Ladies and gentlemen, thank you for standing by and welcome to the Fourth Quarter Earnings. [Operator Instructions]With that, I would now like to hand the conference over to your speaker today, Mr. Ryan Hymel. Thank you. Please go ahead, sir..

Thank you very much, Miara. Good morning, everyone and welcome to Playa Hotels & Resorts fourth quarter 2019 earnings conference call.

Before we begin, I’d like to remind participants that many of our comments today will be considered forward-looking statements and are subject to numerous risks and uncertainties that may cause the company’s actual results to differ materially from what has been communicated.

Forward-looking statements made today are effective only as of today, and the company undertakes no obligation to update forward-looking statements.For a discussion of some of the factors that could cause our actual results to differ, please review the Risk Factors section of our Annual Report on Form 10-K, which we filed at the end of February with the Securities and Exchange Commission.

We’ve updated our Investor Relations website at investors.playaresorts.com with today’s presentation and recent releases.

In addition, a reconciliation to GAAP of the non-GAAP financial measures we discuss on this call were included in yesterday’s press release.On today’s call, Bruce Wardinski, Playa's Chairman and Chief Executive Officer, will provide some comments on the fourth quarter and key operational highlights.

I will then address our fourth quarter results and the 2020 outlook. Bruce will then wrap up the call with some concluding remarks before we turn it over to Q&A.With that, I’ll turn it over to Bruce..

Great. Thanks, Ryan. Good morning everyone and thanks for joining us. We appreciate your interest in Playa.I’ll begin today by reviewing several of our fourth quarter strategic accomplishments, and then give some high level thoughts on the operating environment, as well as give an update on our near-term initiatives and outlook.

I’ll then turn the call over to Ryan to discuss our fourth quarter results and our 2020 outlook in detail.Now, turning to our fourth quarter results. At a high level, our fourth quarter fundamentals were largely as expected.

If you recall on our last earnings call, we mentioned that we had begun to see signs of stabilization in the Yucatán Peninsula particularly in Cancún. Strong close-in bookings led to a moderate decline in RevPAR in Q4 in the Yucatán segment with Cancún posting positive growth and Playa del Carmen continuing to drag down segment results.

We believe the close-in bookings were driven by pent-up demand following weak bookings in September due to Hurricane Dorian.The Pacific was down in line with our expectations as we telegraphed on the last call given a softer group booked position.

Jamaica also suffered from a difficult group comparison in the fourth quarter, but was additionally impacted by weaker overall market visitation and difficult comparisons.Turning to the Dominican Republic and the market recovery there that continues to progress positively.

In the fourth quarter, we experienced a 29.8% drop in comparable RevPAR and a $700,000 loss in EBITDA in the ADR.

If you recall, we were expecting a comparable RevPAR decline of approximately 35% driven by growing spread between our branded and non-branded hotels.The Hilton La Romana in Dreams Punta Cana performed largely as expected during the fourth quarter, but better than expected close-in bookings at Dreams Palm Beach drove comparable segment RevPAR growth upside.

While we are encouraged by the performance at this hotel, we are not changing our outlook, nor view of the market.

This better than expected topline performance didn't flow through to EBITDA as we decided to invest in the guest experience during the opening of our two new properties in the segment to facilitate future EBITDA growth.We remain focused on growing our direct bookings and lowering our customer acquisition cost and are confident we are on target with our five year plan to increase consumer direct business to at least 50% by 2023.

In aggregate, during the fourth quarter of 2019, 25.4% of our Playa managed room nights stayed were direct up 560 basis points year-over-year, and 33.9% of rooms booked were direct up 580 basis points year-over-year.

Moreover, our loyal direct customers also tend to have a higher ADR as they represented 36.2% of our revenue booked during the quarter for future periods.Generally, as we think about direct booking growth partnering with globally recognized U.S.

brands is key to driving the highest value guests at the lowest possible cost to our resorts by reducing customer acquisition costs, increasing our total addressable market, mitigating the impact of supply growth and minimizing the negative effects of competition.At our Hilton and Hyatt branded properties, we're seeing strong increases in direct bookings, as well as more group business.

