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 ~~September~~June 30, ~~2019~~2020



☐	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)





The	Netherlands	98-1346104
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification Number)




Prins Bernhardplein 200
1097 JB	Amsterdam,	the	Netherlands	Not Applicable
(Address of Principal Executive Offices)				(Zip Code)

+31 20 571 12 02

(Registrant's Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:



Title of each Class	Trading Symbol(s)	Name of Each Exchange on Which Registered
Ordinary Shares, €0.10 par value	PLYA	NASDAQ

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 filer	☐	Accelerated 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 ~~October~~July 31, ~~2019,~~2020, there were ~~129,351,389~~134,493,942 shares of the registrant’s ordinary shares, €0.10 par value, outstanding.



Playa Hotels & Resorts N.V. TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION
		Page
Item 1.	Financial Statements (unaudited)
	Condensed Consolidated Balance Sheets as of ~~September~~June 30, ~~2019~~2020 and December 31, ~~2018~~2019	1
	Condensed Consolidated Statements of Operations for the three and ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 and ~~2018~~2019	2
	Condensed Consolidated Statements of Comprehensive (Loss) Income for the three and ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 and ~~2018~~2019	3
	Condensed Consolidated Statements of Shareholders' Equity for the three and ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 and ~~2018~~2019	4
	Condensed Consolidated Statements of Cash Flows for the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 and ~~2018~~2019	65
	Notes to the Condensed Consolidated Financial Statements	87
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	3025
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	6157
Item 4.	Controls and Procedures	6158
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	6359
Item 1A.	Risk Factors	6359
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	6360
Item 3.	Defaults Upon Senior Securities	6360
Item 4.	Mine Safety Disclosures	6360
Item 5.	Other Information	6360
Item 6.	Exhibits	6461

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 September 30,			As of December 31,			As of June 30,			As of December 31,
	2019			2018			2020			2019
ASSETS
Cash and cash equivalents	$	28,165		$	116,353		$	251,022		$	20,931
Restricted cash							27,919			—
Trade and other receivables, net	45,391			64,770			26,867			71,250
Accounts receivable from related parties	3,715			6,430			2,933			5,401
Inventories	15,073			15,390			14,239			16,649
Prepayments and other assets	44,397			32,617			45,963			44,691
Property and equipment, net	1,899,190			1,808,412			1,805,242			1,929,914
Goodwill	84,507			83,656
Goodwill, net							62,166			78,339
Other intangible assets	7,826			6,103			8,555			8,408
Deferred tax assets	15,931			1,427			22,358			21,381
Total assets	$	2,144,195		$	2,135,158		$	2,267,264		$	2,196,964
LIABILITIES AND SHAREHOLDERS' EQUITY
Trade and other payables	$	155,449		$	159,600		$	121,238		$	181,603
Payables to related parties	7,868			4,320			9,260			7,620
Income tax payable	321			1,899			1,813			3,252
Debt	982,838			989,387			1,251,877			1,040,658
Derivative financial instruments	37,905			12,476			55,477			31,932
Other liabilities	29,861			21,602			30,696			24,307
Deferred tax liabilities	105,652			106,033			86,345			97,941
Total liabilities	1,319,894			1,295,317			1,556,706			1,387,313
Commitments and contingencies (see Note 8)
Commitments and contingencies (see Note 7)
Shareholders' equity
Ordinary shares (par value €0.10; 500,000,000 shares authorized, 130,894,830 shares issued and 129,491,038 shares outstanding as of September 30, 2019, and 130,494,734 shares issued and 130,440,126 shares outstanding as of December 31, 2018)	14,206			14,161
Treasury shares (at cost, 1,403,792 shares as of September 30, 2019 and 54,608 shares as of December 31, 2018)	(10,701		)	(394		)
Ordinary shares (par value €0.10; 500,000,000 shares authorized, 136,684,273 shares issued and 134,485,477 shares outstanding as of June 30, 2020, and 130,967,671 shares issued and 129,121,576 shares outstanding as of December 31, 2019)							14,861			14,215
Treasury shares (at cost, 2,198,796 shares as of June 30, 2020 and 1,846,095 shares as of December 31, 2019)							(16,642		)	(14,088		)
Paid-in capital	998,864			992,297			1,025,942			1,001,088
Accumulated other comprehensive loss	(29,070		)	(3,658		)	(36,667		)	(24,642		)
Accumulated deficit	(148,998		)	(162,565		)	(276,936		)	(166,922		)
Total shareholders' equity	824,301			839,841			710,558			809,651
Total liabilities and shareholders' equity	$	2,144,195		$	2,135,158		$	2,267,264		$	2,196,964

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

Playa Hotels & Resorts N.V.

Condensed Consolidated Statements of Operations

($ in thousands, except share data)

(unaudited)


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018			2020			2019			2020			2019
Revenue
Package	$	111,091		$	123,633		$	416,978		$	402,627		$	302		$	136,095		$	153,357		$	305,887
Non-package	20,065			18,800			68,975			61,752			240			24,428			22,818			48,910
Management fees	83			152			1,568			503			(18		)	551			627			1,485
Cost reimbursements	1,586			227			5,123			349			458			2,949			1,408			3,537
Total revenue	132,825			142,812			492,644			465,231			982			164,023			178,210			359,819
Direct and selling, general and administrative expenses
Direct	87,252			91,573			273,577			250,742			20,380			92,582			118,278			186,325
Selling, general and administrative	30,771			28,489			94,647			87,742			19,739			32,048			53,571			63,876
Pre-opening	257			87			548			87			—			202			—			291
Depreciation and amortization	29,417			20,138			77,636			51,709			22,400			25,908			47,359			48,219
Reimbursed costs	1,586			227			5,123			349			458			2,949			1,408			3,537
Impairment loss													25,268			—			41,441			—
Loss on sale of assets													1,729			—			1,729			—
Gain on insurance proceeds	—			(686		)	—			(2,207		)	(2,950		)	—			(2,950		)	—
Direct and selling, general and administrative expenses	149,283			139,828			451,531			388,422			87,024			153,689			260,836			302,248
Operating (loss) income	(16,458		)	2,984			41,113			76,809			(86,042		)	10,334			(82,626		)	57,571
Interest expense	(9,936		)	(7,637		)	(34,796		)	(35,151		)	(20,916		)	(10,666		)	(41,871		)	(24,860		)
Other expense	(2,537		)	(390		)	(2,775		)	(1,836		)
Other income (expense)													4,853			364			947			(238		)
Net (loss) income before tax	(28,931		)	(5,043		)	3,542			39,822			(102,105		)	32			(123,550		)	32,473
Income tax (provision) benefit	(1,530		)	(379		)	10,025			(6,606		)
Income tax benefit													14,647			1,008			13,536			11,555
Net (loss) income	$	(30,461	)	$	(5,422	)	$	13,567		$	33,216		$	(87,458	)	$	1,040		$	(110,014	)	$	44,028

Earnings per share
(Losses) earnings per share - Basic	$	(0.23	)	$	(0.04	)	$	0.10		$	0.28		$	(0.67	)	$	0.01		$	(0.85	)	$	0.34
(Losses) earnings per share - Diluted	$	(0.23	)	$	(0.04	)	$	0.10		$	0.28		$	(0.67	)	$	0.01		$	(0.85	)	$	0.34
Weighted average number of shares outstanding during the period - Basic	129,841,264			130,478,993			130,265,112			119,344,659			130,466,383			130,421,695			129,876,545			130,480,549
Weighted average number of shares outstanding during the period - Diluted	129,841,264			130,478,993			130,601,247			119,647,364			130,466,383			130,815,177			129,876,545			130,789,467

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

Playa Hotels & Resorts N.V.

Condensed Consolidated Statements of Comprehensive (Loss) Income

($ in thousands)

(unaudited)

Three Months Ended September 30, Nine Months Ended September 30,
2019 2018 2019 2018
Net (loss) income $ (30,461 ) $ (5,422 ) $ 13,567
$ 33,216
Other comprehensive (loss) income, net of taxes
Unrealized loss on interest rate swaps (4,588 ) —
(25,230 ) —
Pension obligation (loss) gain (6 ) 37
(182 ) (26 )
Total other comprehensive (loss) income (4,594 ) 37
(25,412 ) (26 )
Comprehensive (loss) income $ (35,055 ) $ (5,385 ) $ (11,845 ) $ 33,190



	Three Months Ended June 30,						Six Months Ended June 30,
	2020			2019			2020			2019
Net (loss) income	$	(87,458	)	$	1,040		$	(110,014	)	$	44,028
Other comprehensive income (loss), net of taxes
Unrealized gain (loss) on interest rate swaps	2,926			(14,784		)	(12,122		)	(20,642		)
Pension obligation gain (loss)	152			(25		)	97			(176		)
Total other comprehensive income (loss)	3,078			(14,809		)	(12,025		)	(20,818		)
Comprehensive (loss) income	$	(84,380	)	$	(13,769	)	$	(122,039	)	$	23,210

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

Playa Hotels & Resorts N.V.

Condensed Consolidated Statements of Shareholders' Equity

($ in thousands, except share data)

(unaudited)


	Ordinary Shares				Treasury Shares				Paid-In Capital		Accumulated Other Comprehensive Loss			Accumulated Deficit			Total			Ordinary Shares				Treasury Shares				Paid-In Capital		Accumulated Other Comprehensive Loss			Accumulated Deficit			Total
	Shares		Amount		Shares	Amount														Shares		Amount		Shares	Amount
Balance at December 31, 2018	130,440,126		$	14,161	54,608	$	(394	)	$	992,297	$	(3,658	)	$	(162,565	)	$	839,841		130,440,126		$	14,161	54,608	$	(394	)	$	992,297	$	(3,658	)	$	(162,565	)	$	839,841
Net income	—		—		—	—			—		—			42,988			42,988			—		—		—	—			—		—			42,988			42,988
Other comprehensive loss	—		—		—	—			—		(6,009		)	—			(6,009		)	—		—		—	—			—		(6,009		)	—			(6,009		)
Share-based compensation	249,044		29		—	—			2,719		—			—			2,748			249,044		29		—	—			2,719		—			—			2,748
Repurchase of ordinary shares	(198,179	)	—		198,179	(1,522		)			—			—			(1,522		)	(198,179	)	—		198,179	(1,522		)	—		—			—			(1,522		)
Balance at March 31, 2019	130,490,991		$	14,190	252,787	$	(1,916	)	$	995,016	$	(9,667	)	$	(119,577	)	$	878,046		130,490,991		$	14,190	252,787	$	(1,916	)	$	995,016	$	(9,667	)	$	(119,577	)	$	878,046
Net income	—		—		—	—			—		—			1,040			1,040			—		—		—	—			—		—			1,040			1,040
Other comprehensive loss	—		—		—	—			—		(14,809		)	—			(14,809		)	—		—		—	—			—		(14,809		)	—			(14,809		)
Share-based compensation	141,491		15		—	—			1,999		—			—			2,014			141,491		15		—	—			1,999		—			—			2,014
Repurchase of ordinary shares	(304,587	)	—		304,587	(2,400		)	—		—			—			(2,400		)	(304,587	)	—		304,587	(2,400		)	—		—			—			(2,400		)
Balance at June 30, 2019	130,327,895		$	14,205	557,374	$	(4,316	)	$	997,015	$	(24,476	)	$	(118,537	)	$	863,891		130,327,895		$	14,205	557,374	$	(4,316	)	$	997,015	$	(24,476	)	$	(118,537	)	$	863,891
Net loss	—		—		—	—			—		—			(30,461		)	(30,461		)
Other comprehensive loss	—		—		—	—			—		(4,594		)	—			(4,594		)
Share-based compensation	9,561		1		—	—			1,849		—			—			1,850
Repurchase of ordinary shares	(846,418	)	—		846,418	(6,385		)	—		—			—			(6,385		)
Balance at September 30, 2019	129,491,038		$	14,206	1,403,792	$	(10,701	)	$	998,864	$	(29,070	)	$	(148,998	)	$	824,301



	Ordinary Shares				Treasury Shares				Paid-In Capital		Accumulated Other Comprehensive Loss			Accumulated Deficit			Total
	Shares		Amount		Shares	Amount
Balance at December 31, 2019	129,121,576		$	14,215	1,846,095	$	(14,088	)	$	1,001,088	$	(24,642	)	$	(166,922	)	$	809,651
Net loss	—		—		—	—			—		—			(22,556		)	(22,556		)
Other comprehensive loss	—		—		—	—			—		(15,103		)	—			(15,103		)
Share-based compensation, net of tax withholdings	493,226		55		4,500	(34		)	3,168		—			—			3,189
Repurchase of ordinary shares	(340,109	)	—		340,109	(2,500		)	—		—			—			(2,500		)
Balance at March 31, 2020	129,274,693		$	14,270	2,190,704	$	(16,622	)	$	1,004,256	$	(39,745	)	$	(189,478	)	$	772,681
Net loss	—		—		—	—			—		—			(87,458		)	(87,458		)
Other comprehensive income	—		—		—	—			—		3,078			—			3,078
Share-based compensation, net of tax withholdings	332,735		38		8,092	(20		)	2,681		—			—			2,699
Equity issuance, net (see Note 8)	4,878,049		553		—	—			19,005		—			—			19,558
Balance at June 30, 2020	134,485,477		$	14,861	2,198,796	$	(16,642	)	$	1,025,942	$	(36,667	)	$	(276,936	)	$	710,558

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

~~Playa Hotels & Resorts N.V.~~

~~Condensed Consolidated Statements of Shareholders' Equity~~ ~~(continued)~~

~~($ in thousands, except share data)~~

~~(unaudited)~~

Ordinary Shares Treasury Shares Paid-In Capital
Accumulated Other
Comprehensive Loss
Accumulated Deficit Total
Shares Amount Shares Amount
Balance at December 31, 2017 110,297,697
$ 11,803
7,367
$ (80 ) $ 773,194
$ (3,826 ) $ (181,542 ) $ 599,549
Net income —
—
—
—
—
—
21,817
21,817
Other comprehensive loss —
—
—
—
—
(81 ) —
(81 )
Share-based compensation 48,699
6
—
—
1,780
—
—
1,786
Balance at March 31, 2018 110,346,396
$ 11,809
7,367
$ (80 ) $ 774,974
$ (3,907 ) $ (159,725 ) $ 623,071
Net income —
—
—
—
—
—
16,821
16,821
Other comprehensive income —
—
—
—
—
18
—
18
Shares issued in business combination (see Note 4) 20,000,000
2,336
—
—
213,064
—
—
215,400
Share-based compensation 132,597
15
—
—
2,089
—
—
2,104
Balance at June 30, 2018 130,478,993
$ 14,160
7,367
$ (80 ) $ 990,127
$ (3,889 ) $ (142,904 ) $ 857,414
Net loss —
—
—
—
—
—
(5,422 ) (5,422 )
Other comprehensive income —
—
—
—
—
37
—
37
Share-based compensation —
—
—
—
1,182
—
—
1,182
Repurchase of Earnout Warrants (see Note 11) —
—
—
—
(55 ) —
—
(55 )
Balance at September 30, 2018 130,478,993

$ 14,160

7,367

$ (80 )
$ 991,254

$ (3,852 )
$ (148,326 ) $ 853,156

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

Playa Hotels & Resorts N.V.

Condensed Consolidated Statements of Cash Flows

($ in thousands)

(unaudited)

Nine Months Ended September 30,
2019 2018
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 13,567
$ 33,216
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization 77,636
51,709
Amortization of debt discount and issuance costs 1,026
1,175
Share-based compensation 6,612
5,072
Loss (gain) on derivative financial instruments 199
(1,817 )
Deferred income taxes (9,786 ) —
Amortization of key money (187 ) —
Gain on property damage insurance proceeds —
(203 )
Other 2,018
985
Changes in assets and liabilities:
Trade and other receivables, net 15,911
14,522
Accounts receivable from related parties 2,715
(4,826 )
Inventories 320
(214 )
Prepayments and other assets (10,418 ) (3,845 )
Trade and other payables (12,882 ) (4,815 )
Payables to related parties 3,548
(692 )
Income tax payable (1,578 ) 85
Other liabilities 4,349
704
Net cash provided by operating activities 93,050
91,056
INVESTING ACTIVITIES
Capital expenditures (165,484 ) (67,252 )
Acquisition of Sagicor business, net of cash acquired —
(93,128 )
Receipt of key money 2,500
—
Purchase of intangibles (2,485 ) (1,505 )
Proceeds from disposal of property and equipment 104
—
Property damage insurance proceeds 2,009
203
Net cash used in investing activities (163,356 ) (161,682 )
FINANCING ACTIVITIES
Proceeds from debt issuance —
99,499
Repayment of Term Loan (7,575 ) (7,325 )
Repurchase of Earnout Warrants —
(55 )
Repurchase of ordinary shares (10,307 ) —
Net cash (used in) provided by financing activities (17,882 ) 92,119
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (88,188 ) 21,493
CASH AND CASH EQUIVALENTS, BEGINNING OF THE PERIOD $ 116,353
$ 117,229
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, END OF THE PERIOD $ 28,165
$ 138,722



	Six Months Ended June 30,
	2020			2019
CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss) income	$	(110,014	)	$	44,028
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization	47,359			48,219
Amortization of debt discount and issuance costs	679			681
Share-based compensation	5,942			4,762
Loss on derivative financial instruments	11,423			1,122
Impairment loss	41,441			—
Deferred income taxes	(12,573		)	(14,341		)
Loss on sale of assets	1,729			—
Amortization of key money	(439		)	(110		)
Other	(154		)	628
Changes in assets and liabilities:
Trade and other receivables, net	44,462			1,743
Accounts receivable from related parties	2,855			1,504
Inventories	950			(224		)
Prepayments and other assets	470			(4,845		)
Trade and other payables	(61,207		)	(5,512		)
Payables to related parties	1,640			4,379
Income tax payable	(1,439		)	(984		)
Other liabilities	(1,520		)	5,026
Net cash (used in) provided by operating activities	(28,396		)	86,076
INVESTING ACTIVITIES
Capital expenditures	(7,414		)	(92,038		)
Receipt of key money	8,500			2,500
Purchase of intangibles	(349		)	(1,424		)
Proceeds from the sale of assets, net	58,125			6
Property damage insurance proceeds	—			2,009
Net cash provided by (used in) investing activities	58,862			(88,947		)
FINANCING ACTIVITIES
Proceeds from debt issuances, net of discount	199,600			—
Issuance costs of debt	(8,677		)	—
Proceeds from ordinary shares, net of issuance costs	19,558			—
Repayments of debt	(5,050		)	(5,050		)
Proceeds from borrowings on revolving credit facility	40,000			—
Repayments of borrowings on revolving credit facility	(15,333		)	—
Repurchase of ordinary shares	(2,500		)	(3,922		)
Repurchase of ordinary shares for tax withholdings	(54		)	—
Net cash provided by (used in) financing activities	227,544			(8,972		)
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	258,010			(11,843		)
CASH AND CASH EQUIVALENTS, BEGINNING OF THE PERIOD	$	20,931		$	116,353
CASH AND CASH EQUIVALENTS, END OF THE PERIOD	$	278,941		$	104,510
RECONCILIATION OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH
Cash and cash equivalents	$	251,022		$	104,510
Restricted cash	27,919			—
TOTAL CASH, CASH EQUIVALENTS AND RESTRICTED CASH	$	278,941		$	104,510

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

Playa Hotels & Resorts N.V.

Condensed Consolidated Statements of Cash Flows (Continued)

($ in thousands)

(unaudited)


	Nine Months Ended September 30,				Six Months Ended June 30,
	2019		2018		2020		2019
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid for interest, net of interest capitalized	$	33,373	$	40,783	$	28,919	$	22,616
Cash paid for income taxes, net	$	6,527	$	9,131	$	2,040	$	4,990
SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING AND FINANCING ACTIVITIES					SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING AND FINANCING ACTIVITIES
Capital expenditures incurred but not yet paid	$	9,046	$	439	$	1,590	$	5,813
Right-of-use assets obtained in exchange for new operating lease liabilities	$	1,393	$	—
Intangible assets capitalized but not yet paid	$	459	$	674	$	208	$	474
Interest capitalized but not yet paid	$	35	$	43	$	—	$	95
Right-of-use assets obtained in exchange for new operating lease liabilities					$	—	$	1,393
Par value of vested restricted share awards	$	45	$	21	$	93	$	44
Non-cash issuance of shares in business combination (see Note 4)	$	—	$	215,400

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

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”) is a leading owner, operator and developer of all-inclusive resorts in prime beachfront locations in popular vacation destinations. ~~As of September 30, 2019, we owned~~We own and/or ~~managed~~manage a portfolio of 21 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.

COVID-19 impact

Due to the spread of the coronavirus (“COVID-19”) global pandemic, and in response to related governmental restrictions and advisories, reductions in scheduled commercial airline service, and potential health risks to our employees and guests, we temporarily suspended operations at all of our resorts from late March through June 2020. Our resorts began reopening in July, in stages, based on incremental easing of government restrictions and advisories and increases in scheduled commercial airline service. On July 1, 2020, we reopened 8 out of our 21 resorts and subsequently opened another 4 resorts. Currently, 12 out of our 21 resorts have reopened. We also implemented additional safety measures at our resorts to mitigate the potential health risks of COVID-19.

Although we began operations in July, we cannot predict when our business will return to normalized levels because we cannot predict when all effects of the pandemic will subside. The longer and more severe the pandemic, the greater the material adverse effect the pandemic will have on our business, results of operations, cash flows, financial condition, access to credit markets and ability to service our debt.

Liquidity and ability to continue as a going concern

As COVID-19 has had a significant adverse impact on our business and financial condition, we took several actions to help remedy our liquidity situation, which include the following:

we temporarily suspended operations in late March and subsequently began opening our resorts, in stages, beginning in July;

closed on the sale of equity (see Note 8) and issuance of additional debt (see Note 11) as part of our capital raise efforts;

amended our Senior Secured Credit Facility to waive the existing financial maintenance covenants until the fiscal quarter ended September 30, 2021 (see Note 11);

sold 2 of our resorts operated under the Jewel brand for cash consideration (see Note 4);

significantly reduced staffing levels at the properties and at our corporate offices;

imposed compensation cuts throughout the entirety of our corporate offices;

adjusted our marketing spend;

canceled all non-essential corporate travel;

deferred all non-critical capital expenditures for the remainder of the year; and

continue to pursue the potential sale of certain of our non-core resorts.

Due to the measures taken, we expect to be in compliance with all financial maintenance covenants and have sufficient liquidity to meet our obligations for at least twelve months from the date of this report. Accordingly, we believe that our plans to improve our liquidity situation have been effectively implemented and the conditions that previously raised substantial doubt about our ability to continue as a going concern have been mitigated.

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, ~~2018,~~2019, included in our Annual Report on Form 10-K, filed with the Securities and Exchange Commission (the “SEC”) on February ~~28, 2019~~27, 2020 (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.

The results of operations for the three and ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 are not necessarily indicative of the results of operations to be expected for the full year ended December 31, ~~2019.~~2020, particularly given the impact of the COVID-19 pandemic noted above. 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~~Assets held for sale

We ~~use derivative financial instruments, primarily interest rate swap contracts,~~classify a hotel as held for sale in the period during which we have made the decision to ~~hedge our exposure~~dispose of the hotel, a binding agreement to ~~interest rate risk. Such derivative financial instruments~~purchase the property has been signed under which the buyer has committed an amount of nonrefundable cash and no significant financing or other contingencies exist which could cause the transaction to not be completed in a timely manner. If these criteria are ~~initially recorded at fair value on~~met, we perform the date on which a derivative contract is entered into and are subsequently remeasured to fair value at period end. As of March 20, 2019, we elected to adopt hedge accounting and designate our existing interest rate swaps as cash flow hedges. Changes infollowing steps: recognize an impairment loss if the fair value is lower than the carrying amount of ~~a derivative contract that~~the hotel and related assets; cease recording depreciation expense; and classify the assets and related liabilities as held for sale on the balance sheet. Any asset impairment is ~~qualified, designated and highly effective as a cash flow hedge are~~ recorded within impairment loss in ~~total other comprehensive (loss) income in our~~ ~~Condensed Consolidated Statements of Comprehensive (Loss) Income~~ ~~and reclassified into interest expense in our~~the Condensed Consolidated Statements of Operations ~~in the same period or periods during which the hedged transaction affects earnings. If a derivative contract does not meet this criteria, then the change in fair value is recognized in earnings.~~.

