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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 March 31, 2024

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

COMMISSION FILE NO. 1-38012
 Playa Hotels & Resorts N.V.
(Exact name of registrant as specified in its charter)
TheNetherlands 98-1346104
       (State or other jurisdiction of incorporation or organization) (IRS Employer Identification Number)
Nieuwezijds Voorburgwal 104 
1012 SGAmsterdam,
theNetherlandsNot Applicable
 (Address of Principal Executive Offices) (Zip Code)
+31 6 82 55 84 30
(Registrant’s Telephone Number, Including Area Code)
 
Securities registered pursuant to Section 12(b) of the Act:
Title of each ClassTrading Symbol(s)Name of Each Exchange on Which Registered
Ordinary Shares, €0.10 par valuePLYAThe Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past ninety (90) days.    Yes    No  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes        No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer
Non-accelerated filer  Smaller reporting company         
Emerging growth company

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

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

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



Playa Hotels & Resorts N.V.
TABLE OF CONTENTS
   
Page
Item 1.
 
 
 
 
Item 2.
Item 3.
Item 4.
Item 1.
Item 1A.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.



PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Playa Hotels & Resorts N.V.
Condensed Consolidated Balance Sheets
($ in thousands, except share data)
(unaudited)
As of March 31,As of December 31,
20242023
ASSETS
Cash and cash equivalents$285,342 $272,520 
Trade and other receivables, net82,222 74,762 
Insurance recoverable11,058 9,821 
Accounts receivable from related parties6,423 5,861 
Inventories18,690 19,963 
Prepayments and other assets49,711 54,294 
Property and equipment, net1,407,248 1,415,572 
Derivative financial instruments9,707 2,966 
Goodwill, net60,642 60,642 
Other intangible assets3,441 4,357 
Deferred tax assets12,514 12,967 
Total assets$1,946,998 $1,933,725 
LIABILITIES AND SHAREHOLDERS’ EQUITY
Trade and other payables$176,716 $196,432 
Payables to related parties11,710 10,743 
Income tax payable 12,608 11,592 
Debt1,060,158 1,061,376 
Other liabilities33,930 33,970 
Deferred tax liabilities64,891 64,815 
Total liabilities1,360,013 1,378,928 
Commitments and contingencies (see Note 7)
Shareholders’ equity
Ordinary shares (par value €0.10; 500,000,000 shares authorized, 172,016,422 shares issued and 135,040,042 shares outstanding as of March 31, 2024 and 169,423,980 shares issued and 136,081,891 shares outstanding as of December 31, 2023)
19,104 18,822 
Treasury shares (at cost, 36,976,380 shares as of March 31, 2024 and 33,342,089 shares as of December 31, 2023)
(280,787)(248,174)
Paid-in capital1,205,652 1,202,175 
Accumulated other comprehensive income7,813 1,112 
Accumulated deficit(364,797)(419,138)
Total shareholders’ equity 586,985 554,797 
Total liabilities and shareholders’ equity $1,946,998 $1,933,725 
The accompanying Notes form an integral part of the Condensed Consolidated Financial Statements.
1

Playa Hotels & Resorts N.V.
Condensed Consolidated Statements of Operations
($ in thousands, except share data)
(unaudited)
Three Months Ended March 31,
20242023
Revenue
Package$259,629 $233,568 
Non-package34,143 33,481 
The Playa Collection1,020 726 
Management fees2,534 1,929 
Cost reimbursements2,889 3,534 
Other revenues420 564 
Total revenue300,635 273,802 
Direct and selling, general and administrative expenses
Direct137,979 128,968 
Selling, general and administrative51,219 45,127 
Depreciation and amortization18,672 19,191 
Reimbursed costs2,889 3,534 
(Gain) loss on sale of assets(36)13 
Business interruption insurance recoveries(17) 
Gain on insurance proceeds(370) 
Direct and selling, general and administrative expenses210,336 196,833 
Operating income90,299 76,969 
Interest expense(23,128)(29,666)
Other (expense) income(793)232 
Net income before tax66,378 47,535 
Income tax provision(12,037)(4,816)
Net income$54,341 $42,719 
Earnings per share
Basic$0.40 $0.27 
Diluted$0.39 $0.27 
Weighted average number of shares outstanding during the period - Basic136,651,696 157,314,177 
Weighted average number of shares outstanding during the period - Diluted138,009,859 158,772,453 
The accompanying Notes form an integral part of the Condensed Consolidated Financial Statements.
2

Playa Hotels & Resorts N.V.
Condensed Consolidated Statements of Comprehensive Income
($ in thousands)
(unaudited)
Three Months Ended March 31,
20242023
Net income$54,341 $42,719 
Other comprehensive income, net of taxes
Gain on derivative financial instruments6,750 2,895 
Pension obligation loss(49)(218)
Total other comprehensive income6,701 2,677 
Comprehensive income$61,042 $45,396 
The accompanying Notes form an integral part of the Condensed Consolidated Financial Statements.
3

Playa Hotels & Resorts N.V.
Condensed Consolidated Statements of Shareholders’ Equity
($ in thousands, except share data)
(unaudited)
Ordinary SharesTreasury SharesPaid-In CapitalAccumulated Other
Comprehensive Income
Accumulated DeficitTotal
SharesAmountSharesAmount
Balance at December 31, 2023136,081,891 $18,822 33,342,089 $(248,174)$1,202,175 $1,112 $(419,138)$554,797 
Net income— — — — — — 54,341 54,341 
Other comprehensive income— — — — — 6,701 — 6,701 
Share-based compensation, net of tax withholdings2,579,278 282 13,164 (109)3,477 — — 3,650 
Repurchase of ordinary shares(3,621,127)— 3,621,127 (32,504)— — — (32,504)
Balance at March 31, 2024135,040,042 $19,104 36,976,380 $(280,787)$1,205,652 $7,813 $(364,797)$586,985 
Ordinary SharesTreasury SharesPaid-In CapitalAccumulated Other
Comprehensive Loss
Accumulated DeficitTotal
SharesAmountSharesAmount
Balance at December 31, 2022158,228,508 $18,700 10,046,996 $(62,953)$1,189,090 $(6,985)$(472,990)$664,862 
Net income— — — — — — 42,719 42,719 
Other comprehensive income— — — — — 2,677 — 2,677 
Share-based compensation1,148,476 122 — — 3,044 — — 3,166 
Repurchase of ordinary shares(4,974,132)— 4,974,132 (40,890)— — — (40,890)
Balance at March 31, 2023154,402,852 $18,822 15,021,128 $(103,843)$1,192,134 $(4,308)$(430,271)$672,534 

