Playa fills few Jamaican hotel rooms despite discounts
Published:Wednesday | November 11, 2020 | 12:06 AM
Playa Hotels & Resorts, which operates hotels in the region, says less than a fifth of its rooms in Jamaica were occupied during summer.
The outlook for 2021 remains unknown as it depends on relaxed virus testings and increased airlift, the company said.
“The underlying demand is there, but airlift is one of the biggest gating issues. Airlift, and then obviously the restrictions that we’ve discussed ad nauseam in Jamaica. And so it just makes it too hard to predict,” said Ryan Hymel, chief financial officer, in response to an analyst query during an investor conference call last week.
Hymel said that Jamaica before the onset of the pandemic had been on track to become the group’s strongest market.
“But the momentum stalled out once COVID-19 testing requirements were put into place in Jamaica in early July, severely disadvantaging this destination relative to our other locations,” said Hymel, who added that locally sourced business helped to drive occupancy levels for its owned and managed properties in the island, which are the Jewel, Hilton and Hyatt brands.
“It has weighed on our average daily rate and mix of rooms sold. We’re starting to see some additional airlift into Montego Bay in October, which has increased occupancy levels at the Hyatt Rose Hall in October, but we would like to see the COVID testing requirements relaxed or removed entirely to increase international demand. Until that happens, we do not expect demand to improve in this destination. On the competitive front, we estimate that roughly half the room inventory in Montego Bay remains closed,” Hymel added.
The hotel group operates in Jamaica, Dominican Republic and Mexico. The local operations earned US$4.8 million between July and the end of September, which was 83 per cent less than the US$221 million recorded in the year-prior period.
“The decreases listed below are a result of the temporary suspension or reduced occupancy at all of our resorts in the third quarter in response to the COVID-19 pandemic,” stated the company in explaining the vast decline.
The Jamaica operations were also the only territory that discounted rooms while operations in Mexico and Dominican Republic increased rates, Playa disclosed in its quarterly filings.
Overall, the all-inclusive hotel group continues to ramp up its operations following the two-month shutdown of all its hotels in late March, with most now reopened. The operations in Jamaica were restarted in July.
Between July and September, the operations in Yucatán Peninsula in Mexico held the highest occupancy at 19 per cent, followed by Jamaica at 16 per cent and Dominican Republic at 3.0 per cent. A year ago, occupancy in Yucatán, Jamaica and Dominican Republic stood at 85 per cent, 78 per cent and 55 per cent, respectively.
Guests over the period paid US$237 per night on average for an all-inclusive package, down seven per cent from US$255 paid a year earlier, according to Playa’s disclosures on average daily rates or ADR.
“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,” the financial report stated.
Rates in the Pacific Coast of Mexico jumped 145 per cent to US$579 from US$236. Dominican Republic increased 71 per cent to US$268 from US$156 in 2019. Yucatán Peninsula in Mexico increased 28 per cent to US$288 from US$225 in 2019.
Playa Hotels earned US$29 million in total revenue during the September quarter, down from compared to US$133 million in 2019. Net losses increased to US$79 million from US$30.5 million. Sagicor Group and its related entities hold a minority stake in Playa and two seats on its board.