.3	%
Property and equipment rental expense	4,071		1,328		2,743		206.6	%
Entertainment expenses and decoration	8,102		4,447		3,655		82.2	%
Office supplies	1,014		703		311		44.2	%
Other operational expenses	4,115		2,141		1,974		92.2	%
Total Net Direct Expenses	$	328,363	$	221,373	$	106,990	48.3	%

Comparable Portfolio


	Nine Months Ended September 30,				Increase/Decrease
	2022		2021		Change		% Change

Food and beverages	$	59,902	$	35,008	$	24,894	71.1	%
Guest costs	16,036		12,976		3,060		23.6	%
Salaries and wages	94,124		68,930		25,194		36.6	%
Repairs and maintenance	14,682		9,757		4,925		50.5	%
Utilities and sewage	27,133		19,598		7,535		38.4	%
Licenses and property taxes	1,275		1,742		(467)		(26.8)	%
Incentive and management fees	2,763		764		1,999		261.6	%
Franchise / license fees	22,291		13,877		8,414		60.6	%
Transportation and travel expenses	2,315		1,825		490		26.8	%
Laundry and cleaning expenses	3,545		2,567		978		38.1	%
Property and equipment rental expense	1,961		656		1,305		198.9	%
Entertainment expenses and decoration	6,923		3,809		3,114		81.8	%
Office supplies	781		554		227		41.0	%
Other operational expenses	2,803		1,631		1,172		71.9	%
Total Net Direct Expenses	$	256,534	$	173,694	$	82,840	47.7	%

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Selling, General and Administrative Expenses

Our selling, general and administrative expenses for the nine months ended September 30, 2022 increased $45.1 million, or 52.9%, compared to the nine months ended September 30, 2021. The higher levels of occupancy from the ongoing recovery at our resorts during the nine months ended September 30, 2022 resulted in a $6.3 million increase in advertising expenses, a $13.0 million increase in commissions expenses, and a $5.1 million increase in credit card commissions. In addition, we had a $1.9 million increase in insurance expenses driven by higher premiums for the current year, a $7.4 million increase in corporate personnel costs, and a $2.2 million increase in professional fees. The increase in commissions expense includes an additional $8.6 million that was a result of a change in billing methodology of an OTA, which requires Playa to present the commissions on a gross basis under U.S. GAAP. We also incurred $8.9 million of estimated clean up and repair expenses related to Hurricane Fiona in the third quarter of 2022 which are not expected to be offset by property damage insurance proceeds.

Depreciation and Amortization Expense

Our depreciation and amortization expense for the nine months ended September 30, 2022 decreased $2.2 million, or 3.6%, compared to the nine months ended September 30, 2021, which was primarily due to a $0.9 million decrease from the sale of the Capri Resort in June 2021.

Impairment Loss

Our impairment loss for the nine months ended September 30, 2022 decreased $24.0 million, or 100.0%, compared to the nine months ended September 30, 2021. The decrease was driven by $24.0 million of property and equipment impairment recognized upon classification of the Capri Resort as held for sale in March 2021, as the carrying value exceeded the sale price of the assets under the sales agreement. We had no impairment loss for the nine months ended September 30, 2022.

Interest Expense

Our interest expense for the nine months ended September 30, 2022 decreased $16.3 million, or 29.0%, compared to the nine months ended September 30, 2021. The decrease in interest expense was driven primarily by a $12.3 million benefit over the period related to the change in fair value of our interest rate swaps, which was a result of the increase in forecasted interest rates, and a $4.0 million reduction in the interest paid on our Senior Secured Credit Facility due to the effect of our interest rate swaps, as interest rates moved closer to our 1.0% LIBOR floor during the nine months ended September 30, 2022.

Cash interest paid was $55.0 million for the nine months ended September 30, 2022, representing a $3.4 million, or 5.9% decrease as compared to the nine months ended September 30, 2021. The decrease in cash interest paid was primarily driven by a $3.9 million reduction in the interest paid on our Senior Secured Credit Facility due to the effect of our interest rate swaps, as interest rates moved closer to our 1.0% LIBOR floor during the nine months ended September 30, 2022. This was partially offset by an $0.8 million increase in cash interest paid on our Property Loan due to the timing of interest payments during the nine months ended September 30, 2022.

Income Tax Provision

For the nine months ended September 30, 2022, our income tax provision was $3.2 million, compared to a $13.0 million income tax benefit for the nine months ended September 30, 2021. The increase in our income tax provision of $16.2 million was primarily driven by:

•a $12.1 million increased tax provision due to higher pre-tax book income from our taxpaying entities;

•a $5.5 million decreased tax benefit related to the sale of the Dreams Puerto Aventuras and Capri Resort in 2021; and

•a $1.6 million increased tax provision associated with foreign exchange rate fluctuations.

These increases were partially offset by:

•a $3.1 million decreased tax provision related to valuation allowances recognized for our Jamaica and Mexico entities.

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Key Indicators of Financial and Operating Performance

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

•Net Package Revenue

•Net Non-package Revenue

•Owned Net Revenue

•Management Fee Revenue

•Total Net Revenue

•Occupancy

•Net Package ADR

•Net Package RevPAR

•Net Direct Expenses

•EBITDA

•Adjusted EBITDA

•Adjusted EBITDA Margin

•Owned Resort EBITDA

•Owned Resort EBITDA Margin

•Comparable Non-U.S. GAAP Measures

Net Package Revenue, Net Non-package Revenue, Owned Net Revenue, Management Fee Revenue, Cost Reimbursements, Total Net Revenue and Net Direct Expenses

“Net Package Revenue” is derived from the sale of all-inclusive packages, which include room accommodations, 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” represents all other revenues earned from the operations of our resorts, other than Net Package Revenue, net of compulsory tips paid to employees. Government mandated compulsory tips in the Dominican Republic are not included in this adjustment, as they are already excluded from revenue. Net Non-package Revenue includes revenue associated with guests' purchases of upgrades, premium services and amenities, such as premium rooms, dining experiences, wines and spirits and spa packages, which are not included in the all-inclusive package. 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.

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“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 revenue, and an incentive fee, which is computed as a percentage of profitability. Management Fee Revenue had a minor contribution to our operating results for the three and nine months ended September 30, 2022 and 2021, but we expect Management Fee Revenue to be a more relevant indicator to assess the overall performance of our business in the future as we enter into more management contracts.

“Total Net Revenue” represents Net Package Revenue, Net Non-package Revenue and Management Fee Revenue. “Cost Reimbursements” is excluded from Total Net Revenue as it is not considered a key indicator of financial and operating performance. Cost Reimbursements is derived from the reimbursement of certain costs incurred by Playa on behalf of resorts managed by Playa and owned by third parties. This revenue is fully offset by reimbursable costs and has no net impact on operating income (loss) or net (loss) income.