The accompanying Notes form an integral part of the Condensed Consolidated Financial Statements.
4

Playa Hotels & Resorts N.V.
Condensed Consolidated Statements of Cash Flows
($ in thousands)
(unaudited)
Three Months Ended March 31,
20242023
CASH FLOWS FROM OPERATING ACTIVITIES
Net income$54,341 $42,719 
Adjustments to reconcile net income to net cash from operating activities
Depreciation and amortization18,672 19,191 
Amortization of debt discount and issuance costs1,648 1,795 
Share-based compensation3,759 3,166 
Loss on derivative financial instruments9 6,405 
Deferred income taxes529 3,826 
(Gain) loss on sale of assets(36)13 
Amortization of key money(192)(193)
Provision for doubtful accounts491 81 
Other153 198 
Changes in assets and liabilities:
Trade and other receivables, net(7,951)(11,403)
Insurance recoverable(1,237)5,626 
Accounts receivable from related parties(562)(2,602)
Inventories1,273 (569)
Prepayments and other assets5,393 3,159 
Trade and other payables(21,692)(28,743)
Payables to related parties 967 2,292 
Income tax payable1,016 (205)
Other liabilities196 531 
Net cash provided by operating activities56,777 45,287 
INVESTING ACTIVITIES
Capital expenditures(9,953)(10,257)
Purchase of intangibles(79)(77)
Payment of key money(485) 
Proceeds from the sale of assets, net71 3 
Property damage insurance proceeds 7,979 
Net cash used in investing activities(10,446)(2,352)
FINANCING ACTIVITIES
Repayments of debt(2,750)(2,750)
Repurchase of ordinary shares(30,534)(42,558)
Principal payments on finance lease obligations(116)(107)
Repurchase of ordinary shares for tax withholdings(109) 
Net cash used in financing activities(33,509)(45,415)
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS12,822 (2,480)
CASH AND CASH EQUIVALENTS, BEGINNING OF THE PERIOD$272,520 $283,945 
CASH AND CASH EQUIVALENTS, END OF THE PERIOD$285,342 $281,465 
The accompanying Notes form an integral part of the Condensed Consolidated Financial Statements.
5

Playa Hotels & Resorts N.V.
Condensed Consolidated Statements of Cash Flows (continued)
($ in thousands)
(unaudited)
Three Months Ended March 31,
20242023
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid for interest, net of interest capitalized$21,038 $21,406 
Cash paid for income taxes, net$11,381 $1,427 
SUPPLEMENTAL DISCLOSURES OF NON-CASH ACTIVITIES
Capital expenditures incurred but not yet paid$1,894 $873 
Repurchase of ordinary shares not yet settled$1,970 $ 
Par value of vested restricted share awards$282 $122 
The accompanying Notes form an integral part of the Condensed Consolidated Financial Statements.
6

Playa Hotels & Resorts N.V.
Notes to the Condensed Consolidated Financial Statements
(unaudited)
Note 1. Organization, operations and basis of presentation
Background
Playa Hotels & Resorts N.V. (“Playa” or the “Company”), through its subsidiaries, is a leading owner, operator and developer of all-inclusive resorts in prime beachfront locations in popular vacation destinations. We own and/or manage a portfolio of 24 resorts located in Mexico, the Dominican Republic and Jamaica. Unless otherwise indicated or the context requires otherwise, references in our condensed consolidated financial statements (our “Condensed Consolidated Financial Statements”) to “we,” “our,” “us” and similar expressions refer to Playa and its subsidiaries.
Basis of preparation, presentation and measurement
Our Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information. Certain information and disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. Accordingly, these unaudited interim Condensed Consolidated Financial Statements should be read in conjunction with our Consolidated Financial Statements as of and for the year ended December 31, 2023, included in our Annual Report on Form 10-K, filed with the Securities and Exchange Commission (the “SEC”) on February 22, 2024 (the “Annual Report”).
In our opinion, the unaudited interim Condensed Consolidated Financial Statements have been prepared on the same basis as the annual Consolidated Financial Statements and include all adjustments, consisting of only normal recurring adjustments, necessary for fair presentation. Results for the comparative prior periods have been reclassified to conform to the current period presentation.
The results of operations for the three months ended March 31, 2024 are not necessarily indicative of the results of operations to be expected for the full year ending December 31, 2024. All dollar amounts (other than per share amounts) in the following disclosures are in thousands of United States dollars, unless otherwise indicated.
Note 2. Significant accounting policies
Derivative financial instruments
Derivative financial instruments are initially recorded at fair value on the date on which a derivative contract is entered into and are subsequently remeasured to fair value at period end. Changes in the fair value of a derivative contract that is qualified, designated and highly effective as a cash flow hedge are recorded in total other comprehensive income in our Condensed Consolidated Statements of Comprehensive Income and reclassified into earnings in our Condensed Consolidated Statements of Operations in the same period or periods during which the hedged transaction occurs. If a derivative contract does not meet these criteria, then the total change in fair value is recognized in earnings. Cash flows from a derivative financial instrument that is classified as a cash flow hedge are recorded in the same category as the cash flows from the items being hedged in the Condensed Consolidated Statements of Cash Flows.
Standards not yet adopted
StandardDescriptionDate of AdoptionEffect on the Financial Statements or Other Significant Matters
ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures
The amendments in this update improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses.Annual periods beginning after December 15, 2023We are in the process of evaluating the impact of ASU No. 2023-07 on the Condensed Consolidated Financial Statements with respect to our segment disclosures.
ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures
The amendments in this update require that public business entities on an annual basis (i) disclose specific categories in the rate reconciliation and (ii) provide additional information for reconciling items that meet a quantitative threshold.Annual periods beginning after December 15, 2024We are in the process of evaluating the impact of ASU No. 2023-09 on the Condensed Consolidated Financial Statements with respect to our income tax disclosures.
7