Standards adopted



Standard	Description	Date of Adoption	Effect on the Financial Statements or Other Significant Matters
Accounting ~~Standards~~Standard Update ~~(“ASU”~~(“ASU”) No. ~~2016-02,~~ 2016-13,~~Leases (Topic 842)~~	This standard introduces a lessee model that brings most leases on the balance sheet. This will increase a lessee’s reported assets and liabilities—in some cases very significantly. Lessor accounting remains substantially similar to current U.S. GAAP.	~~January 2019~~	~~We adopted ASU 2016-02 using the transition method outlined in ASU No. 2018-11,~~ ~~Leases (Topic 842): Targeted Improvements, resulting in no cumulative adjustment to accumulated deficit as our lease portfolio consists solely of operating leases. Refer to Note 9 for further discussion.~~
~~ASU No. 2018-02,~~ ~~Income Statement-Reporting Comprehensive Income (Topic 220)~~	This standard provides guidance regarding the treatment of stranded income tax effects in accumulated other comprehensive income resulting from the Tax Cuts and Jobs Act of 2017. Entities can make an election to reclassify these stranded income tax effects from accumulated other comprehensive income to retained earnings.	~~January 2019~~	~~We adopted ASU 2018-02 and concluded that the effect on our Condensed Consolidated~~ Financial ~~Statements was immaterial. The tax effects presented in accumulated other comprehensive loss relate to our employee benefit plan and have been historically immaterial.~~

~~Standards not yet adopted~~

Standards not yet adopted



Standard	Description	Date of Adoption	Effect on the Financial Statements or Other Significant Matters
ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes	The standard simplifies the accounting for income taxes, eliminates certain exceptions within ASC 740, Income Taxes, and clarifies certain aspects of the current guidance to promote consistency among reporting entities.	January 2021	We are in the process of evaluating the impact of ASU No. 2019-12. We expect the adoption of this standard to result in changes to deferred tax liabilities and deferred income tax expense for our resorts located in the Dominican Republic, which are subject to hybrid tax regimes.
ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting	The amendments in this update provide optional expedients and exceptions for applying generally accepted accounting principles (GAAP) to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met.	January 2022	We are currently evaluating the impact of ASU No. 2020-04 on the Condensed Consolidated Financial Statements. We may elect to early adopt the standard prior to the discontinuation of LIBOR rates as of December 31, 2021.

Note 3. Revenue

The following tables present our revenues disaggregated by geographic segment (refer to discussion of our reportable segments in Note ~~19)~~15) ($ in thousands):


	Three Months Ended September 30, 2019												Three Months Ended June 30, 2020
	Yucatán Peninsula		Pacific Coast		Dominican Republic		Jamaica		Other		Total		Yucatán Peninsula			Pacific Coast			Dominican Republic			Jamaica			Other			Total
Package revenue	$	45,663	$	15,450	$	11,689	$	38,289	$	—	$	111,091	$	(165	)	$	(90	)	$	(178	)	$	735		$	—		$	302
Non-package revenue	7,437		2,310		2,928		7,377		13		20,065		187			15			190			(172		)	20			240
Management fees	—		—		—		—		83		83		—			—			—			—			(18		)	(18		)
Cost reimbursements	—		—		—		1,311		275		1,586		—			—			—			414			44			458
Total revenue	$	53,100	$	17,760	$	14,617	$	46,977	$	371	$	132,825	$	22		$	(75	)	$	12		$	977		$	46		$	982


	Three Months Ended September 30, 2018												Three Months Ended June 30, 2019
	Yucatán Peninsula		Pacific Coast		Dominican Republic		Jamaica		Other		Total		Yucatán Peninsula		Pacific Coast		Dominican Republic		Jamaica		Other		Total
Package revenue	$	52,047	$	14,848	$	22,800	$	33,938	$	—	$	123,633	$	53,460	$	19,770	$	18,226	$	44,639	$	—	$	136,095
Non-package revenue	6,681		2,169		4,780		5,170		—		18,800		8,400		3,155		4,394		8,465		14		24,428
Management fees	—		—		—		—		152		152		—		—		—		—		551		551
Cost reimbursements	—		—		—		—		227		227		—		—		—		2,588		361		2,949
Total revenue	$	58,728	$	17,017	$	27,580	$	39,108	$	379	$	142,812	$	61,860	$	22,925	$	22,620	$	55,692	$	926	$	164,023


	Nine Months Ended September 30, 2019												Six Months Ended June 30, 2020
	Yucatán Peninsula		Pacific Coast		Dominican Republic		Jamaica		Other		Total		Yucatán Peninsula		Pacific Coast		Dominican Republic		Jamaica		Other		Total
Package revenue	$	163,424	$	57,943	$	58,439	$	137,172	$	—	$	416,978	$	56,562	$	18,634	$	31,189	$	46,972	$	—	$	153,357
Non-package revenue	23,676		9,111		11,922		24,236		30		68,975		7,734		3,101		4,455		7,494		34		22,818
Management fees	—		—		—		—		1,568		1,568		—		—		—		—		627		627
Cost reimbursements	—		—		—		3,899		1,224		5,123		—		—		—		1,010		398		1,408
Total revenue	$	187,100	$	67,054	$	70,361	$	165,307	$	2,822	$	492,644	$	64,296	$	21,735	$	35,644	$	55,476	$	1,059	$	178,210


	Nine Months Ended September 30, 2018												Six Months Ended June 30, 2019
	Yucatán Peninsula		Pacific Coast		Dominican Republic		Jamaica		Other		Total		Yucatán Peninsula		Pacific Coast		Dominican Republic		Jamaica		Other		Total
Package revenue	$	182,913	$	57,057	$	83,849	$	78,466	$	342	$	402,627	$	117,761	$	42,493	$	46,750	$	98,883	$	—	$	305,887
Non-package revenue	22,775		10,338		15,644		12,994		1		61,752		16,239		6,801		8,994		16,859		17		48,910
Management fees	—		—		—		—		503		503		—		—		—		—		1,485		1,485
Cost reimbursements	—		—		—		—		349		349		—		—		—		2,588		949		3,537
Total revenue	$	205,688	$	67,395	$	99,493	$	91,460	$	1,195	$	465,231	$	134,000	$	49,294	$	55,744	$	118,330	$	2,451	$	359,819

Contract assets and liabilities

We do not have any material contract assets as of ~~September~~June 30, ~~2019~~2020 and December 31, ~~2018~~2019 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 ~~18)~~14) within trade and other payables on our Condensed Consolidated Balance Sheet. Our advanced deposits are generally recognized as revenue within one year.

~~Note 4. Business combinations~~

~~Business combination with the Sagicor Parties~~

On February 26, 2018, we entered into a Share Exchange Implementation Agreement with JCSD Trustee Services Limited, X Fund Properties Limited, Sagicor Pooled Investment Funds Limited, and Sagicor Real Estate X Fund Limited (collectively, the “Sagicor Parties”), as amended by that certain First Amendment to Share Exchange Implementation Agreement dated May 31, 2018 (as amended, the “Contribution Agreement”). Pursuant to the Contribution Agreement, the Sagicor Parties agreed to contribute a portfolio of the following assets (the “~~SagicorAssets”) to a subsidiary of ours in exchange for consideration consisting of a combination of our ordinary shares and cash:~~

~~The Hilton Rose Hall Resort & Spa;~~

~~The Jewel Runaway Bay Beach & Golf Resort;~~

~~The Jewel Dunn’s River Beach Resort & Spa;~~

~~The Jewel Paradise Cove Beach Resort & Spa;~~

~~The 88 units comprising one of the towers in the multi-tower condominium and spa at the Jewel Grande Montego Bay Resort & Spa;~~

~~Developable land sites adjacent to the Jewel Grande Montego Bay Resort & Spa and the Hilton Rose Hall Resort & Spa;~~

~~The management contract for the units owned by the Sagicor Parties at the Jewel Grande Montego Bay Resort & Spa; and~~

~~All of the Sagicor Parties’ rights to “The Jewel” hotel brand.~~

~~On June 1, 2018 (the “Acquisition Date”), we consummated our acquisition of the~~ ~~SagicorAssets~~ for total consideration, after prorations and working capital adjustments, of $308.5 million. We accounted for the acquisition as a business combination in accordance with Accounting Standards Codification (“ASC”) 805, ~~Business Combinations~~, and allocated the purchase price to the fair values of assets acquired and liabilities assumed. The business combination with the Sagicor Parties allows us to expand our portfolio of resorts in the all-inclusive segment of the lodging industry, capitalize on opportunities for growth and create significant operational synergies.

~~The following table summarizes the fair value of each class of consideration transferred to the Sagicor Parties on the Acquisition Date ($ in thousands, except share data~~):

Cash consideration, net of cash acquired of $0.1 million $ 93,128
Ordinary shares (20,000,000 shares at the Acquisition Date closing price of $10.77 per share, €0.10 par value) 215,400
Total purchase consideration $ 308,528

~~Fair values of assets acquired and liabilities assumed~~

The following table presents our estimates of fair values of the assets that we acquired and the liabilities that we assumed on the Acquisition Date as previously disclosed in our Annual Report and as finalized during the three months ended June 30, 2019 ~~($ in thousands)~~:

June 1, 2018
(as previously reported)

Adjustments⁽¹⁾

June 1, 2018
(as finalized)
Total purchase consideration $ 308,528
$ —
$ 308,528
Net assets acquired
Working capital (1,665 ) —
(1,665 )
Property and equipment 304,299
(5,950 ) 298,349
Identifiable intangible assets and liabilities (449 ) —
(449 )
Deferred income taxes (25,582 ) 5,099
(20,483 )
Goodwill 31,925
851
32,776
Total net assets acquired $ 308,528
$ —
$ 308,528

~~________~~

⁽¹⁾In addition to the adjustments recorded during the measurement period, we recognized adjustments to deferred income taxes and goodwill representing an immaterial correction of an error for acquired property and equipment in the third quarter of 2019. The adjustments made in the third quarter of 2019 were not significant to our previously reported Condensed Consolidated Financial Statements.

~~Property and equipment~~

Property and equipment primarily consists of the all-inclusive resorts and adjacent developable land sites. We estimated the value of the acquired property and equipment using a combination of the income and market approaches, which are primarily based on significant Level 2 and Level 3 assumptions (as described in Note 16), such as estimates of future income growth, capitalization rates, discount rates, and capital expenditure needs of the ~~SagicorAssets~~.

~~Identified intangible assets and liabilities~~

~~The following table presents our estimates of the fair values of the identified intangible asset and liability and their related estimated useful lives~~ ~~($ in thousands)~~:

Balance Sheet Classification Estimated Fair Value
Weighted-Average Amortization Period
(in years)
Management contract Other intangible assets $ 1,900
20
Unfavorable ground lease liability Other liabilities (2,349 ) 22
Total identifiable intangibles acquired $ (449 )

We estimated the value of the management contract using the multi-period excess earnings valuation method, which is a variation of the income valuation approach. This method estimates an intangible asset’s value based on the present value of its incremental after-tax cash flows. This valuation approach utilizes Level 3 inputs (as described in ~~Note 16~~).

~~Deferred income taxes~~

Deferred income taxes primarily relate to the fair value of non-current assets and liabilities acquired from the Sagicor Parties, including property and equipment and intangible liabilities. We calculated deferred income taxes based on the statutory rate in the jurisdiction of the legal entities where the acquired non-current assets and liabilities are recorded. Deferred tax assets, net of a $0.7 million valuation allowance, were $0.2 million and deferred tax liabilities were $20.7 million related to the acquisition.

~~Goodwill~~

The excess of the purchase consideration over the aggregate fair values of assets acquired and liabilities assumed was recorded as goodwill. The goodwill recognized is attributable primarily to expected synergies and future growth opportunities of our combined operations and is not deductible for income tax purposes. Goodwill related to the business combination was recognized at the Jamaica reportable segment (refer to discussion of our reportable segments in ~~Note 19~~).

~~Pro forma results of operations~~

~~The following unaudited pro forma results of operations were prepared as though the business combination was completed on~~ ~~January 1, 2017~~. This unaudited pro forma financial information does not necessarily reflect the results of operations of Playa that actually would have resulted had the acquisition of the Sagicor Assets occurred at the date indicated, nor does it project the results of operations of Playa for any future date or period ~~($ in thousands, except per share amounts)~~:

Three Months Ended September 30, Nine Months Ended September 30,
2018 2018
Pro forma revenue $ 142,812
$ 514,995
Pro forma net (loss) income $ (5,422 ) $ 45,640
Pro forma (losses) earnings per share - Basic $ (0.04 ) $ 0.35
Pro forma (losses) earnings per share - Diluted $ (0.04 ) $ 0.35

~~The unaudited pro forma financial information for the three and nine months ended September 30, 2018includes adjustments for:~~

~~Depreciation and amortization expense resulting from the estimated fair values of acquired property and equipment and identifiable definite-lived intangible assets and liabilities, respectively;~~


•	~~Elimination of the SagicorAssets' management fees and interest expense;~~

~~Interest expense resulting from the issuance of a $100.0 million term loan add-on;~~

~~Related income tax effects; and~~

~~Weighted-average number of shares outstanding.~~

For the nine months ended September 30, 2018, we incurred $2.9 million in transaction costs related to the acquisition and $1.3 million in transaction costs related to the issuance of the $100.0 million term loan add-on. These costs are recorded within selling, general and administrative expenses in the Condensed Consolidated Statement of Operations.

~~Sagicor Assets' results of operations~~

~~The following table presents the results of the Sagicor~~Assets' operations, which are recorded within our Jamaica reportable segment, included in our Condensed Consolidated Statement of Operations for the period from the Acquisition Date through September 30, 2018 ~~($ in thousands)~~:

June 2, 2018 -
September 30, 2018
Revenue $ 31,961
Net income $ 1,714

Note 5.4. Property and equipment

The balance of property and equipment, net is as follows ($ in thousands):


	As of September 30,			As of December 31,			As of June 30,			As of December 31,
	2019			2018			2020			2019
Property and equipment, gross
Land, buildings and improvements	$	1,799,092		$	1,787,727		$	1,909,979		$	1,976,214
Fixtures and machinery	71,631			69,396			80,909			81,437
Furniture and other fixed assets	200,585			195,036			229,751			228,533
Construction in progress	245,570			106,520			14,850			42,083
Total property and equipment, gross	2,316,878			2,158,679			2,235,489			2,328,267
Accumulated depreciation	(417,688		)	(350,267		)	(430,247		)	(398,353		)
Total property and equipment, net	$	1,899,190		$	1,808,412		$	1,805,242		$	1,929,914

Depreciation expense for property and equipment was ~~$76.9~~$46.7 million and ~~$50.8~~$47.7 million for the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 and ~~2018,~~2019, respectively, and ~~$29.2~~$22.0 million and ~~$19.8~~$25.6 million for the three months ended ~~September~~June 30, 2020 and 2019, ~~and 2018,~~ respectively.

For the ~~nine~~six months ended ~~September~~June 30, 2020 and 2019, ~~and 2018, $8.6~~$0 million and ~~$3.4~~$5.0 million of interest expense was capitalized on qualifying assets, respectively. For the three months ended ~~September~~June 30, 2020 and 2019, ~~and 2018, $3.6~~$0 million and ~~$1.3~~$2.9 million of interest expense was capitalized on qualifying assets, respectively. Interest expense was capitalized using the weighted-average interest rate of the debt.

Sale of assets

On May 22, 2020, we completed the sale of the Jewel Dunn’s River Beach Resort & Spa and Jewel Runaway Bay Beach Resort & Waterpark, which were reported within our Jamaica reportable segment, for $60.0 million in cash consideration. Upon classification as held for sale, we recorded an impairment loss of $25.3 million based on the sale price of the properties, which is considered an observable input other than quoted prices (Level 2) in the U.S. GAAP fair value hierarchy. The impairment is recorded within impairment loss in the Condensed Consolidated Statements of Operations. Upon closing, we received total cash consideration of $58.7 million, after customary closing costs, and recognized a $1.8 million loss within loss on sale of assets in the Condensed Consolidated Statements of Operations.

Consistent with terms of our Existing Credit Agreement (as defined in Note 11), a portion of the net proceeds, after deducting incremental expenses and capital expenditures incurred across our portfolio for 18 months following the sale, will be used to prepay our Term Loan in the fourth quarter of 2021.

Lessor contracts

We rent certain real estate to third parties for office and retail space within our hotels. 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 and six months ended June 30, 2020 and 2019 ($ in thousands):



Leases	Financial Statement Classification	Three Months Ended June 30, 2020		Three Months Ended June 30, 2019
Operating lease income ⁽¹⁾	Non-package revenue	$	—	$	1,245



Leases	Financial Statement Classification	Six Months Ended June 30, 2020		Six Months Ended June 30, 2019
Operating lease income ⁽¹⁾	Non-package revenue	$	1,146	$	2,716

________

⁽¹⁾ Includes variable lease revenue, which is typically calculated as a percentage of our tenant's net sales.

Note 6.5. Income taxes

We are domiciled in The Netherlands and are taxed in The Netherlands with our other Dutch subsidiaries. Dutch companies are subject to Dutch corporate income tax at a general tax rate of 25%.

During the first quarter of 2019, we implemented a new transfer pricing policy, where the intercompany pricing mechanics between our entities are based on the return on operating assets per applicable guidelines defined by the Organization for Economic Cooperation and Development. As a result, certain of our hotel entities that were previously in loss positions ~~are now~~were expected to be profitable, which resulted in the release of their valuation allowances.

The adverse economic effects of the COVID-19 pandemic (see Note 1) have caused us to reassess our tax positions. Due to the current environment, including the temporary suspension of operations at our hotels, we concluded that the transfer pricing method will not apply for the immediate future, but will resume once operations are normalized.

On March 27, 2020, the United States House of Representatives passed the Coronavirus Aid, Relief, and Economic Security Act (The CARES Act), also known as the Third COVID-19 Supplemental Relief Bill, and the President of the United States signed the legislation into law. We analyzed The CARES Act and do not expect the provisions of the legislation to have a significant impact on our effective tax rate or our income tax ~~impact of the new policy has been reflected in the~~payable and deferred income tax ~~computation for the three and nine months ended September~~positions as of June 30, ~~2019.~~2020.

For the ~~nine~~three months ended ~~September~~June 30, ~~2019,~~2020, our income tax benefit was ~~$10.0~~$14.6 million, compared to a ~~$6.6~~$1.0 million income tax ~~provision~~benefit for the ~~nine~~three months ended ~~September~~June 30, ~~2018.~~2019. The increase in our income tax benefit of ~~$16.6~~$13.6 million was driven primarily by ~~the net impact of our valuation allowance release of $14.3 million from the newly implemented transfer pricing policy, a $5.5~~an $8.1 million increased tax benefit due to ~~the shift in the jurisdictional mix of~~lower pre-tax book income ~~and~~from our tax paying entities, a ~~$2.6 million decrease in the discrete tax expense associated with foreign exchange rate fluctuations, offset by a $4.9~~$1.2 million increase in the discrete tax ~~expense~~benefit associated with future tax liabilities of certain Dominican Republic ~~entities.~~

~~For~~entities and a $5.8 million tax benefit associated with the sale of the Jewel Dunn’s River Beach Resort & Spa and Jewel Runaway Bay Beach Resort & Waterpark. The increased income tax benefit was partially offset by an $0.8 million increase in tax expense associated with foreign exchange rate fluctuations and a non-recurring $0.7 million tax benefit from the valuation allowance release during the three months ended ~~September~~June 30, ~~2019,~~2019.

For the six months ended June 30, 2020, our income tax ~~provision~~benefit was ~~$1.5~~$13.5 million, compared to ~~a $0.4~~an $11.6 million income tax ~~provision~~benefit for the ~~three~~six months ended ~~September~~June 30, ~~2018.~~2019. The increase in our income tax ~~provision~~benefit of ~~$1.1~~$1.9 million was driven primarily by a $10.0 million increased tax benefit due to lower pre-tax book income from our tax paying entities, a $4.5 million increase in the ~~net impact of an additional~~ discrete tax ~~expense of $4.3 million for~~benefit associated with future tax liabilities of certain Dominican Republic entities, and ~~additional~~a $5.8 million tax ~~expense~~benefit associated with the sale of ~~$1.5 million due to~~ the ~~shift in the jurisdictional mix of pre-tax book~~Jewel Dunn’s River Beach Resort & Spa and Jewel Runaway Bay Beach Resort & Waterpark. The increased income tax benefit was partially offset by a ~~$5.2~~$3.2 million ~~decrease~~increase in income tax expense from an immaterial correction of a prior year error, a non-recurring $14.3 million tax benefit from the ~~discrete~~valuation allowance release during the six months ended June 30, 2019 and an $0.8 million increase in tax expense associated with foreign exchange rate fluctuations.

~~On August 2, 2019, we received a formal resolution notice from~~NaN of our Dominican Republic entities, Playa Romana Mar B.V. and Playa Dominican Resorts B.V., which hold our Hilton La Romana All-Inclusive Resort and Hyatt Ziva and Hyatt Zilara Cap Cana resorts, respectively, were granted 15-year tax exemptions by the Ministry of Finance of the Dominican ~~Republic.~~Republic beginning in 2019. The ~~resolution granted our Playa Romana Mar B.V. Dominican Republic branch a 15-year~~ tax exemption ~~starting from~~status of Inversiones Vilazul, S.A.S., which holds our Dreams Punta Cana resort, expired on December 31, 2019. ~~There is no income tax impact because we had previously concluded this entity to be an asset tax payer and had not recorded any income tax expense to date.~~

Note 76. 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 and representation on our Board of Directors. 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.

Relationship with Sagicor

~~In connection with the acquisition of the Sagicor Assets, we issued 20,000,000 ordinary shares of our common stock to affiliates of~~ Sagicor Group Jamaica Limited (“Sagicor”)~~. Sagicor~~ is considered a related party due to ~~the~~its ownership of our ordinary shares by its affiliated entities and representation on our Board of Directors.

We pay Sagicor for insurance coverage for some of our Jamaica ~~employees and~~ properties. As of December 31, 2018, we were also owed $4.8 million from Sagicor related to advance deposits and credit card collections which were paid to Sagicor, rather than us, following the acquisition. As of September 30, 2019, substantially all of this amount has been received.

Sagicor is also a part owner of the Jewel Grande Montego Bay Resort & Spa and compensates us as manager of the property.

Relationship with Sabre

We have a service agreement with Sabre Hospitality Solutions (“Sabre”), a division of Sabre GLBL Inc., for use of a central reservation and direct booking system. Sabre also provides call center services. Sabre is considered a related party as a member of our Board of Directors serves on the board of Sabre Corporation, the parent company of Sabre GLBL Inc.

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 and ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 and ~~2018~~2019 were as follows ($ in thousands):


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended June 30,				Six Months Ended June 30,
Related Party	Transaction	2019		2018		2019		2018		Transaction	2020		2019		2020		2019
Hyatt	Franchise fees ⁽¹⁾	$	3,516	$	3,248	$	13,054	$	12,293	Franchise fees ⁽¹⁾	$	1,048	$	4,902	$	6,564	$	9,538
Sagicor	Insurance premiums ⁽¹⁾	$	186	$	—	$	1,317	$	—	Insurance premiums ⁽¹⁾	$	119	$	380	$	533	$	1,131
Sagicor	Cost reimbursements	$	1,393	$	—	$	4,200	$	—	Cost reimbursements	$	442	$	2,807	$	1,164	$	2,807
Sabre										Booking and call center services ⁽²⁾	$	60	$	—	$	274	$	—
Chief Executive Officer	Lease expense ⁽²⁾	$	187	$	258	$	539	$	730	Lease expense ⁽²⁾	$	196	$	206	$	378	$	352

________


⁽¹⁾	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.


⁽²⁾	Included in selling, general, and administrative expense in the Condensed Consolidated Statements of Operations.

Note 8.7. 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. Our Dutch companies file as a fiscal unity, with the exception of Playa Romana B.V., Playa Romana Mar B.V. and Playa Hotels & Resorts N.V. 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 ~~9. Leases~~

~~On January 1, 2019, we adopted ASU No. 2016-02,~~ ~~Leases (Topic 842)~~ ~~(“ASU 2016-02”), as described in Note 2, using the transition method outlined in ASU No. 2018-11,~~ ~~Leases (Topic 842): Targeted Improvements. The adoption of ASU 2016-02 resulted in no cumulative adjustment to accumulated deficit as our lease portfolio consists solely of operating leases. The comparative periods~~

~~presented in our Condensed Consolidated Financial Statements are presented in accordance with ASC 840,~~ ~~Leases~~ and do not reflect the impact of ASU 2016-02. On the date of adoption, January 1, 2019, we recorded right-of-use assets of $5.0 million and lease liabilities of $5.3 million related to our portfolio of operating leases (see Note 18 for balances as of September 30, 2019).

~~We elected the following practical expedients, as provided under the applicable transition guidance:~~


•	~~Package of practical expedients, which, among other things, allows us to carry forward our prior lease classifications under ASC 840,~~ ~~Leases; and~~

~~Recognized lease payments on a straight-line basis over the lease term for all leases with a term of 12 months or less and were not classified on the balance sheet.~~

Our administrative offices, located in Virginia, Florida and Cancún, are leased under various lease agreements that extend for varying periods through 2025, with the option to extend our Cancún and Florida office leases through 2026 and 2030, respectively. The extension options are reasonably certain to be exercised and included in the amounts recorded. Our administrative offices contain lease components (e.g., fixed rent payments) and non-lease components (e.g., common-area maintenance, shared service costs, real estate taxes and insurance costs), which we account for separately. The lease components and non-lease components associated with our administrative offices represent the majority of our lease expense and variable lease expense, respectively.