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

Occupancy

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

Net Package ADR

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

Net Package RevPAR

“Net Package RevPAR” is the product of Net Package ADR and the average daily occupancy percentage. Net Package RevPAR does not reflect the impact of non-package revenue. Although Net Package RevPAR does not include this additional revenue, it generally is considered the key performance measure 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 income or expense

•Pre-opening expense

•Transaction expenses

•Severance expense

•Other tax expense

•Gain on property damage insurance proceeds

•Share-based compensation

•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; repairs from hurricanes and tropical storms and impairment losses.

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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 calculating Adjusted EBITDA as they are considered part of our ongoing resort operations.

“Adjusted EBITDA Margin” represents Adjusted EBITDA as a percentage of Total Net Revenue.

“Owned Resort EBITDA” represents Adjusted EBITDA before corporate expenses and Management Fee Revenue.

“Owned Resort EBITDA Margin” represents Owned Resort EBITDA as a percentage of Owned Net Revenue.

Usefulness and Limitation of Non-U.S. GAAP Measures

We believe that each of Net Package Revenue, Net Non-package Revenue, Owned Net Revenue, Total Net Revenue, Net Package ADR, Net Package RevPAR and Net Direct Expenses are useful to investors as they 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 based, in part, on consolidated Adjusted EBITDA. We believe that Adjusted EBITDA is useful to investors because it provides investors with information utilized by our Board and management to assess our performance and may (subject to the limitations described below) enable investors to compare the performance of our portfolio to our competitors.

We believe that Owned Resort EBITDA and Owned Resort EBITDA Margin are useful to investors as they allow investors to measure resort-level performance and profitability by excluding expenses not directly tied to our resorts, such as corporate expenses, and excluding ancillary revenues not derived from our resorts, such as management fee revenue. We believe Owned Resort EBITDA is also helpful to investors that use it in estimating the value of our resort portfolio. Management uses these measures to monitor property-level performance and profitability.

Our non-U.S. GAAP financial measures are not substitutes for revenue, net income or any other measure determined in accordance with U.S. GAAP. There are limitations to the utility of non-U.S. GAAP financial measures, such as Adjusted EBITDA. For example, other companies in our industry may define Adjusted EBITDA differently than we do. As a result, it may be difficult to use Adjusted EBITDA or similarly named non-U.S. GAAP financial measures that other companies publish to compare the performance of those companies to our performance. Because of these limitations, our non-U.S. GAAP financial measures should not be considered as a measure of the income or loss generated by our business or discretionary cash available for investment in our business, and investors should carefully consider our U.S. GAAP results presented.

For a reconciliation of EBITDA, Adjusted EBITDA and Owned Resort EBITDA to net income or loss as computed under U.S. GAAP, see “Non-U.S. GAAP Financial Measures.”

Comparable Non-U.S. GAAP Measures

We believe that presenting Adjusted EBITDA, Owned Resort EBITDA, Total Net Revenue, Net Package Revenue, Net Non-package Revenue and Net Direct Expenses on a comparable basis is useful to investors because these measures include only the results of resorts owned and in operation for the entirety of the periods presented and thereby eliminate disparities in results due to the acquisition or disposition of resorts or the impact of resort closures or re-openings in connection with redevelopment or renovation projects. As a result, we believe these measures provide more consistent metrics for comparing the performance of our operating resorts. We calculate comparable Adjusted EBITDA, comparable Owned Resort EBITDA, comparable Total Net Revenue,

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comparable Net Package Revenue and comparable Net Non-package Revenue as the total amount of each respective measure less amounts attributable to non-comparable resorts, by which we mean resorts that were not owned or in operation during some or all of the relevant reporting period.

Our comparable portfolio for the three months ended September 30, 2022 excludes the Hilton La Romana All-Inclusive Resort and Hyatt Ziva and Hyatt Zilara Cap Cana, which were closed the last twelve days of the third quarter of 2022 to expedite necessary clean up and repair work as a result of Hurricane Fiona. Our comparable portfolio for the nine months ended September 30, 2022 exclude the Hilton La Romana All-Inclusive Resort and Hyatt Ziva and Hyatt Zilara Cap Cana as well as the Dreams Puerto Aventuras, which was sold in February 2021 and Capri Resort, which was sold in June 2021.

A reconciliation of net income as computed under U.S. GAAP to comparable Adjusted EBITDA and comparable Owned Resort EBITDA is presented in “Non-U.S. GAAP Financial Measures,” below. For a reconciliation of Comparable Net Package Revenue, Comparable Net Non-package Revenue, Comparable Management Fee Revenue and Comparable Total Net Revenue to total revenue as computed under U.S. GAAP, see “Results of Operations.”

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Segment Results

Three Months Ended September 30, 2022 and 2021

We evaluate our business segment operating performance using segment Owned Net Revenue and segment Owned Resort EBITDA. The following tables summarize segment Owned Net Revenue and segment Owned Resort EBITDA for the three months ended September 30, 2022 and 2021 ($ in thousands):


	Three Months Ended September 30,				Increase / Decrease
	2022		2021		Change		% Change
Owned Net Revenue
Yucatán Peninsula	$	65,594	$	51,209	$	14,385	28.1	%
Pacific Coast	30,301		21,982		8,319		37.8	%
Dominican Republic	55,190		42,794		12,396		29.0	%
Jamaica	43,759		29,502		14,257		48.3	%
Segment Owned Net Revenue	194,844		145,487		49,357		33.9	%
Other	716		232		484		208.6	%
Management fees	786		673		113		16.8	%
Total Net Revenue	$	196,346	$	146,392	$	49,954	34.1	%


	Three Months Ended September 30,				Increase / Decrease
	2022		2021		Change		% Change
Owned Resort EBITDA
Yucatán Peninsula	$	21,617	$	17,518	$	4,099	23.4	%
Pacific Coast	10,512		6,429		4,083		63.5	%
Dominican Republic	14,014		11,267		2,747		24.4	%
Jamaica	11,267		5,632		5,635		100.1	%
Segment Owned Resort EBITDA	57,410		40,846		16,564		40.6	%
Other corporate (1)	(13,322)		(9,749)		(3,573)		(36.6)	%
Management fees	786		673		113		16.8	%
Total Adjusted EBITDA	$	44,874	$	31,770	$	13,104	41.2	%

________

(1) Other corporate includes $0.6 million of revenue generated by The Playa Collection for the three months ended September 30, 2022.