Note 3. Revenue

The following tables present our revenues disaggregated by geographic segment (refer to discussion of our reportable segments in Note 15) ($ in thousands):
Three Months Ended March 31, 2024
Yucatán
Peninsula
Pacific
Coast
Dominican
Republic
JamaicaOtherTotal
Package revenue$88,062 $39,638 $72,213 $59,716 $ $259,629 
Non-package revenue10,794 5,916 9,508 7,925  34,143 
The Playa Collection    1,020 1,020 
Management fees39    2,495 2,534 
Cost reimbursements   1,095 1,794 2,889 
Other revenues    420 420 
Total revenue$98,895 $45,554 $81,721 $68,736 $5,729 $300,635 
Three Months Ended March 31, 2023
Yucatán
Peninsula
Pacific
Coast
Dominican
Republic
JamaicaOtherTotal
Package revenue$81,287 $36,803 $59,602 $55,876 $ $233,568 
Non-package revenue (1)
9,700 4,747 9,167 9,867  33,481 
The Playa Collection    726 726 
Management fees38    1,891 1,929 
Cost reimbursements   1,337 2,197 3,534 
Other revenues (1)
    564 564 
Total revenue$91,025 $41,550 $68,769 $67,080 $5,378 $273,802 
________
(1)Includes $0.6 million that was reclassified from non-package revenue to other revenues to conform with current period presentation.

Contract assets and liabilities

We do not have any material contract assets as of March 31, 2024 and December 31, 2023 other than trade and other receivables on our Condensed Consolidated Balance Sheet. Our receivables are primarily the result of contracts with customers, which are reduced by an allowance for doubtful accounts that reflects our estimate of amounts that will not be collected.

We record contract liabilities when cash payments are received or due in advance of guests staying at our resorts, which are presented as advance deposits (see Note 14) within trade and other payables on our Condensed Consolidated Balance Sheet. Our advanced deposits are generally recognized as revenue within one year.
8

Note 4. Property and equipment
The balance of property and equipment, net is as follows ($ in thousands):
As of March 31,As of December 31,
20242023
Property and equipment, gross
Land, buildings and improvements$1,648,338 $1,646,452 
Fixtures and machinery (1)
87,539 86,717 
Furniture and other fixed assets205,476 203,639 
Construction in progress25,402 22,077 
Total property and equipment, gross1,966,755 1,958,885 
Accumulated depreciation(559,507)(543,313)
Total property and equipment, net$1,407,248 $1,415,572 
________
(1) Includes the gross balance of our finance lease right-of-use assets, which was $6.3 million as of March 31, 2024 and December 31, 2023.
Depreciation expense for property and equipment was $17.7 million and $18.8 million for the three months ended March 31, 2024 and 2023, respectively.
For the three months ended March 31, 2024, we capitalized $0.3 million of interest expense on qualifying assets using the weighted-average interest rate of our debt. We did not capitalize any interest expense for the three months ended March 31, 2023.
Hurricane Fiona
We received business interruption proceeds of $0.4 million during the three months ended March 31, 2024 related to the impact of Hurricane Fiona in September 2022. We received an additional $1.2 million of business interruption insurance proceeds in April and May 2024 and expect to receive the remaining proceeds in 2024.
Lessor contracts
We rent certain real estate to third parties for office and retail space within our resorts. Our lessor contracts are considered operating leases and generally have a contractual term of one to three years. The following table presents our rental income for the three months ended March 31, 2024 and 2023 ($ in thousands):
Three Months Ended March 31,
Leases20242023
Operating lease income (1)
$1,186 $950 
________
(1) Our operating lease income, which is recorded within non-package revenue in the Condensed Consolidated Statements of Operations, includes variable lease revenue which is typically calculated as a percentage of our tenant’s net sales.
Note 5. Income taxes
We file tax returns for our entities in key jurisdictions including Mexico, the Dominican Republic, Jamaica, the United States, and the Netherlands. We are domiciled in the Netherlands and our Dutch subsidiaries are subject to a Dutch general tax rate of 25.8%. Our other operating subsidiaries are subject to tax rates of up to 30% in the jurisdictions in which they are domiciled.
The Netherlands enacted the Dutch Minimum Tax Act 2024 in December 2023. The Dutch Minimum Tax Act 2024 implements measures to ensure that large multinational groups of companies pay a minimum corporate tax rate of 15% in accordance with the European Union's Pillar 2 Directive. As we are incorporated in the Netherlands, we were subject to certain provisions of the Dutch Minimum Tax Act 2024 beginning January 1, 2024. The adoption of the Dutch Minimum Tax Act 2024 resulted in $12.0 million of additional income tax expense incurred in the Netherlands for the three months ended March 31, 2024, which increased our effective tax rate (“ETR”) by 18.2%. As a result, our ETR was 18.1% for the three months ended March 31, 2024 compared to 10.1% for the three months ended March 31, 2023.
9