~~Our minimum future lease payments under non-cancelable operating leases with third parties and related parties and lease liability as of September 30, 2019 were as follows~~ ~~($ in thousands)~~:

As of September 30, 2019
Minimum future lease payments
Remainder of 2019 $ 241
2020 991
2021 1,036
2022 1,074
2023 786
2024 652
Thereafter 2,927
Total minimum future lease payments 7,707
Less: imputed interest (1,330 )
Total lease liability $ 6,377

~~Our minimum future lease payments at December 31, 2018 payable under non-cancelable operating leases with third parties and related parties were as follows ($ in thousands~~):

As of December 31, 2018
2019 $ 1,199
2020 1,031
2021 1,016
2022 1,044
2023 745
Thereafter 3,394
Total minimum future lease payments $ 8,429

~~The following table presents the components of lease expense for the three and nine months ended September 30, 2019 and supplemental cash flow information for the nine months ended September 30, 2019~~ ~~($ in thousands)~~:

Three Months Ended September 30, 2019 Nine Months Ended September 30, 2019
Lease expense ⁽¹⁾⁽²⁾
$ 636
$ 1,942

Cash paid for amounts included in the measurement of lease liabilities
Operating cash outflows for operating leases $ 473

~~________~~

⁽¹⁾ Includes variable lease and short term lease expenses, which are considered individually immaterial. Our lease expense is reported in direct expense and selling, general and administrative expense in the ~~Condensed Consolidated Statements of Operations~~ ~~depending on the nature of the lease.~~

⁽²⁾ ~~Lease expense under ASC 840,~~ ~~Leases,~~ ~~related to our non-cancelable operating leases, including variable lease cost, was $0.7 million and $1.8 million for the three and nine months ended September 30, 2018, respectively.~~

~~The following table presents other relevant information related to our leases as of September 30, 2019:~~



~~Weighted-average remaining lease term~~	~~8.14 years~~
~~Weighted-average discount rate~~ ⁽¹⁾	~~4.54~~	%

~~________~~

⁽¹⁾ ~~The discount rates applied to each lease reflects our estimated incremental borrowing rate.~~

We rent certain real estate to third parties for office and retail space within our hotels. 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 and nine months ended September 30, 2019 ~~($ in thousands)~~:

Leases Financial Statement Classification Three Months Ended September 30, 2019 Nine Months Ended September 30, 2019
Operating lease income ⁽¹⁾
Non-package revenue $ 1,215
$ 3,931

~~________~~

⁽¹⁾ ~~Includes variable lease revenue, which is typically calculated as a percentage of our tenant's net sales.~~

~~Note 10.~~8. Ordinary shares

On December 14, 2018, our Board of Directors authorized the repurchase of up to $100.0 million of our outstanding ordinary shares as market conditions and our liquidity warrant. The repurchase program is subject to certain limitations under Dutch law, including 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 ~~and nine~~ months ended ~~September~~June 30, ~~2019,~~2020, we ~~purchased 846,418 and 1,349,184~~did 0t purchase any ordinary shares ~~respectively,~~ under the repurchase program. ~~The~~

On June 12, 2020, we issued 4,878,049 ordinary shares ~~repurchased were recorded~~with a par value of €0.10 per share, in a private placement exempt from registration under the Securities Act of 1933, as ~~treasury shares on the~~ ~~Condensed Consolidated Balance Sheet~~ ~~as of September 30, 2019.~~amended, in connection with our capital raising efforts. We received $19.6 million in cash consideration, after customary closing costs.

As of ~~September~~June 30, ~~2019,~~2020, our ordinary share capital consisted of ~~129,491,038~~134,485,477 ordinary shares outstanding, which have a par value of €0.10 per share. In addition, ~~3,088,202~~3,505,051 restricted shares and performance share awards and ~~21,543~~22,656 restricted share units were outstanding under the 2017 Plan (as defined in Note ~~12)~~9). The holders of restricted shares and performance share awards are entitled to vote, but not 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 11. Warrants~~

We previously issued 3,000,000 warrants (the “Earnout Warrants”) which entitle the holders to acquire 1 ordinary share for each Earnout Warrant for an exercise price of €0.10 per ordinary share in the event that the price per share underlying the Earnout Warrants on the NASDAQ is greater than $13.00 for a period of more than 20 days out of 30 consecutive trading days within the five years after March 11, 2017. The Earnout Warrants expire on March 11, 2022 or earlier upon redemption or liquidation in accordance with their term.

On August 8, 2018, we repurchased 12,230 of the outstanding Earnout Warrants for less than $0.1 million. The repurchase of such Earnout Warrants resulted in a reduction to paid in capital and had no impact on our ~~Condensed Consolidated Statements of Operationsfor the three and nine months ended September 30, 2018.~~

~~As of September 30, 2019, there were 2,987,770 Earnout Warrants outstanding.~~

Note ~~12.~~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 and service providers. The 2017 Plan was approved by our Board of Directors and shareholders on March 10, 2017 and was amended on May 16, 2019 to increase the number of ordinary shares authorized and available for grant from 4,000,000 shares to 12,000,000 shares. The Compensation Committee of our Board of Directors may award share options, share appreciation rights, restricted shares, share units, unrestricted shares, dividend equivalent rights, performance shares and other performance-based awards, other equity-based awards and cash bonus awards under the 2017 Plan. As of ~~September~~June 30, ~~2019,~~2020, there were ~~7,689,239~~6,226,580 shares available for future grants under the 2017 Plan.

~~Restricted share awards~~

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) subject to restrictions and to a risk of forfeiture. Restricted shares issued to our employees and executives generally vest over a period of three or five years. Restricted share units generally vest over a period of three years. For restricted share awards with a three-year vesting period, one-third of the award vests on each of the first three anniversaries of the grant date of the award. For restricted share awards with a five-year vesting period, 25% of the award vests on the third anniversary of the grant date of the award, 25% vests on the fourth anniversary of the grant date of the award and 50% vests on the fifth anniversary of the grant date of the award. Restricted share awards issued to our directors for their services as directors generally vest immediately on the grant date of the award.

The vesting of restricted share awards is subject to the holder’s continued employment through the applicable vesting date. Unvested restricted share awards will be forfeited if the employee’s or the executive’s employment terminates during the vesting period, provided that unvested restricted share awards will accelerate upon certain terminations of employment as set forth in the applicable award agreements.

The holders of restricted shares have the right to vote the restricted shares and receive all dividends declared and paid on such shares, provided that dividends paid on unvested restricted shares will be subject to the same conditions and restrictions applicable to the underlying restricted shares. The holders of restricted share units have no right to vote the underlying shares and may be entitled to be credited with dividend equivalents in respect of each cash dividend declared and paid by us, in an amount per share unit equal to the per-share dividend paid on our ordinary shares, which dividend equivalents will be deemed to have been reinvested in additional restricted share units that are subject to the same terms and conditions applicable to the underlying restricted share units to which they relate.

Compensation expense for restricted share awards is measured based upon the fair market value of our ordinary shares at the date of grant and recognized on a straight-line basis over the vesting period.

A summary of our restricted share awards from January 1, ~~2019~~2020 to ~~September~~June 30, ~~2019~~2020 is as follows:


	Number of Shares		Weighted-Average Grant Date Fair Value		Number of Shares		Weighted-Average Grant Date Fair Value
Unvested balance at January 1, 2019	1,718,684		$	10.19
Unvested balance at January 1, 2020					2,157,336		$	9.03
Granted	938,162		7.25		1,076,619		7.92
Vested	(400,096	)	9.55		(838,553	)	8.97
Forfeited	(81,112	)	9.20		(68,409	)	8.95
Unvested balance at September 30, 2019	2,175,638		$	9.08
Unvested balance at June 30, 2020					2,326,993		$	8.54

The fair value of vested restricted share awards during the nine months ended September 30, 2019 and 2018 was $3.0 million and $1.9 million, respectively. The fair value of vested restricted share awards during the three months ended September 30, 2019 was $0.1 million. NaN restricted share awards vested during the three months ended September 30, 2018. As of September 30, 2019 and 2018, the unrecognized compensation cost related to restricted share awards was $12.7 million and $12.3 million, respectively, and is expected to be recognized over a weighted-average period of 2.1 years and 2.9 years, respectively.

Compensation expense related to restricted share awards was $5.9 million and $3.9 million for the nine months ended September 30, 2019 and 2018, respectively, and $1.8 million and $1.1 million for the three months ended September 30, 2019 and 2018, respectively. Compensation expense is recorded within selling, general and administrative expenses in the ~~Condensed Consolidated Statements of Operations~~.

~~Performance share awards~~

Performance share awards consist of ordinary shares that may become earned and vested based on the achievement of performance targets adopted by our Compensation Committee. The actual number of ordinary shares that ultimately vest will range from 0% to 150% of the target award and will be determined at the end of the three-year performance period based on 2 performance criteria as defined in the applicable award agreements for the period of performance.

Any ordinary shares that ultimately vest based on the achievement of the applicable performance criteria will be deemed to be vested on the date on which our Compensation Committee certifies the level of achievement of such performance criteria. Except in connection with certain qualifying terminations of employment, as set forth in the applicable award agreements, the awards require continued service through the certification date. The holders of these awards have voting rights equivalent to the target level of ordinary shares granted to the holder and any dividends declared on such shares will be accumulated and paid within 30 days after and to the extent the target ordinary shares vest.

~~The grant date fair value of the portion of the award based on the compounded annual growth rate of our total shareholder return was estimated using a Monte-Carlo model.~~ The table below summarizes the key inputs used in the Monte-Carlo simulation to determine the grant date fair value of the total shareholder return performance awards ($ in thousands):


Performance Award Grant Date	Percentage of Total Award		Grant Date Fair Value by Component		Volatility ⁽¹⁾		Interest Rate ⁽²⁾		Dividend Yield		Percentage of Total Award		Grant Date Fair Value by Component		Volatility ⁽¹⁾		Interest Rate ⁽²⁾		Dividend Yield
May 26, 2017
January 2, 2020
Total Shareholder Return	50	%	$	770	27.02	%	1.39	%	—	%	50	%	$	1,334	24.87	%	1.58	%	—	%
Adjusted EBITDA Comparison	50	%	$	1,350	—	%	—	%	—	%	50	%	$	2,187	—	%	—	%	—	%
January 2, 2018
Total Shareholder Return	50	%	$	860	26.13	%	2.00	%	—	%
Adjusted EBITDA Comparison	50	%	$	1,475	—	%	—	%	—	%
January 2, 2019
Total Shareholder Return	50	%	$	537	27.78	%	2.46	%	—	%
Adjusted EBITDA Comparison	50	%	$	900	—	%	—	%	—	%
September 19, 2019
Total Shareholder Return	50	%	$	287	25.86	%	1.72	%	—	%
Adjusted EBITDA Comparison	50	%	$	448	—	%	—	%	—	%

________

⁽¹⁾ Expected volatility was determined based on the historical share prices in our industry.

⁽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.

~~In the table above, the total shareholder return component is a market condition as defined by ASC 718,~~ ~~Compensation—Stock Compensation~~, and compensation expense related to this component is recognized on a straight-line basis over the vesting period. The grant date fair value of the portion of the awards based on the compounded annual growth rate of our Adjusted EBITDA (as defined in Note 19) was based on the closing stock price of our ordinary shares on such date. The Adjusted EBITDA component is a performance condition as defined by ASC 718, and, therefore, compensation expense related to this component is reassessed at each reporting date based on our estimate of the probable level of achievement, and the accrual of compensation expense is adjusted as appropriate.

A summary of our performance share awards from January 1, ~~2019~~2020 to ~~September~~June 30, ~~2019~~2020 is as follows:

Number of Shares Weighted-Average Grant Date Fair Value
Unvested balance at January 1, 2019 523,545
$ 8.26
Granted 410,562
5.83
Unvested balance at September 30, 2019 934,107
$ 7.19



	Number of Shares		Weighted-Average Grant Date Fair Value
Unvested balance at January 1, 2020	913,407		$	7.22
Granted	552,395		6.38
Forfeited	(265,088	)	7.99
Unvested balance at June 30, 2020	1,200,714		$	6.66

As of September 30, 2019 and 2018, the unrecognized compensation cost related to the performance share awards was $1.8 million and $2.5 million, respectively, and is expected to be recognized over a weighted-average period of 2.0 years and 2.0 years, respectively.

Compensation expense related to the performance share awards was $0.7 million and $1.2 million for the nine months ended September 30, 2019 and 2018, respectively, and $0.1 million and $0.1 million for the three months ended September 30, 2019 and 2018, respectively. Compensation expense is recorded within selling, general and administrative expenses in the ~~Condensed Consolidated Statements of Operations~~.

Note ~~13.~~10. Earnings per share

Basic and diluted earnings or losses per share (“EPS”) are as follows ($ in thousands, except share data):


	Three Months Ended September 30,						Nine Months Ended September 30,				Three Months Ended June 30,					Six Months Ended June 30,
	2019			2018			2019		2018		2020			2019		2020			2019
Numerator
Net (loss) income	$	(30,461	)	$	(5,422	)	$	13,567	$	33,216	$	(87,458	)	$	1,040	$	(110,014	)	$	44,028
Denominator
Denominator for basic EPS - weighted-average number of shares outstanding	129,841,264			130,478,993			130,265,112		119,344,659		130,466,383			130,421,695		129,876,545			130,480,549
Effect of dilutive securities
Unvested restricted share awards	—			—			336,135		302,705		—			393,482		—			308,918
Denominator for diluted EPS - adjusted weighted-average number of shares outstanding	129,841,264			130,478,993			130,601,247		119,647,364		130,466,383			130,815,177		129,876,545			130,789,467

EPS - Basic	$	(0.23	)	$	(0.04	)	$	0.10	$	0.28	$	(0.67	)	$	0.01	$	(0.85	)	$	0.34
EPS - Diluted	$	(0.23	)	$	(0.04	)	$	0.10	$	0.28	$	(0.67	)	$	0.01	$	(0.85	)	$	0.34

For the three and ~~nine~~six months ended ~~September~~June 30, ~~2019 and 2018, 934,107 and 538,951~~2020, 1,200,714 shares of unvested performance-based equity awards ~~respectively,~~were not included in the computation of diluted EPS after assumed conversions as the performance criteria were not met as of the end of the respective reporting period. For the three and six months ended June 30, 2019, 781,045 shares of unvested performance-based equity awards were not included in the computation of diluted EPS after assumed conversions as the performance criteria were not met as of the end of the respective reporting period.

For the three and ~~nine~~six months ended ~~September~~June 30, 2020, 2,326,993 shares of unvested restricted share awards were not included in the computation of diluted EPS as their effect would have been anti-dilutive. For the three and six months ended June 30, 2019, ~~2,175,638~~273,811 and ~~292,937~~312,424 shares of unvested restricted share awards, respectively, were not included in the computation of diluted EPS as their effect would have been anti-dilutive. For the three and nine months ended September 30, 2018, 1,570,834 and 39,345 of unvested restricted share awards, respectively, were not included in the computation of diluted EPS as their effect would have been anti-dilutive.

For the three and ~~nine~~six months ended ~~September~~June 30, 2020 and 2019, ~~and 2018,~~ outstanding ~~Earnout Warrants~~earnout warrants to acquire a total of 2,987,770 ordinary shares were not included in the computation of diluted EPS after assumed conversions because the warrants were not exercisable as of the end of the respective reporting period.

Note ~~14.~~11. Debt

Our debt consists of the following ($ in thousands):

As of September 30, As of December 31,
2019 2018
Debt obligations
Term Loan ⁽¹⁾
$ 988,973
$ 996,548
Revolving Credit Facility ⁽²⁾
—
—
Total debt obligations 988,973
996,548
Unamortized discount and debt issuance costs
Discount on Term Loan (2,297 ) (2,681 )
Unamortized debt issuance costs on Term Loan (3,838 ) (4,480 )
Total unamortized discount and debt issuance costs (6,135 ) (7,161 )
Total debt $ 982,838
$ 989,387



			Outstanding Balance as of
	Interest Rate	Maturity Date	June 30, 2020			December 31, 2019
Revolving Credit Facilities
Revolving Credit Facility ⁽¹⁾	LIBOR + 3.00%	April 27, 2022	$	84,667		$	60,000

Senior Secured Credit Facilities
Term Loan ⁽²⁾	LIBOR + 2.75%	April 27, 2024	$	981,398		$	986,448
Term A1 Loan	11.4777%	April 27, 2024	35,000			—
Term A2 Loan	11.4777%	April 27, 2024	31,000			—
Term A3 Loan ⁽³⁾	LIBOR + 3.00%	April 27, 2024	28,000			—
Total Term Loans (at stated value)			1,075,398			986,448
Unamortized discount			(1,914		)	(2,168		)
Unamortized debt issuance costs			(6,975		)	(3,622		)
Total Term Loans, net			$	1,066,509		$	980,658

Property Loan
Property Loan (at stated value)	9.25%	July 1, 2025	$	110,000		$	—
Unamortized discount			(4,400		)	—
Unamortized debt issuance costs			(4,899		)	—
Total Property Loan, net			$	100,701		$	—

Total debt, net			$	1,251,877		$	1,040,658

________

⁽¹⁾

~~Borrowings under the Term Loan~~Undrawn balances bear interest ~~at floating rates equal~~between 0.5% to ~~one-month~~0.25% depending on certain leverage ratios. We had available balances of $0 million and $40.0 million as of June 30, 2020 and December 31, 2019, respectively. The weighted-average interest rate on the outstanding balance of our Revolving Credit Facility was 3.18% and 4.72% as of June 30, 2020 and December 31, 2019, respectively.

⁽²⁾

One-month London Interbank Offered Rate (“LIBOR”) ~~plus 2.75% (where the applicable LIBOR~~ rate ~~has~~is subject to a 1.0% ~~floor).~~floor. The interest rate was ~~4.79%~~3.75% and ~~5.27%~~4.55% as of ~~September~~June 30, ~~2019~~2020 and December 31, ~~2018,~~2019, respectively. ~~Effective~~ ~~March 29, 2018, we entered into~~Our 2 interest rate swaps to fix LIBOR at 2.85% on $800.0 million of our Term Loan (see Note ~~15)~~12).

⁽²⁾⁽³⁾

LIBOR rate is subject to a 1.0% floor. The ~~commitment fee on the $100.0 million undrawn balance of our Revolving Credit Facility bore~~ interest ~~of 0.5%~~rate was 4.00% as of ~~September~~June 30, 2019 and December 31, 2018. The commitment fee may range from 0.5% to 0.25% depending on certain leverage ratios. For any drawn balances, the Revolving Credit Facility bears interest at one-month LIBOR plus 3.0%.2020.

~~Financial maintenance covenants~~Fourth Amendment to Amended and Restated Credit Agreement

Our Senior Secured Credit Facility requires us to meet a springing leverage ratio financial maintenance covenant, but only if the aggregate amount outstanding on our Revolving Credit Facility exceeds 35% of the aggregate revolving credit commitments as defined in our Senior Secured Credit Facility. On ~~March 19, 2019,~~June 12, 2020, we entered into the ~~Third~~Fourth Amendment to the Amended & Restated Credit Agreement (the ~~“Third~~“Fourth Amendment”, and collectively with the unamended terms of the Senior Secured Credit Facility, the “Existing Credit Agreement”). The terms of the Senior Secured Credit Facility remain in effect except for the following terms modified by the Fourth Amendment:


i.	replace the total net leverage ratio requirement of the financial covenant with a minimum liquidity test until September 30, 2021 (the “Relief Period”);


ii.	modify the financial covenant for certain test dates after the Relief Period; and


iii.	add certain restrictions on, among other things, the incurrence of additional debt and making of investments, dispositions and restricted payments during the Relief Period.

Additional Credit Facility

On June 12, 2020, we entered into an additional senior secured credit facility with an average interest rate of 9.25% that matures on April 27, 2024 and ranks pari passu with the Existing Credit Agreement (the “Additional Credit Facility”). The Additional Credit Facility consists of the following term loans:


i.	$35.0 million term loan at fixed rate of 11.4777% (the “Term A1 Loan”);


ii.	$31.0 million term loan at fixed rate of 11.4777% (the “Term A2 Loan”); and


iii.	$28.0 million term loan at our option of either a base rate plus a margin of 2.00% or LIBOR plus 3.00% (the “Term A3 Loan”). Term A3 Loan is a Eurocurrency loan subject to a 1.0% LIBOR floor consistent with the Existing Credit Agreement.

We intend to use the proceeds from the Additional Credit Facility for general corporate purposes. The obligations under the Additional Credit Facility are collateralized in a manner that is substantially identical to the Existing Credit Agreement.

Prior to the maturity date, the Additional Credit Facility does not require principal payments, but does include mandatory prepayment requirements for the Term A3 Loan that are consistent with the Existing Credit Agreement. Mandatory prepayments are required for certain asset sales, casualty events and condemnation events (the “Triggering Events”) that are not reinvested in our business where our total net leverage ratio is above 4.00x. We may not voluntarily prepay any portion of the Additional Credit Facility prior to ~~exclude~~June 2023 without paying a make-whole premium equal to 100% of the ~~lesser~~interest that would have otherwise accrued from the date of ~~$50.0 million and~~such payment through June 2022 plus 50% of the ~~aggregate amount~~interest that otherwise would have accrued from June 2022 to June 2023. Subsequent to June 2023, we may prepay any portion of ~~revolving credit commitments borrowed in~~the Additional Credit Facility without penalty.

In connection with the Additional Credit Facility, we terminated the remaining $15.0 million of unused capacity of our Revolving Credit Facility under the Existing Credit Agreement. The Additional Credit Facility contains covenants, including a springing financial maintenance covenant, identical to those contained in the Existing Credit Agreement.

Property Loan Agreement

On June 12, 2020, we entered into a property loan agreement in the amount of $110.0 million that has a fixed interest rate of 9.25% and matures on July 1, 2025 (the “Property Loan”). Prior to maturity, the Property Loan does not require principal payments. The Property Loan is collateralized by the mortgages of our Hyatt Ziva ~~Cap Cana~~ and Hyatt Zilara Cap Cana ~~development project from~~properties located in the ~~calculation~~Dominican Republic and the Hilton Rose Hall Resort & Spa located in Jamaica (collectively the “Properties”). We intend to use the proceeds of the ~~springing leverage~~Property Loan to finance the operation and management of the Properties and for general corporate purposes.

During the term of the Property Loan, we are required to deposit certain cash reserves including reserves for operating expenses, debt service and certain property improvement plan required work. We will continue to fund the reserves until the Properties achieve a debt service coverage ratio of 1.50x for ~~the period July 1, 2019 through~~2 consecutive calendar quarters. These reserves are presented as restricted cash on our Condensed Consolidated Balance Sheet, which had a balance of $27.9 million as of June 30, 2020. ~~On July 1, 2020, the springing leverage ratio will be calculated based on the provisions in the Senior Secured Credit Facility as if the Third Amendment had not taken place.~~

Financial maintenance covenants

We were in compliance with all applicable covenants as of ~~September~~June 30, ~~2019.~~2020. See a summary of our applicable covenants and restrictions below:



Debt		Covenant Terms
Existing Credit Agreement		We are required to maintain a minimum liquidity balance of $60.0 million through the Relief Period. If we have more than 35% drawn on the Revolving Credit Facility for periods subsequent to June 30, 2021, we will be subject to the following total net leverage ratio requirements: ▪ 6.50x for the period ended September 30, 2021; ▪ 6.00x for the period ended December 31, 2021; and ▪ 4.75x for periods thereafter.
Term A1 Loan		Same terms as the Existing Credit Agreement.
Term A2 Loan		No applicable debt covenants.
Term A3 Loan		No applicable debt covenants.
Property Loan		No applicable debt covenants other than the requirement to maintain a cash reserve until the Properties achieve a debt service coverage ratio of 1.50x for two consecutive quarters.

Note ~~15.~~12. Derivative financial instruments

Interest rate swaps

Effective March 29, 2018, we entered into 2 interest rate swaps to mitigate the interest rate risk inherent to our floating rate ~~debt, including the Revolving Credit Facility and Term Loan.~~debt. The interest rate swaps are not for trading purposes and have fixed notional values of $200.0 million and $600.0 million. The fixed rate paid by us is 2.85% and the variable rate received resets monthly to the one-month LIBOR rate, which results in us fixing LIBOR at 2.85% on $800.0 million of our Term Loan. The interest rate swaps mature on March 31, 2023.

~~As of~~On March 20, 2019, we elected to adopt hedge accounting and designate our interest rate swaps as cash flow hedges. Prior to our adoption of hedge accounting, the change in fair value of our interest rate swaps was recognized through interest expense in the Condensed Consolidated Statements of Operations. Following the adoption, the change in the fair value of our interest rate swaps that qualifies as effective cash flow hedges iswas recorded through other comprehensive loss (“OCI”) in the Condensed Consolidated Statements of Comprehensive (Loss) Income. Unrealized gains and losses in accumulated other comprehensive loss (“AOCI”) are reclassified to interest expense as interest payments are made on our variable rate debt. On February 29, 2020, our interest rate swaps were ineffective due to the decrease in interest rates and all subsequent changes in fair value were recognized through interest expense in the Condensed Consolidated Statements of Operations.