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

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Yucatán Peninsula

The following tables set forth information with respect to our Occupancy, Net Package ADR, Net Package RevPAR, Net Package Revenue, Net Non-package Revenue, Owned Net Revenue, Owned Resort EBITDA and Owned Resort EBITDA Margin for our Yucatán Peninsula segment for the three months ended September 30, 2022 and 2021 for the total segment portfolio:


	Three Months Ended September 30,						Increase / Decrease
	2022			2021			Change			% Change
Occupancy	77.0		%	64.7		%	12.3		pts	19.0	%
Net Package ADR	$	376.40		$	336.35		$	40.05		11.9	%
Net Package RevPAR	$	289.87		$	217.75		$	72.12		33.1	%
	($ in thousands)
Net Package Revenue	$	56,696		$	42,589		$	14,107		33.1	%
Net Non-package Revenue	8,898			8,620			278			3.2	%
Owned Net Revenue	65,594			51,209			14,385			28.1	%
Owned Resort EBITDA	$	21,617		$	17,518		$	4,099		23.4	%
Owned Resort EBITDA Margin	33.0		%	34.2		%	(1.2)		pts	(3.5)	%

Segment Owned Net Revenue. Our Owned Net Revenue for the three months ended September 30, 2022 increased $14.4 million, or 28.1%, compared to the three months ended September 30, 2021. The increase was due to the following:

•Occupancy rate increasing 12.3 percentage points compared to the three months ended September 30, 2021, driven by an increase in demand from guests sourced across all our major geographies;

•an 11.9% increase in Net Package ADR as a result of the ongoing leisure travel recovery and pricing discipline to coincide with investments in guest satisfaction at our resorts;

•continued strength in Net Non-package Revenue driven by improvements in our product offering across our resorts; and

•an incremental $9.55 favorable Net Package ADR impact compared to the three months ended September 30, 2021 as a result of the change in billing methodology of an OTA, which requires Playa to present this revenue gross of commissions under U.S. GAAP. Excluding this adjustment, Net Package ADR would have been $366.85.

Compared to the same period in 2019, for our current comparable portfolio of resorts in the Yucatán, which excludes the Dreams Puerto Aventuras and Capri Resort, Comparable Net Package ADR for the three months ended September 30, 2022 increased by $133.33, or 54.8%. Excluding the aforementioned adjustment for the OTA billing methodology, the increase would have been $107.80, or 44.3%.

Segment Owned Resort EBITDA. Our Owned Resort EBITDA for the three months ended September 30, 2022 increased $4.1 million, or 23.4%, compared to the three months ended September 30, 2021. The increase was a result of the on-going revenue recovery, particularly the strong Net Package ADR increases and cost control practices which partially offset occupancy-related increases in resort operating expenses, including higher food costs, compared to the three months ended September 30, 2021.

Compared to the same period in 2019, for our current comparable portfolio of resorts in the Yucatán, which excludes the Dreams Puerto Aventuras and Capri Resort, Comparable Owned Resort EBITDA for the three months ended September 30, 2022 increased by $9.1 million, or 73.0%.

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Pacific Coast

The following table sets forth information with respect to our Occupancy, Net Package ADR, Net Package RevPAR, Net Package Revenue, Net Non-package Revenue, Owned Net Revenue, Owned Resort EBITDA and Owned Resort EBITDA Margin for our Pacific Coast segment for the three months ended September 30, 2022 and 2021 for the total segment portfolio:


	Three Months Ended September 30,						Increase / Decrease
	2022			2021			Change			% Change
Occupancy	72.3		%	60.5		%	11.8		pts	19.5	%
Net Package ADR	$	439.41		$	372.39		$	67.02		18.0	%
Net Package RevPAR	$	317.58		$	225.43		$	92.15		40.9	%
	($ in thousands)
Net Package Revenue	$	27,055		$	19,205		$	7,850		40.9	%
Net Non-package Revenue	3,246			2,777			469			16.9	%
Owned Net Revenue	30,301			21,982			8,319			37.8	%
Owned Resort EBITDA	$	10,512		$	6,429		$	4,083		63.5	%
Owned Resort EBITDA Margin	34.7		%	29.2		%	5.5		pts	18.8	%

Segment Owned Net Revenue. Our Owned Net Revenue for the three months ended September 30, 2022 increased $8.3 million, or 37.8%, compared to the three months ended September 30, 2021. The increase was due to the following:

•Occupancy rate increasing 11.8 percentage points compared to the three months ended September 30, 2021, driven by an increase in demand from United States and Canadian sourced guests;

•an 18.0% increase in Net Package ADR as a result of the ongoing leisure travel recovery and pricing discipline to coincide with investments in guest satisfaction at our resorts;

•continued strength in Net Non-package Revenue driven by improvements in our product offering across our resorts; and

•an incremental $8.22 favorable Net Package ADR impact compared to the three months ended September 30, 2021 as a result of the change in billing methodology of an OTA, which requires Playa to present this revenue gross of commissions under U.S. GAAP. Excluding this adjustment, Net Package ADR would have been $431.18.

Compared to the same period in 2019, Net Package ADR for the three months ended September 30, 2022 increased by $203.17, or 86.0%. Excluding the aforementioned adjustment for the OTA billing methodology, the increase would have been $178.44, or 75.5%.

Segment Owned Resort EBITDA. Our Owned Resort EBITDA for the three months ended September 30, 2022 increased $4.1 million, or 63.5%, compared to the three months ended September 30, 2021. The increase was a result of the on-going revenue recovery, particularly the strong Net Package ADR increases and cost control practices which partially offset occupancy-related increases in resort operating expenses, including higher food costs, compared to the three months ended September 30, 2021.

Compared to the same period in 2019, Owned Resort EBITDA for the three months ended September 30, 2022 increased by $6.0 million, or 133.9%.

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Dominican Republic

The following table sets forth information with respect to our Occupancy, Net Package ADR, Net Package RevPAR, Net Package Revenue, Net Non-package Revenue, Owned Net Revenue, Owned Resort EBITDA and Owned Resort EBITDA Margin for our Dominican Republic segment for the three months ended September 30, 2022 and 2021 for the total segment portfolio and comparable segment portfolio:

Total Portfolio


	Three Months Ended September 30,						Increase / Decrease
	2022			2021			Change			% Change
Occupancy	70.7		%	55.4		%	15.3		pts	27.6	%
Net Package ADR	$	266.96		$	260.61		$	6.35		2.4	%
Net Package RevPAR	$	188.75		$	144.26		$	44.49		30.8	%
	($ in thousands)
Net Package Revenue	$	45,913		$	35,092		$	10,821		30.8	%
Net Non-package Revenue	9,277			7,702			1,575			20.4	%
Owned Net Revenue	55,190			42,794			12,396			29.0	%
Owned Resort EBITDA	$	14,014		$	11,267		$	2,747		24.4	%
Owned Resort EBITDA Margin	25.4		%	26.3		%	(0.9)		pts	(3.4)	%

Comparable Portfolio


	Three Months Ended September 30,						Increase / Decrease
	2022			2021			Change		% Change
Occupancy	81.0		%	54.9		%	26.1	pts	47.5	%
Net Package ADR	$	149.00		$	142.01		6.99		4.9	%
Net Package RevPAR	$	120.63		$	78.03		42.60		54.6	%
	($ in thousands)
Net Package Revenue	$	12,430		$	8,040		4,390		54.6	%
Net Non-package Revenue	3,041			2,253			788		35.0	%
Owned Net Revenue	15,471			10,293			5,178		50.3	%
Owned Resort EBITDA	$	2,710		$	796		1,914		240.5	%
Owned Resort EBITDA Margin	17.5		%	7.7		%	9.8	pts	127.3	%

Segment Comparable Owned Net Revenue. Our Comparable Owned Net Revenue for the three months ended September 30, 2022 increased $5.2 million, or 50.3%, compared to the three months ended September 30, 2021. The increase was due to the following:

•Occupancy rate increasing 26.1 percentage points compared to the three months ended September 30, 2021, driven by an increase in demand from European and Canadian sourced guests;

•a 4.9% increase in Net Package ADR as a result of a higher MICE group contribution to our guest mix, the ongoing leisure travel recovery, and pricing discipline to coincide with investments in guest satisfaction at our resorts, and

•continued improvement in Net Non-package Revenue driven by improvements in our product offering across our resorts.