An Advance Pricing Agreement (“APA”) for Playa Dominican Resort B.V. was approved in March 2024 and is effective January 1, 2022 through December 31, 2025. We are in the process of finalizing new APAs for Playa Cana B.V. and Playa Romana Mar B.V., which expired as of December 31, 2021. We expect the APAs to be completed before the end of 2024, as the APA terms for the general hotel association have already been approved. Our estimated annual effective tax rate calculation reflects the terms of the APAs that are expected to apply for the year ending December 31, 2024.
We had no uncertain tax positions or unrecognized tax benefits as of March 31, 2024. We expect no significant changes in unrecognized tax benefits over the next twelve months.
We regularly assess the realizability of our deferred tax assets by evaluating historical and projected future operating results, the reversal of existing temporary differences, taxable income in permitted carry back years, and the availability of tax planning strategies. As of March 31, 2024, a valuation allowance has been maintained as a reserve on a portion of our net deferred tax assets due to the uncertainty of realization of our loss carry forwards and other deferred tax assets. If our operating results continue to improve and our projections show continued utilization of tax attributes, we may consider that as significant positive evidence and our future reassessment may result in the determination that all or a portion of the valuation allowance is no longer required. The exact timing and amount of the valuation allowance releases are ultimately contingent upon the level of profitability achieved in future periods.
Note 6. Related party transactions
Relationship with Hyatt
Hyatt Hotels Corporation (“Hyatt”) is considered a related party due to its ownership of our ordinary shares by its affiliated entities. We pay Hyatt fees associated with the franchise agreements of our resorts operating under the all-ages Hyatt Ziva and adults-only Hyatt Zilara brands and receive reimbursements for guests that pay for their stay using the World of Hyatt® guest loyalty program. Hyatt also owns Apple Leisure Group (“ALG”), the brand management platform AMResorts, and various tour operators and travel agencies.
Relationship with Sagicor
Sagicor Financial Corporation Limited and its affiliated entities (collectively “Sagicor”) is considered a related party due to its ownership of our ordinary shares and representation on our Board of Directors (our “Board”). We pay Sagicor for employee insurance coverage at one of our Jamaica properties. Sagicor is also a part owner of the Jewel Grande Montego Bay Resort & Spa and compensates us as manager of the property.
Lease with our Chief Executive Officer
One of our offices is owned by our Chief Executive Officer and we sublease the space at that location from a third party.
Transactions with related parties
Transactions between us and related parties during the three months ended March 31, 2024 and 2023 were as follows ($ in thousands):
Three Months Ended March 31,
Related PartyTransaction20242023
Revenues
Sagicor
Cost reimbursements(1)
$1,095 $1,477 
Expenses
Hyatt
Franchise fees(2)
$11,299 $9,954 
Sagicor
Insurance premiums(2)
$394 $320 
Chief Executive Officer
Lease expense(3)
$153 $196 
AMResorts
Management fees(2)
$ $41 
AMResorts
Marketing fees(3)
$ $37 
________
(1)Equivalent amount included as reimbursed costs in the Condensed Consolidated Statements of Operations.
(2)Included in direct expense in the Condensed Consolidated Statements of Operations with the exception of certain immaterial fees associated with the Hyatt franchise agreements, which are included in selling, general, and administrative expense.
(3)Included in selling, general, and administrative expense in the Condensed Consolidated Statements of Operations.
10

Note 7. Commitments and contingencies
We are involved in various claims and lawsuits arising in the normal course of business, including proceedings involving tort and other general liability claims, and workers’ compensation and other employee claims. Most occurrences involving liability and claims of negligence are covered by insurance with solvent insurance carriers. We recognize a liability when we believe the loss is probable and reasonably estimable. We currently believe that the ultimate outcome of such lawsuits and proceedings will not, individually or in the aggregate, have a material effect on our Condensed Consolidated Financial Statements.
The Dutch Corporate Income Tax Act provides the option of a fiscal unity, which is a consolidated tax regime wherein the profits and losses of group companies can be offset against each other. With the exception of Playa Hotels & Resorts N.V., our Dutch companies file as a fiscal unity. Playa Resorts Holding B.V. is the head of our Dutch fiscal unity and is jointly and severally liable for the tax liabilities of the fiscal unity as a whole.
Note 8. Ordinary shares
Our Board previously authorized a $200.0 million share repurchase program pursuant to which we may repurchase our outstanding ordinary shares as market conditions and our liquidity warrant. The repurchase program is subject to certain limitations under Dutch law, including the existing repurchase authorization granted by our shareholders. Repurchases may be made from time to time in the open market, in privately negotiated transactions or by other means (including Rule 10b5-1 trading plans). Depending on market conditions and other factors, these repurchases may be commenced or suspended from time to time without prior notice.
During the three months ended March 31, 2024, we repurchased 3,621,127 ordinary shares under the program at an average price of $8.98 per share. As of March 31, 2024, we had approximately $163.9 million remaining under the $200.0 million share repurchase program.
As of March 31, 2024, our ordinary share capital consisted of 135,040,042 ordinary shares outstanding, which have a par value of €0.10 per share. In addition, 5,075,907 restricted shares and performance share awards and 36,272 restricted share units were outstanding under the 2017 Plan (as defined in Note 9). The holders of restricted shares and performance share awards are entitled to vote, but not to dispose of, such shares until they vest. The holders of restricted share units are neither entitled to vote nor dispose of such shares until they vest.
Note 9. Share-based compensation
We adopted our 2017 Omnibus Incentive Plan (the “2017 Plan”) to attract and retain independent directors, executive officers and other key employees. As of March 31, 2024, there were 10,054,397 shares available for future grants under the 2017 Plan.
Restricted share awards consist of restricted shares and restricted share units that are granted to eligible employees, executives, and board members and consist of ordinary shares (or the right to receive ordinary shares).
A summary of our restricted share awards from January 1, 2024 to March 31, 2024 is as follows:
Number of SharesWeighted-Average Grant Date Fair Value
Unvested balance at January 1, 20242,733,532 $6.84 
Granted1,456,506 8.03 
Vested(1,417,634)6.61 
Forfeited(19,156)7.25 
Unvested balance at March 31, 20242,753,248 $7.59 
Performance share awards consist of ordinary shares that may become earned and vested at the end of a three-year performance period based on the achievement of performance targets adopted by our Compensation Committee. Our performance shares have market conditions where either 25% or 50% of the performance share awards will vest based on the total shareholder return (“TSR”) of our ordinary shares relative to those of our peer group and either 50% or 75% will vest based on the compound annual growth rate of the price of our ordinary shares. The peer shareholder return component may vest between 0% and 200% of target, with the award capped at 100% of target should Playa’s TSR be negative. The growth rate component may vest up to 100% of target.
11

