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Hospitality company Playa Hotels & Resorts (NASDAQ:PLYA) reported Q2 CY2024 results beating Wall Street analysts' expectations, with revenue down 5.1% year on year to $235.5 million. It made a non-GAAP profit of $0.12 per share, down from its profit of $0.13 per share in the same quarter last year.
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Playa Hotels & Resorts (PLYA) Q2 CY2024 Highlights:
- Revenue: $235.5 million vs analyst estimates of $228.4 million (3.1% beat)
- EPS (non-GAAP): $0.12 vs analyst estimates of $0.09 (27.4% beat)
- Gross Margin (GAAP): 45.9%, down from 47.2% in the same quarter last year
- Adjusted EBITDA Margin: 27.1%, down from 29.1% in the same quarter last year
- RevPAR: $323.68 at quarter end, up 3.5% year on year
- Market Capitalization: $1.03 billion
Hotels, Resorts and Cruise LinesHotels, resorts, and cruise line companies often sell experiences rather than tangible products, and in the last decade-plus, consumers have slowly shifted from buying "things" (wasteful) to buying "experiences" (memorable). In addition, the internet has introduced new ways of approaching leisure and lodging such as booking homes and longer-term accommodations. Traditional hotel, resorts, and cruise line companies must innovate to stay relevant in a market rife with innovation.
Sales GrowthA company’s long-term performance can give signals about its business quality. Even a bad business can shine for one or two quarters, but a top-tier one tends to grow for years. Regrettably, Playa Hotels & Resorts's sales grew at a weak 8.7% compounded annual growth rate over the last five years. This shows it failed to expand in any major way and is a rough starting point for our analysis.
We at StockStory place the most emphasis on long-term growth, but within consumer discretionary, a stretched historical view may miss a company riding a successful new property or emerging trend. Playa Hotels & Resorts's annualized revenue growth of 13.6% over the last two years is above its five-year trend, but we were still disappointed by the results.
We can dig further into the company's revenue dynamics by analyzing its revenue per available room, which clocked in at $323.68 this quarter and is a key metric accounting for daily rates and occupancy levels. Over the last two years, Playa Hotels & Resorts's revenue per room averaged 17.9% year-on-year growth. Because this number is better than its revenue growth, we can see its room bookings outperformed its sales from other areas like restaurants, bars, and amenities.
This quarter, Playa Hotels & Resorts's revenue fell 5.1% year on year to $235.5 million but beat Wall Street's estimates by 3.1%. Looking ahead, Wall Street expects revenue to decline 5.5% over the next 12 months.
Operating MarginOperating margin is an important measure of profitability as it shows the portion of revenue left after accounting for all core expenses–everything from the cost of goods sold to advertising and wages. It's also useful for comparing profitability across companies with different levels of debt and tax rates because it excludes interest and taxes.
Playa Hotels & Resorts's operating margin might have seen some fluctuations but has generally stayed the same over the last year, averaging 17.6%. Its profitability was top-notch for a consumer discretionary business, showing it's an optimally-run company with an efficient cost structure.
In Q2, Playa Hotels & Resorts generated an operating profit margin of 16.1%, down 4 percentage points year on year. This contraction shows it was recently less efficient because its expenses increased relative to its revenue.
Key Takeaways from Playa Hotels & Resorts's Q2 Results We were impressed by how significantly Playa Hotels & Resorts blew past analysts' EPS expectations this quarter. We were also glad its revenue outperformed Wall Street's estimates. Zooming out, we think this was a solid quarter. The stock remained flat at $7.64 immediately after reporting.