Segment Comparable Owned Resort EBITDA. Our Comparable Owned Resort EBITDA for the three months ended September 30, 2022 increased $1.9 million, or 240.5%, compared to the three months ended September 30, 2021. The increase was a result of the on-going revenue recovery, Net Package ADR increases and cost control practices which partially offset occupancy-related increases in resort operating expenses, including higher food costs, compared to the three months ended September 30, 2021.

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Jamaica

The following table sets forth information with respect to our Occupancy, Net Package ADR, Net Package RevPAR, Net Package Revenue, Net Non-package Revenue, Owned Net Revenue, Owned Resort EBITDA and Owned Resort EBITDA Margin for our Jamaica segment for the three months ended September 30, 2022 and 2021 for the total segment portfolio:


	Three Months Ended September 30,						Increase / Decrease
	2022			2021			Change			% Change
Occupancy	75.5		%	57.7		%	17.8		pts	30.8	%
Net Package ADR	$	365.65		$	314.62		$	51.03		16.2	%
Net Package RevPAR	$	276.05		$	181.39		$	94.66		52.2	%
	($ in thousands)
Net Package Revenue	$	36,266		$	23,831		$	12,435		52.2	%
Net Non-package Revenue	7,493			5,671			1,822			32.1	%
Owned Net Revenue	43,759			29,502			14,257			48.3	%
Owned Resort EBITDA	$	11,267		$	5,632		$	5,635		100.1	%
Owned Resort EBITDA Margin	25.7		%	19.1		%	6.6		pts	34.6	%

Segment Owned Net Revenue. Our Owned Net Revenue for the three months ended September 30, 2022 increased $14.3 million, or 48.3%, compared to the three months ended September 30, 2021. The increase was due to the following:

•Occupancy rate increasing 17.8 percentage points compared to the three months ended September 30, 2021, driven by an increase in demand from United States, European, Canadian and South American sourced guests;

•a 16.2% increase in Net Package ADR as a result of a higher MICE group contribution to our guest mix, the ongoing leisure travel recovery, and pricing discipline to coincide with investments in guest satisfaction at our resorts; and

•continued strength in Net Non-package Revenue driven by improvements in our product offering across our resorts.

Compared to the same period in 2019, for our current comparable portfolio in Jamaica, which excludes the Jewel Dunn’s River Beach Resort & Spa and Jewel Runaway Bay Beach Resort & Waterpark, Comparable Net Package ADR for the three months ended September 30, 2022 increased by $83.20, or 29.5%.

Segment Owned Resort EBITDA. Our Owned Resort EBITDA for the three months ended September 30, 2022 increased $5.6 million, or 100.1%, compared to the three months ended September 30, 2021. The increase was a result of the on-going revenue recovery, particularly the strong Net Package ADR increases and cost control practices which partially offset occupancy-related increases in resort operating expenses, including higher food costs, compared to the three months ended September 30, 2021.

Compared to the same period in 2019, for our current comparable portfolio in Jamaica, which excludes the Jewel Dunn’s River Beach Resort & Spa and Jewel Runaway Bay Beach Resort & Waterpark, Comparable Owned Resort EBITDA for the three months ended September 30, 2022 increased by $3.6 million, or 48.8%.

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Segment Results

Nine Months Ended September 30, 2022 and 2021

We evaluate our business segment operating performance using segment Owned Net Revenue and segment Owned Resort EBITDA. The following tables summarize segment Owned Net Revenue and segment Owned Resort EBITDA for the nine months ended September 30, 2022 and 2021 ($ in thousands):


	Nine Months Ended September 30,				Increase / Decrease
	2022		2021		Change		% Change
Owned Net Revenue
Yucatán Peninsula	$	204,200	$	129,879	$	74,321	57.2	%
Pacific Coast	92,901		51,117		41,784		81.7	%
Dominican Republic	189,714		97,563		92,151		94.5	%
Jamaica	131,781		65,358		66,423		101.6	%
Segment Owned Net Revenue	618,596		343,917		274,679		79.9	%
Other	1,878		726		1,152		158.7	%
Management Fee Revenue	3,186		1,469		1,717		116.9	%
Total Net Revenue	$	623,660	$	346,112	$	277,548	80.2	%


	Nine Months Ended September 30,				Increase / Decrease
	2022		2021		Change		% Change
Owned Resort EBITDA
Yucatán Peninsula	$	77,049	$	37,714	$	39,335	104.3	%
Pacific Coast	36,966		13,992		22,974		164.2	%
Dominican Republic	63,138		20,859		42,279		202.7	%
Jamaica	40,567		6,924		33,643		485.9	%
Segment Owned Resort EBITDA	217,720		79,489		138,231		173.9	%
Other corporate (1)	(37,385)		(28,778)		(8,607)		(29.9)	%
Management Fee Revenue	3,186		1,469		1,717		116.9	%
Total Adjusted EBITDA	$	183,521	$	52,180	$	131,341	251.7	%

________

(1) Other corporate includes $1.3 million of revenue generated by The Playa Collection for the nine months ended September 30, 2022.