The table below summarizes the key inputs used in the Monte-Carlo simulation to determine the grant date fair value of our performance share awards ($ in thousands):
Performance Award Grant DatePercentage of Total AwardGrant Date Fair Value by Component
Volatility (1)
Interest
Rate (2)
Dividend Yield
January 17, 2024
Peer Shareholder Return50 %$2,915 39.05 %4.09 % %
Growth Rate50 %$2,066 39.05 %4.09 % %
February 8, 2024
Growth Rate100 %$4,369 38.21 %4.20 % %
________
(1) Expected volatility was determined based on Playa’s historical share prices.
(2) The risk-free rate was based on U.S. Treasury zero coupon issues with a remaining term equal to the remaining term of the measurement period.
A summary of our performance share awards from January 1, 2024 to March 31, 2024 is as follows:
Number of SharesWeighted-Average Grant Date Fair Value
Unvested balance at January 1, 20242,048,350 $6.34 
Granted1,509,519 7.39 
Vested(1,174,808)5.38 
Forfeited(24,130)6.01 
Unvested balance at March 31, 20242,358,931 $7.35 
Note 10. Earnings per share
Basic and diluted earnings per share (“EPS”) are as follows ($ in thousands, except share data):
Three Months Ended March 31,
20242023
Numerator
Net income$54,341 $42,719 
Denominator
Denominator for basic EPS - weighted-average number of shares outstanding136,651,696 157,314,177 
Effect of dilutive securities
Unvested performance share awards747,783 952,494 
Unvested restricted share awards610,380 505,782 
Denominator for diluted EPS - adjusted weighted-average number of shares outstanding138,009,859 158,772,453 
EPS - Basic$0.40 $0.27 
EPS - Diluted$0.39 $0.27 

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

For the three months ended March 31, 2024 and 2023, we had no anti-dilutive unvested restricted share awards.
12

Note 11. Debt
Our debt consists of the following ($ in thousands):
Outstanding Balance as of
Interest RateMaturity DateMarch 31, 2024December 31, 2023
Senior Secured Credit Facilities
Revolving Credit Facility (1)
SOFR + 3.50%
January 5, 2028$ $ 
Term Loan due 2029 (2)
SOFR + 3.25%
January 5, 20291,086,250 1,089,000 
Total Senior Secured Credit Facilities (at stated value)1,086,250 1,089,000 
Unamortized discount(25,139)(26,466)
Unamortized debt issuance costs(6,059)(6,380)
Total Senior Secured Credit Facilities, net$1,055,052 $1,056,154 
Financing lease obligations$5,106 $5,222 
Total debt, net$1,060,158 $1,061,376 
________
(1)We had an available balance on our Revolving Credit Facility of $225.0 million as of March 31, 2024 and December 31, 2023.
(2)The effective interest rate for the Term Loan due 2029 was 8.58% and 8.59% as of March 31, 2024 and December 31, 2023, respectively.
Financial maintenance covenants
We were in compliance with all applicable covenants as of March 31, 2024. A summary of our applicable covenants and restrictions is as follows:
DebtCovenant Terms
Senior Secured Credit Facility
We are subject to a total net leverage ratio of 5.20x if we have more than 35% drawn on the Revolving Credit Facility.
Note 12. Derivative financial instruments
Interest rate swaps
We have entered into interest rate swaps to mitigate the interest rate risk inherent to our floating rate debt. Our interest rate swaps outstanding during the three months ended March 31, 2024 and 2023 are as follows:
Notional AmountInterest Rate ReceivedFixed Rate PaidEffective DateMaturity Date
Designated as Cash Flow Hedges
$275 millionOne-month SOFR4.05%April 15, 2023April 15, 2025
$275 millionOne-month SOFR3.71%April 15, 2023April 15, 2026
Not Designated as Hedging Instrument (1)
$800 millionOne-month LIBOR2.85%March 29, 2018March 31, 2023
________
(1) Our LIBOR-based interest rate swaps were designated as cash flow hedges in March 2019, but were deemed ineffective in February 2020 due to the decrease in interest rates.

Foreign currency forward contracts

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

13

Quantitative disclosures about derivative financial instruments

The following tables present the effect of our derivative financial instruments, net of tax, in the Condensed Consolidated Statements of Comprehensive Income and Condensed Consolidated Statements of Operations for the three months ended March 31, 2024 and 2023 ($ in thousands):
Three Months Ended March 31,
20242023
Interest rate swaps(1)
Foreign currency forwards(2)
Interest rate swaps
Change in fair value$(5,852)$(2,868)$ 
Reclassification from AOCI to the income statement$2,024 $(54)$(2,895)
________
(1) Amounts are reclassified from AOCI to interest expense. As of March 31, 2024, the total amount expected to be reclassified during the next twelve months is $5.6 million.
(2) Amounts are reclassified from AOCI to direct expenses. As of March 31, 2024, the total amount expected to be reclassified during the next twelve months is $2.9 million.
Derivative Financial Instruments Financial Statement ClassificationThree Months Ended March 31,
20242023
Designated as Cash Flow Hedges
Interest rate swapsInterest expense$(2,024)$ 
Foreign currency forwardsDirect expenses$(180)$ 
Not Designated as Hedging Instruments
Interest rate swaps(1)
Interest expense$ $3,013 
________
(1) Includes the loss from the change in fair value of our interest rate swaps and the cash interest paid or received for the monthly settlements of the derivative.
The following table presents the effect of our derivative financial instruments in the Condensed Consolidated Balance Sheet as of March 31, 2024 and December 31, 2023 ($ in thousands):
Derivative Financial InstrumentsFinancial Statement ClassificationAs of March 31,As of December 31,
20242023
Designated as Cash Flow Hedges
Interest rate swapsDerivative financial instruments$6,785 $2,966 
Foreign currency forwardsDerivative financial instruments$2,922 $ 

