A travel warning issued against Jamaica resulted in the cancellation of some vacation plans, but not enough to slow business for resorts operated locally by Playa Hotels & Resorts, which generated record profit for the group.
“[This] marks the highest second-quarter occupancy rate and owned-resort EBITDA margin we have ever achieved in Jamaica, reinforcing our belief that nothing has fundamentally changed for this market, compared to the pre-pandemic period when it was our best-performing segment,” said Playa President & CEO Bruce Wardinski.
Playa’s resorts in Jamaica hit a record US$61.3 million ($9.5 billion) in revenue in the June quarter, up 30 per cent year-on-year. The Jamaican properties, Hyatt Ziva Rose Hall, Hyatt Zilara Rose Hall, Hilton Rose Hall, Jewel Paradise Cove and Jewel Grande, generated quarterly EBITDA, or operating profit, of US$21.9 million in the April to June period, up from US$12.1 million a year earlier.
“Jamaica led the way year-over-year for average daily rates, occupancy growth and margin improvement, despite the temporary impact of the travel warning,” said Playa Chief Financial Officer Ryan Hymel, during an earnings call to discuss the financial results.
The travel advisory issued in May by the United States – Jamaica’s largest source market for tourists – ranked the country at ‘Level 3’ in an alert for Americans to “reconsider travel to Jamaica due to crime”.
“Local police often do not respond effectively to serious criminal incidents. When arrests are made, cases are infrequently prosecuted to a conclusive sentence,” the US State Department said in the notice.
Hymel said the advisory temporarily impacted bookings and weighed on Playa’s June results.
“These types of warnings are not unusual nor unheard of in Jamaica. However, this one picked up more media coverage than we typically see and led to some disruption in bookings and cancellations, particularly in the group segment,” he said.
The Level 3 alert is still in effect, but Playa’s hotel group’s outlook on business is strong due to the increased airlift and ongoing expansion of Sangster International Airport, the country’s largest gateway for tourist traffic.
“The ongoing recovery, in addition to the significant investment being made to improve the Montego Bay airport, which is expected to be completed in the near future, bode well for the Jamaican segment for the second half of 2023 and beyond,” said Hymel.
He added that the forecasted flight seats into Montego Bay are expected to grow 10 per cent year-over-year in the second half of 2023, which leads other destinations.
Playa manages a portfolio of 26 resorts located in Jamaica, Dominican Republic and Mexico along its Yucatan Peninsula and Pacific Coast.
Over six months, the Yucatan Peninsula generated the highest EBITDA at US$62.2 million, followed by Jamaica at US$49 million, Dominican Republic at US$48.8 million, and the Pacific Coast at US$32.4 million.
Earnings from Jamaica are now above DR, but that was not the case last year when the omicron variant of the COVID-19 virus led to the imposition of travel restrictions.
“As I mentioned, fundamental strength during the quarter was led by our Jamaican segment, as this market is a little behind on the recovery curve, compared to our other segments due to the longer-lived COVID-related travel restrictions being in place until April of 2022,” Wardinski reiterated.
Jamaica’s occupancy rate averaged 82.5 per cent during the half-year, compared to 72 per cent a year earlier. It was also the highest in the group, with occupancy rates in the Yucatan averaging 80.3 per cent, Pacific 75.5 per cent, and Dominican Republic 59 per cent.
The Pacific Coast resorts were filled at an average rate of US$542 per night, the Yucatan at US$499, Jamaica US$478, and Dominican Republic US$409.
The entire Playa group generated operating profit of US$63.4 million at half-year, down from US$73.3 million in the 2022 period.