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Yucatán Peninsula

The following tables set forth information with respect to our Occupancy, Net Package ADR, Net Package RevPAR, Net Package Revenue, Net Non-package Revenue, Owned Net Revenue, Owned Resort EBITDA and Owned Resort EBITDA Margin for our Yucatán Peninsula segment for the nine months ended September 30, 2022 and 2021 for the total segment portfolio and comparable segment portfolio:

Total Portfolio


	Nine Months Ended September 30,						Increase / Decrease
	2022			2021			Change			% Change
Occupancy	74.6		%	52.2		%	22.4		pts	42.9	%
Net Package ADR	$	404.05		$	320.69		$	83.36		26.0	%
Net Package RevPAR	$	301.62		$	167.54		$	134.08		80.0	%
	($ in thousands)
Net Package Revenue	$	175,058		$	107,764		$	67,294		62.4	%
Net Non-package Revenue	29,142			22,115			7,027			31.8	%
Owned Net Revenue	204,200			129,879			74,321			57.2	%
Owned Resort EBITDA	$	77,049		$	37,714		$	39,335		104.3	%
Owned Resort EBITDA Margin	37.7		%	29.0		%	8.7		pts	30.0	%

Comparable Portfolio


	Nine Months Ended September 30,						Increase / Decrease
	2022			2021			Change			% Change
Occupancy	74.6		%	57.2		%	17.4		pts	30.4	%
Net Package ADR	$	404.05		$	322.79		$	81.26		25.2	%
Net Package RevPAR	$	301.62		$	184.59		$	117.03		63.4	%
	($ in thousands)
Net Package Revenue	$	175,058		$	107,133		$	67,925		63.4	%
Net Non-package Revenue	29,140			21,563			7,577			35.1	%
Owned Net Revenue	204,198			128,696			75,502			58.7	%
Owned Resort EBITDA	$	76,864		$	38,956		$	37,908		97.3	%
Owned Resort EBITDA Margin	37.6		%	30.3		%	7.3		pts	24.1	%

Segment Comparable Owned Net Revenue. Our Comparable Owned Net Revenue for the nine months ended September 30, 2022 increased $75.5 million, or 58.7%, compared to the nine months ended September 30, 2021. The increase was due to the following:

•Occupancy rate increasing 17.4 percentage points compared to the nine months ended September 30, 2021, driven by an increase in demand from guests sourced across all our major geographies;

•a 25.2% increase in Comparable Net Package ADR as a result of a higher MICE group contribution to our guest mix, the ongoing leisure travel recovery, and pricing discipline to coincide with investments in guest satisfaction at our resorts;

•continued strength in Net Non-package Revenue driven by improvements in our product offering across our resorts; and

•an incremental $12.44 favorable Net Package ADR impact compared to the nine months ended September 30, 2021 as a result of the change in billing methodology of an OTA, which requires Playa to present this revenue gross of commissions under U.S. GAAP. Excluding this adjustment, Comparable Net Package ADR would have been $391.61.

Compared to the same period in 2019, for our current comparable portfolio of resorts in the Yucatán, which excludes the Dreams Puerto Aventuras and Capri Resort, Comparable Net Package ADR for the nine months ended September 30, 2022 increased by $122.38, or 43.5%. Excluding the aforementioned adjustment for the OTA billing methodology, the increase would have been $101.48, or 36.0%.

Segment Comparable Owned Resort EBITDA. Our Comparable Owned Resort EBITDA for the nine months ended September 30, 2022 increased $37.9 million, or 97.3%, compared to the nine months ended September 30, 2021. The increase was a result of the on-going revenue recovery, particularly the strong Comparable Net Package ADR increases and cost control practices which partially

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offset occupancy-related increases in resort operating expenses, including higher food costs, compared to the nine months ended September 30, 2021.

Compared to the same period in 2019, for our current comparable portfolio of resorts in the Yucatán, which excludes the Dreams Puerto Aventuras and Capri Resort, Comparable Owned Resort EBITDA for the nine months ended September 30, 2022 increased by $18.6 million, or 31.9%.

Pacific Coast

The following tables set forth information with respect to our Occupancy, Net Package ADR, Net Package RevPAR, Net Package Revenue, Net Non-package Revenue, Owned Net Revenue, Owned Resort EBITDA and Owned Resort EBITDA Margin for our Pacific Coast segment for the nine months ended September 30, 2022 and 2021 for the total segment portfolio:


	Nine Months Ended September 30,						Increase / Decrease
	2022			2021			Change			% Change
Occupancy	71.4		%	49.6		%	21.8		pts	44.0	%
Net Package ADR	$	449.66		$	347.61		$	102.05		29.4	%
Net Package RevPAR	$	321.25		$	172.36		$	148.89		86.4	%
	($ in thousands)
Net Package Revenue	$	81,211		$	43,572		$	37,639		86.4	%
Net Non-package Revenue	11,690			7,545			4,145			54.9	%
Owned Net Revenue	92,901			51,117			41,784			81.7	%
Owned Resort EBITDA	$	36,966		$	13,992		$	22,974		164.2	%
Owned Resort EBITDA Margin	39.8		%	27.4		%	12.4		pts	45.3	%

Segment Owned Net Revenue. Our Owned Net Revenue for the nine months ended September 30, 2022 increased $41.8 million, or 81.7%, compared to the nine months ended September 30, 2021. The increase was due to the following:

•Occupancy rate increasing 21.8 percentage points compared to the nine months ended September 30, 2021, driven by an increase in demand from United States and Canadian sourced guests, and group room nights which were up 10.9% versus the same period in 2019;

•a 29.4% increase in Net Package ADR as a result of a higher MICE group contribution to our guest mix, the ongoing leisure travel recovery, and pricing discipline to coincide with investments in guest satisfaction at our resorts;

•continued strength in Net Non-package Revenue driven by improvements in our product offering across our resorts; and

•an incremental $10.02 favorable Net Package ADR impact compared to the nine months ended September 30, 2021 as a result of the change in billing methodology of an OTA, which requires Playa to present this revenue gross of commissions under U.S. GAAP. Excluding this adjustment, Net Package ADR would have been $439.63.

Compared to the same period in 2019, Net Package ADR for the nine months ended September 30, 2022 increased by $156.93, or 53.6%. Excluding the aforementioned adjustment for the OTA billing methodology, the increase would have been $137.77, or 47.1%.

Segment Owned Resort EBITDA. Our Owned Resort EBITDA for the nine months ended September 30, 2022 increased $23.0 million, or 164.2%, compared to the nine months ended September 30, 2021. The increase was a result of the on-going revenue recovery, particularly the strong Net Package ADR increases and cost control practices which partially offset occupancy-related increases in resort operating expenses, including higher food costs, compared to the nine months ended September 30, 2021.

Compared to the same period in 2019, Owned Resort EBITDA for the nine months ended September 30, 2022 increased by $11.5 million, or 45.2%.