Derivative financial instruments expose us to credit risk in the event of non-performance by the counterparty under the terms of each instrument. We incorporate these counterparty credit risks in our fair value measurements (see Note 13) and believe we minimize this credit risk by transacting with major creditworthy financial institutions.
Note 13. Fair value of financial instruments
The objective of a fair value measurement is to estimate the price at which an orderly transaction to sell the asset or to transfer the liability would take place between market participants at the measurement date under current market conditions. U.S. GAAP establishes a hierarchical disclosure framework, which prioritizes and ranks the level of observability of inputs used in measuring fair value as follows:
Level 1: Unadjusted quoted prices in active markets for identical assets or liabilities.
Level 2: Unadjusted quoted prices for similar assets or liabilities in active markets, or unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or inputs other than quoted prices that are observable for the asset or liability.
Level 3: Inputs are unobservable and reflect our judgments about assumptions that market participants would use in pricing an asset or liability.
14

We believe the carrying value of our financial instruments, excluding our debt, approximate their fair values as of March 31, 2024 and December 31, 2023. We did not have any Level 3 instruments during any of the periods presented in our Condensed Consolidated Financial Statements.
The following tables present our fair value hierarchy for our financial assets measured at fair value on a recurring basis as of March 31, 2024 and December 31, 2023 ($ in thousands):
Financial AssetsMarch 31, 2024Level 1Level 2Level 3
Fair value measurements on a recurring basis
Interest rate swaps$6,785 $ $6,785 $ 
Foreign currency forwards$2,922 $ $2,922 $ 
Financial AssetsDecember 31, 2023Level 1Level 2Level 3
Fair value measurements on a recurring basis
Interest rate swaps$2,966 $ $2,966 $ 
The following tables present our fair value hierarchy for our financial liabilities not measured at fair value as of March 31, 2024 and December 31, 2023 ($ in thousands):
Carrying Value
Fair Value
As of March 31, 2024Level 1
Level 2
Level 3
Financial liabilities not recorded at fair value
Term Loan due 2029$1,055,052 $ $ $1,102,108 
Carrying ValueFair Value
As of December 31, 2023Level 1Level 2Level 3
Financial liabilities not recorded at fair value
Term Loan due 2029$1,056,154 $ $ $1,097,081 
15

The following table summarizes the valuation techniques used to estimate the fair value of our financial instruments measured at fair value on a recurring basis and our financial instruments not measured at fair value:
Valuation Technique
Financial instruments recorded at fair value
Foreign currency forwardsThe fair value of the foreign currency forwards is estimated based on the expected future cash flows by incorporating the notional amount of the forward contract, the maturity date of the contract, and observable inputs including spot rates, forward rates, and interest rate curves (including discount factors). The fair value also incorporates credit valuation adjustments to appropriately reflect nonperformance risk. The fair value is largely dependent on prevailing foreign currency forward rates as of the measurement date and maturing on the maturity dates of any existing forwards. If, in subsequent periods, any prevailing foreign currency forward rate differs from the corresponding contracted foreign currency rate, we will recognize a gain or loss.
Interest rate swapsThe fair value of the interest rate swaps is estimated based on the expected future cash flows by incorporating the notional amount of the swaps, the contractual period to maturity, and observable market-based inputs, including interest rate curves. The fair value also incorporates credit valuation adjustments to appropriately reflect nonperformance risk. The fair value of our interest rate swaps is largely dependent on forecasted SOFR as of the measurement date. If, in subsequent periods, forecasted SOFR exceeds the fixed rates we pay on our interest rate swaps, we will recognize a gain and future cash inflows. Conversely, if forecasted SOFR falls below the fixed rates we pay on our interest rate swaps in subsequent periods, we will recognize a loss and future cash outflows.
Financial instruments not recorded at fair value
Term Loan due 2029The fair value of our Term Loan due 2029 is estimated using cash flow projections over the remaining contractual period by applying market forward rates and discounting back at the appropriate discount rate.
Revolving Credit FacilityThe valuation technique of our Revolving Credit Facility is consistent with our Term Loan due 2029. The fair value of the Revolving Credit Facility generally approximates its carrying value as the expected term is significantly shorter in duration.
Note 14. Other balance sheet items
Trade and other receivables, net
The following summarizes the balances of trade and other receivables, net as of March 31, 2024 and December 31, 2023 ($ in thousands):
As of March 31,As of December 31,
20242023
Gross trade and other receivables (1)
$82,656 $75,051 
Allowance for doubtful accounts(434)(289)
Total trade and other receivables, net$82,222 $74,762 
________
(1) The opening balance as of January 1, 2023 was $63.4 million.

