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Playa Hotels & Resorts Limited estimates that the travel warnings on Jamaica will cost it US$10 million in lost bookings, despite lowering daily rates that position its Jamaican hotels as cheaper than their peers.
“So, net-net, our best estimate for the impact of annualising that travel advisory warning is a negative US$10 million to next year,” said Ryan Hymel, chief financial officer of Playa, during an earnings call this month.
In Jamaica, Playa owns and manages Hyatt Zilara Rose Hall, Hyatt Ziva Rose Hall, Hilton Rose Hall Resort & Spa, Jewel Grande Montego Bay Resort & Spa, and Jewel Paradise Cove Beach Resort & Spa.
In addition to the travel advisory, the region was affected by Hurricane Beryl in July. These factors led to reduced bookings in the island, and region. Consequently, the company started offering lower daily rates to drive occupancy for the fourth quarter. The rates position the island, at times, cheaper than its peers in the Dominican Republic and Mexico.
“Jamaica is still a wild card,” said Hymel. “It’s nothing scientific other than just getting heads in the beds again.”
Consumers won’t get more than 15 per cent off the standard price. But it is aimed to raise local occupancy levels from the current 63 per cent at the end of summer back to 78 per cent from a year ago.
“There is something to be said about the relative value Jamaica will show versus our other destinations,” noted Hymel. “Jamaica, for what it’s worth, is … cheaper to go for a great experience, at any one of the resorts there, versus heading to the Dominican Republic or Mexico.”
In January, the State Department in the United States issued a Level 3 threat for its citizens, advising them to “reconsider travel” to Jamaica. That’s one level away from the most severe ‘do not travel’ warning. In July, the US revised the language of the warning but maintained its concerns on crime, and the medical infrastructure.
Playa Hotels Chairman Bob Wardinski said that the reduced bookings stemmed from the travel advisory and the hurricane. The group’s revenues are down by 14 per cent, while Jamaica’s are down twice that amount.
“As we outlined on our last earnings call, the segment was starting to regain its footing, especially for the fourth quarter, but the recovery was significantly disrupted by Hurricane Beryl,” said Wardinski. “Although the physical property impact of Beryl was not significant, it had a meaningful impact on demand for the summer and early fall period in both the Caribbean and the Yucatan, as both destinations were in the direct path of the storm.”
In the September 2024 quarter, Playa’s total operations generated US$173 million in revenue, 14 per cent lower year-on-year. The Jamaican properties generated US$36 million in revenue, down from the US$50 million earned during the same period in 2023. From those flows, the hotel company made an operating profit of US$3.2 million, down from US$15.3 million a year ago. Over nine months ending September, the operating profit from the Jamaican operations was US$43.4 million, 33 per cent less than the US$64.3 million earned a year earlier.
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