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Dominican Republic

The following tables set forth information with respect to our Occupancy, Net Package ADR, Net Package RevPAR, Net Package Revenue, Net Non-package Revenue, Owned Net Revenue, Owned Resort EBITDA and Owned Resort EBITDA Margin for our Dominican Republic segment for the nine months ended September 30, 2022 and 2021 for the total segment portfolio and comparable segment portfolio:

Total Portfolio


	Nine Months Ended September 30,						Increase / Decrease
	2022			2021			Change			% Change
Occupancy	74.2		%	42.2		%	32.0		pts	75.8	%
Net Package ADR	$	295.01		$	263.98		$	31.03		11.8	%
Net Package RevPAR	$	218.78		$	111.42		$	107.36		96.4	%
	($ in thousands)
Net Package Revenue	$	157,918		$	80,426		$	77,492		96.4	%
Net Non-package Revenue	31,796			17,137			14,659			85.5	%
Owned Net Revenue	189,714			97,563			92,151			94.5	%
Owned Resort EBITDA	$	63,138		$	20,859		$	42,279		202.7	%
Owned Resort EBITDA Margin	33.3		%	21.4		%	11.9		pts	55.6	%

Comparable Portfolio


	Nine Months Ended September 30,						Increase / Decrease
	2022			2021			Change			% Change
Occupancy	79.0		%	38.0		%	41.0		pts	107.9	%
Net Package ADR	$	169.15		$	144.88		$	24.27		16.8	%
Net Package RevPAR	$	133.56		$	55.03		$	78.53		142.7	%
	($ in thousands)
Net Package Revenue	$	40,837		$	16,825		$	24,012		142.7	%
Net Non-package Revenue	9,872			4,750			5,122			107.8	%
Owned Net Revenue	50,709			21,575			29,134			135.0	%
Owned Resort EBITDA	$	11,065		$	(319)		$	11,384		3,568.7	%
Owned Resort EBITDA Margin	21.8		%	(1.5)		%	23.3		pts	1,553.3	%

Segment Comparable Owned Net Revenue. Our Comparable Owned Net Revenue for the nine months ended September 30, 2022 increased $29.1 million, or 135.0%, compared to the nine months ended September 30, 2021. The increase was due to the following:

•Occupancy rate increasing 41.0 percentage points compared to the nine months ended September 30, 2021, driven by an increase in demand from United States, European and Canadian sourced guests;

•a 16.8% increase in Net Package ADR as a result of a higher MICE group contribution to our guest mix, the ongoing leisure travel recovery, and pricing discipline to coincide with investments in guest satisfaction at our resorts,

•continued strength in Net Non-package Revenue driven by improvements in our product offering across our resorts.

Segment Comparable Owned Resort EBITDA. Our Comparable Owned Resort EBITDA for the nine months ended September 30, 2022 increased $11.4 million, or 3568.7%, compared to the nine months ended September 30, 2021. The increase was a result of the on-going revenue recovery, particularly the strong Net Package ADR increases and cost control practices which partially offset occupancy-related increases in resort operating expenses, including higher food costs, compared to the nine months ended September 30, 2021.

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Jamaica

The following table sets forth information with respect to our Occupancy, Net Package ADR, Net Package RevPAR, Net Package Revenue, Net Non-package Revenue, Owned Net Revenue, Owned Resort EBITDA and Owned Resort EBITDA Margin for our Jamaica segment for the nine months ended September 30, 2022 and 2021 for the total segment portfolio:


	Nine Months Ended September 30,						Increase / Decrease
	2022			2021			Change			% Change
Occupancy	73.1		%	44.4		%	28.7		pts	64.6	%
Net Package ADR	$	377.83		$	304.13		$	73.70		24.2	%
Net Package RevPAR	$	276.29		$	135.06		$	141.23		104.6	%
	($ in thousands)
Net Package Revenue	$	107,710		$	52,652		$	55,058		104.6	%
Net Non-package Revenue	24,071			12,706			11,365			89.4	%
Owned Net Revenue	131,781			65,358			66,423			101.6	%
Owned Resort EBITDA	$	40,567		$	6,924		$	33,643		485.9	%
Owned Resort EBITDA Margin	30.8		%	10.6		%	20.2		pts	190.6	%

Segment Owned Net Revenue. Our Owned Net Revenue for the nine months ended September 30, 2022 increased $66.4 million, or 101.6%, compared to the nine months ended September 30, 2021. The increase was due to the following:

•Occupancy rate increasing 28.7 percentage points compared to the nine months ended September 30, 2021, driven by an increase in demand from United States, European, Canadian and South American sourced guests and MICE groups, and local governments easing COVID-19 related restrictions during the second quarter of 2022. The recovery in Jamaica has continued to improve but was depressed as this segment suffered the greatest impact from the Omicron variant with disrupted bookings in January as a result of more stringent COVID-19 related travel restrictions;

•a 24.2% increase in Net Package ADR as a result of a higher MICE group contribution to our guest mix, the ongoing leisure travel recovery, and pricing discipline to coincide with investments in guest satisfaction at our resorts; and

•continued strength in Net Non-package Revenue driven by improvements in our product offering across our resorts.

Compared to the same period in 2019, for our current comparable portfolio in Jamaica, which excludes the Jewel Dunn’s River Beach Resort & Spa and Jewel Runaway Bay Beach Resort & Waterpark, Comparable Net Package ADR for the nine months ended September 30, 2022 increased by $49.87, or 15.2%.

Segment Owned Resort EBITDA. Our Owned Resort EBITDA for the nine months ended September 30, 2022 increased $33.6 million, or 485.9%, compared to the nine months ended September 30, 2021. The increase was a result of the on-going revenue recovery, particularly the strong Net Package ADR increases and cost control practices which partially offset occupancy-related increases in resort operating expenses, including higher food costs, compared to the nine months ended September 30, 2021.

Compared to the same period in 2019, for our current comparable portfolio in Jamaica, which excludes the Jewel Dunn’s River Beach Resort & Spa and Jewel Runaway Bay Beach Resort & Waterpark, Comparable Owned Resort EBITDA for the nine months ended September 30, 2022 increased by $1.0 million, or 2.6%.

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Non-U.S. GAAP Financial Measures

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

The following is a reconciliation of our U.S. GAAP net (loss) income to EBITDA, Adjusted EBITDA, Owned Resort EBITDA and Comparable Owned Resort EBITDA for the three and nine months ended September 30, 2022 and 2021 ($ in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Net (loss) income	$	(2,229)	$	(12,371)	$	71,043	$	(89,884)
Interest expense	17,832		19,047		39,892		56,164
Income tax provision (benefit)	268		1,360		3,168		(13,043)
Depreciation and amortization	19,502		19,927		58,630		60,827
EBITDA	35,373		27,963		172,733		14,064
Other (income) expense (a)	(2,608)		(587)		(7,850)		747
Share-based compensation	2,777		3,270		9,043		9,899

Transaction expense (b)	582		210		1,384		928
Severance expense	—		—		—		1,287
Other tax expense (c)	—		67		—		228
Contract termination fees	—		400		—		400
Impairment loss	—		—		—		24,011
Loss (gain) on sale of assets	2		(4)		11		644
Repairs from hurricanes and tropical storms (d)	8,850		435		8,850		435
Non-service cost components of net periodic (cost) benefit	(102)		16		(650)		(463)
Adjusted EBITDA	44,874		31,770		183,521		52,180
Other corporate (e)(f)	13,322		9,749		37,385		28,778
Management fee income	(786)		(673)		(3,186)		(1,469)
Owned Resort EBITDA	57,410		40,846		217,720		79,489
Less: Non-comparable Owned Resort EBITDA	11,304		10,471		52,258		19,936
Comparable Owned Resort EBITDA(g)	$	46,106	$	30,375	$	165,462	$	59,553

________

(a) Represents changes in foreign exchange and other miscellaneous expenses or income.