We have not experienced any significant write-offs to our accounts receivable during the three months ended March 31, 2024 and 2023.
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Prepayments and other assets
The following summarizes the balances of prepayments and other assets as of March 31, 2024 and December 31, 2023 ($ in thousands):
As of March 31,As of December 31,
20242023
Advances to suppliers$13,391 $18,213 
Prepaid income taxes12,540 11,510 
Prepaid other taxes (1)
4,606 5,641 
Operating lease right-of-use assets6,243 6,426 
Key money6,896 6,475 
Other assets6,035 6,029 
Total prepayments and other assets$49,711 $54,294 
________
(1) Includes recoverable value-added tax, general consumption tax, and other sales tax accumulated by our Mexico, Jamaica, Dutch and Dominican Republic entities.
Goodwill
We recognized no goodwill impairment losses on our reporting units nor any additions to goodwill during the three months ended March 31, 2024. The gross carrying values and accumulated impairment losses of goodwill by reportable segment (refer to discussion of our reportable segments in Note 15) as of March 31, 2024 and December 31, 2023 are as follows ($ in thousands):
Yucatán PeninsulaPacific CoastDominican RepublicJamaicaTotal
Gross carrying value$51,731 $ $ $33,879 $85,610 
Accumulated impairment losses(6,168)  (18,800)(24,968)
Net carrying value$45,563 $ $ $15,079 $60,642 
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Other intangible assets
Other intangible assets as of March 31, 2024 and December 31, 2023 consisted of the following ($ in thousands):
As of March 31,As of December 31,
20242023
Gross carrying value
Casino and other licenses (1)
$628 $607 
Management contract1,900 1,900 
Enterprise resource planning system6,352 6,352 
Other4,732 4,674 
Total gross carrying value13,612 13,533 
Accumulated amortization
Management contract(546)(523)
Enterprise resource planning system(5,250)(4,349)
Other(4,375)(4,304)
Total accumulated amortization(10,171)(9,176)
Net carrying value
Casino and other licenses (1)
628 607 
Management contract1,354 1,377 
Enterprise resource planning system 1,102 2,003 
Other357 370 
Total net carrying value$3,441 $4,357 
________
(1) Our casino and other licenses have indefinite lives. Accordingly, there is no associated amortization expense or accumulated amortization.
Amortization expense for intangible assets was $1.0 million and $0.4 million for the three months ended March 31, 2024 and 2023, respectively.
Trade and other payables
The following summarizes the balances of trade and other payables as of March 31, 2024 and December 31, 2023 ($ in thousands):
As of March 31,As of December 31,
20242023
Trade payables$26,374 $25,929 
Advance deposits (1)
69,054 80,506 
Withholding and other taxes payable15,747 15,164 
Interest payable2,853 2,603 
Payroll and related accruals25,183 31,466 
Accrued expenses and other payables (2)
37,505 40,764 
Total trade and other payables$176,716 $196,432 
________
(1) The opening balance as of January 1, 2023 was $83.3 million.
(2) As of March 31, 2024 and December 31, 2023, accrued expenses and other payables includes $10.1 million and $16.8 million, respectively, of unpaid clean up and repair expenses related to Hurricane Fiona. As of March 31, 2024, accrued expenses and other payables also includes $2.0 million related to share repurchases not yet settled.
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Other liabilities
The following summarizes the balances of other liabilities as of March 31, 2024 and December 31, 2023 ($ in thousands):
As of March 31,As of December 31,
20242023
Pension obligation (1)
$10,396 $9,980 
Operating lease liabilities6,811 6,973 
Unfavorable ground lease liability1,721 1,748 
Key money14,073 14,331 
Other929 938 
Total other liabilities$33,930 $33,970 
________
(1) For the three months ended March 31, 2024 and 2023, the service cost component of net periodic pension cost was $0.4 million and $0.3 million, respectively, and the non-service cost components were $0.3 million and $0.9 million, respectively.
Note 15. Business segments
We consider each one of our owned resorts to be an operating segment, none of which meets the threshold for a reportable segment. We also allocate resources and assess operating performance based on individual resorts. Our operating segments meet the aggregation criteria and thus, we report four separate reportable segments by geography: (i) Yucatán Peninsula, (ii) Pacific Coast, (iii) Dominican Republic and (iv) Jamaica.
Our operating segments are components of the business that are managed discretely and for which discrete financial information is reviewed regularly by our Chief Executive Officer, Chief Financial Officer and Chief Operating Officer, all of whom represent our chief operating decision maker (“CODM”). Financial information for each reportable segment is reviewed by the CODM to assess performance and make decisions regarding the allocation of resources. For the three months ended March 31, 2024 and 2023, we have excluded the immaterial amounts of management fees, cost reimbursements, The Playa Collection revenues and other from our segment reporting.
The performance of our business is evaluated primarily on adjusted earnings before interest expense, income tax provision, and depreciation and amortization expense (“Adjusted EBITDA”) and the performance of our segments is evaluated on Adjusted EBITDA before corporate expenses, The Playa Collection revenue and management fees (“Owned Resort EBITDA”). Adjusted EBITDA and Owned Resort EBITDA should not be considered alternatives to net income or other measures of financial performance or liquidity derived in accordance with U.S. GAAP.
We define Adjusted EBITDA as net income, determined in accordance with U.S. GAAP, for the periods presented, before interest expense, income tax provision, and depreciation and amortization expense, further adjusted to exclude the following items: (a) (gain) loss on sale of assets; (b) other (expense) income; (c) repairs from hurricanes and tropical storms; (d) share-based compensation; and (e) transaction expenses. Adjusted EBITDA includes corporate expenses, which are overhead costs that are essential to support the operation of the Company, including the operations and development of our resorts.
There are limitations to using financial measures such as Adjusted EBITDA and Owned Resort EBITDA. For example, other companies in our industry may define Adjusted EBITDA differently than we do. As a result, it may be difficult to use Adjusted EBITDA or similarly named financial measures that other companies publish to compare the performance of those companies to our performance. Because of these limitations, Adjusted EBITDA should not be considered as a measure of the income or loss generated by our business or discretionary cash available for investment in our business and investors should carefully consider our U.S. GAAP results presented in our Condensed Consolidated Financial Statements.
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The following table presents segment Owned Net Revenue, defined as total revenue less compulsory tips paid to employees, cost reimbursements, management fees, The Playa Collection revenue, and other miscellaneous revenue not derived from segment operations, and a reconciliation to total revenue for the three months ended March 31, 2024 and 2023 ($ in thousands):
Three Months Ended March 31,
20242023
Owned net revenue
Yucatán Peninsula$95,988 $88,748 
Pacific Coast44,296 40,515 
Dominican Republic81,612 68,769 
Jamaica64,642 62,977 
Segment owned net revenue286,538 261,009 
Other revenues420 564 
Management fees2,534 1,929 
The Playa Collection1,020 726 
Cost reimbursements2,889 3,534 
Compulsory tips7,234 6,040 
Total revenue$300,635 $273,802 
The following table presents segment Owned Resort EBITDA, Adjusted EBITDA and a reconciliation to net income for the three months ended March 31, 2024 and 2023 ($ in thousands):
Three Months Ended March 31,
20242023
Owned Resort EBITDA
Yucatán Peninsula$40,053 $37,936 
Pacific Coast19,141 17,523 
Dominican Republic37,770 26,849 
Jamaica27,076 27,081 
Segment Owned Resort EBITDA124,040 109,389 
Other corporate(14,122)(13,555)
The Playa Collection1,020 726 
Management fees2,534 1,929 
Adjusted EBITDA113,472 98,489 
Interest expense(23,128)(29,666)
Depreciation and amortization(18,672)(19,191)
Gain (loss) on sale of assets36 (13)
Other (expense) income(793)232 
Repairs from hurricanes and tropical storms 861 
Share-based compensation(3,759)(3,166)
Transaction expenses(1,037)(863)
Non-service cost components of net periodic pension cost (1)
259 852 
Net income before tax66,378 47,535 
Income tax provision(12,037)(4,816)
Net income$54,341 $42,719 
________
(1) Represents the non-service cost components of net periodic pension cost or benefit recorded within other (expense) income in the Condensed Consolidated Statements of Operations. We include these costs in calculating Adjusted EBITDA as they are considered part of our ongoing resort operations.
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The following table presents segment property and equipment, gross and a reconciliation to total property and equipment, net as of March 31, 2024 and December 31, 2023 ($ in thousands):
As of March 31,As of December 31,
20242023
Segment property and equipment, gross
Yucatán Peninsula$683,966 $683,073 
Pacific Coast308,271 305,588 
Dominican Republic542,700 541,629 
Jamaica425,382 422,772 
Total segment property and equipment, gross1,960,319 1,953,062 
Corporate property and equipment, gross6,436 5,823 
Accumulated depreciation(559,507)(543,313)
Total property and equipment, net$1,407,248 $1,415,572 