The following tables present the effect of our interest rate swaps, net of tax, in the Condensed Consolidated Statements of Comprehensive (Loss) Income and Condensed Consolidated Statements of Operations for the three and ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 and ~~2018~~2019 ($ in thousands):


Derivative Liabilities Designated as Hedging Instruments	2019			2018
						2020			2019
AOCI from our cash flow hedges as of January 1	$	—		$	—	$	20,164		$	—
Change in fair value	5,834			—		16,956			5,834
Reclassification from AOCI to interest expense	24			—		(1,908		)	24
OCI related to our cash flow hedges for the three months ended March 31	5,858			—		15,048			5,858
Change in fair value	14,648			—		—			14,648
Reclassification from AOCI to interest expense(1)	136			—		(2,926		)	136
OCI related to our cash flow hedges for the three months ended June 30	14,784			—		(2,926		)	14,784
Change in fair value	4,912			—
Reclassification from AOCI to interest expense	(324		)	—
OCI related to our cash flow hedges for the three months ended September 30	4,588			—
AOCI from our cash flow hedges as of September 30 ⁽¹⁾	$	25,230		$	—
AOCI from our cash flow hedges as of June 30						$	32,286		$	20,642

________

⁽¹⁾As of ~~September~~June 30, ~~2019,~~2020, the total amount expected to be reclassified from AOCI to interest expense during the next twelve months is ~~$5.9~~$11.7 million.


Derivative Liabilities Not Designated as Hedging Instruments	Financial Statement Classification	Three Months Ended September 30,					Nine Months Ended September 30,
	Financial Statement Classification	2019		2018			2019		2018
Derivative Liabilities for Ineffective Hedges											Financial Statement Classification	Three Months Ended June 30,				Six Months Ended June 30,
Derivative Liabilities for Ineffective Hedges											Financial Statement Classification	2020		2019		2020		2019
Interest rate swaps ⁽¹⁾	Interest expense ⁽²⁾	$	—	$	(3,985	)	$	2,715	$	1,642	Interest expense	$	9,774	$	—	$	18,503	$	2,715

________

⁽¹⁾Includes the change in fair value of our interest rate swaps and the cash interest paid for the monthly settlements of the ~~derivative prior to our hedge designation date of March 20, 2019.~~derivative.

⁽²⁾~~Negative amounts represent reductions to interest expense resulting from the change in fair value of the interest rate swaps.~~

The following tables present the effect of our interest rate swaps in the Condensed Consolidated Balance Sheet as of ~~September~~June 30, ~~2019~~2020 and December 31, ~~2018~~2019 ($ in thousands):


Derivative Liabilities Designated as Hedging Instruments	Financial Statement Classification	As of September 30,		As of December 31,
		2019		2018
Derivative Liabilities for Effective Hedges						Financial Statement Classification	As of June 30,		As of December 31,
							2020		2019
Interest rate swaps	Derivative financial instruments	$	37,905	$	—	Derivative financial instruments	$	—	$	31,932


Derivative Liabilities Not Designated as Hedging Instruments	Financial Statement Classification	As of September 30,		As of December 31,
		2019		2018
Derivative Liabilities for Ineffective Hedges						Financial Statement Classification	As of June 30,		As of December 31,
							2020		2019
Interest rate swaps	Derivative financial instruments	$	—	$	12,476	Derivative financial instruments	$	55,477	$	—

Derivative financial instruments expose us to credit risk in the event of non-performance by the counterparty under the terms of the interest rate swaps. We incorporate these counterparty credit risks in our fair value measurements (see Note ~~16)~~13) and believe we minimize this credit risk by transacting with major creditworthy financial institutions.

Note 1613. 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.

We believe the carrying value of our financial instruments, excluding our debt, approximate their fair values as of ~~September~~June 30, ~~2019~~2020 and December 31, ~~2018.~~2019. We did not have any Level 3 instruments during any of the periods presented in our Condensed Consolidated Financial ~~Statements.~~Statements.

The following table presents our fair value hierarchy for our financial liabilities measured at fair value on a recurring basis as of ~~September~~June 30, ~~2019~~2020 and December 31, ~~2018~~2019 ($ in thousands):


	September 30, 2019		Level 1		Level 2		Level 3		June 30, 2020		Level 1		Level 2		Level 3
Fair value measurements on a recurring basis
Interest rate swap	$	37,905	$	—	$	37,905	$	—	$	55,477	$	—	$	55,477	$	—


	December 31, 2018		Level 1		Level 2		Level 3		December 31, 2019		Level 1		Level 2		Level 3
Fair value measurements on a recurring basis
Interest rate swap	$	12,476	$	—	$	12,476	$	—	$	31,932	$	—	$	31,932	$	—

The following tables present our fair value hierarchy for our financial liabilities not measured at fair value as of ~~September~~June 30, ~~2019~~2020 and December 31, ~~2018~~2019 ($ in thousands):


	Carrying Value		Fair Value						Carrying Value		Fair Value
	As of September 30, 2019		Level 1		Level 2		Level 3		As of June 30, 2020		Level 1		Level 2		Level 3
Financial liabilities not recorded at fair value
Term Loan	$	982,838	$	—	$	—	$	970,518	$	976,286	$	—	$	—	$	876,693
Revolving Credit Facility	—		—		—		—		84,667		—		—		84,802
Term A1 Loan									33,593		—		—		35,201
Term A2 Loan									29,754		—		—		31,178
Term A3 Loan									26,876		—		—		29,040
Property Loan									100,701		—		—		110,176
Total liabilities	$	982,838	$	—	$	—	$	970,518	$	1,251,877	$	—	$	—	$	1,167,090


	Carrying Value		Fair Value						Carrying Value		Fair Value
	As of December 31, 2018		Level 1		Level 2		Level 3		As of December 31, 2019		Level 1		Level 2		Level 3
Financial liabilities not recorded at fair value
Term Loan	$	989,387	$	—	$	—	$	927,025	$	980,658	$	—	$	—	$	983,214
Revolving Credit Facility	—		—		—		—		60,000		—		—		60,000
Total liabilities	$	989,387	$	—	$	—	$	927,025	$	1,040,658	$	—	$	—	$	1,043,214

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
Interest rate swaps		The 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 LIBOR as of the measurement date. If, in subsequent periods, forecasted LIBOR exceeds 2.85% we will recognize a gain and future cash inflows. Conversely, if forecasted LIBOR falls below 2.85% in subsequent periods we will recognize a loss and future cash outflows.
Financial instruments not recorded at fair value
Term Loans and Property Loan		The fair value of our Term Loans and Property Loan isare 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 Facility		The valuation technique of our Revolving Credit Facility is consistent with our Term ~~Loan.~~Loans. The fair value of the Revolving Credit Facility generally approximates its carrying value as the expected term is significantly shorter in duration.

~~Note 17. Employee benefit plan~~

In accordance with labor law regulations in Mexico, certain employees are legally entitled to receive severance that is commensurate with the tenure they had with us at the time of termination. There were 0 plan assets as of September 30, 2019 or December 31, 2018 as contributions are made only to the extent benefits are paid.

~~The following table presents the components of net periodic pension cost for the three and nine months ended September 30, 2019 and 2018 ($ in thousands~~):

Three Months Ended September 30, Nine Months Ended September 30,
2019 2018 2019 2018
Service cost $ 191
$ 176
$ 570
$ 526
Interest cost 123
94
367
270
Effect of foreign exchange rates 112
201
296
226
Amortization of prior service cost —
77
1
25
Amortization of gain (5 ) (4 ) (15 ) (14 )
Compensation-non-retirement post employment benefits (12 ) (16 ) (85 ) 2
Settlement gain (41 ) —
(41 ) —
Curtailment gain —
(17 ) (171 ) (17 )
Total net periodic pension cost $ 368

$ 511
$ 922
$ 1,018

~~The service cost component of net periodic pension cost is recorded within direct expense in the~~ ~~Condensed Consolidated Statements of Operations. The non-service cost components of net periodic pension cost are recorded within other expense for all periods presented.~~

Note ~~18.~~14. Other balance sheet items

Trade and other receivables, net

The following summarizes the balances of trade and other receivables, net as of ~~September~~June 30, ~~2019~~2020 and December 31, ~~2018~~2019 ($ in thousands):


	As of September 30,			As of December 31,			As of June 30,			As of December 31,
	2019			2018			2020			2019
Gross trade and other receivables ⁽¹⁾	$	47,355		$	65,363		$	27,447		$	73,015
Allowance for doubtful accounts ⁽²⁾	(1,964		)	(593		)	(580		)	(1,765		)
Total trade and other receivables, net(3)	$	45,391		$	64,770		$	26,867		$	71,250

________


⁽¹⁾	Includes ~~$2.0~~$3.0 million in receivables related to ~~property damage~~business interruption insurance claims as of ~~December 31, 2018.~~June 30, 2020. There were 0 such receivables as of ~~September 30,~~December 31, 2019.


⁽²⁾	~~Recognized~~ We recognized an additional $0.8 million in bad debt expense during the ~~three months~~year ended ~~September 30,~~December 31, 2019 as a result of the bankruptcy of Thomas Cook, one of our travel partners.


⁽³⁾	The opening balance as of January 1, 2019 was $64.8 million.

We have not experienced any significant write-offs to our accounts receivable during the three and ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 and ~~2018.~~2019.

Prepayments and other assets

The following summarizes the balances of prepayments and other assets as of ~~September~~June 30, ~~2019~~2020 and December 31, ~~2018~~2019 ($ in thousands):


	As of September 30,		As of December 31,		As of June 30,		As of December 31,
	2019		2018		2020		2019
Advances to suppliers	$	11,604	$	9,447	$	9,479	$	7,865
Prepaid income taxes	12,409		7,538		11,352		12,412
Prepaid other taxes ⁽¹⁾	9,109		10,240		11,829		11,156
Right of use assets ⁽²⁾	5,863		—		5,285		5,673
Contract deposit ⁽³⁾⁽²⁾	2,700		2,700		2,700		2,700
Other assets	2,712		2,692		5,318		4,885
Total prepayments and other assets	$	44,397	$	32,617	$	45,963	$	44,691

________

⁽¹⁾ Includes recoverable value-added tax, ~~and~~ general consumption tax and other sales tax accumulated by our Mexico, Jamaica, Netherlands and ~~Jamaica entities, respectively.~~Dominican Republic entities.

⁽²⁾ ~~Represents right of use assets recognized in connection with our adoption of ASU 2016-02 on January 1, 2019 (see Note 9).~~

⁽³⁾ Represents a cash deposit related to the Sanctuary Cap Cana management contract. ~~We are in the process of negotiating final terms for the purchase of a 30% interest, and the~~The deposit will be used towards ~~this~~a purchase of a partial interest in Sanctuary Cap Cana if we are able to agree on terms. If the purchase is not completed, this amount, together with an additional $0.8 million due, will be treated as key money.

Goodwill

The gross carrying values and accumulated impairment losses of goodwill by reportable segment (refer to discussion of our reportable segments in Note ~~19)~~15) as of ~~September~~June 30, ~~2019~~2020 and December 31, ~~2018~~2019 are as follows ($ in thousands):



	Yucatán Peninsula			Pacific Coast		Dominican Republic		Jamaica			Total
Balance at December 31, 2019
Gross carrying value	$	51,731		$	—	$	—	$	32,776		$	84,507
Accumulated impairment losses	(6,168		)	—		—		—			(6,168		)
Net carrying value	45,563			—		—		32,776			78,339

Activity during the year
Impairment losses	—			—		—		(16,173		)	(16,173		)

Balance at June 30, 2020
Gross carrying value	51,731			—		—		32,776			84,507
Accumulated impairment losses	(6,168		)	—		—		(16,173		)	(22,341		)
Net carrying value	$	45,563		$	—	$	—	$	16,603		$	62,166

Yucatán Peninsula Pacific Coast Dominican Republic Jamaica Total
Gross carrying value as of December 31, 2018 $ 51,731
$ —
$ —
$ 31,925
$ 83,656
Accumulated impairment losses —
—
—
—
—
Net carrying value as of December 31, 2018 51,731
—
—
31,925
83,656

Adjustments ⁽¹⁾
—
—
—
851
851

Gross carrying value as of September 30, 2019 51,731
—
—
32,776
84,507
Accumulated impairment losses —
—
—
—
—
Net carrying value as of September 30, 2019 $ 51,731
$ —
$ —
$ 32,776
$ 84,507

~~________~~

⁽¹⁾ ~~Represents adjustments to~~As a result of COVID-19 and the temporary suspension of operations at our ~~goodwill from the business combination with the Sagicor Parties~~resorts (see Note ~~4).~~1), the forecasted future cash flows of our reporting units materially decreased during the first and second quarter of 2020. We performed an interim quantitative impairment analysis as of March 31, 2020 and recognized $16.2 million of goodwill impairment losses at the following reporting units within impairment loss in the Condensed Consolidated Statements of Operations for the three months ended March 31, 2020 as we determined that their carrying values exceeded their fair value ($ in thousands):



Reporting Unit	Reportable Segment	Impairment Loss
Jewel Runaway Bay Beach Resort & Waterpark	Jamaica	$	6,946
Jewel Dunn’s River Beach Resort & Spa	Jamaica	$	5,126
Jewel Paradise Cove Beach Resort & Spa	Jamaica	$	4,101

We recognized 0 additional goodwill impairment losses on our reporting units based on our interim quantitative impairment analysis as of June 30, 2020.

Other intangible assets

Other intangible assets as of ~~September~~June 30, ~~2019~~2020 and December 31, ~~2018~~2019 consisted of the following ($ in thousands):


	As of September 30,			As of December 31,			As of June 30,			As of December 31,
	2019			2018			2020			2019
Gross carrying value
Casino licenses ⁽¹⁾	$	858		$	858
Management contract ⁽²⁾	1,900			1,900
Enterprise resource planning system ⁽³⁾	4,494			2,246
Casino and other licenses ⁽¹⁾							$	875		$	875
Management contract							1,900			1,900
Enterprise resource planning system ⁽²⁾							5,544			5,187
Other	3,177			3,027			3,802			3,346
Total gross carrying value	10,429			8,031			12,121			11,308

Accumulated amortization
Management contract ⁽²⁾	(119		)	(48		)
Enterprise resource planning system ⁽³⁾	(302		)	(67		)
Management contract							(190		)	(143		)
Enterprise resource planning system ⁽²⁾							(763		)	(437		)
Other	(2,182		)	(1,813		)	(2,613		)	(2,320		)
Total accumulated amortization	(2,603		)	(1,928		)	(3,566		)	(2,900		)

Net carrying value
Casino licenses ⁽¹⁾	858			858
Casino and other licenses ⁽¹⁾							875			875
Management contract ⁽²⁾	1,781			1,852			1,710			1,757
Enterprise resource planning system ⁽³⁾⁽²⁾	4,192			2,179			4,781			4,750
Other	995			1,214			1,189			1,026
Total net carrying value	$	7,826		$	6,103		$	8,555		$	8,408

________


⁽¹⁾	Our casino licenses have indefinite lives. Accordingly, there is no associated amortization expense or accumulated amortization.


⁽²⁾	Represents ~~the fair value of a management contract acquired in the business combination with the Sagicor Parties (see Note 4).~~


⁽³⁾	~~Represents~~ software development costs incurred to develop and implement SAP as our integrated enterprise resource planning (“ERP”) system, of which ~~$0.7~~$1.3 million and ~~$1.9~~$2.6 million was placed into service in ~~February 2019~~2020 and ~~July~~ 2019, respectively and are being amortized over a weighted-average amortization period of 7 years.

Amortization expense for intangible assets was ~~$0.8~~$0.7 million and ~~$0.9~~$0.5 million for the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 and ~~2018,~~2019, respectively, and ~~$0.2~~$0.4 million and $0.3 million for the three months ended ~~September~~June 30, ~~2019~~2020 and ~~2018,~~2019, respectively.

Trade and other payables

The following summarizes the balances of trade and other payables as of ~~September~~June 30, ~~2019~~2020 and December 31, ~~2018~~2019 ($ in thousands):


	As of September 30,		As of December 31,		As of June 30,		As of December 31,
	2019		2018		2020		2019
Trade payables	$	30,385	$	24,452	$	22,724	$	45,299
Advance deposits(1)	37,556		57,339		25,377		53,769
Withholding and other taxes payable	45,863		45,274		42,074		46,983
Interest payable	132		147		870		125
Payroll and related accruals	14,792		14,251		13,110		14,547
Accrued expenses and other payables	26,721		18,137		17,083		20,880
Total trade and other payables	$	155,449	$	159,600	$	121,238	$	181,603

________


⁽¹⁾	The opening balance as of January 1, 2019 was $57.3 million.

Other liabilities

The following summarizes the balances of other liabilities as of ~~September~~June 30, ~~2019~~2020 and December 31, ~~2018~~2019 ($ in thousands):


	As of September 30,		As of December 31,		As of June 30,		As of December 31,
	2019		2018		2020		2019
Pension obligation(2)	$	5,281	$	5,123	$	5,524	$	6,764
Cap Cana land purchase obligation	10,625		10,625
Lease liabilities ⁽¹⁾	6,377		—
Unfavorable ground lease liability⁽²⁾	2,212		2,294
Lease liabilities					5,850		6,208
Unfavorable ground lease liability					2,170		2,187
Key money ⁽³⁾	4,313		1,994		16,257		8,225
Other	1,053		1,566		895		923
Total other liabilities	$	29,861	$	21,602	$	30,696	$	24,307

________

⁽¹⁾ ~~Represents lease liabilities recognized~~For the six months ended June 30, 2020 and 2019, the service cost component of net periodic pension cost was $0.4 million and $0.4 million, respectively. For the three months ended June 30, 2020 and 2019, the service cost component of net periodic pension cost was $0.2 million and $0.2 million, respectively. These costs are recorded within direct expense in ~~connection with our adoption~~the Condensed Consolidated Statements of ~~ASU 2016-02 on January 1, 2019 (see Note 9)~~Operations.

⁽²⁾ ~~Represents~~For the ~~unamortized balance~~six months ended June 30, 2020 and 2019, the non-service cost components of net periodic pension benefit or cost were $1.3 million and $0.2 million, respectively. For the ~~unfavorable ground lease intangible acquired~~three months ended June 30, 2020 and 2019, the non-service cost components of net periodic pension benefit or cost were $0.7 million and $0.2 million, respectively. These costs are recorded within other income (expense) in the ~~business combination with the Sagicor Parties (see Note 4)~~Condensed Consolidated Statements of Operations.

⁽³⁾ Represents the unamortized balance of key money received, which is amortized as a reduction to franchise fees within direct expenses in the Condensed Consolidated Statements of Operations. We received ~~$1.5~~$8.5 million and $6.5 million in ~~May~~2020 and 2019, ~~and $1.0 million in March 2019.~~respectively.

Note 1915. Segment information

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 present 4 separate reportable segments by geography: (i) Yucatán Peninsula, (ii) Pacific Coast, (iii) Dominican Republic and (iv) Jamaica. For the three and ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 and ~~2018,~~2019, we have excluded the immaterial amounts of management fees, cost reimbursements and other from our segment reporting.

Our operating segments are components of the business which 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.

The performance of our business is evaluated primarily on adjusted earnings before interest expense, income tax ~~(provision)~~ benefit, and depreciation and amortization expense (“Adjusted EBITDA”), which should not be considered an alternative to net (loss) income or other measures of financial performance or liquidity derived in accordance with U.S. GAAP. The performance of our segments is evaluated on Adjusted EBITDA before corporate expenses and management fee income (“Owned Resort EBITDA”).

We define Adjusted EBITDA as net (loss) income, determined in accordance with U.S. GAAP, for the period presented, before interest expense, income tax ~~(provision)~~ benefit, and depreciation and amortization expense, further adjusted to exclude the following items: (a) impairment loss; (b) other ~~expense; (b)~~income (expense); (c) pre-opening expenses; ~~(c)~~(d) share-based compensation; ~~(d)~~(e) other tax ~~benefit (expense); (e) property damage insurance proceeds;~~expense; (f) transaction expenses; (g) ~~severance expense;~~loss on sale of assets; and (h) ~~Jamaica delayed opening accrual reversal.~~severance expenses.

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.

The following table presents segment owned net revenue and a reconciliation to total revenue for the three and ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 and ~~2018~~2019 ($ in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended June 30,					Six Months Ended June 30,
	2019		2018		2019		2018		2020			2019		2020		2019
Owned net revenue
Yucatán Peninsula	$	50,996	$	57,087	$	180,981	$	200,025	$	21		$	59,772	$	62,338	$	129,985
Pacific Coast	17,404		16,211		65,061		65,081		(74		)	22,087		21,081		47,657
Dominican Republic	14,585		27,580		70,226		99,493		11			22,566		35,607		55,641
Jamaica	43,075		36,651		152,686		87,141		564			50,464		52,000		109,611
Segment owned net revenue ⁽¹⁾	126,060		137,529		468,954		451,740		522			154,889		171,026		342,894
Other	14		—		30		343		20			14		35		16
Management fees	83		152		1,568		503		(18		)	551		627		1,485
Cost reimbursements	1,586		227		5,123		349		458			2,949		1,408		3,537
Compulsory tips	5,082		4,904		16,969		12,296		—			5,620		5,114		11,887
Total revenue	$	132,825	$	142,812	$	492,644	$	465,231	$	982		$	164,023	$	178,210	$	359,819

________

⁽¹⁾ Segment owned net revenue represents total revenue less compulsory tips paid to employees, cost reimbursements, management fees and other miscellaneous revenue not derived from segment operations.

The following table presents segment Owned Resort EBITDA, Adjusted EBITDA and a reconciliation to net (loss) income for the three and ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 and ~~2018~~2019 ($ in thousands):


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018			2020			2019			2020			2019
Owned Resort EBITDA
Yucatán Peninsula	$	13,777		$	18,484		$	67,087		$	83,814		$	(8,004	)	$	21,151		$	16,931		$	53,310
Pacific Coast	4,495			2,869			25,451			23,327			(2,816		)	8,569			6,056			20,956
Dominican Republic	(1,201		)	7,161			17,305			35,174			(4,881		)	5,043			2,908			18,506
Jamaica	8,802			6,688			47,781			25,421			(8,097		)	14,631			10,976			38,979
Segment Owned Resort EBITDA	25,873			35,202			157,624			167,736			(23,798		)	49,394			36,871			131,751
Other corporate	(10,126		)	(9,322		)	(28,519		)	(26,331		)	(7,606		)	(9,887		)	(18,577		)	(18,393		)
Management fees	83			152			1,568			503			(18		)	551			627			1,485
Total Adjusted EBITDA	15,830			26,032			130,673			141,908			(31,422		)	40,058			18,921			114,843
Interest expense	(9,936		)	(7,637		)	(34,796		)	(35,151		)	(20,916		)	(10,666		)	(41,871		)	(24,860		)
Depreciation and amortization	(29,417		)	(20,138		)	(77,636		)	(51,709		)	(22,400		)	(25,908		)	(47,359		)	(48,219		)
Other expense	(2,537		)	(390		)	(2,775		)	(1,836		)
Impairment loss													(25,268		)	—			(41,441		)	—
Loss on sale of assets													(1,729		)	—			(1,729		)	—
Other income (expense)													4,853			364			947			(238		)
Pre-opening expenses	(257		)	(87		)	(548		)	(87		)	—			(202		)	—			(291		)
Share-based compensation	(1,850		)	(1,182		)	(6,612		)	(5,072		)	(2,719		)	(2,014		)	(5,942		)	(4,762		)
Other tax benefit (expense)	318			(399		)	(484		)	(1,257		)
Property damage insurance proceeds	—			203			—			203
Other tax expense													(231		)	(443		)	(468		)	(802		)
Transaction expenses	(1,253		)	(1,447		)	(4,493		)	(7,678		)	(289		)	(1,273		)	(875		)	(3,240		)
Severance expense	(6		)	(333		)	(139		)	(333		)	(1,246		)	(133		)	(2,444		)	(133		)
Jamaica delayed opening accrual reversal	—			—			—			342
Non-service cost components of net periodic pension cost ⁽¹⁾	177			335			352			492
Non-service cost components of net periodic pension (benefit) cost ⁽¹⁾													(738		)	249			(1,289		)	175
Net (loss) income before tax	(28,931		)	(5,043		)	3,542			39,822			(102,105		)	32			(123,550		)	32,473
Income tax (provision) benefit	(1,530		)	(379		)	10,025			(6,606		)
Income tax benefit													14,647			1,008			13,536			11,555
Net (loss) income	$	(30,461	)	$	(5,422	)	$	13,567		$	33,216		$	(87,458	)	$	1,040		$	(110,014	)	$	44,028

________


⁽¹⁾	Represents the non-service cost components of net periodic pension (benefit) cost recorded within other ~~expense~~income (expense) 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.