Specifically related to group, the Hyatt Ziva and Zilara Cap Cana are very strategic resorts for Playa.

All-inclusive resorts of this caliber with meeting space to handle large incentive groups in a destination like Punta Cana more often than not do incredibly well.And they will serve to boost bookings that our direct group - at our other group properties.

The Hyatt Ziva, Los Cabos, the Hyatt Ziva and Hyatt Zilara Rose Hall and to a certain extent the Hyatt Ziva Cancún, because we will now be able to fulfill meeting planners three-year rotation cycle all in-house without them having to go outside of our portfolio to provide the variety destinations their clients desire.As I mentioned Q4 was not a strong group quarter for Playa, but as we look out to 2020 MICE business on the books plus advanced negotiation group business in the pipeline at the end of the fourth quarter should translate to flat to modestly positive RevPAR growth in 2020 in the Pacific.For the portfolio as a whole our MICE business booked for 2020 is up mid-teens year-to-date versus the same time last year.

Now, I would like to touch on some of our ongoing technological strategic initiatives.We continue to invest in the business launching and expanding on several initiatives including our book direct initiative I've already mentioned, aimed at improving the customer experience, lowering our customer acquisition costs and most importantly driving growth.In early 2019 we began the soft rollout of a new end-to-end upsell and re-book technology at selected resorts.

By using sophisticated algorithms it identifies in real time, new revenue opportunities including selling ancillary items and additional room packages to targeted guests.This technology will also enable us to accept more of the room upgrade bids as we move further back to the booking window and enter a seasonally slower period of the year.

We finished enabling the entire portfolio with this technology during the fourth quarter.

During the first quarter of 2019 we launched our proprietary travel agent portal on which travel agents can now make commissioned reservations directly without having to go through a tour and travel operator.This effectively removes a layer of costs that previously existed, saving Playa of roughly 7% to 9% in commissions per booking while at the same time maintaining the economics for the travel agent on a basic booking and improving the economics in the case of upsells or pre-booked ancillary revenues.To-date bookings via our website have been in line with our modest expectations as in our view the real growth potential is in 2020.

Now that agents can book a commissionable end to end vacation inclusive of air, ground transportation, excursions, suites, exclusive dinners and luxury spa appointments - and luxury spa appointments.We are now live with the ability to book flights and ancillary services for a complete vacation package.

As of February 1, our direct to consumer website playaresorts.com is pacing ahead of our expectations with $37.8 million of gross revenue on the books for 2020 versus $22 million in 2019.Let’s now turn to the rollout of our new yield management system. We went live with our first property in Q1 2019 and expanded into two more properties during Q2.

We made further progress during Q3 and are now live in nearly all of our hotels.We’ll operate the new system in parallel with our current forecasting process for at least a year to fine tune it leveraging historical data and judgment of our marketing teams, an important step given the seasonality of our business.

We expect the real benefit of the system to show up in our financial results starting in late 2020.On the share repurchase front during the fourth quarter we purchased approximately 442,000 shares outstanding at an average price of $7.66 per share for $3.4 million between January 1 and February 27 we repurchased an additional 341,000 shares at an average price of $7.35.

Since program inception, we’ve purchased a total of approximately 2.2 million shares at an average price of $7.58 over $16.5 million.In conclusion given the 2020 Presidential election general global travel concerns due to the coronavirus which I will touch on momentarily and the uncertainty with respect to the DR recovery and the cadence of a ramp in new assets we felt the need to exercise prudence as we approach our 2020 planning and guidance.

Given these uncertainties we are giving a wider range for our 2020 EBITDA guidance which we hope proves to be conservative and will be updated as we move through the year.We continue to expect a sizable ramp in our free cash flow generation as our newly renovated Hilton properties come online along with contribution from the brand new Hyatt Ziva and Zilara in Cap Cana.

We’re cautiously optimistic about our ability to achieve the goals we have set and return capital to shareholders as we continue to unlock value.With respect to the coronavirus, it is important to note, there are no confirmed cases of the coronavirus in Mexico, Jamaica or the Dominican Republic to date.