(b) Represents expenses incurred in connection with corporate initiatives, such as: system implementations, debt refinancing costs; other capital raising efforts; and strategic initiatives, such as the launch of a new resort or possible expansion into new markets.

(c) Relates primarily to a Dominican Republic asset tax, which is an alternative tax to income tax in the Dominican Republic. We eliminate this expense from Adjusted EBITDA because it is substantially similar to the income tax provision or benefit we eliminate from EBITDA.

(d) For the three and nine months ended September 30, 2022, represents expected repair and clean-up expenses and write offs of property and equipment and inventory related to Hurricane Fiona, which are not expected to be offset by property damage insurance proceeds.

(e) For the three months ended September 30, 2022 and 2021, represents corporate salaries and benefits of $8.8 million for 2022 and $6.2 million for 2021, professional fees of $2.5 million for 2022 and $1.8 million for 2021, corporate rent and insurance of $1.0 million for 2022 and $1.0 million for 2021, and corporate travel, software licenses, board fees and other miscellaneous corporate expenses of $1.4 million for 2022 and $0.7 million for 2021, and includes $0.6 million of revenue generated by The Playa Collection in 2022.

(f) For the nine months ended September 30, 2022 and 2021, represents corporate salaries and benefits of $25.9 million for 2022 and $19.2 million for 2021, professional fees of $6.7 million for 2022 and $5.4 million for 2021, corporate rent and insurance of $3.0 million for 2022 and $2.6 million for 2021, and corporate travel, software licenses, board fees and other miscellaneous corporate expenses of $2.5 million for 2022 and $1.6 million for 2021, and includes $1.3 million of revenue generated by The Playa Collection in 2022.

(g) Comparable resorts for the three months ended September 30, 2022 exclude the Hilton La Romana All-Inclusive Resort and Hyatt Ziva and Hyatt Zilara Cap Cana, which were closed the last twelve days of the third quarter to expedite necessary clean up and repair work as a result of Hurricane Fiona. Comparable resorts for the nine months ended September 30, 2022 exclude the Hilton La Romana All-Inclusive Resort and Hyatt Ziva and Hyatt Zilara Cap Cana as well as the Dreams Puerto Aventuras, which was sold in February 2021, and Capri Resort, which was sold in June 2021.

Seasonality

The seasonality of the lodging industry and the location of our resorts in Mexico, Jamaica and Dominican Republic have historically resulted in the greatest demand for our resorts occurring between mid-December and April of each year, yielding higher occupancy levels and package rates during this period. This seasonality in demand has resulted in predictable fluctuations in revenue, results of operations, and liquidity, which are consistently higher during the first quarter of each year than in successive quarters.

However, the COVID-19 pandemic altered this seasonal trend in 2021 and Net Package ADR was progressively stronger during the second, third and fourth quarters of 2021 than it was in the first quarter of 2021. We have seen a return to pre-COVID-19 seasonality trends thus far in 2022.

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Inflation

We have experienced an elevated level of inflationary pressure on our direct resort expenses thus far in 2022. The higher expense inflation has primarily affected our labor, food and beverage and utility costs. We expect the elevated inflation rate will likely continue through the remainder of 2022 at a similar rate. While we, like most operators of lodging properties, have the ability to adjust room rates to reflect the effects of inflation, competitive pricing pressures and the continuing effects of the COVID-19 pandemic may limit our ability to raise room rates to fully offset inflationary cost increases.

Liquidity and Capital Resources

Our net cash provided by operating activities for the nine months ended September 30, 2022 was $136.7 million, representing a significant increase over the nine months ended September 30, 2021 as our business continues to recover from the impacts of the COVID-19 pandemic. We believe that our sources of cash, which consist of available cash and cash from operations, together with the available borrowing capacity under our Revolving Credit Facility and our access to the capital markets, will be adequate to meet our cash requirements, including our contractual obligations, over the next twelve months and beyond.

Sources of Cash

As of September 30, 2022, we had $371.7 million of available cash, up from $270.1 million as of December 31, 2021. The increase in available cash was primarily due to improved cash flow from operations across our portfolio due to the ongoing recovery from the COVID-19 pandemic. We also benefited from increased vaccination levels, easing of government travel restrictions, and pent-up customer demand for leisure travel, as well as our strategic decision to focus on pricing discipline to coincide with investments in guest satisfaction at our resorts.

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, our restricted cash balance related to our Property Loan of $23.5 million as of December 31, 2021 was released into unrestricted cash during the second quarter of 2022 due to the strong operating performance of the Hyatt Ziva and Hyatt Zilara Cap Cana and Hilton Rose Hall Resort & Spa properties. As of October 31, 2022, we had approximately $347.0 million of available cash and also had $68.0 million available on our Revolving Credit Facility, which does not mature until January 2024.

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 2022 and thereafter consist of (i) contractually obligated expenditures, including payments of principal and interest; (ii) other essential expenditures, including operating expenses and maintenance of our resorts; and (iii) opportunistic expenditures, including possible property developments, expansions, renovations, repositioning and rebranding projects, potential acquisitions, the repayment of indebtedness and discretionary repurchases of our securities.

As of September 30, 2022, 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, other than the change in mandatory Term Loan repayments as a result of the sales of our resorts in 2021 and 2020. As of September 30, 2022, we do not expect to make any additional repayments on our outstanding Term Loan during the remainder of 2022 related to the sale of the Capri Resort in June 2021, as the remaining net proceeds from the sale after deducting incremental expenses and capital expenditures are expected to be $0 million. We expect to repay $23.9 million of our outstanding Term Loan in February 2023 as a result of the proceeds we received from the sale of the Dreams Puerto Aventuras in February 2021. As of September 30, 2022, we had $21.0 million of scheduled contractual obligations remaining in 2022 which we expect to pay with available cash.

We are continuing to monitor our liquidity and we may pursue additional sources of liquidity as needed. The availability of additional liquidity options will depend on the economic and financial environment, our credit, our historical and projected financial and operating performance and continued compliance with financial covenants. If operating conditions do not continue to improve, whether as a result of the current pandemic or a resurgence thereof or for other reasons, such as inflation or global economic impacts related to the conflict between Ukraine and Russia, we may not be able to maintain our current liquidity position or access additional sources of liquidity at acceptable terms or at all.

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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.