The following table presents segment property and equipment, gross and a reconciliation to total property and equipment, net as of ~~September~~June 30, ~~2019~~2020 and December 31, ~~2018~~2019 ($ in thousands):


	As of September 30,			As of December 31,			As of June 30,			As of December 31,
	2019			2018			2020			2019
Segment property and equipment, gross
Yucatán Peninsula	$	875,925		$	861,380		$	864,815		$	865,900
Pacific Coast	287,033			285,936			287,850			288,358
Dominican Republic	638,076			501,624			672,769			667,120
Jamaica	497,672			500,550			405,322			499,569
Total segment property and equipment, gross	2,298,706			2,149,490			2,230,756			2,320,947
Other corporate	18,172			9,189			4,733			7,320
Accumulated depreciation	(417,688		)	(350,267		)	(430,247		)	(398,353		)
Total property and equipment, net	$	1,899,190		$	1,808,412		$	1,805,242		$	1,929,914

The following table presents segment capital expenditures and a reconciliation to total capital expenditures for the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 and ~~2018~~2019 ($ in thousands):


	Nine Months Ended September 30,				Six Months Ended June 30,
	2019		2018		2020		2019
Segment capital expenditures
Yucatán Peninsula	$	18,256	$	11,099	$	2,348	$	10,055
Pacific Coast	1,476		2,007		230		395
Dominican Republic	142,518		48,013		4,286		79,515
Jamaica	3,204		2,866		1,809		2,507
Total segment capital expenditures ⁽¹⁾	165,454		63,985		8,673		92,472
Other corporate	9,076		3,706		331		5,379
Total capital expenditures ⁽¹⁾	$	174,530	$	67,691	$	9,004	$	97,851

________


⁽¹⁾	Includes capital expenditures incurred, but not yet paid.

Note ~~20.~~16. Subsequent events

In preparing the interim Condensed Consolidated Financial Statements, ~~we have evaluated~~there were no subsequent events ~~through November 6, 2019, which is~~since June 30, 2020 other than the ~~date~~following:

Subsequent to June 30, 2020, the ~~Condensed Consolidated Financial Statements were issued.~~

~~During~~global economy has continued to be severely impacted by the ~~period from October 1, 2019 through October 31, 2019~~COVID-19 pandemic. We cannot predict when the effects of the pandemic will subside, and thus we ~~purchased 139,649 ordinary shares at an average price~~cannot predict when we will be able to reopen all of ~~$7.74 per share.~~

~~On October 1, 2019~~our remaining resorts, whether our resorts will be permitted to remain open or when our business will return to normalized levels. There also can be no guarantee that when the effects of the pandemic subside that there will not be a later resurgence of the virus or that the demand for lodging, and ~~October 18, 2019, we drew $25.0 million~~consumer confidence in travel generally, will recover as quickly as other industries. The longer and ~~$15.0 million, respectively,~~more severe the pandemic, and the possibility of repeat or cyclical outbreaks of the virus beyond the one currently being experienced, the greater the material adverse effect the pandemic will have on our ~~Revolving Credit Facility.~~

~~On October 28, 2019, we paid the remaining $10.6 million~~business, results of ~~the purchase price for the Hyatt Ziva~~operations, cash flows, financial condition, access to credit markets and ~~Hyatt Zilara Cap Cana land. As a result of such payment,~~ability to service our ~~obligations to the seller of the land have been discharged and all liens released.~~indebtedness.

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

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 relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts. Forward-looking statements reflect our current views with respect to, among other things, our capital resources, portfolio performance and results of operations. Likewise, all of our statements regarding anticipated growth in our operations, anticipated market conditions, demographics and results of operations are forward-looking statements. In some cases, you can identify these forward-looking statements by the use of terminology such as “outlook,” “believes,” “expects,” “potential,” “continues,” “may,” “will,” “should,” “could,” “seeks,” “approximately,” “predicts,” “intends,” “plans,” “estimates,” “anticipates” or the negative version of these words or other comparable words or phrases.

The forward-looking statements contained in this quarterly report reflect our current views about future events and are subject to numerous known and unknown risks, uncertainties, assumptions and changes in circumstances that may cause our actual results to differ significantly from those expressed in any forward-looking statement. The factors discussed in this filing and our other filings with the United States Securities and Exchange Commission (“SEC”), including our Annual Report on Form 10-K for the year ended December 31, ~~2018,~~2019, filed with the SEC on February ~~28, 2019, together~~27, 2020 and our Quarterly Report on Form 10-Q for the quarter ended March 31, 2020, filed with the ~~following factors,~~SEC on May 11, 2020, could cause actual results and future events to differ materially from those set forth or contemplated in the forward-looking ~~statements:~~statements. Currently, one of the most significant factors that could cause actual outcomes to differ materially from our forward-looking statements is the adverse effects of the current COVID-19 pandemic on our financial condition, operating results and cash flows, the airlines that service the locations where we own resorts, the short and longer-term demand for travel, the global economy and the local economies where we own resorts, and the financial markets. As a result of the COVID-19 pandemic all of our resorts temporarily suspended operations from March 2020 until July 2020 and operations at [nine] resorts continue to be suspended. The extent to which the COVID-19 pandemic will impact us and consumer behavior will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the scope, severity and duration of the pandemic, any resurgence of the pandemic after conditions initially improve, the actions taken to contain the pandemic or mitigate its impact, and the direct and indirect economic effects of the pandemic and containment measures,including magnitude of its impact on unemployment rates and consumer discretionary spending, among others. Additional factors that could cause actual results and future events to differ materially from those set forth or contemplated in the forward-looking statements include:

general economic uncertainty and the effect of general economic conditions on the lodging industry in particular;

the popularity of the all-inclusive resort model, particularly in the luxury segment of the resort market;

changes in economic, social or political conditions in the regions we operate, including changes in perception of public-safety and changes in the supply of rooms from competing resorts;

the success and continuation of our relationships with Hyatt Hotels Corporation (“Hyatt”) and Hilton Worldwide Holdings, Inc. (“Hilton”);

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, including the rebranding of two of our resorts under the all-inclusive “Panama Jack” brand and rebranding of certain resorts acquired from Sagicor in Jamaica;~~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;~~utilities costs;

our ability to obtain and maintain financing arrangements on attractive terms;

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, 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;

the effectiveness of our internal controls and our corporate policies and procedures and the success and timing of the remediation efforts for the material weakness that we identified in our internal control over financial reporting;

changes in personnel and availability of qualified personnel;

environmental uncertainties and risks related to adverse weather conditions and natural disasters;

outbreak of widespread contagious diseases;

dependence on third parties to provide Internet, telecommunications and network connectivity to our data centers;

the volatility of the market price and liquidity of our ordinary shares and other of our securities; and

the increasingly competitive environment in which we operate.

While forward-looking statements reflect our good faith beliefs, they are not guarantees of future performance. The Company disclaims any obligation to publicly update or revise any forward-looking statement to reflect changes in underlying assumptions or factors, new information, data or methods, future events or other changes after the date of this quarterly report, except as required by applicable law. You should not place undue reliance on any forward-looking statements, which are based only on information currently available to us (or to third parties making the forward-looking statements).

Overview

Playa is a leading owner, operator and developer of all-inclusive resorts in prime beachfront locations in popular vacation destinations in Mexico and the Caribbean. As of ~~September~~June 30, ~~2019,~~2020, Playa owned and/or managed a total portfolio consisting of 21 resorts ~~(7,940~~(8,172 rooms) located in Mexico, Jamaica, and the Dominican Republic. In Mexico, Playa owns and manages Hyatt Zilara Cancún, Hyatt Ziva Cancún, Panama Jack Resorts Cancún, Panama Jack Resorts Playa del Carmen, Hilton Playa del Carmen All-Inclusive Resort, Hyatt Ziva Puerto Vallarta and Hyatt Ziva Los Cabos. In Jamaica, Playa owns and manages Hyatt Zilara Rose Hall, Hyatt Ziva Rose Hall, Hilton Rose Hall Resort & Spa, Jewel ~~Dunn’s River Beach Resort & Spa, Jewel~~ Grande Montego Bay Resort & Spa, ~~Jewel Runaway Bay Beach & Golf Resort~~ and Jewel Paradise Cove Beach Resort & Spa. In the Dominican Republic, Playa owns and manages the Hilton La Romana All-Inclusive Family Resort, ~~and~~ the Hilton La Romana All-Inclusive Adult ~~Resort.~~Resort, Hyatt Zilara Cap Cana and Hyatt Ziva Cap Cana. Playa also owns four resorts in Mexico and the Dominican Republic that are managed by a third party and Playa manages the Sanctuary Cap Cana in the Dominican Republic. We believe that the resorts we own and manage are among the finest all-inclusive resorts in the markets they serve. All of our resorts offer guests luxury accommodations, noteworthy architecture, extensive on-site activities and multiple food and beverage options. Our guests also have the opportunity to purchase upgrades from us such as premium rooms, dining experiences, wines and spirits and spa packages.

For the three months ended ~~September~~June 30, ~~2019,~~2020, during which time operations at all of our resorts were temporarily suspended in response to the COVID-19 pandemic, we generated a net loss of ~~$30.5~~$87.5 million, total revenue of ~~$132.8~~$1.0 million, Net Package RevPAR of ~~$169.58~~$0 and Adjusted EBITDA of ~~$15.8~~$(31.4) million. For the three months ended ~~September 30, 2018, we generated a net loss of $5.4 million, total revenue of $142.8 million, Net Package RevPAR of $175.27 and Adjusted EBITDA of $26.0 million.~~

~~For the nine months ended September~~June 30, 2019, we generated net income of ~~$13.6~~$1.0 million, total revenue of ~~$492.6~~$164.0 million, Net Package RevPAR of ~~$207.22~~$205.55 and Adjusted EBITDA of ~~$130.7~~$40.1 million.

For the six months ended June 30, 2020, we generated a net loss of $110.0 million, total revenue of $178.2 million, Net Package RevPAR of $100.01 and Adjusted EBITDA of $18.9 million. For the ~~nine~~six months ended ~~September~~June 30, ~~2018,~~2019, we generated net income of ~~$33.2~~$44.0 million, total revenue of ~~$465.2~~$359.8 million, Net Package RevPAR of ~~$214.10~~$225.37 and Adjusted EBITDA of ~~$141.9~~$114.8 million.

Impact of COVID-19 Pandemic

The COVID-19 pandemic and the public health measures that have been undertaken in response have had a significant adverse impact on the global economy, the travel and hospitality industries and our business starting in the first quarter of 2020. The effects of the COVID-19 pandemic, including related government restrictions, border closings, quarantines, “shelter-in-place” orders and “social distancing,” have significantly disrupted global leisure travel, and has adversely impacted global commercial activity, contributing to

worldwide economic contraction and rising unemployment. We expect that the continuing economic fallout will create headwinds for leisure travel even after the current government restrictions are lifted.

Due to the spread of the COVID-19 pandemic and the associated restrictions placed on international travel, we temporarily suspended operations at all of our resorts in late March 2020 and subsequently began reopening our resorts on July 1, 2020.

As of July 1, 2020, we reopened 8 out of our 21 resorts and subsequently reopened another 4 resorts. Currently, 12 out of our 21 resorts have reopened:



Resort	Date Reopened
Hyatt Ziva Cancún	7/1/2020
Hyatt Zilara Cancún	7/1/2020
Hilton Playa del Carmen All-Inclusive Resort	7/1/2020
Panama Jack Resorts Cancún	7/15/2020
Hyatt Ziva Rose Hall	7/1/2020
Hyatt Zilara Rose Hall	7/1/2020
Hilton Rose Hall Resort & Spa	7/1/2020
Jewel Paradise Cove Beach Resort & Spa	7/1/2020
Jewel Grande Montego Bay Resort & Spa	7/1/2020
Hyatt Ziva Cap Cana	7/22/2020
Hyatt Zilara Cap Cana	7/22/2020
Sanctuary Cap Cana	7/15/2020

We issued a press release on June 16, 2020 with our anticipated reopening schedule and will update this schedule as we move through the year.

The suspension of operations at all of our resorts during the quarter, which account for all of our revenue, has had a significant adverse effect on our liquidity. As of June 30, 2020 we had $251.0 million of available cash. We have taken the following measures to mitigate the impact of the effects of the COVID-19 pandemic on our liquidity position:


•	we announced on June 12, 2020 that we had raised $224.0 million of additional capital from affiliates of Davidson Kempner Capital Management LP (“DK”) in the form of $204.0 million of additional debt financing and $20.0 million of equity financing at a price of $4.10 per share;


•	we sold the Jewel Dunn's River Beach Resort & Spa and the Jewel Runaway Bay Beach Resort & Waterpark for a total cash consideration of $60.0 million. The transaction closed in May 2020 and the cash consideration is reflected in our available cash;


•	we borrowed an additional $40.0 million under our Revolving Credit Facility in March 2020, increasing the amount outstanding on the facility to $85.0 million;


•	the temporary suspension of operations of all of our resorts significantly reduced the variable cost components of our resort-level operating expenses, including resort franchise and franchise-related fees, management fees and expenses related to our resort employees;


•	we have deferred all of our non-critical capital expenditures planned for 2020 and intend to spend a minimal amount on emergency capital expenditures;


•	we adopted voluntary senior executive salary reductions, including reducing our Chief Executive Officer’s salary by 100%, these reductions are being phased back in during the third quarter with the exception of our Chief Executive Officer;


•	we imposed compensation cuts broadly throughout our corporate workforce and canceled all non-essential corporate travel and spending;


•	we have temporarily suspended repurchases of our ordinary shares under our share repurchase program until we have more visibility into the longer-term impact of COVID-19 and economic conditions improve; and


•	we also significantly reduced marketing expenditures during the second quarter.

In addition, the recent reduction in the size of our Board of Directors to align with the Company’s size and needs will further reduce our expenses.

We cannot predict when the effects of the pandemic will subside, and thus we cannot predict when we will be able to reopen our remaining resorts, whether our resorts will be permitted to remain open or when our business will return to normalized levels. There also can be no guarantee that when the effects of the pandemic subside that there will not be a later resurgence of the virus or that the demand for lodging, and consumer confidence in travel generally, will recover as quickly as other industries. The longer and more severe the pandemic, and the possibility of repeat or cyclical outbreaks of the virus beyond the one currently being experienced, the greater the material adverse effect the pandemic will have on our business, results of operations, cash flows, financial condition, access to credit markets and ability to service our indebtedness. See “Part II - Item 1A. Risk Factors” included in our Quarterly Report on Form 10-Q for additional information.

Our Portfolio of Resorts

The following table presents an overview of our resorts at ~~September~~June 30, ~~2019.~~2020. None of the resorts we own individually contributed more than ~~14.0%~~13.1% of our Total Net Revenue or ~~19.6%~~31.3% of our consolidated Adjusted EBITDA for the ~~nine~~six months ended ~~September~~June 30, ~~2019.~~2020. The table below is organized by our four geographic business segments: the Yucatán Peninsula, the Pacific Coast, the Dominican Republic and Jamaica.

Name of Resort

Location

Brand and Type

Operator

Year Built; Significant Renovations

Rooms

Location

Brand and Type

Operator

Year Built; Significant Renovations

Rooms

Owned Resorts

Yucatán Peninsula

Hyatt Ziva Cancún

Cancún, Mexico

Hyatt Ziva (all ages)

Playa

1975; 1980; 1986; 2002; 2015

547

Cancún, Mexico

Hyatt Ziva (all ages)

Playa

1975; 1980; 1986; 2002; 2015

547

Hyatt Zilara Cancún

Cancún, Mexico

Hyatt Zilara (adults-only)

Playa

2006; 2009; 2013; 2017

310

Cancún, Mexico

Hyatt Zilara (adults-only)

Playa

2006; 2009; 2013; 2017

310

Panama Jack Resorts Cancún

Cancún, Mexico

Panama Jack (all ages)

Playa

1985; 2009; 2017

458

Cancún, Mexico

Panama Jack (all ages)

Playa

1985; 2009; 2017

458

Hilton Playa del Carmen All-Inclusive Resort ⁽¹⁾

Playa del Carmen, Mexico

Hilton (adults-only)

Playa

2002; 2009; 2019

524

Playa del Carmen, Mexico

Hilton (adults-only)

Playa

2002; 2009; 2019

524

Panama Jack Resorts Playa del Carmen

Playa del Carmen, Mexico

Panama Jack (all ages)

Playa

1996; 2006; 2012; 2017

287

Playa del Carmen, Mexico

Panama Jack (all ages)

Playa

1996; 2006; 2012; 2017

287

Secrets Capri

Riviera Maya, Mexico

Secrets (adults-only)

AMResorts

2003

291

Riviera Maya, Mexico

Secrets (adults-only)

AMResorts

2003

291

Dreams Puerto Aventuras

Riviera Maya, Mexico

Dreams (all ages)

AMResorts

1991; 2009

305

Riviera Maya, Mexico

Dreams (all ages)

AMResorts

1991; 2009

305

Pacific Coast

Hyatt Ziva Los Cabos

Cabo San Lucas, Mexico

Hyatt Ziva (all ages)

Playa

2007; 2009; 2015

591

Cabo San Lucas, Mexico

Hyatt Ziva (all ages)

Playa

2007; 2009; 2015

591

Hyatt Ziva Puerto Vallarta

Puerto Vallarta, Mexico

Hyatt Ziva (all ages)

Playa

1969; 1990; 2002; 2009; 2014; 2017

335

Puerto Vallarta, Mexico

Hyatt Ziva (all ages)

Playa

1969; 1990; 2002; 2009; 2014; 2017

335

Dominican Republic

Hilton La Romana All-Inclusive Resort ⁽¹⁾⁽²⁾

La Romana, Dominican Republic

Hilton (adults-only)

Playa ⁽²⁾

1997; 2008; 2019

356

La Romana, Dominican Republic

Hilton (adults-only)

Playa ⁽²⁾

1997; 2008; 2019

356

Hilton La Romana All-Inclusive Resort ⁽¹⁾⁽²⁾

La Romana, Dominican Republic

Hilton (all ages)

Playa ⁽²⁾

1997; 2008; 2019

418

La Romana, Dominican Republic

Hilton (all ages)

Playa ⁽²⁾

1997; 2008; 2019

418

Dreams Palm Beach

Punta Cana, Dominican Republic

Dreams (all ages)

AMResorts

1994; 2008

500

Punta Cana, Dominican Republic

Dreams (all ages)

AMResorts

1994; 2008

500

Dreams Punta Cana

Punta Cana, Dominican Republic

Dreams (all ages)

AMResorts

2004

620

Punta Cana, Dominican Republic

Dreams (all ages)

AMResorts

2004

620

Hyatt Ziva Cap Cana

Cap Cana, Dominican Republic

Hyatt Ziva (all ages)

Playa

2019

375

Hyatt Zilara Cap Cana

Cap Cana, Dominican Republic

Hyatt Zilara (adults-only)

Playa

2019

375

Jamaica

Hyatt Ziva Rose Hall

Montego Bay, Jamaica

Hyatt Ziva (all ages)

Playa

2000; 2014; 2017

276

Montego Bay, Jamaica

Hyatt Ziva (all ages)

Playa

2000; 2014; 2017

276

Hyatt Zilara Rose Hall

Montego Bay, Jamaica

Hyatt Zilara (adults-only)

Playa

2000; 2014; 2017

344

Montego Bay, Jamaica

Hyatt Zilara (adults-only)

Playa

2000; 2014; 2017

344

Hilton Rose Hall Resort & Spa

Montego Bay, Jamaica

Hilton (all ages)

Playa

1974; 2008; 2017

495

Montego Bay, Jamaica

Hilton (all ages)

Playa

1974; 2008; 2017

495

Jewel Runaway Bay Beach & Golf Resort

Runaway Bay, Jamaica

Jewel (all ages)

Playa

1960; 1961; 1965; 2007; 2012

268

Jewel Dunn’s River Beach Resort & Spa

Ocho Rios, Jamaica

Jewel (adults-only)

Playa

1957; 1970; 1980; 2010

250

Jewel Paradise Cove Beach Resort & Spa

Runaway Bay, Jamaica

Jewel (adults-only)

Playa

2013

225

Runaway Bay, Jamaica

Jewel (adults-only)

Playa

2013

225

Jewel Grande Montego Bay Resort & Spa ⁽⁴⁾

Montego Bay, Jamaica

Jewel (all ages)

Playa

2016; 2017

Jewel Grande Montego Bay Resort & Spa ⁽³⁾

Montego Bay, Jamaica

Jewel (all ages)

Playa

2016; 2017

Total Rooms Owned

7,488

7,720

Managed Resorts

Sanctuary Cap Cana ⁽³⁾

Punta Cana, Dominican Republic

Sanctuary (adults-only)

Playa

2008; 2015; 2018

323

Jewel Grande Montego Bay Resort & Spa ⁽⁴⁾

Montego Bay, Jamaica

Jewel (condo-hotel)

Playa

2016; 2017

129

Sanctuary Cap Cana ⁽⁴⁾

Punta Cana, Dominican Republic

Sanctuary (adults-only)

Playa

2008; 2015; 2018

323

Jewel Grande Montego Bay Resort & Spa ⁽³⁾

Montego Bay, Jamaica

Jewel (condo-hotel)

Playa

2016; 2017

129

Total Rooms Operated

452

Total Rooms Owned and Operated

7,940

8,172

⁽¹⁾Effective November 20, 2018, this resort was rebranded into Hilton all-inclusive resort. Renovations were completed in 2019.

⁽²⁾Pursuant to an agreement with Hilton, we rebranded these resorts as Hilton all-inclusive resorts in November 2018. The resorts are still owned and operated by Playa.

⁽²⁾~~Effective November 20, 2018, this resort was rebranded into two Hilton all-inclusive resorts. Renovations are currently underway and projected to be complete by the end of 2019.~~

⁽³⁾~~Owned by a third party.~~

⁽⁴⁾We acquired an 88-unit tower and spa as part of ~~our acquisition of~~ the ~~Sagicor Assets.~~business combination with Sagicor. Additionally, we manage the majority of the units within the remaining two condo-hotel towers owned by Sagicor that comprise the Jewel Grande Montego Bay Resort & Spa.

⁽⁴⁾ Owned by a third party.

Results of Operations

Three Months Ended ~~September~~June 30, ~~2019~~2020 and ~~2018~~2019

The following table summarizes our results of operations on a consolidated basis for the three months ended ~~September~~June 30, ~~2019~~2020 and ~~2018~~2019 ($ in thousands):


	Three Months Ended September 30,						Increase / Decrease					Three Months Ended June 30,						Increase / Decrease
	2019			2018			Change			% Change		2020			2019			Change			% Change
Revenue
Package	$	111,091		$	123,633		$	(12,542	)	(10.1	)%	$	302		$	136,095		$	(135,793	)	(99.8	)%
Non-package	20,065			18,800			1,265			6.7	%	240			24,428			(24,188		)	(99.0	)%
Management fees	83			152			(69		)	(45.4	)%	(18		)	551			(569		)	(103.3	)%
Cost reimbursements	1,586			227			1,359			598.7	%	458			2,949			(2,491		)	(84.5	)%
Total revenue	132,825			142,812			(9,987		)	(7.0	)%	982			164,023			(163,041		)	(99.4	)%
Direct and selling, general and administrative expenses
Direct	87,252			91,573			(4,321		)	(4.7	)%	20,380			92,582			(72,202		)	(78.0	)%
Selling, general and administrative	30,771			28,489			2,282			8.0	%	19,739			32,048			(12,309		)	(38.4	)%
Pre-opening	257			87			170			195.4	%	—			202			(202		)	(100.0	)%
Depreciation and amortization	29,417			20,138			9,279			46.1	%	22,400			25,908			(3,508		)	(13.5	)%
Reimbursed costs	1,586			227			1,359			598.7	%	458			2,949			(2,491		)	(84.5	)%
Impairment loss												25,268			—			25,268			100.0	%
Loss on sale of assets												1,729			—			1,729			100.0	%
Gain on insurance proceeds	—			(686		)	686			(100.0	)%	(2,950		)	—			(2,950		)	100.0	%
Direct and selling, general and administrative expenses	149,283			139,828			9,455			6.8	%	87,024			153,689			(66,665		)	(43.4	)%
Operating (loss) income	(16,458		)	2,984			(19,442		)	(651.5	)%	(86,042		)	10,334			(96,376		)	(932.6	)%
Interest expense	(9,936		)	(7,637		)	(2,299		)	30.1	%	(20,916		)	(10,666		)	(10,250		)	96.1	%
Other expense	(2,537		)	(390		)	(2,147		)	550.5	%
Net loss before tax	(28,931		)	(5,043		)	(23,888		)	473.7	%
Income tax provision	(1,530		)	(379		)	(1,151		)	303.7	%
Net loss	$	(30,461	)	$	(5,422	)	$	(25,039	)	461.8	%
Other income												4,853			364			4,489			1,233.2	%
Net (loss) income before tax												(102,105		)	32			(102,137		)	(319,178.1	)%
Income tax benefit												14,647			1,008			13,639			1,353.1	%
Net (loss) income												$	(87,458	)	$	1,040		$	(88,498	)	(8,509.4	)%

The tables below set forth information for our total portfolio and our comparable portfolio with respect to our Occupancy, Net Package ADR, Net Package RevPAR, Net Package Revenue, Net Non-package Revenue, Management Fee Revenue, Total Net Revenue, Adjusted EBITDA and Adjusted EBITDA Margin. For a description of these operating metrics and non-U.S. GAAP measures, see “Key Indicators of Financial and Operating Performance” below. For discussion of Adjusted EBITDA and reconciliation to the most comparable U.S. GAAP financial measures, see “Key Indicators of Financial and Operating Performance” and “Non-U.S. GAAP Financial Measures” below.