The following table presents segment capital expenditures and a reconciliation to total capital expenditures for the three months ended March 31, 2024 and 2023 ($ in thousands):
Three Months Ended March 31,
20242023
Segment capital expenditures
Yucatán Peninsula$2,021 $2,741 
Pacific Coast2,528 946 
Dominican Republic1,554 3,895 
Jamaica3,175 1,806 
Total segment capital expenditures (1)
9,278 9,388 
Corporate874 126 
Total capital expenditures (1)
$10,152 $9,514 
________
(1) Represents gross additions to property and equipment.
Note 16. Subsequent events
During the period from April 1, 2024 through April 30, 2024, we purchased 1,859,322 ordinary shares at an average price of $9.36 per share. As of April 30, 2024, we had $146.5 million remaining under our $200.0 million share repurchase program.
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The following discussion and analysis of Playa Hotels & Resorts N.V.’s (“Playa”) financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements (our “Condensed Consolidated Financial Statements”) and the notes related thereto which are included in “Item 1. Financial Statements” of this Quarterly Report on Form 10-Q. Unless the context otherwise requires, “we,” “us,” “our” and the “Company” refer to Playa and its subsidiaries.

Cautionary Note Regarding Forward-Looking Statements
This quarterly report contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements reflect our current expectations and projections about future events at the time, and thus involve uncertainty and risk. The words “believe,” “expect,” “anticipate,” “will,” “could,” “would,” “should,” “may,” “plan,” “estimate,” “intend,” “predict,” “potential,” “continue,” and the negatives of these words and other similar expressions generally identify forward looking statements. Forward-looking statements are subject to various factors that could cause actual outcomes or results to differ materially from those indicated in these statements, including the risks described under the sections entitled “Risk Factors” of our Annual Report on Form 10-K, filed with the SEC on February 22, 2024 and in this Quarterly Report on Form 10-Q, as such factors may be updated from time to time in our periodic filings with the SEC, which are accessible on the SEC’s website at www.sec.gov. These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this release and in our filings with the SEC. The following factors, among others, could also cause actual results and future events to differ materially from those set forth or contemplated in the forward-looking statements:
general economic uncertainty and the effect of general economic conditions, including inflation, elevated interest rates and worsening global economic conditions or low levels of economic growth, on consumer discretionary spending and the lodging industry in particular;
changes in consumer preferences, including the popularity of the all-inclusive resort model, particularly in the luxury segment of the resort market, and the popularity of tropical beach-front vacations compared to other vacation options or destinations;
changes in economic, social or political conditions in the regions we operate, including changes in perception of public-safety, changes in unemployment rates and labor force availability, and changes in the supply of rooms from competing resorts;
the success and continuation of our relationships with Hyatt Hotels Corporation (“Hyatt”), Hilton Worldwide Holdings, Inc. (“Hilton”), and Wyndham Hotels & Resorts, Inc. (“Wyndham”);
the volatility of currency exchange rates;
the success of our branding or rebranding initiatives with our current portfolio and resorts that may be acquired in the future;
our failure to successfully complete acquisition, expansion, repair and renovation projects in the timeframes and at the costs and returns anticipated;
changes we may make in timing and scope of our development and renovation projects;
significant increases in construction and development costs;
significant increases in utilities, labor or other resort costs;
our ability to obtain and maintain financing arrangements on attractive terms or at all;
our ability to obtain and maintain ample liquidity to fund operations and service debt;
the impact of and changes in governmental regulations or the enforcement thereof, tax laws and rates (including expected increases in our corporate tax rate pursuant to the Dutch Minimum Tax Act 2024), accounting guidance and similar matters in regions in which we operate;
the ability of our guests to reach our resorts given government-mandated travel restrictions, such as those related to COVID-19 or other public health crises, or airline service/capacity issues, as well as changes in demand for our resorts
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