And we are in constant contact with the World Health Organization and the CDC to maintain the highest standards of prevention.We are working with our travel industry partners to navigate this crisis.

And given the significant flight restrictions from the affected areas, we have waved cancellation fees from anyone that is traveling from Mainland China, Hong Kong or Macau up to 30 days prior to arrival at our resorts. Our mix of Asian customers is 4% with Mainland China representing less than 1% of total guests.

Total Asian source revenue was less than $9 million in 2019 with 27% in Q1, 26% in Q2 and 34% in Q4.At this same point in time last year, we had approximately 50% of our total year’s production on the books with approximately 40% of that already recognized in January and February.Our current full year Asian source pacing is down 10% with Q2 Asian business down approximately 20% and reflected in our guidance.

For Q2 we have just over $1 million currently on the books. Also important to note, the vast majority of our Asian business comes to Ziva and Zilara Cancún, hotels that should be able to replace the business given the appropriately lead time.With that, I'll turn the call back over to Ryan to discuss fourth quarter results and our 2020 outlook..

Thank you, Bruce. Good morning, again everyone.Our fourth quarter adjusted EBITDA was $20 million representing a 46% decrease versus last year.

As Bruce mentioned strong close in bookings in Cancún was the bright spot in the quarter with Pacific and the Dominican in line with expectations we outlined on the last call.Comparable net package RevPAR decreased 6% during the quarter on a 130 basis point decline in occupancy and a 450 basis point decrease in rate Excluding the DR, comparable resort level EBITDA margins compressed by just under 500 basis points, primarily as a result of our investments in our shared services center and operating leverage in light of those RevPAR declines.Comparable net non-packaged revenue was down just over 3% in the fourth quarter and total net non-package revenue was down 4%.

For the full-year 2019, we generated adjusted EBITDA of $150.7 million with comparable net package RevPAR declining 3.4%.

The decline in full-year RevPAR to comparable resort EBITDA margin erosion of only 230 basis points for the year.In the Yucatán, comparable net package RevPAR declined a little over 1% the quarter on a 3.4% ADR decline and a 180 basis point higher occupancy. As again the market benefited from stronger closed-in bookings, particularly in Cancún.

Comparable owned property level resort EBITDA margin in the region which reflects both Cancún and Playa del Carmen decreased $4.2 million or 22%.Margins in the segment we're again impacted by increases in expenses related to sales and marketing, repairs and maintenance in our shared services facility though which should lead to margin benefits over the medium to long term.On the Pacific Coast, net package RevPAR decreased 2.5% driven by a 4.3% decrease in ADR and a 1.4% increase in occupancy.

Owned-resort EBITDA decreased $1.5 million or 20% driven by a 57% decline in group room nights which weighed on RevPAR and an 18% decline in non-packaged revenue in the quarter as a result of this lower group mix.Now turning to Jamaica.

Comparable net package RevPAR decreased 5% driven by a 6.2% decrease in ADR and a 90 basis point increase in occupancy. The RevPAR decline was driven by weaker international passenger arrivals in Q4 specifically in November, a decline of 16% of group room nights and a very tough comparison from Q4.

Property-level EBITDA decreased 3% reflecting the lower RevPAR performance while margins held steady.As a reminder, Sagicor portfolio was folded into the Playa portfolio in June 2018 and became comparable in Q3 of 2019. The one exception is the 88-room Century Tower, which wasn’t open in 2018 will not be comparable until 2020.

The results at our Sagicor portfolio continue to meet or exceed our expectations with property-level EBITDA of roughly $30 million in 2019.We’re very, very proud of the work the teams are doing in Jamaica, and we’re thankful for the ongoing partnership with Sagicor.

Looking forward, we're expecting another solid year in 2020 from our properties in the Jamaican segment.Now, turning to the Dominican Republic. We will again try and give you as much information as we can to help you with your models and give you better visibility into our outlook.