Our comparable portfolio for the three months ended ~~September~~June 30, ~~2019~~2020 excludes the following resorts: Hilton La Romana All-Inclusive Resort and Hilton Playa del Carmen All-Inclusive Resort, which ~~are currently under renovation, Jewel Grande Montego Bay Resort & Spa, which was~~were under renovation in ~~2018, and~~2019, Hyatt Ziva and Hyatt Zilara Cap Cana, a ground-up development ~~open during~~opened November ~~2019.~~2019 and Jewel Dunn’s River Beach Resort & Spa and Jewel Runaway Bay Beach Resort & Waterpark, which were sold in May 2020.

Total Portfolio


	Three Months Ended September 30,						Increase / Decrease					Three Months Ended June 30,						Increase / Decrease
	2019			2018			Change			% Change		2020			2019			Change			% Change
Occupancy	75.5		%	79.2		%	(3.7		)pts	(4.7	)%	—		%	79.8		%	(79.8		)pts	(100.0	)%
Net Package ADR	$	224.60		$	221.40		$	3.20		1.4	%	$	—		$	257.66		$	(257.66	)	(100.0	)%
Net Package RevPAR	$	169.58		$	175.27		$	(5.69	)	(3.2	)%	$	—		$	205.55		$	(205.55	)	(100.0	)%
	($ in thousands)											($ in thousands)
Net Package Revenue	$	106,954		$	118,810		$	(11,856	)	(10.0	)%	$	302		$	130,896		$	(130,594	)	(99.8	)%
Net Non-package Revenue	19,120			18,719			401			2.1	%	240			24,007			(23,767		)	(99.0	)%
Management Fee Revenue	83			152			(69		)	(45.4	)%	(18		)	551			(569		)	(103.3	)%
Total Net Revenue	126,157			137,681			(11,524		)	(8.4	)%	524			155,454			(154,930		)	(99.7	)%
Adjusted EBITDA	$	15,830		$	26,032		$	(10,202	)	(39.2	)%	$	(31,422	)	$	40,058		$	(71,480	)	(178.4	)%
Adjusted EBITDA Margin	12.5		%	18.9		%	(6.4		)pts	(33.9	)%	(5,996.6		)%	25.8		%	(6,022.4		)pts	(23,342.6	)%

Comparable Portfolio


	Three Months Ended September 30,						Increase / Decrease					Three Months Ended June 30,						Increase / Decrease
	2019			2018			Change			% Change		2020			2019			Change			% Change
Occupancy	77.0		%	78.6		%	(1.6		)pts	(2.0	)%	—		%	81.3		%	(81.3		)pts	(100.0	)%
Net Package ADR	$	226.38		$	227.88		$	(1.50	)	(0.7	)%	$	—		$	265.62		$	(265.62	)	(100.0	)%
Net Package RevPAR	$	174.28		$	179.05		$	(4.77	)	(2.7	)%	$	—		$	215.89		$	(215.89	)	(100.0	)%
	($ in thousands)											($ in thousands)
Net Package Revenue	$	97,838		$	100,465		$	(2,627	)	(2.6	)%	$	535		$	111,412		$	(110,877	)	(99.5	)%
Net Non-package Revenue	17,154			15,820			1,334			8.4	%	218			20,244			(20,026		)	(98.9	)%
Management Fee Revenue	83			152			(69		)	(45.4	)%	(18		)	551			(569		)	(103.3	)%
Total Net Revenue	115,075			116,437			(1,362		)	(1.2	)%	735			132,207			(131,472		)	(99.4	)%
Adjusted EBITDA	$	17,476		$	19,458		$	(1,982	)	(10.2	)%	$	(24,966	)	$	35,216		$	(60,182	)	(170.9	)%
Adjusted EBITDA Margin	15.2		%	16.7		%	(1.5		)pts	(9.0	)%	(3,396.7		)%	26.6		%	(3,423.3		)pts	(12,869.5	)%

Total Revenue and Total Net Revenue

Our total revenue for the three months ended ~~September~~June 30, ~~2019~~2020 decreased ~~$10.0~~$163.0 million, or ~~7.0%~~99.4%, compared to the three months ended ~~September~~June 30, ~~2018.~~2019. Our Total Net Revenue for the three months ended ~~September~~June 30, ~~2019~~2020 decreased ~~$11.5~~$154.9 million, or ~~8.4%~~99.7%, compared to the three months ended ~~September~~June 30, ~~2018. This decrease was driven by~~2019. These decreases are due to the closures of all our resorts during the second quarter as a ~~decrease in Net Package Revenue~~result of ~~$11.9 million, or 10.0%, and partially offset by an increase in Net Non-package Revenue~~the COVID-19 pandemic. See “Impact of ~~$0.4 million, or 2.1%.~~COVID-19 Pandemic” above for more information regarding the effects of the COVID-19 pandemic on our results of operations.

The following table shows a reconciliation of comparable Net Package Revenue, Net Non-package Revenue and Management Fee Revenue to total revenue for the three months ended ~~September~~June 30, ~~2019~~2020 and ~~2018~~2019 ($ in thousands):


	Three Months Ended September 30,				Increase/Decrease					Three Months Ended June 30,					Increase/Decrease
	2019		2018		Change			% Change		2020			2019		Change			% Change
Net Package Revenue
Comparable Net Package Revenue	$	97,838	$	100,465	$	(2,627	)	(2.6	)%	$	535		$	111,412	$	(110,877	)	(99.5	)%
Non-comparable Net Package Revenue	9,116		18,345		(9,229		)	(50.3	)%	(233		)	19,484		(19,717		)	(101.2	)%
Net Package Revenue	106,954		118,810		(11,856		)	(10.0	)%	302			130,896		(130,594		)	(99.8	)%

Net Non-package Revenue
Comparable Net Non-package Revenue	17,154		15,820		1,334			8.4	%	218			20,244		(20,026		)	(98.9	)%
Non-comparable Net Non-package Revenue	1,966		2,899		(933		)	(32.2	)%	22			3,763		(3,741		)	(99.4	)%
Net Non-package Revenue	19,120		18,719		401			2.1	%	240			24,007		(23,767		)	(99.0	)%

Management Fee Revenue
Comparable Management Fee Revenue	83		152		(69		)	(45.4	)%	(18		)	551		(569		)	(103.3	)%
Non-comparable Management Fee Revenue	—		—		—			—	%	—			—		—			—	%
Management Fee Revenue	83		152		(69		)	(45.4	)%	(18		)	551		(569		)	(103.3	)%

Total Net Revenue
Comparable Total Net Revenue	115,075		116,437		(1,362		)	(1.2	)%	735			132,207		(131,472		)	(99.4	)%
Non-comparable Total Net Revenue	11,082		21,244		(10,162		)	(47.8	)%	(211		)	23,247		(23,458		)	(100.9	)%
Total Net Revenue	126,157		137,681		(11,524		)	(8.4	)%	524			155,454		(154,930		)	(99.7	)%
Compulsory tips	5,082		4,904		178			3.6	%	—			5,620		(5,620		)	(100.0	)%
Cost Reimbursements	1,586		227		1,359			598.7	%	458			2,949		(2,491		)	(84.5	)%
Total revenue	$	132,825	$	142,812	$	(9,987	)	(7.0	)%	$	982		$	164,023	$	(163,041	)	(99.4	)%

Comparable Total Net Revenue

Our Comparable Total Net Revenue for the three months ended ~~September~~June 30, ~~2019~~2020 decreased ~~$1.4~~$131.5 million, or ~~1.2%~~99.4%, compared to the three months ended ~~September~~June 30, ~~2018.~~2019. This decrease was driven by a decrease in Comparable Net Package Revenue of $2.6 million, or 2.6%, and partially offset by an increase in Comparable Net Non-package Revenue of $1.3 million, or 8.4%. Comparable Total Net Revenue decreasedis due to the ~~decreases in Comparable Total Net Revenue at~~closures of all our ~~Yucatán Peninsula and Dominican Republic~~ resorts ~~compared to~~during the ~~three months ended September 30, 2018.~~second quarter, a result of the COVID-19 pandemic. See “Impact of COVID-19 Pandemic” above for more information regarding the effects of the COVID-19 pandemic on our results of operations.

Direct Expenses

The following table shows a reconciliation of our direct expenses to Net Direct Expenses for the three months ended ~~September~~June 30, ~~2019~~2020 and ~~2018~~2019 ($ in thousands):


	Three Months Ended September 30,				Increase/Decrease					Three Months Ended June 30,				Increase/Decrease
	2019		2018		Change			% Change		2020		2019		Change			% Change
Direct expenses	$	87,252	$	91,573	$	(4,321	)	(4.7	)%	$	20,380	$	92,582	$	(72,202	)	(78.0	)%
Less: compulsory tips	5,082		4,904		178			3.6	%	—		5,620		(5,620		)	(100.0	)%
Net Direct Expenses	$	82,170	$	86,669	$	(4,499	)	(5.2	)%	$	20,380	$	86,962	$	(66,582	)	(76.6	)%

Our direct expenses include resort expenses, such as food and beverage, salaries and wages, utilities and other ongoing operational expenses. Our Net Direct Expenses were ~~$82.2~~$20.4 million, or ~~65.1%~~3,889.3% of Total Net Revenue, for the three months ended ~~September~~June 30, ~~2019~~2020 and ~~$86.7~~$87.0 million, or ~~62.9%~~55.9% of Total Net Revenue, for the three months ended ~~September~~June 30, ~~2018.~~2019.

Net Direct Expenses for the three months ended ~~September~~June 30, ~~2019~~2020 decreased ~~$4.5~~$66.6 million, or ~~5.2%~~76.6%, compared to the three months ended ~~September~~June 30, ~~2018.~~2019. Net Direct Expenses at our comparable properties decreased ~~primarily~~$55.9 million, or 77.7%, compared to the three months ended June 30, 2019. Net Direct Expenses decreases are due to the closures of all our ~~development projects under renovation at~~resorts during the second quarter and

~~Hilton La Romana All-Inclusive Resort and Hilton Playa del Carmen All-Inclusive Resort which accounted for $4.1 million~~cost cutting measures taken in response to the COVID-19 pandemic. We temporarily suspended operations at all of ~~the change.~~our resorts from late March 2020 through June 2020. Direct operating expenses fluctuate based on various factors, including changes in occupancy, labor costs, utilities, repair and maintenance costs and license and property taxes. Management fees and franchise fees, which are computed as a percentage of revenue, ~~increase~~increase/decrease as a result of ~~higher~~changes in revenues.

Net Direct Expenses consists of the following ($ in thousands):

Total Portfolio


	Three Months Ended September 30,				Increase/Decrease					Three Months Ended June 30,					Increase/Decrease
	2019		2018		Change			% Change		2020			2019		Change			% Change
Food and beverages	$	20,063	$	21,793	$	(1,730	)	(7.9	)%	$	702		$	21,269	$	(20,567	)	(96.7	)%
Salaries and wages	31,341		31,406		(65		)	(0.2	)%	11,393			32,663		(21,270		)	(65.1	)%
Repairs and maintenance	4,231		4,701		(470		)	(10.0	)%	1,478			4,183		(2,705		)	(64.7	)%
Utilities and sewerage	9,657		10,834		(1,177		)	(10.9	)%	3,312			9,482		(6,170		)	(65.1	)%
Licenses and property taxes	611		805		(194		)	(24.1	)%	898			921		(23		)	(2.5	)%
Incentive and management fees	874		2,151		(1,277		)	(59.4	)%	(256		)	1,856		(2,112		)	(113.8	)%
Franchise / license fees	4,850		4,294		556			12.9	%	1,227			5,929		(4,702		)	(79.3	)%
Transportation and travel expenses	1,076		1,220		(144		)	(11.8	)%	74			1,120		(1,046		)	(93.4	)%
Laundry and cleaning expenses	1,188		1,269		(81		)	(6.4	)%	270			1,144		(874		)	(76.4	)%
Property and equipment rental expense	494		728		(234		)	(32.1	)%	(31		)	923		(954		)	(103.4	)%
Entertainment expenses and decoration	1,704		1,759		(55		)	(3.1	)%	14			1,901		(1,887		)	(99.3	)%
Office supplies	257		682		(425		)	(62.3	)%	59			370		(311		)	(84.1	)%
Other operational expenses	5,824		5,027		797			15.9	%	1,240			5,201		(3,961		)	(76.2	)%
Total Net Direct Expenses	$	82,170	$	86,669	$	(4,499	)	(5.2	)%	$	20,380		$	86,962	$	(66,582	)	(76.6	)%

Comparable Portfolio


	Three Months Ended September 30,				Increase/Decrease					Three Months Ended June 30,					Increase/Decrease
	2019		2018		Change			% Change		2020			2019		Change			% Change
Food and beverages	$	18,066	$	18,467	$	(401	)	(2.2	)%	$	503		$	17,478	$	(16,975	)	(97.1	)%
Salaries and wages	29,008		29,049		(41		)	(0.1	)%	8,956			26,616		(17,660		)	(66.4	)%
Repairs and maintenance	3,947		4,194		(247		)	(5.9	)%	1,155			3,414		(2,259		)	(66.2	)%
Utilities and sewerage	8,592		9,099		(507		)	(5.6	)%	2,426			7,646		(5,220		)	(68.3	)%
Licenses and property taxes	467		525		(58		)	(11.0	)%	656			556		100			18.0	%
Incentive and management fees	946		1,500		(554		)	(36.9	)%	(256		)	1,855		(2,111		)	(113.8	)%
Franchise / license fees	4,501		4,291		210			4.9	%	1,183			5,456		(4,273		)	(78.3	)%
Transportation and travel expenses	971		1,086		(115		)	(10.6	)%	21			883		(862		)	(97.6	)%
Laundry and cleaning expenses	1,079		1,107		(28		)	(2.5	)%	243			853		(610		)	(71.5	)%
Property and equipment rental expense	442		613		(171		)	(27.9	)%	(16		)	708		(724		)	(102.3	)%
Entertainment expenses and decoration	1,620		1,567		53			3.4	%	19			1,705		(1,686		)	(98.9	)%
Office supplies	235		575		(340		)	(59.1	)%	58			327		(269		)	(82.3	)%
Other operational expenses	4,366		4,289		77			1.8	%	1,066			4,418		(3,352		)	(75.9	)%
Total Net Direct Expenses	$	74,240	$	76,362	$	(2,122	)	(2.8	)%	$	16,014		$	71,915	$	(55,901	)	(77.7	)%

Selling, General and Administrative Expenses

Our selling, general and administrative expenses for the three months ended ~~September~~June 30, ~~2019 increased $2.3~~2020 decreased $12.3 million, or ~~8.0%~~38.4%, compared to the three months ended ~~September~~June 30, ~~2018. This increase was due primarily~~2019. These decreases were driven by the closures of all our resorts during the second quarter and cost cutting measures taken in response to the COVID-19 pandemic. We temporarily suspended operations at all of our resorts from late March 2020 through June 2020 which drove a ~~$1.2~~$9.7 million ~~increase~~decrease in advertising and commissions, a $2.0 million

decrease in property selling, general and administrative expenses, a $1.0 million decrease in transaction expenses and a $0.4 million decrease in professional fees.

These decreases were offset by an increase of $1.0 million in insurance expense.

Depreciation and Amortization Expense

Our depreciation and amortization expense for the three months ended ~~September~~June 30, ~~2019 increased $9.3~~2020 decreased $3.5 million, or ~~46.1%~~13.5%, compared to the three months ended ~~September~~June 30, ~~2018. This increase~~2019. The decrease was due to ~~an $8.9~~a $5.2 million ~~increase in depreciation from renovations~~decrease at ~~the Hilton La Romana All-Inclusive Resort and~~our 2019 renovation properties, Hilton Playa del Carmen All-Inclusive Resort ~~which included~~and Hilton La Romana All-Inclusive Resort that incurred accelerated depreciation ~~on asset disposals.~~in 2019. This decrease was partially offset by the opening of Hyatt Ziva and Hyatt Zilara Cap Cana in the fourth quarter of 2019, which accounted for a $2.3 million increase.

Impairment loss

Our impairment loss for the three months ended June 30, 2020 increased $25.3 million, or 100.0%, compared to the three months ended June 30, 2019. The increase was due to property and equipment impairment upon classification of the Jewel Dunn’s River Beach Resort & Spa and Jewel Runaway Bay Beach Resort & Waterpark as held for sale. For further details see Note 4 to our Condensed Consolidated Financial Statements.

Interest Expense

Our interest expense for the three months ended ~~September~~June 30, ~~2019~~2020 increased ~~$2.3~~$10.3 million, or ~~30.1%~~96.1%, as compared to the three months ended ~~September~~June 30, ~~2018.~~2019. The increase in interest expense was driven primarily by ~~$4.6~~a $5.9 million ~~in additional interest expense~~increase due to the change in ~~accounting for~~fair value of our interest rate ~~swaps and a $2.3 million reduction in interest expense due to additional capitalized interest.~~swaps. In March 2019, we elected to adopt hedge accounting and designate our interest rate swaps as cash flow hedges. After the adoption of hedge accounting, we recorded the change in fair value of our interest rate swaps through other comprehensive (loss) income. ~~Prior~~Due to the drop in interest rates, our ~~adoption of~~cash flow hedge ~~accounting,~~was deemed ineffective and dedesignated in March 2020, resulting in recognizing the change in fair value of our interest rate swaps ~~was recognized~~ through interest ~~expense, which resulted in an increase in~~expense. Additionally, our interest expense increased due to $2.9 million of ~~$4.6 million for~~capitalized interest recorded in the three months ended ~~September~~June 30, 2019 ~~and a reduction~~related to ~~interest expense for~~our development projects in 2019. For the three months ended ~~September~~June 30, ~~2018.~~2020, we did not record any capitalized interest. Finally, our interest expense increased $0.8 million due to draws on our Revolving Credit Facility.

Cash interest paid, excluding the effects of capitalized interest, increased ~~$0.4~~$0.9 million for the three months ended ~~September~~June 30, ~~2019~~2020 as compared to the three months ended ~~September~~June 30, ~~2018. The increase in cash~~2019. Cash interest paid ~~was~~increased $0.8 million due to ~~higher~~additional interest ~~incurred~~from draws on the ~~variable portion~~Revolving Credit Facility. As of June 30, 2020, the total amount outstanding under our ~~debt.~~Revolving Credit Facility was $84.7 million.

Income Tax ~~Provision~~Benefit

For the three months ended ~~September~~June 30, ~~2019,~~2020, our income tax ~~provision~~benefit was ~~$1.5~~$14.6 million, compared to a ~~$0.4~~$1.0 million tax ~~provision~~benefit for the three months ended ~~September~~June 30, ~~2018. The increase~~2019. See further details in Note 5 to our income tax provision of $1.1 million was driven primarily by the net impact of an additional discrete tax expense of $4.3 million for future tax liabilities of certain Dominican Republic entities and additional tax expense of $1.5 million due to the shift in the jurisdictional mix of pre-tax book income, offset by a $5.2 million decrease in the discrete tax expense associated with foreign exchange rate fluctuations.Condensed Consolidated Financial Statements.

Results of Operations

~~Nine~~Six Months Ended ~~September~~June 30, ~~2019~~2020 and ~~2018~~2019

The following table summarizes our results of operations on a consolidated basis for the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 and ~~2018~~2019 ($ in thousands):


	Nine Months Ended September 30,						Increase / Decrease					Six Months Ended June 30,						Increase / Decrease
	2019			2018			Change			% Change		2020			2019			Change			% Change
Revenue
Package	$	416,978		$	402,627		$	14,351		3.6	%	$	153,357		$	305,887		$	(152,530	)	(49.9	)%
Non-package	68,975			61,752			7,223			11.7	%	22,818			48,910			(26,092		)	(53.3	)%
Management fees	1,568			503			1,065			211.7	%	627			1,485			(858		)	(57.8	)%
Cost reimbursements	5,123			349			4,774			1,367.9	%	1,408			3,537			(2,129		)	(60.2	)%
Total revenue	492,644			465,231			27,413			5.9	%	178,210			359,819			(181,609		)	(50.5	)%
Direct and selling, general and administrative expenses
Direct	273,577			250,742			22,835			9.1	%	118,278			186,325			(68,047		)	(36.5	)%
Selling, general and administrative	94,647			87,742			6,905			7.9	%	53,571			63,876			(10,305		)	(16.1	)%
Pre-opening	548			87			461			529.9	%	—			291			(291		)	(100.0	)%
Depreciation and amortization	77,636			51,709			25,927			50.1	%	47,359			48,219			(860		)	(1.8	)%
Reimbursed costs	5,123			349			4,774			1,367.9	%	1,408			3,537			(2,129		)	(60.2	)%
Impairment loss												41,441			—			41,441			100.0	%
Loss on sale of assets												1,729			—			1,729			100.0	%
Gain on insurance proceeds	—			(2,207		)	2,207			(100.0	)%	(2,950		)	—			(2,950		)	100.0	%
Direct and selling, general and administrative expenses	451,531			388,422			63,109			16.2	%	260,836			302,248			(41,412		)	(13.7	)%
Operating income	41,113			76,809			(35,696		)	(46.5	)%
Operating (loss) income												(82,626		)	57,571			(140,197		)	(243.5	)%
Interest expense	(34,796		)	(35,151		)	355			(1.0	)%	(41,871		)	(24,860		)	(17,011		)	68.4	%
Other expense	(2,775		)	(1,836		)	(939		)	51.1	%
Net income before tax	3,542			39,822			(36,280		)	(91.1	)%
Income tax benefit (provision)	10,025			(6,606		)	16,631			(251.8	)%
Net income	$	13,567		$	33,216		$	(19,649	)	(59.2	)%
Other income (expense)												947			(238		)	1,185			(497.9	)%
Net (loss) income before tax												(123,550		)	32,473			(156,023		)	(480.5	)%
Income tax benefit												13,536			11,555			1,981			17.1	%
Net (loss) income												$	(110,014	)	$	44,028		$	(154,042	)	(349.9	)%

The tables below set forth information for our total portfolio and comparable portfolio with respect to our Occupancy, Net Package ADR, Net Package RevPAR, Net Package Revenue, Net Non-package Revenue, Management Fee Revenue, Total Net Revenue, Adjusted EBITDA and Adjusted EBITDA Margin. For a description of these operating metrics and non-U.S. GAAP measures, see “Key Indicators of Financial and Operating Performance” below. For discussion of Adjusted EBITDA and reconciliation to the most comparable U.S. GAAP financial measures, see “Key Indicators of Financial and Operating Performance” and “Non-U.S. GAAP Financial Measures” below.

Our comparable portfolio for the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 excludes the following resorts: Hilton La Romana All-Inclusive Resort and Hilton Playa del Carmen All-Inclusive Resort, which ~~are currently~~were under renovation Hilton Rose Hall Resort & Spa, Jewel Runaway Bay Beach & Golf Resort, Jewel Dunn’s River Beach Resort & Spa, Jewel Paradise Cove Beach Resort & Spa and Jewel Grande Montego Bay Resort & Spa, which were acquired on June 1, 2018, andin 2019, Hyatt Ziva and Hyatt Zilara Cap Cana, a ground-up development ~~open during~~opened November ~~2019.~~2019 and Jewel Dunn’s River Beach Resort & Spa and Jewel Runaway Bay Beach Resort & Waterpark, which were sold in May 2020.