Recent Transactions Affecting Our Liquidity and Capital Resources

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


	Nine Months Ended September 30,
	2022		2021
Net cash provided by (used in) operating activities	$	136,742	$	(14,034)
Net cash (used in) provided by investing activities	$	(21,743)	$	76,965
Net cash (used in) provided by financing activities	$	(36,888)	$	20,292
Increase in cash, cash equivalents, and restricted cash	$	78,111	$	83,223

Cash Flows from Operating Activities

Our net cash from operating activities is generated primarily from operating income of our resorts. For the nine months ended September 30, 2022, our net cash provided by operating activities was $136.7 million. For the nine months ended September 30, 2021, our net cash used in operating activities was $14.0 million.

Cash Flows from Investing Activities

For the nine months ended September 30, 2022, our net cash used in investing activities was $21.7 million. For the nine months ended September 30, 2021, our net cash provided by investing activities was $77.0 million.

Activity for the nine months ended September 30, 2022:

•Purchases of property and equipment of $21.6 million, primarily for maintenance related expenditures.

Activity for the nine months ended September 30, 2021:

•Net proceeds from the sale of assets, primarily consisting of the Dreams Puerto Aventuras and Capri Resort, of $88.9 million; and

•Purchases of property and equipment of $11.7 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. We have approval rights over capital expenditures made by our third-party manager as part of the annual budget process for each property they manage. 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.

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Cash Flows from Financing Activities

Our net cash used in financing activities was $36.9 million for the nine months ended September 30, 2022 compared to $20.3 million of cash provided by financing activities for the nine months ended September 30, 2021.

Activity for the nine months ended September 30, 2022:

•Principal payments on our Term Loan of $32.4 million, which includes a $24.9 million mandatory repayment as a result of the sale of the Jewel Dunn’s River Beach Resort & Spa and Jewel Runaway Bay Beach Resort & Waterpark in May 2020 as well as our quarterly principal payments; and

•Repurchases of ordinary shares of $4.2 million.

Activity for the nine months ended September 30, 2021:

•Net proceeds from our January 2021 equity issuance of $137.7 million;

•Principal payments on our Term Loan of $32.0 million, which includes a $24.4 million mandatory repayment as a result of the sale of Capri Resort in June 2021 as well as our quarterly principal payments; and

•Repayments on our Revolving Credit Facility of $84.7 million.

Critical Accounting Policies and Estimates

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

We have discussed those estimates that we believe are critical and require the use of complex judgment in their application in our Consolidated Financial Statements included within our Annual Report on Form 10-K for the year ended December 31, 2021, filed with the SEC on February 24, 2022. 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 an interest rate swap (see Note 12 of our Condensed Consolidated Financial Statements) to manage exposure to this risk. As of September 30, 2022, 12% of our outstanding indebtedness bore interest at floating rates and 88% bore interest at fixed rates.

•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 $1.5 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 $1.5 million annually, assuming the balance outstanding under our Revolving Credit Facility remained at $0 million and the current LIBOR rate on our floating rate debt could not fall below the existing 1.0% LIBOR floor.

Foreign Currency Risk

We are exposed to exchange rate fluctuations because all of our resort investments are based in locations where the local currency is not the U.S. dollar, which is our reporting currency. For the nine months ended September 30, 2022 approximately 2.4% of our revenues were denominated in currencies other than the U.S. dollar. As a result, our revenues reported on our Condensed Consolidated Statements of Operations are affected by movements in exchange rates.

Approximately 75.2% of our resort-level operating expenses for the nine months ended September 30, 2022 were denominated in the local currencies in the countries in which we operate. As a result, our operating expenses reported on our Condensed Consolidated Statements of Operations are affected by movements in exchange rates. The foreign currencies in which our expenses are primarily denominated are the Mexican Peso, Dominican Peso and the Jamaican Dollar.

•The effect of an immediate 5% adverse change in foreign exchange rates on Mexican Peso-denominated expenses at September 30, 2022 would have impacted our Owned Resort EBITDA by approximately $6.9 million on a year-to-date basis.

•The effect of an immediate 5% adverse change in foreign exchange rates on Dominican Peso-denominated expenses at September 30, 2022 would have impacted our Owned Resort EBITDA by approximately $5.2 million on a year-to-date basis.

•The effect of an immediate 5% adverse change in foreign exchange rates on Jamaican Dollar-denominated expenses at September 30, 2022 would have impacted our Owned Resort EBITDA by approximately $3.8 million on a year-to-date basis.

At this time, we do not have any outstanding derivatives or other financial instruments designed to hedge our foreign currency exchange risk.

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Item 4. Controls and Procedures.

Disclosure Controls and Procedures.

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

Changes in Internal Control Over Financial Reporting.

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

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings.

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

Item 1A. Risk Factors.

We are supplementing the risk factors described under “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2021 with the additional risk factor set forth below, which supplements, and to the extent inconsistent, supersedes such risk factors.

The ongoing conflict between Russia and Ukraine has and may continue to negatively impact macro-economic conditions which could affect consumer spending adversely and as a result, our business, results of operations, cash flows or financial condition.

The current conflict between Russia and Ukraine has not had a direct or material impact on the Company. However, the conflict has negatively impacted global macro-economic conditions and a prolonged conflict, the potential expansion of the conflict into other European countries, or the involvement of the United States or other countries where we source our guests could have more significant impacts on macro-economic conditions which could adversely affect consumer spending and consequently, our operations. Further, the rising price of utilities, including increases in fuel prices, have and may continue to raise the overall vacation cost to our guests and may adversely affect demand for our vacation packages.

Additional risks to our business relating to the Russia and Ukraine conflict include potential interruptions in global supply chains and the availability of items essential to our resort operations, the heightened possibility of cyberattacks, and the potential for travel restrictions affecting our guests' ability to access our resort destinations.

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 during the three months ended September 30, 2022:


	Total number of shares purchased	Average price paid per share(1)		Total number of shares purchased as part of publicly announced program(2)	Maximum approximate dollar value of shares that may yet be purchased under the program ($ in thousands)(2)
July 1, 2022 to July 31, 2022	—	$	—	—	$	83,492
August 1, 2022 to August 31, 2022	—	—		—	83,492
September 1, 2022 to September 30, 2022	973,931	5.93		973,931	94,227
Total	973,931	$	5.93	973,931	$	94,227

________

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

(2) In December 2018, our Board established a $100.0 million share repurchase program, pursuant to which we may repurchase our outstanding ordinary shares as market conditions and our liquidity warrant. Our Board reauthorized and renewed the repurchase authorization in September 2022 so that there was again $100.0 million available under the program. 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.

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Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

None.

Item 6. Exhibits.

The following exhibits are filed as part of this Form 10-Q:


Exhibit Number						Exhibit Description
3.1						Board Rules for Playa Hotels & Resorts N.V.

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 September 30, 2022, 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 (Loss) (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)

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Playa Hotels & Resorts N.V.

Date:

November 3, 2022

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:

November 3, 2022

By:

/s/ Ryan Hymel

Ryan Hymel

Chief Financial Officer

(Principal Financial Officer)

Playa Hotels & Resorts - 10-Q quarterly report FY2022 Q3

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