For the quarter, Comparable Net Package RevPAR decreased just under 30% driven by a 13 point decrease in occupancy and a 14% decrease in ADR.Comparable EBITDA margins compressed 12.4 percentage points which was an improvement versus the roughly 18% or 19% decline reported in Q3 as we had more lead time to rightsize staffing and OpEx.The newly remodeled Hilton La Romana and the newly remodeled Ziva and Zilara Cap Cana combined for a small EBITDA loss, but still a small improvement over Q3, but elevated levels of staffing and marketing pressured profits as we made the conscious decision to invest in the guest experience during the opening months at these resorts.On our last earnings call, we highlighted the slowdown we saw in late September DR bookings and the growing spread between our branded and non-branded properties.

As the quarter unfolded, the Hilton La Romana and Dreams Punta Cana performed in line with projections while Dreams Palm Beach finished 800 basis points ahead of the forecast driving the RevPAR outperformance versus our previous guidance of down mid 30%.Turning to mix and sourcing.

We continue to be validated in our belief that our partnership with Hilton will be transformative with respect to consumer sourcing. During the fourth quarter 20% of the room nights stayed at Hilton La Romana were booked direct versus 8% in Q4 of last year.

We also made the decision to pivot to more European sourcing for ADR.As a result our European source business has improved from 32% in Q1 to 46% in Q4 albeit a lower package ADR with respect to group bookings at Hyatt Cap Cana with the property open in the market concern slowly easing group sales have dramatically improved in the first two months of 2020.As we look ahead to 2020 we continue to believe the best strategy from mere assets like the Hilton La Romana and Hyatt Cap Cana is to maintain rate integrity to support and multi-year ramp and EBITDA.

Similar what we saw and experienced at Ziva Cancún and what we're seeing today at the Hyatt and Rose Hall. While we are encouraged by first the performance of Dreams Palm Beach in the fourth quarter; two, the trends we've seen thus far in Q1, 2020; and three, the recent improvement in airport visitation data.

As Bruce mentioned we're not yet materially changing our market view.We expect one, back half loaded year as the Hilton and Hyatt Cap Cana ramp and as we lap the steep decline in ADR that began in June 2019; and two, the market faces ongoing headwinds from the absence of airlift to the 737 MAX issues; and three, the new property ramps tend to be non-linear in our ability to market the Hilton La Romana family side has been limited during construction resulting in a large spread between the family and adult size.With respect to comparable RevPAR growth, we expect Q1 comparable ADR RevPAR growth to be down roughly 30% which is similar to the Q4 results of 2019 and total ADR RevPAR to be down low to mid double digits.With respect to EBITDA the two Dreams properties were - present a material drag to 2020 EBITDA as a total over 1,100 rooms and in 2018 performed quite well recorded $25 million of combined resort EBITDA and in 2019 in the first half recorded $16 million of EBITDA.

The EBITDA drag from these two hotels is not expected to be as severe in the first half of 2020 compared to the second half of 2019 even if we assume the same RevPAR declines given the high season ADR and RevPARs are roughly 50% higher than they are in the low season.Given our cautious RevPAR our outlook for the DR market, we think the appropriate range for margins at Hyatt Cap Cana is something in the high teens to low 20s.

And at the Hilton La Romana, we feel comfortable that we can achieve low to mid 20% EBITDA margins in a more conservative RevPAR scenario.Turning to the balance sheet and cash flows.

As of yearend, we had $21 million in cash on hand and $60 million outstanding borrowings on our revolver and total outstanding debt of just over $1 billion.Year-to-date, we've already paid back $15 million of outstanding borrowings on a revolver and expect to repay the remaining balance during the first half of 2020.

With our major renovations and development projects complete, we're forecasting CapEx of roughly 30$ to 40$ with roughly two thirds of that going towards maintenance CapEx.And the remaining capital needed for finishing our major capital projects that spilled over into 2020.

Our forecasted use of cash does not include additional share repurchases as they depend on market conditions and other factors and maybe commenced or suspended from time to time.As always, we'll update you update you on that front as the year progress.

Our current leverage is higher than we would like, but we expect to de-lever quickly in 2020 as the Hiltons and Cap Cana ran through EBITDA contributions and we believe adjusting our leverage levels for these significant investments in our properties as appropriate.

As a reminder in March of 2018, we locked LIBOR at 2.85% on $800 million of our term loan through March of 2023.Now turning our attention to the 2020 outlook.