Total Portfolio


	Nine Months Ended September 30,						Increase / Decrease					Six Months Ended June 30,						Increase / Decrease
	2019			2018			Change			% Change		2020			2019			Change			% Change
Occupancy	78.5		%	83.2		%	(4.7		)pts	(5.6	)%	33.6		%	79.9		%	(46.3		)pts	(57.9	)%
Net Package ADR	$	263.99		$	257.25		$	6.74		2.6	%	$	297.28		$	281.93		$	15.35		5.4	%
Net Package RevPAR	$	207.22		$	214.10		$	(6.88	)	(3.2	)%	$	100.01		$	225.37		$	(125.36	)	(55.6	)%
	($ in thousands)											($ in thousands)
Net Package Revenue	$	401,637		$	390,365		$	11,272		2.9	%	$	148,398		$	294,683		$	(146,285	)	(49.6	)%
Net Non-package Revenue	67,347			61,718			5,629			9.1	%	22,663			48,227			(25,564		)	(53.0	)%
Management Fee Revenue	1,568			503			1,065			211.7	%	627			1,485			(858		)	(57.8	)%
Total Net Revenue	470,552			452,586			17,966			4.0	%	171,688			344,395			(172,707		)	(50.1	)%
Adjusted EBITDA	$	130,673		$	141,908		$	(11,235	)	(7.9	)%	$	18,921		$	114,843		$	(95,922	)	(83.5	)%
Adjusted EBITDA Margin	27.8		%	31.4		%	(3.6		)pts	(11.5	)%	11.0		%	33.3		%	(22.3		)pts	(67.0	)%

Comparable Portfolio


	Nine Months Ended September 30,						Increase / Decrease					Six Months Ended June 30,						Increase / Decrease
	2019			2018			Change			% Change		2020			2019			Change			% Change
Occupancy	80.3		%	83.3		%	(3.0		)pts	(3.6	)%	35.7		%	82.8		%	(47.1		)pts	(56.9	)%
Net Package ADR	$	272.80		$	268.86		$	3.94		1.5	%	$	300.49		$	289.99		$	10.50		3.6	%
Net Package RevPAR	$	219.09		$	223.93		$	(4.84	)	(2.2	)%	$	107.35		$	240.13		$	(132.78	)	(55.3	)%
	($ in thousands)											($ in thousands)
Net Package Revenue	$	290,844		$	297,169		$	(6,325	)	(2.1	)%	$	110,816		$	246,236		$	(135,420	)	(55.0	)%
Net Non-package Revenue	48,363			48,123			240			0.5	%	17,829			40,157			(22,328		)	(55.6	)%
Management Fee Revenue	1,568			503			1,065			211.7	%	627			1,485			(858		)	(57.8	)%
Total Net Revenue	340,775			345,795			(5,020		)	(1.5	)%	129,272			287,878			(158,606		)	(55.1	)%
Adjusted EBITDA	$	95,754		$	102,052		$	(6,298	)	(6.2	)%	$	12,130		$	96,094		$	(83,964	)	(87.4	)%
Adjusted EBITDA Margin	28.1		%	29.5		%	(1.4		)pts	(4.7	)%	9.4		%	33.4		%	(24.0		)pts	(71.9	)%

Total Revenue and Total Net Revenue

Our total revenue for the ~~nine~~six months ended ~~September~~June 30, ~~2019 increased $27.4~~2020 decreased $181.6 million, or ~~5.9%~~50.5%, compared to the ~~nine~~six months ended ~~September~~June 30, ~~2018.~~2019. Our Total Net Revenue for the ~~nine~~six months ended ~~September~~June 30, ~~2019 increased $18.0~~2020 decreased $172.7 million, or ~~4.0%~~50.1%, compared to the ~~nine~~six months ended ~~September~~June 30, ~~2018. This increase was driven by an increase in Net Package Revenue~~2019. These decreases are due to the closures of ~~$11.3 million, or 2.9%, and an increase in Net Non-package Revenue~~all our resorts during the second quarter as a result of ~~$5.6 million, or 9.1%. The increase in Total Net Revenue was driven by our non-comparable portfolio, which accounted for a $23.0 million increase over~~ the ~~comparable periods.~~COVID-19 pandemic.

The following table shows a reconciliation of comparable Net Package Revenue, Net Non-package Revenue and Management Fee Revenue to total revenue for the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 and ~~2018~~2019 ($ in thousands):


	Nine Months Ended September 30,				Increase/Decrease					Six Months Ended June 30,				Increase/Decrease
	2019		2018		Change			% Change		2020		2019		Change			% Change
Net Package Revenue
Comparable Net Package Revenue	$	290,844	$	297,169	$	(6,325	)	(2.1	)%	$	110,816	$	246,236	$	(135,420	)	(55.0	)%
Non-comparable Net Package Revenue	110,793		93,196		17,597			18.9	%	37,582		48,447		(10,865		)	(22.4	)%
Net Package Revenue	401,637		390,365		11,272			2.9	%	148,398		294,683		(146,285		)	(49.6	)%

Net Non-package Revenue
Comparable Net Non-package Revenue	48,363		48,123		240			0.5	%	17,829		40,157		(22,328		)	(55.6	)%
Non-comparable Net Non-package Revenue	18,984		13,595		5,389			39.6	%	4,834		8,070		(3,236		)	(40.1	)%
Net Non-package Revenue	67,347		61,718		5,629			9.1	%	22,663		48,227		(25,564		)	(53.0	)%

Management Fee Revenue
Comparable Management Fee Revenue	1,568		503		1,065			211.7	%	627		1,485		(858		)	(57.8	)%
Non-comparable Management Fee Revenue	—		—		—			—	%	—		—		—			—	%
Management Fee Revenue	1,568		503		1,065			211.7	%	627		1,485		(858		)	(57.8	)%

Total Net Revenue
Comparable Total Net Revenue	340,775		345,795		(5,020		)	(1.5	)%	129,272		287,878		(158,606		)	(55.1	)%
Non-comparable Total Net Revenue	129,777		106,791		22,986			21.5	%	42,416		56,517		(14,101		)	(25.0	)%
Total Net Revenue	470,552		452,586		17,966			4.0	%	171,688		344,395		(172,707		)	(50.1	)%
Compulsory tips	16,969		12,296		4,673			38.0	%	5,114		11,887		(6,773		)	(57.0	)%
Cost Reimbursements	5,123		349		4,774			1,367.9	%	1,408		3,537		(2,129		)	(60.2	)%
Total revenue	$	492,644	$	465,231	$	27,413		5.9	%	$	178,210	$	359,819	$	(181,609	)	(50.5	)%

Comparable Total Net Revenue

Our Comparable Total Net Revenue for the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 decreased ~~$5.0~~$158.6 million, or ~~1.5%~~55.1%, compared to the ~~nine~~six months ended ~~September~~June 30, ~~2018.~~2019. This decrease was driven by a decrease in Comparable Net Package Revenue of $6.3 million, or 2.1%, and partially offset by an increase in Comparable Net Non-package Revenue of $0.2 million, or 0.5%, and an increase of $1.1 million in Comparable Management Fee Revenue. Comparable Total Net Revenue decreased primarilyis due to the ~~decreases in Comparable Total Net Revenue at~~closures of all our ~~Yucatán Peninsula and Dominican Republic~~ resorts ~~compared to~~during the ~~nine months ended September 30, 2018.~~second quarter, a result of the COVID-19 pandemic. See “Impact of COVID-19 Pandemic” above for more information regarding the effects of the COVID-19 pandemic on our results of operations.

Direct Expenses

The following table shows a reconciliation of our direct expenses to Net Direct Expenses for the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 and ~~2018~~2019 ($ in thousands):


	Nine Months Ended September 30,				Increase/Decrease				Six Months Ended June 30,				Increase/Decrease
	2019		2018		Change		% Change		2020		2019		Change			% Change
Direct expenses	$	273,577	$	250,742	$	22,835	9.1	%	$	118,278	$	186,325	$	(68,047	)	(36.5	)%
Less: compulsory tips	16,969		12,296		4,673		38.0	%	5,114		11,887		(6,773		)	(57.0	)%
Net Direct Expenses	$	256,608	$	238,446	$	18,162	7.6	%	$	113,164	$	174,438	$	(61,274	)	(35.1	)%

Our direct expenses include resort expenses, such as food and beverage, salaries and wages, utilities and other ongoing operational expenses. Our Net Direct Expenses were ~~$256.6~~$113.2 million, or ~~54.5%~~65.9%, of Total Net Revenue for the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 and ~~$238.4~~$174.4 million, or ~~52.7%~~50.7%, of Total Net Revenue for the ~~nine~~six months ended ~~September~~June 30, ~~2018.~~2019.

Net Direct Expenses for the ~~nine~~six months ended ~~September~~June 30, ~~2019 increased $18.2~~2020 decreased $61.3 million, or ~~7.6%~~35.1%, compared to the ~~nine~~six months ended ~~September~~June 30, ~~2018.~~2019. Net Direct Expenses ~~increased primarily~~at our comparable properties decreased $58.0 million, or 40.5%, compared to the six months ended June 30, 2019 due to the ~~acquisition~~closures of all our resorts during the ~~SagicorAssets, which accounted for $31.1 million of~~second quarter and cost cutting measures taken in

response to the change. This increase was partially offset by a decrease of $9.3 million in Net Direct Expenses due to our development projects under renovation at Hilton La Romana All-Inclusive Resort and Hilton Playa del Carmen All-Inclusive Resort.COVID-19 pandemic. Direct operating expenses fluctuate based on various factors, including changes in occupancy, labor costs, utilities, repair and maintenance costs and license and property taxes. Management fees and franchise fees, which are computed as a percentage of revenue, ~~increase~~increase/decrease as a result of ~~higher~~changes in revenues.

Net Direct Expenses consists of the following ($ in thousands):

Total Portfolio


	Nine Months Ended September 30,				Increase/Decrease					Six Months Ended June 30,				Increase/Decrease
	2019		2018		Change			% Change		2020		2019		Change			% Change
Food and beverages	$	62,925	$	58,576	$	4,349		7.4	%	$	21,592	$	42,862	$	(21,270	)	(49.6	)%
Salaries and wages	95,701		87,342		8,359			9.6	%	49,008		64,360		(15,352		)	(23.9	)%
Repairs and maintenance	12,212		11,355		857			7.5	%	5,661		7,981		(2,320		)	(29.1	)%
Utilities and sewerage	28,172		25,103		3,069			12.2	%	12,975		18,515		(5,540		)	(29.9	)%
Licenses and property taxes	2,436		2,299		137			6.0	%	1,697		1,825		(128		)	(7.0	)%
Incentive and management fees	5,336		9,038		(3,702		)	(41.0	)%	1,424		4,462		(3,038		)	(68.1	)%
Franchise / license fees	17,150		13,941		3,209			23.0	%	8,235		12,300		(4,065		)	(33.0	)%
Transportation and travel expenses	3,535		3,244		291			9.0	%	1,449		2,459		(1,010		)	(41.1	)%
Laundry and cleaning expenses	3,498		3,106		392			12.6	%	1,475		2,310		(835		)	(36.1	)%
Property and equipment rental expense	2,404		3,845		(1,441		)	(37.5	)%	802		1,910		(1,108		)	(58.0	)%
Entertainment expenses and decoration	5,391		5,335		56			1.0	%	2,036		3,687		(1,651		)	(44.8	)%
Office supplies	1,126		1,824		(698		)	(38.3	)%	309		869		(560		)	(64.4	)%
Other operational expenses	16,722		13,438		3,284			24.4	%	6,501		10,898		(4,397		)	(40.3	)%
Total Net Direct Expenses	$	256,608	$	238,446	$	18,162		7.6	%	$	113,164	$	174,438	$	(61,274	)	(35.1	)%

Comparable Portfolio

Nine Months Ended September 30, Increase/Decrease
2019 2018 Change % Change
Food and beverages $ 41,344
$ 42,895
$ (1,551 ) (3.6 )%
Salaries and wages 76,385
75,835
550
0.7 %
Repairs and maintenance 8,102
8,344
(242 ) (2.9 )%
Utilities and sewerage 18,639
17,760
879
4.9 %
Licenses and property taxes 1,484
1,301
183
14.1 %
Incentive and management fees 5,433
6,429
(996 ) (15.5 )%
Franchise / license fees 13,338
12,831
507
4.0 %
Transportation and travel expenses 2,626
2,416
210
8.7 %
Laundry and cleaning expenses 1,809
2,033
(224 ) (11.0 )%
Property and equipment rental expense 1,824
3,276
(1,452 ) (44.3 )%
Entertainment expenses and decoration 4,492
4,474
18
0.4 %
Office supplies 945
1,494
(549 ) (36.7 )%
Other operational expenses 9,289
10,243
(954 ) (9.3 )%
Total Net Direct Expenses $ 185,710
$ 189,331
$ (3,621 ) (1.9 )%



	Six Months Ended June 30,				Increase/Decrease
	2020		2019		Change			% Change
Food and beverages	$	15,350	$	34,691	$	(19,341	)	(55.8	)%
Salaries and wages	37,997		52,428		(14,431		)	(27.5	)%
Repairs and maintenance	4,232		6,420		(2,188		)	(34.1	)%
Utilities and sewerage	9,257		14,809		(5,552		)	(37.5	)%
Licenses and property taxes	1,289		1,180		109			9.2	%
Incentive and management fees	1,424		4,543		(3,119		)	(68.7	)%
Franchise / license fees	6,201		10,816		(4,615		)	(42.7	)%
Transportation and travel expenses	904		1,820		(916		)	(50.3	)%
Laundry and cleaning expenses	1,026		1,691		(665		)	(39.3	)%
Property and equipment rental expense	678		1,523		(845		)	(55.5	)%
Entertainment expenses and decoration	1,565		3,283		(1,718		)	(52.3	)%
Office supplies	239		765		(526		)	(68.8	)%
Other operational expenses	5,019		9,164		(4,145		)	(45.2	)%
Total Net Direct Expenses	$	85,181	$	143,133	$	(57,952	)	(40.5	)%

Selling, General and Administrative Expenses

Our selling, general and administrative expenses for the ~~nine~~six months ended ~~September~~June 30, ~~2019 increased $6.9~~2020 decreased $10.3 million, or ~~7.9%~~16.1%, compared to the ~~nine~~six months ended ~~September~~June 30, ~~2018. This increase was primarily driven by~~2019. These decreases are due to the ~~acquisition~~closures of all our resorts during the ~~Sagicor Assets,~~second quarter and cost cutting measures taken in response to the COVID-19 pandemic, which ~~accounted for an $8.1~~drove a decrease of $10.4 million ~~increase, partially offset by~~in advertising and commissions, a ~~$3.2~~$2.3 million decrease in transaction expenses and a $1.7 million decrease in property selling, general and administrative expenses. These decreases were offset by an increase of $1.5 million in insurance expense, a $1.2 million increase in share-based compensation, a $1.0 million increase in corporate personnel expense and a $0.2 million increase in professional fees.

Depreciation and Amortization Expense

Our depreciation and amortization expense for the ~~nine~~six months ended ~~September~~June 30, ~~2019 increased $25.9~~2020 decreased $0.9 million, or ~~50.1%~~1.8%, compared to the ~~nine~~six months ended ~~September~~June 30, ~~2018. This increase~~2019. The decrease was due to ~~the acquisition of the~~ ~~SagicorAssets, which accounted for $8.2~~a $5.0 million ~~of the increase, and a $17.3 million increase in depreciation from renovations~~decrease at ~~the Hilton La Romana All-Inclusive Resort and~~our 2019 renovation properties, Hilton Playa del Carmen All-Inclusive Resort ~~which included~~and Hilton La Romana All-Inclusive Resort that incurred accelerated depreciation ~~on asset disposals.~~in 2019. This decrease was partially offset by the opening of Hyatt Ziva and Hyatt Zilara Cap Cana in the fourth quarter of 2019, which accounted for a $4.9 million increase.

Impairment Loss

Our impairment loss for the six months ended June 30, 2020 increased $41.4 million, or 100.0%, compared to the six months ended June 30, 2019. The increase was driven by $25.3 million of property and equipment impairment recognized upon classification of the Jewel Dunn’s River Beach Resort & Spa and Jewel Runaway Bay Beach Resort & Waterpark as held for sale (see Note 4 to our Condensed Consolidated Financial Statements). The remaining increase was due to goodwill impairment resulting from the decrease in forecasted future cash flows in the first quarter of 2020 from the temporary suspension of operations from COVID-19 (see Note 14 to our Condensed Consolidated Financial Statements).

Interest Expense

Our interest expense for the ~~nine~~six months ended ~~September~~June 30, ~~2019 decreased $0.4~~2020 increased $17.0 million, or ~~1.0%~~68.4%, compared to the ~~nine~~six months ended ~~September~~June 30, ~~2018.~~2019. The ~~decrease~~increase in interest expense was driven primarily by a ~~$5.2~~$10.3 million reduction in interest expense due to additional capitalized interest. The decrease was partially offset by an additional $2.9 million in interest expense due to the issuance of the $100.0 million add-on to our Term Loan in 2018 to fund the business combination with Sagicor and an increase ~~of $2.0 million in interest expense~~ due to the change in ~~accounting for~~fair value of our interest rate swaps. In March 2019, we elected to adopt hedge accounting and designate our interest rate swaps as cash flow hedges. After the adoption of hedge accounting, we recorded the change in fair value of our interest rate swaps through other comprehensive (loss) income. ~~Prior~~Due to the drop in interest rates, our ~~adoption of~~cash flow hedge ~~accounting,~~was deemed ineffective and dedesignated in March 2020, resulting in recognizing the change in fair value of our interest rate swaps ~~was recognized~~ through interest expense. Additionally, our interest expense ~~which resulted~~increased due to $5.0 million of capitalized interest recorded in ~~an increase of $2.0 million for~~ the ~~nine~~six months ended ~~September~~June 30, 2019 ~~and a reduction to~~for our development projects in 2019. For the six months ended June 30, 2020, we did not record any capitalized interest. Finally, our interest expense ~~for the nine months ended September 30, 2018.~~increased $1.5 million due to draws on our Revolving Credit Facility.

Cash interest paid, excluding the effects of capitalized interest, ~~decreased $2.2~~increased $1.3 million for the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 as compared to the ~~nine~~six months ended ~~September~~June 30, ~~2018.~~2019. Cash interest paid on our Term Loan decreased $4.1 million over the comparable period. In 2018, the interest paid in the first half of the year included cash interest for November and December of 2017. The decrease in cash interest paid was offset by an increase in interest paid of $1.8increased $1.5 million due ~~primarily~~ to additional interest from draws on the ~~issuance~~Revolving Credit Facility. As of June 30, 2020, the ~~$100.0 million add-on to~~total amount outstanding under our ~~Term Loan to fund the business combination with Sagicor.~~Revolving Credit Facility was $84.7 million.

Income Tax Benefit

For the ~~nine~~six months ended ~~September~~June 30, ~~2019,~~2020, our income tax benefit was ~~$10.0~~$13.5 million, compared to a ~~$6.6~~$11.6 million income tax ~~provision~~benefit for the ~~nine~~six months ended ~~September~~June 30, ~~2018. The increase~~2019. See further details in Note 5 to our income tax benefit of $16.6 million was driven primarily by the net impact of our valuation allowance release of $14.3 million from the newly implemented transfer pricing policy, a $5.5 million increased tax benefit due to the shift in the jurisdictional mix of pre-tax book income and a $2.6 million decrease in the discrete tax expense associated with foreign exchange rate fluctuations, offset by a $4.9 million increase in the discrete tax expense associated with future tax liabilities of certain Dominican Republic entities.Condensed Consolidated Financial Statements.

Key Indicators of Financial and Operating Performance

We use a variety of financial and other information to monitor the financial and operating performance of our business. Some of this is financial information prepared in accordance with U.S. GAAP, while other information, though financial in nature, is not prepared in accordance with U.S. GAAP. For reconciliations of non-U.S. GAAP financial measures to the most comparable U.S. GAAP financial measure, see “Non-U.S. GAAP Financial Measures.” Our management also uses other information that is not financial in nature, including statistical information and comparative data that are commonly used within the lodging industry to evaluate the financial and operating performance of our portfolio. Our management uses this information to measure the performance of our segments and consolidated portfolio. We use this information for planning and monitoring our business, as well as in determining management and employee compensation. These key indicators include:


•	Net Package Revenue


•	Net Non-package Revenue


•	Owned Net Revenue


•	Management Fee Revenue


•	Total Net Revenue


•	Occupancy


•	Net Package ADR


•	Net Package RevPAR


•	Adjusted EBITDA


•	Adjusted EBITDA Margin


•	Owned Resort EBITDA


•	Owned Resort EBITDA Margin

Comparable Non-U.S. GAAP Measures

Net Package Revenue, Net Non-package Revenue, Owned Net Revenue, Management Fee Revenue, Cost Reimbursements, Total Net Revenue and Net Direct Expenses

“Net Package Revenue” is derived from the sale of all-inclusive packages, which include room accommodations, food and beverage services and entertainment activities, net of compulsory tips paid to employees. Government mandated compulsory tips in the Dominican Republic are not included in this adjustment, as they are already excluded from revenue. Revenue is recognized, net of discounts and rebates, when the rooms are occupied and/or the relevant services have been rendered. Advance deposits received from guests are deferred and included in trade and other payables until the rooms are occupied and/or the relevant services have been rendered, at which point the revenue is recognized.

“Net Non-package Revenue” represents all other revenues earned from the operations of our resorts, other than Net Package Revenue, net of compulsory tips paid to employees. Government mandated compulsory tips in the Dominican Republic are not included in this adjustment, as they are already excluded from revenue. Net Non-package Revenue includes revenue associated with guests' purchases of upgrades, premium services and amenities, such as premium rooms, dining experiences, wines and spirits and spa packages, which are not included in the all-inclusive package. Revenue not included in a guest’s all-inclusive package is recognized when the goods are consumed.

“Owned Net Revenue” represents Net Package Revenue and Net Non-package Revenue. Owned Net Revenue represents a key indicator to assess the overall performance of our business and analyze trends, such as consumer demand, brand preference and competition. In analyzing our Owned Net Revenues, our management differentiates between Net Package Revenue and Net Non-package Revenue. Guests at our resorts purchase packages at stated rates, which include room accommodations, food and beverage services and entertainment activities, in contrast to other lodging business models, which typically only include the room accommodations in the stated rate. The amenities at all-inclusive resorts typically include a variety of buffet and á la carte restaurants, bars, activities, and shows and entertainment throughout the day.

“Management Fee Revenue” is derived from fees earned for managing hotels owned by third-parties. The fees earned are typically composed of a base fee, which is computed as a percentage of revenue, and an incentive fee, which is computed as a percentage of profitability. Management Fee Revenue had a minor contribution to our operating results for the three and ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 and ~~2018,~~2019, but we expect Management Fee Revenue to be a more relevant indicator to assess the overall performance of our business in the future as we enter into more management contracts.

“Total Net Revenue” represents Net Package Revenue, Net Non-package Revenue and Management Fee Revenue. “Cost Reimbursements” is excluded from Total Net Revenue as it is not considered a key indicator of financial and operating performance. Cost Reimbursements is derived from the reimbursement of certain costs incurred by Playa on behalf of resorts managed by Playa and owned by third parties. This revenue is fully offset by reimbursable costs and has no net impact on operating (loss) income or net (loss) income.

“Net Direct Expenses” represents direct expenses, net of compulsory tips paid to employees.

Occupancy

“Occupancy” represents the total number of rooms sold for a period divided by the total number of rooms available during such period. The total number of rooms available excludes any rooms considered “Out of Order” due to renovation or a temporary problem rendering them inadequate for occupancy for an extended period of time. Occupancy is a useful measure of the utilization of a resort’s total available capacity and can be used to gauge demand at a specific resort or group of properties during a given period. Occupancy levels also enable us to optimize Net Package ADR by increasing or decreasing the stated rate for our all-inclusive packages as demand for a resort increases or decreases.

Net Package ADR

“Net Package ADR” represents total Net Package Revenue for a period divided by the total number of rooms sold during such period. Net Package ADR trends and patterns provide useful information concerning the pricing environment and the nature of the

guest base of our portfolio or comparable portfolio, as applicable. Net Package ADR is a commonly used performance measure in the

all-inclusive segment of the lodging industry, and is commonly used to assess the stated rates that guests are willing to pay through various distribution channels.

Net Package RevPAR

“Net Package RevPAR” is the product of Net Package ADR and the average daily occupancy percentage. Net Package RevPAR does not reflect the impact of non-package revenue. Although Net Package RevPAR does not include this additional revenue, it generally is considered the key performance measure in the all-inclusive segment of the lodging industry to identify trend information with respect to net room revenue produced by our portfolio or comparable portfolio, as applicable, and to evaluate operating performance on a consolidated basis or a regional basis, as applicable.

EBITDA, Adjusted EBITDA, Owned Resort EBITDA, Owned Resort EBITDA Margin and Adjusted EBITDA Margin

We define EBITDA, a non-U.S. GAAP financial measure, as net income or loss, determined in accordance with U.S. GAAP, for the period presented, before interest expense, income tax and depreciation and amortization expense. We define Adjusted EBITDA, a non-U.S. GAAP financial measure, as EBITDA further adjusted to exclude the following items:

Other income or expense


•	Pre-opening expense


•	Transaction expenses


•	Severance expense


•	Other tax expense


•	Gain on property damage insurance proceeds

Share-based compensation


•	Loss on extinguishment of debt


•	Other items which may include, but are not limited to the following: management contract termination fees; gains or losses from legal settlements; repairs from hurricanes and tropical ~~storms;~~storms and impairment ~~losses and Jamaica delayed opening accrual reversals.~~losses.

We include the non-service cost components of net periodic pension cost or benefit recorded within other ~~expense~~income (expense) in the Condensed Consolidated Statements of Operations in calculating Adjusted EBITDA as they are considered part of our ongoing resort operations.

“Owned Resort EBITDA” represents Adjusted EBITDA before corporate expenses and Management Fee Revenue.

“Owned Resort EBITDA Margin” represents Owned Resort EBITDA as a percentage of Owned Net Revenue.

“Adjusted EBITDA Margin” represents Adjusted EBITDA as a percentage of Total Net Revenue.