We are forecasting 2020 EBITDA of $160 million to $175 million and that's based on total portfolio RevPAR growth of flat-to-down low-single digits.As I mentioned before, we're expecting a stronger second half of 2020 driven by the ramp of our newly renovated Hilton Hotels and the Hyatt Cap Cana and easier comparisons as we lap the DR decline into the second half.

Excluding the DR, we're expecting modest total portfolio for RevPAR growth once again once again led by the Jamaica segment.The low-end of our guidance range assumes that 2020 looks very similar to 2019 with respect to total RevPAR growth despite the addition of the Hyatt Cap Cana in a full-year of the renovated Hiltons.

As we get more clarity on the impact of the global travel from coronavirus and given the percentage of our EBITDA that is generated earlier in the year, we'll look to fine tune our range as the year progresses just as Bruce mentioned.Before I hand it back to Bruce, I want to highlight that we've included our historical rooms out of service related to our renovations last year in our Financial Supplement which we posted today on our website which will help you with your models.With that, I’ll turn it back over to Bruce for some closing remarks..

Our fourth quarter performance in Mexico and the Dominican Republic, our current momentum at the start of the year and our group business on the books for 2020 in Jamaica give us a sense of optimism as we begin 2020.

That being said, as Ryan also highlighted the ramp of the Hyatt Cap Cana in our new Hiltons will be critical determinants of our success this year, but also make the forecasting difficult given their new properties.In addition to the fundamentals behind the scenes, we've gone live with several new technology initiatives aimed at increasing the value engagement and level of satisfaction we offer at gas and travel industry partners alike while at the same time enhancing returns to our shareholders.

We see these initiatives really gathering steam as we work through this year and expect a longtail of contribution.On another front, I would like to let you know about our progress on the asset sale side and our capital allocation priorities.

Although we are pleased to share with you that we have signed a non-binding LIO for the sale of one of our assets and are currently in discussions, I’m extremely disappointed to not be able to share news of an asset sale with you today.Given the sensitivity and stage of the negotiations, I cannot comment on any transaction except to say I’m hoping to be able to share exciting news with you in the future.

We are also proceeding with other asset sale processes as well and will update you when appropriate.With a potential asset sale in mind, I want to reiterate that we are committed to reducing our leverage and returning capital to shareholders, including through our existing buyback program or recognizing the constraint presented by our average daily trading volume of premium tender offer.Before we go to Q&A, let me just say that I am incredibly frustrated.

I'm frustrated that I cannot announce today that we are consummating an asset sale.

I am frustrated that because of us working and in discussions on asset sales I cannot personally buy our stock when in my opinion is trading at a price level dramatically below intrinsic value.I am frustrated that the media frenzy surrounding events in the DR last year has caused our results there to suffer greatly and to cause our fantastic new Hyatt and Hilton resorts in the country to open into a weaker market.

I am frustrated that in my belief the coronavirus may cause people to stop traveling, which may affect our 2020 results.The only solace I get when thinking about all of these frustrations is that they all have one thing in common, they are temporary.

As frustrated as I am and I am sure are all of Playa’s investors, none of this affects the underlying value of our assets or our future profitability and free cash flow potential.Playa has gone through some very difficult and frustrating times over the past 18 months and I am confident that there are better times coming and those investors who stick with us will reap benefits.

I am personally 100% committed to improving our stock price and driving outsized returns to our investors.Thank you for your time and interest in Playa and we will now take your questions..

[Operator Instructions] We have our first question comes from the line of Chris Woronka. Your line is open. Please go ahead..

Appreciate all the color and data points you've already provided. Just a couple of questions I had. One is as you kind of look at bookings in real time for the portfolio and whether you look at it maybe daily or weekly.

Have you noticed any shifts recently in booking behavior and that will be related to the virus or not just - anything geographically that stands out recently or any big changes?.

No, I mean the positives that we mentioned that the close in bookings have remained strong and we're taking a hard line when it comes to yield management that we don't need to overly discount as we move through the months.

And just based on our booking position today, we're not panicking it from behind a lot of that's by design with regards to any of the recent news.And currently at this moment aside from the bookings statistics that we shared with you on our Asian business already, we're not seeing any real change in the bookings or cancellations through Wednesday of this week.

In our agent pacing is deteriorated roughly 500 basis points in the last month. And that's reflected in our guidance. And as we mentioned a very small part of our overall net package revenue, but I do want to point out that our guidance does not reflect the global travel epidemic..

And then as we think about the DR and really wanted to kind of zoom in on the Hilton and Hyatt Cap Cana.

When you compare that to the direct booking percentage for the other Hiltons and the other Hiltons and Hyatts in your portfolio, do you think that stabilizes at a higher level for those two assets in the Dominican?.

I don't think in my opinion, I don’t think they’ll stabilize any higher. I think they’ll be more consistent with what you see from just Hiltons and being part of their - global reach and their much larger loyalty program..

And I just want to add to it. I think just having more Hiltons I mean if you think about it, we only had one Hilton. So having now four Hiltons and then, having going from six to eight Hyatts. I think the more Hilton all-inclusive and Hyatt Ziva and Hyatt Zilara properties there are, there is greater exposure rather to the Hilton and Hyatt customers.

And I think that's going to benefit us on the direct side. So, I think just having greater reach, more locations that's going to be a really big positive..

And then just last one is, Bruce understand the comments about the asset sales and you can't really comment, wanted to ask from a share repurchase standpoint for the company. How do you balance, I know you want to get the leverage down and you have some natural deleveraging that should occur with the cash flow.

But given that the stock seems to be most dislocated right now, how do you guys balance, taking advantage of that right now versus the cash flow coming in later in the year..

No, great Chris, that’s a really good question. So we believe if we’re able to demonstrate that we can achieve a great multiple for an asset it will reset our stock price. So with that in mind, the proceeds from per sale will be more stock buyback focused, but we’ll remain neutral impact to the balance sheet.

As we have future asset sales, then they'll probably shift a little more to deleveraging, but that's our focus..

Our next question comes from the line of [Chad Ben]. Your line is open. Please go ahead..

Regarding the - you talked about in the fourth quarter, DR little bit of margin pressure because of the additional staffing and in the marketing that you decided to invest back in the region.

As we think about your guidance and the ramp to the margin targets that you talked about for Cap Cana and La Romana, does that include a reduction in marketing in the back half. Or is that just a natural ramp as the property kind of takes hold and the occupancies improve? Thanks..

Yes it's a natural ramp. We actually - so both, there is two parts to kind of the additional expenses. One was kind of the elevated levels of staffing that we had down there. But two because of the issues we saw on the DR, there are some things that we actually moved up.

I mean I'm not a marketing expert, but traditionally you've kind of wait to the property had been opened for a couple months and bring more groups and stuff down there and you show it really humming.We actually did a lot of trips with travel agents, partners, a lot of media attention to bring people down to the market at late last year in Q4 to really showcase the property earlier when they traditionally would because we needed the help.

And we weren't going to sit around and wait for outside sources to do that for us. So, it's a little bit shift of both. But I think from a marketing perspective, you'll see that more evenly throughout the year notwithstanding the additional money spent in the fourth quarter of 2019..

Okay, thank you. And then back on the capital allocation front, Bruce quite clear in terms of your view on where the stock is and the corporate buybacks in the fourth quarter and quarter-to-date.

But as you think about the capital allocation decision tree, are there still opportunities for JV or sliver equity as you talked about to increase your portfolio. Or should we push those thoughts back to times when the leverage is lower than where it is now? Thanks..

No, I mean there is all - it all depends on the opportunity. But certainly as opportunities present themselves, we won't miss something that's really potentially highly profitable and valuable to our growth.

But there’s no question, I mean, given where the stock is today and our leverage situation, it’s glaring what the obvious uses of the cash need to be from asset sales. So that's kind of our position..

Our next question comes from the line of Tyler Batory. Your line is open. Please go ahead..

I wanted to ask a bit more about the two Hiltons. Can you talk about the displacement in 2019 from those renovations, discuss how much of that you think you can make back in 2020.

And then when you look longer term, can you just discuss your views on what those two properties could do at stabilization and whether that timeline or the amount of EBITDA contributions changed at all?.

Yes our stabilized - our opinion of where stabilized value could be has not changed and we've been pretty consistent about just the shape of the recovery. Though, we had said that those properties would have about $25 million to $30 million of displacement in 2019. They finish at the upper end of that range.

We are not expecting that either one of them get back to their 2018 numbers in 2020.In fact the low end of our guidance range implied that you'd get anywhere from kind of $12 million to $13 million back from those Hiltons.

So not even close to half back what they were doing in 2018 given the fact that the DR is obviously still slowly re-ramping given everything that happened last year.

And the relative underperformance of the Playa del Carmen market as compared to Cancún and the greater Yucatán.Again we are still incredibly excited about the returns and what we said before still stands. It's just about the shape of the recovery.

And again given everything we've said earlier we hope that that low end of the range proves to be conservative and we’ll update you as the year moves on..

And then as a follow-up just in the Yucatán it sounds like Playa del Carmen a little bit weaker than Cancún.

So can you just talk about differences in trends between those two markets and what in your mind needs to happen for trends to inflect higher in the Yucatán generally?.

Yes, the differences between the two, there are some obvious stuff that apply to our comments further from the airport. The way the beaches and the tides were there, it suffered far worse from sargassum the seaweed then Cancún did.

I spent a lot of time last year in both those locations and it was just always far, far worse particularly at our Panama Jack Cancún just the way that beach sits.And historically not so much that we're seeing in 2020, but historically it had a lot more supply particularly lower end supply that came in at that market.

There is just fewer places to build in Cancún particularly in Cancún proper people are building to the North. I mean it’s a little bit further and further away from the airport.

So those, you add those things up it leads to relative under-performance when compared to Cancún.Like we said, we kind of noticed it at the - on our Q3 call and we're still seeing it now that there are some signs of stabilization particularly in Cancún. We still expect that Cancún will outperform Playa del Carmen.

But I said, January was off to an okay start. And so, we're cautiously optimistic that we've built some momentum here. Notwithstanding anything that's going on in the world today..

Our next question comes from the line of Patrick Scholes. Your line is open. Please go ahead..

How would you characterize your sentiment about the trajectory of Dominican Republic today versus say January - yes two months ago January 1.

How are you feeling in that sort of two month' period, better or worse, same?.

I mean, I think better. So - as we said it's always tough when you're comparing big negatives and you're saying the big negative was not as big negative as you expected. So that case is where - we're improving and the trend line is better. So, I mean in my opinion it's more positive than two months ago..

Yes it's more positive. We've seen the bookings continue to progress not to be the downer here, but the other side of that is that there's still continued airlift issue that's a prohibitively expensive market to fly into without any of the news that happened last year.

But then you layer on to it that there's been capacity shifts from the airlines and the lingering issues with the 737 MAX. So that is why we were clear that while we're encouraged by what we're seeing.We're not yet changing our outlooks it's about the change in the - ramp of the recovery.

We do not believe at all that that market is impaired indefinitely or anything like that.

It's just about the shape of the recovery and because so much of the year-over-year growth in absolute terms - its back half loaded.We thought it prudent to continue to give a wide range and update you - in just a couple of months on our May call when we have just done a lot more information.

So like said we’re encouraged, but we'd like to see some of these other headwinds start to dissipate and right now they’re not..

Thank you for color on that.

And then secondly, can you give a little bit color on the sort of the travel makeup of your Asia Pacific customers to Mexico? Are those all like group tours where the whole group could just cancel that right or is this more sort of individual travelers?.

It is not group, okay. So it's primarily - we have a big percentage of that business who are Honeymooners. So that's been really stable good profitable business for us. And then the other part of that tends to be couples or families. So, definitely it is not a group business..

Our next question comes from the line of Smedes Rose. Your line is open. Please go ahead. Once again Smedes Rose, your line is open. Please go ahead..

I wanted to ask you a little more on the use of capital particularly if you are able to sell assets. And it seems like - I mean you've hinted at being more interested in share repurchase. But I mean, if we are and who knows on the verge of a global slowdown in travel and your EBITDA - debt to EBITDA is verging on six times now.

I mean, isn't it more prudent to attack the debt first before and the stock which we’ll care itself later.

Or I mean it seems like you’re getting awfully high on the leverage side?.

Yes, I mean, it’s a good point. So what I stated was kind of our sentiment where we are today. But, I can't predict where we'll be tomorrow let alone you know probably in a week or a month so..

Right exactly and given where you are on leverage, wouldn’t it be better to go ahead and get in front of that since - to exactly your point, you can't predict what will happen?.

That may absolutely be what happens. So - we’ll meet with the Board and we'll have that discussion given all of evidence of - our business and our prospects as well as the global situation. And it may be very well that we do that.

But let me just comment a little bit where - it and I won’t say it doesn't matter, but I'll say that we can still accomplish both okay.

And the reason I say that, is even with a downturn, our free cash flow generation is very significant.And so as Ryan mentioned, we’re going to be paying off the rest of the revolver in the first-half of the year if we have the proceeds from an asset sale. I think we'll have different levers that we can pool.

So as we look at it, we will make that determination and we're not going to do anything stupid. We're going to do what's best to secure a great outcome and if that outcome is deleveraging, we will deleverage. If it's a combination of deleveraging a stock buyback, we will do that..

And then, I just wanted to ask you, you guys have talked a little bit about how you thought the Cap Cana asset would ramp up comparing it to your Cancún properties.

I mean has that changed at all in terms - of how you think the first, second and potentially third year EBITDA generation looks there?.

No, no and again, going to my - kind of my summary comment about my frustrations, it's definitely a temporary issue. So Hyatt Ziva and Zilara Cap Cana unfortunately open into a soft market, okay. As Ryan said, this isn't something that's going to go on indefinitely.

It's kind of recovering and I think once the 737 MAX situation is resolved, once coronavirus is resolves, once a lot of things are resolved that asset - those two hotels are going to be incredibly successful.You can go on and you can look at the TripAdvisor ratings you can go down and you can talk to guests who have been there, the overall experience is tremendous.

And what happens in our industry is that you need that natural progression to occur. You need guest to go to a resort.

You need great feedback from their experience, you need groups to go to the resort and get great feedback and then success breeds success and I think that's what you're going to see.We had that situation - at Ziva and Zilara Rose Hall and I think it will be even better here at Hyatt Ziva and Zilara Cap Cana. It is an incredible asset.

It’s built for groups. It has more amenities and facilities and efficiencies than any other resort we have. It's got the best beach of all of our resorts. The Dominican has had a cloud over it due to the whole media frenzy in 2019.

And then, it was impacted as Ryan said by flight availability.These things will clear out and that resort will do well and even in the meantime, it's going to do better than the competition there. I mean, Cap Cana is for one an incredible location and number two we have the best resort in Cap Cana.

We have the best resort in the Dominican and arguably in the Caribbean. So, I think it's going to do well. It's just opened into a soft market that's it..

There are no questions at this time. Please continue..

Okay. So, I'll just wrap it up by saying it's an uncertain world and we have a lot of challenges, but we are not alone, okay. If I were to choose where to go in the world right now, I personally would choose to go to one of our locations, but who knows what's going to happen to the whole travel market, leisure business everything combined.

We've seen this before. It's hard to predict with this one, but I can tell you that from the standpoint of our business operations.I think things are going as well as they can, given the external situations and we will continue to focus on driving free cash flow and profitability and that's our focus. So we had a good start to the year.

Hopefully that will continue even given the external factors and that's going to be our focus.

The asset sale discussion we've had I can’t comment on any specifics, but I can tell you as we’ve said before, that remains an incredible focus as well for the company.So, we will do that and whether [indiscernible] has used the money to deliver to buy back stock, we will do what's most prudent in the best interest of our shareholders, but we will do that.

And so with that I'd just like to say hang in there. I guarantee you, I'm hanging in there. I feel more positive in this year than I did last year and even with coronavirus I think this shall pass. So thank you very much for taking your time to listen to our comments today..

Ladies and gentlemen, this concludes today's conference call. Thank you all for participating. You may now disconnect. Have a great day..