Non-U.S. GAAP Measures

We believe that each of Net Package Revenue, Net Non-package Revenue, Owned Net Revenue, Total Net Revenue, Net Package ADR, Net Package RevPAR and Net Direct Expenses are ~~all~~ useful to investors as they ~~more accurately~~ reflect our operating results by excluding compulsory tips. These tips have a margin of zero and do not represent our operating results.

We also believe that Adjusted EBITDA is useful to investors for two principal reasons. First, we believe Adjusted EBITDA assists investors in comparing our performance over various reporting periods on a consistent basis by removing from our operating results the impact of items that do not reflect our core operating performance. For example, changes in foreign exchange rates (which are the principal driver of changes in other expense), and expenses related to capital raising, strategic initiatives and other corporate initiatives, such as expansion into new markets (which are the principal drivers of changes in transaction expenses), are not indicative of the operating performance of our resorts. The other adjustments included in our definition of Adjusted EBITDA relate to items that occur infrequently and therefore would obstruct the comparability of our operating results over reporting periods. For example, revenue from insurance policies, other than business interruption insurance policies, is infrequent in nature, and we believe excluding these expense and revenue items permits investors to better evaluate the core operating performance of our resorts over time. We believe Adjusted EBITDA Margin provides our investors a useful measurement of operating profitability for the same reasons we find Adjusted EBITDA useful.

The second principal reason that we believe Adjusted EBITDA is useful to investors is that it is considered a key performance indicator by our board of directors (our “Board”) and management. In addition, the compensation committee of our Board determines the annual variable compensation for certain members of our management based, in part, on consolidated Adjusted EBITDA. We believe that Adjusted EBITDA is useful to investors because it provides investors with information utilized by our Board and management to assess our performance and may (subject to the limitations described below) enable investors to compare the performance of our portfolio to our competitors.

~~Any of our~~Our non-U.S. GAAP financial measures are not substitutes for revenue, net income or any other measure determined in accordance with U.S. GAAP. There are limitations to the utility of non-U.S. GAAP financial measures, such as Adjusted 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 non-U.S. GAAP financial measures that other companies publish to compare the performance of those companies to our performance. Because of these limitations, our non-U.S. GAAP financial measures 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.

For a reconciliation of EBITDA, Adjusted EBITDA and Owned Resort EBITDA to net income as computed under U.S. GAAP, see “Non-U.S. GAAP Financial Measures.”

Comparable Non-U.S. GAAP Measures

We believe that presenting Adjusted EBITDA, Total Net Revenue, Net Package Revenue, Net Non-package Revenue and Net Direct Expenses on a comparable basis is useful to investors because these measures include only the results of resorts owned and in operation for the entirety of the periods presented and thereby eliminate disparities in results due to the acquisition or disposition of resorts or the impact of resort closures or re-openings in connection with redevelopment or renovation projects. As a result, we believe these measures provide more consistent metrics for comparing the performance of our operating resorts. We calculate comparable Adjusted EBITDA, comparable Total Net Revenue, comparable Net Package Revenue and comparable Net Non-package Revenue as the total amount of each respective measure less amounts attributable to non-comparable resorts, by which we mean resorts that were not owned or in operation during some or all of the relevant reporting period.

Our comparable resorts for the three and six months ended ~~September~~June 30, ~~2019 exclude~~2020 excludes the ~~following:~~following resorts: Hilton La Romana All-Inclusive Resort and Hilton Playa del Carmen All-Inclusive Resort, which ~~are currently under renovation, Jewel Grande Montego Bay Resort & Spa, which was~~were under renovation in ~~2018, and~~2019, Hyatt Ziva and Hyatt Zilara Cap Cana, a ground-up development ~~open during~~opened November ~~2019.~~

~~Our comparable resorts for the nine months ended September 30,~~ 2019 ~~exclude the following: Hilton La Romana All-Inclusive Resort~~ and ~~Hilton Playa del Carmen All-Inclusive Resort, which are currently under renovation, Hilton Rose Hall Resort & Spa, Jewel Runaway Bay Beach & Golf Resort,~~ Jewel Dunn’s River Beach Resort & Spa and Jewel ~~Paradise Cove~~Runaway Bay Beach Resort & ~~Spa and Jewel Grande Montego Bay Resort & Spa,~~Waterpark which were ~~acquired on June 1, 2018, and Hyatt Ziva and Hyatt Zilara Cap Cana, a ground-up development open during November 2019.~~ sold in May 2020.

A reconciliation of net income as computed under U.S. GAAP to comparable Adjusted EBITDA is presented in “Non-U.S. GAAP Financial Measures,” below. For a reconciliation of Comparable Net Package Revenue, Comparable Net Non-package Revenue, Comparable Management Fee Revenue and Comparable Total Net Revenue to total revenue as computed under U.S. GAAP, see “Results of Operations.”

Segment Results

Three Months Ended ~~September~~June 30, ~~2019~~2020 and ~~2018~~2019

We evaluate our business segment operating performance using segment Owned Net Revenue and segment Owned Resort EBITDA. The following tables summarize segment Owned Net Revenue and segment Owned Resort EBITDA for the three months ended ~~September~~June 30, ~~2019~~2020 and ~~2018~~2019 ($ in thousands):


	Three Months Ended September 30,				Increase / Decrease					Three Months Ended June 30,					Increase / Decrease
	2019		2018		Change			% Change		2020			2019		Change			% Change
Owned Net Revenue
Yucatán Peninsula	$	50,996	$	57,087	$	(6,091	)	(10.7	)%	$	21		$	59,772	$	(59,751	)	(100.0	)%
Pacific Coast	17,404		16,211		1,193			7.4	%	(74		)	22,087		(22,161		)	(100.3	)%
Dominican Republic	14,585		27,580		(12,995		)	(47.1	)%	11			22,566		(22,555		)	(100.0	)%
Jamaica	43,075		36,651		6,424			17.5	%	564			50,464		(49,900		)	(98.9	)%
Segment Owned Net Revenue	126,060		137,529		(11,469		)	(8.3	)%	522			154,889		(154,367		)	(99.7	)%
Other	14		—		14			100.0	%	20			14		6			42.9	%
Management fees	83		152		(69		)	(45.4	)%	(18		)	551		(569		)	(103.3	)%
Total Net Revenue	$	126,157	$	137,681	$	(11,524	)	(8.4	)%	$	524		$	155,454	$	(154,930	)	(99.7	)%


	Three Months Ended September 30,						Increase / Decrease					Three Months Ended June 30,						Increase / Decrease
	2019			2018			Change			% Change		2020			2019			Change			% Change
Owned Resort EBITDA
Yucatán Peninsula	$	13,777		$	18,484		$	(4,707	)	(25.5	)%	$	(8,004	)	$	21,151		$	(29,155	)	(137.8	)%
Pacific Coast	4,495			2,869			1,626			56.7	%	(2,816		)	8,569			(11,385		)	(132.9	)%
Dominican Republic	(1,201		)	7,161			(8,362		)	(116.8	)%	(4,881		)	5,043			(9,924		)	(196.8	)%
Jamaica	8,802			6,688			2,114			31.6	%	(8,097		)	14,631			(22,728		)	(155.3	)%
Segment Owned Resort EBITDA	25,873			35,202			(9,329		)	(26.5	)%	(23,798		)	49,394			(73,192		)	(148.2	)%
Other corporate	(10,126		)	(9,322		)	(804		)	8.6	%	(7,606		)	(9,887		)	2,281			(23.1	)%
Management fees	83			152			(69		)	(45.4	)%	(18		)	551			(569		)	(103.3	)%
Total Adjusted EBITDA	$	15,830		$	26,032		$	(10,202	)	(39.2	)%	$	(31,422	)	$	40,058		$	(71,480	)	(178.4	)%

For a reconciliation of segment Owned Net Revenue and segment Owned Resort EBITDA to total revenue and net income, respectively, each as computed under U.S. GAAP, see Note 1915 to our Condensed Consolidated Financial Statements.

Yucatán Peninsula

The following tables set forth information with respect to our Occupancy, Net Package ADR, Net Package RevPAR, Net Package Revenue, Net Non-package Revenue, Owned Net Revenue, Owned Resort EBITDA and Owned Resort EBITDA Margin for our Yucatán Peninsula segment for the three months ended ~~September~~June 30, ~~2019~~2020 and ~~2018~~2019 for the total segment portfolio and comparable segment portfolio:

Total Portfolio


	Three Months Ended September 30,						Increase / Decrease					Three Months Ended June 30,						Increase / Decrease
	2019			2018			Change			% Change		2020			2019			Change			% Change
Occupancy	85.3		%	84.4		%	0.9		pts	1.1	%	—		%	84.4		%	(84.4		)pts	(100.0	)%
Net Package ADR	$	225.21		$	239.94		$	(14.73	)	(6.1	)%	$	—		$	256.75		$	(256.75	)	(100.0	)%
Net Package RevPAR	$	192.00		$	202.62		$	(10.62	)	(5.2	)%	$	—		$	216.78		$	(216.78	)	(100.0	)%
	($ in thousands)											($ in thousands)
Net Package Revenue	$	44,292		$	50,482		$	(6,190	)	(12.3	)%	$	(167	)	$	51,626		$	(51,793	)	(100.3	)%
Net Non-package Revenue	6,704			6,605			99			1.5	%	188			8,146			(7,958		)	(97.7	)%
Owned Net Revenue	50,996			57,087			(6,091		)	(10.7	)%	21			59,772			(59,751		)	(100.0	)%
Owned Resort EBITDA	$	13,777		$	18,484		$	(4,707	)	(25.5	)%	$	(8,004	)	$	21,151		$	(29,155	)	(137.8	)%
Owned Resort EBITDA Margin	27.0		%	32.4		%	(5.4		)pts	(16.7	)%	(38,114.3		)%	35.4		%	(38,149.7		)pts	(107,767.5	)%

Comparable Portfolio


	Three Months Ended September 30,						Increase / Decrease					Three Months Ended June 30,						Increase / Decrease
	2019			2018			Change			% Change		2020			2019			Change			% Change
Occupancy	85.2		%	84.4		%	0.8		pts	0.9	%	—		%	84.7		%	(84.7		)pts	(100.0	)%
Net Package ADR	$	227.14		$	242.41		$	(15.27	)	(6.3	)%	$	—		$	259.07		$	(259.07	)	(100.0	)%
Net Package RevPAR	$	193.56		$	204.56		$	(11.00	)	(5.4	)%	$	—		$	219.39		$	(219.39	)	(100.0	)%
	($ in thousands)											($ in thousands)
Net Package Revenue	$	39,140		$	41,308		$	(2,168	)	(5.2	)%	$	(73	)	$	43,864		$	(43,937	)	(100.2	)%
Net Non-package Revenue	5,685			5,357			328			6.1	%	169			6,784			(6,615		)	(97.5	)%
Owned Net Revenue	44,825			46,665			(1,840		)	(3.9	)%	96			50,648			(50,552		)	(99.8	)%
Owned Resort EBITDA	$	13,423		$	14,814		$	(1,391	)	(9.4	)%	$	(6,735	)	$	18,458		$	(25,193	)	(136.5	)%
Owned Resort EBITDA Margin	29.9		%	31.7		%	(1.8		)pts	(5.7	)%	(7,015.6		)%	36.4		%	(7,052.0		)pts	(19,373.6	)%

Segment Comparable Owned Net Revenue. Our Comparable Owned Net Revenue for the three months ended ~~September~~June 30, ~~2019~~2020 decreased ~~$1.8~~$50.6 million, or ~~3.9%~~99.8%, compared to the three months ended ~~September~~June 30, ~~2018. This decrease was primarily driven by~~2019. These decreases are a ~~decrease in Net Package ADR~~result of ~~6.3%. Comparable Owned Net Revenue~~the temporary suspension of operations at all ~~properties decreased $1.8 million. Rates~~of our resorts from late March 2020 through June 2020 in response to the ~~Yucatán Peninsula have been depressed given several headwinds impacting the market.~~COVID-19 pandemic.

Segment Comparable Owned Resort EBITDA. Our Comparable Owned Resort EBITDA for the three months ended ~~September~~June 30, ~~2019~~2020 decreased ~~$1.4~~$25.2 million, or ~~9.4%~~136.5%, compared to the three months ended ~~September~~June 30, ~~2018. Excluding Hyatt Ziva Cancún, Comparable Owned Resort EBITDA~~2019. These decreases are a result of the temporary suspension of operations at all ~~other properties decreased $2.0 million compared~~of our resorts from late March 2020 through June 2020 in response to the ~~three months ended September 30, 2018. These decreases were offset by the performance of Hyatt Ziva Cancún, which accounted for a $0.6 million increase.~~COVID-19 pandemic.

Pacific Coast

The following tables set forth information with respect to our Occupancy, Net Package ADR, Net Package RevPAR, Net Package Revenue, Net Non-package Revenue, Owned Net Revenue, Owned Resort EBITDA and Owned Resort EBITDA Margin for our Pacific Coast segment for the three months ended ~~September~~June 30, ~~2019~~2020 and ~~2018~~2019 for the total segment portfolio:


	Three Months Ended September 30,						Increase / Decrease					Three Months Ended June 30,						Increase / Decrease
	2019			2018			Change			% Change		2020			2019			Change			% Change
Occupancy	76.1		%	72.5		%	3.6		pts	5.0	%	—		%	76.6		%	(76.6		)pts	(100.0	)%
Net Package ADR	$	236.24		$	227.42		$	8.82		3.9	%	$	—		$	295.48		$	(295.48	)	(100.0	)%
Net Package RevPAR	$	179.66		$	164.86		$	14.80		9.0	%	$	—		$	226.37		$	(226.37	)	(100.0	)%
	($ in thousands)											($ in thousands)
Net Package Revenue	$	15,306		$	14,045		$	1,261		9.0	%	$	(89	)	$	19,076		$	(19,165	)	(100.5	)%
Net Non-package Revenue	2,098			2,166			(68		)	(3.1	)%	15			3,011			(2,996		)	(99.5	)%
Owned Net Revenue	17,404			16,211			1,193			7.4	%	(74		)	22,087			(22,161		)	(100.3	)%
Owned Resort EBITDA	$	4,495		$	2,869		$	1,626		56.7	%	$	(2,816	)	$	8,569		$	(11,385	)	(132.9	)%
Owned Resort EBITDA Margin	25.8		%	17.7		%	8.1		pts	45.8	%	3,805.4		%	38.8		%	3,766.6		pts	9,707.7	%

Segment Owned Net Revenue. Our Owned Net Revenue for the three months ended ~~September~~June 30, ~~2019 increased $1.2~~2020 decreased $22.2 million, or ~~7.4%~~100.3%, compared to the three months ended ~~September~~June 30, ~~2018. This increase was due~~2019. These decreases are a result of the temporary suspension of operations at all of our resorts from late March 2020 through June 2020 in response to the ~~strong performance by both properties within this segment. Hyatt Ziva Puerto Vallarta continues to show growth in Net Package ADR after the completion of renovations in 2017.~~COVID-19 pandemic.

Segment Owned Resort EBITDA. Our Owned Resort EBITDA for the three months ended ~~September~~June 30, ~~2019 increased $1.6~~2020 decreased $11.4 million, or ~~56.7%~~132.9%, compared to the three months ended ~~September~~June 30, ~~2018. This increase was due~~2019. These decreases are a result of the temporary suspension of operations at all of our resorts from late March 2020 through June 2020 in response to ~~increased Owned Net Revenue, as well as a continued focus on controlling operating expenses by both properties within this segment.~~the COVID-19 pandemic.

Dominican Republic

The following table sets forth information with respect to our Occupancy, Net Package ADR, Net Package RevPAR, Net Package Revenue, Net Non-package Revenue, Owned Net Revenue, Owned Resort EBITDA and Owned Resort EBITDA Margin for our Dominican Republic segment for the three months ended ~~September~~June 30, ~~2019~~2020 and ~~2018~~2019 for the total segment portfolio and comparable segment portfolio:

Total Portfolio


	Three Months Ended September 30,						Increase / Decrease					Three Months Ended June 30,						Increase / Decrease
	2019			2018			Change			% Change		2020			2019			Change			% Change
Occupancy	54.9		%	79.6		%	(24.7		)pts	(31.0	)%	—		%	72.6		%	(72.6		)pts	(100.0	)%
Net Package ADR	$	156.30		$	165.90		$	(9.60	)	(5.8	)%	$	—		$	182.37		$	(182.37	)	(100.0	)%
Net Package RevPAR	$	85.85		$	132.10		$	(46.25	)	(35.0	)%	$	—		$	132.34		$	(132.34	)	(100.0	)%
	($ in thousands)											($ in thousands)
Net Package Revenue	$	11,658		$	22,800		$	(11,142	)	(48.9	)%	$	(178	)	$	18,171		$	(18,349	)	(101.0	)%
Net Non-package Revenue	2,927			4,780			(1,853		)	(38.8	)%	189			4,395			(4,206		)	(95.7	)%
Owned Net Revenue	14,585			27,580			(12,995		)	(47.1	)%	11			22,566			(22,555		)	(100.0	)%
Owned Resort EBITDA	$	(1,201	)	$	7,161		$	(8,362	)	(116.8	)%	$	(4,881	)	$	5,043		$	(9,924	)	(196.8	)%
Owned Resort EBITDA Margin	(8.2		)%	26.0		%	(34.2		)pts	(131.5	)%	(44,372.7		)%	22.3		%	(44,395.0		)pts	(199,080.7	)%

Comparable Portfolio


	Three Months Ended September 30,						Increase / Decrease					Three Months Ended June 30,						Increase / Decrease
	2019			2018			Change			% Change		2020			2019			Change			% Change
Occupancy	59.6		%	79.3		%	(19.7		)pts	(24.8	)%	—		%	79.7		%	(79.7		)pts	(100.0	)%
Net Package ADR	$	153.45		$	166.89		$	(13.44	)	(8.1	)%	$	—		$	186.98		$	(186.98	)	(100.0	)%
Net Package RevPAR	$	91.53		$	132.27		$	(40.74	)	(30.8	)%	$	—		$	149.03		$	(149.03	)	(100.0	)%
	($ in thousands)											($ in thousands)
Net Package Revenue	$	9,431		$	13,629		$	(4,198	)	(30.8	)%	$	(6	)	$	15,189		$	(15,195	)	(100.0	)%
Net Non-package Revenue	2,502			3,129			(627		)	(20.0	)%	92			3,735			(3,643		)	(97.5	)%
Owned Net Revenue	11,933			16,758			(4,825		)	(28.8	)%	86			18,924			(18,838		)	(99.5	)%
Owned Resort EBITDA	$	811		$	4,257		$	(3,446	)	(80.9	)%	$	(1,092	)	$	5,751		$	(6,843	)	(119.0	)%
Owned Resort EBITDA Margin	6.8		%	25.4		%	(18.6		)pts	(73.2	)%	(1,269.8		)%	30.4		%	(1,300.2		)pts	(4,277.0	)%

Segment Comparable Owned Net Revenue. Our Comparable Owned Net Revenue for the three months ended ~~September~~June 30, ~~2019~~2020 decreased ~~$4.8~~$18.8 million, or ~~28.8%~~99.5%, compared to the three months ended ~~September~~June 30, ~~2018. This decrease was due~~2019. These decreases are a result of the temporary suspension of operations at all of our resorts from late March 2020 through June 2020 in response to ~~a decrease in Net Package RevPAR of 30.8% over~~ the ~~same period in the prior year, driven by a decrease in Occupancy of 1,970 basis points and a decrease in Net Package ADR of 8.1%.~~COVID-19 pandemic.

Segment Comparable Owned Resort EBITDA. Our Comparable Owned Resort EBITDA for the three months ended ~~September~~June 30, ~~2019~~2020 decreased ~~$3.4~~$6.8 million, or ~~80.9%~~119.0%, compared to the three months ended ~~September~~June 30, ~~2018. This decrease was~~2019. These decreases are a ~~direct impact~~result of the ~~decrease~~temporary suspension of operations at all of our resorts from late March 2020 through June 2020 in ~~Comparable Owned Net Revenue discussed above. The negative press regarding~~response to the ~~Dominican Republic, and corresponding near-term business disruption, had a negative impact on third quarter results in this segment.~~COVID-19 pandemic.

Jamaica

The following table sets forth information with respect to our Occupancy, Net Package ADR, Net Package RevPAR, Net Package Revenue, Net Non-package Revenue, Owned Net Revenue, Owned Resort EBITDA and Owned Resort EBITDA Margin for our Jamaica segment for the three months ended ~~September~~June 30, ~~2019~~2020 and ~~2018~~2019 for the total segment portfolio and comparable segment portfolio:

Total Portfolio


	Three Months Ended September 30,						Increase / Decrease					Three Months Ended June 30,						Increase / Decrease
	2019			2018			Change			% Change		2020			2019			Change			% Change
Occupancy	78.3		%	74.3		%	4.0		pts	5.4	%	—		%	80.6		%	(80.6		)pts	(100.0	)%
Net Package ADR	$	254.72		$	247.82		$	6.90		2.8	%	$	—		$	294.39		$	(294.39	)	(100.0	)%
Net Package RevPAR	$	199.40		$	184.18		$	15.22		8.3	%	$	—		$	237.30		$	(237.30	)	(100.0	)%
	($ in thousands)											($ in thousands)
Net Package Revenue	$	35,698		$	31,483		$	4,215		13.4	%	$	736		$	42,023		$	(41,287	)	(98.2	)%
Net Non-package Revenue	7,377			5,168			2,209			42.7	%	(172		)	8,441			(8,613		)	(102.0	)%
Owned Net Revenue	43,075			36,651			6,424			17.5	%	564			50,464			(49,900		)	(98.9	)%
Owned Resort EBITDA	$	8,802		$	6,688		$	2,114		31.6	%	$	(8,097	)	$	14,631		$	(22,728	)	(155.3	)%
Owned Resort EBITDA Margin	20.4		%	18.2		%	2.2		pts	12.1	%	(1,435.6		)%	29.0		%	(1,464.6		)pts	(5,050.3	)%

Comparable Portfolio


	Three Months Ended September 30,						Increase / Decrease					Three Months Ended June 30,						Increase / Decrease
	2019			2018			Change			% Change		2020			2019			Change			% Change
Occupancy	78.2		%	74.3		%	3.9		pts	5.2	%	—		%	80.3		%	(80.3		)pts	(100.0	)%
Net Package ADR	$	254.16		$	247.82		$	6.34		2.6	%	$	—		$	318.98		$	(318.98	)	(100.0	)%
Net Package RevPAR	$	198.67		$	184.18		$	14.49		7.9	%	$	—		$	256.12		$	(256.12	)	(100.0	)%
	($ in thousands)											($ in thousands)
Net Package Revenue	$	33,961		$	31,483		$	2,478		7.9	%	$	703		$	33,283		$	(32,580	)	(97.9	)%
Net Non-package Revenue	6,855			5,168			1,687			32.6	%	(78		)	6,700			(6,778		)	(101.2	)%
Owned Net Revenue	40,816			36,651			4,165			11.4	%	625			39,983			(39,358		)	(98.4	)%
Owned Resort EBITDA	$	8,790		$	6,688		$	2,102		31.4	%	$	(6,699	)	$	11,774		$	(18,473	)	(156.9	)%
Owned Resort EBITDA Margin	21.5		%	18.2		%	3.3		pts	18.1	%	(1,071.8		)%	29.4		%	(1,101.2		)pts	(3,745.6	)%

Segment Comparable Owned Net Revenue. Our Comparable Owned Net Revenue for the three months ended ~~September~~June 30, ~~2019 increased $4.2~~2020 decreased $39.4 million, or ~~11.4%~~98.4%, compared to the three months ended ~~September~~June 30, ~~2018. This increase was primarily due~~2019. These decreases are a result of the temporary suspension of operations at all of our resorts from late March 2020 through June 2020 in response to the performance of Hyatt Ziva and Hyatt Zilara Rose Hall and Hilton Rose Hall Resort & Spa, which accounted for $4.1 million of the increase in Comparable Owned Net Revenue compared to the three months ended September 30, 2018.COVID-19 pandemic.

Segment Comparable Owned Resort EBITDA. Our Comparable Owned Resort EBITDA for the three months ended ~~September~~June 30, ~~2019 increased $2.1~~2020 decreased $18.5 million, or ~~31.4%~~156.9%, compared to the three months ended ~~September~~June 30, ~~2018. This increase was primarily due~~2019. These decreases are a result of the temporary suspension of operations at all of our resorts from late March 2020 through June 2020 in response to the performance of Hyatt Ziva and Hyatt Zilara Rose Hall, which accounted for $1.8 million of the increase in Comparable Owned Resort EBITDA compared to three months ended September 30, 2018. This property continues to show positive results after the completion of renovations in 2017 combined with improvements in cost control and expansion of direct sales channels.COVID-19 pandemic.

Segment Results

~~Nine~~Six Months Ended ~~September~~June 30, ~~2019~~2020 and ~~2018~~2019

We evaluate our business segment operating performance using segment Owned Net Revenue and segment Owned Resort EBITDA. The following tables summarize segment Owned Net Revenue and segment Owned Resort EBITDA for the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 and ~~2018~~2019 ($ in thousands):


	Nine Months Ended September 30,				Increase / Decrease					Six Months Ended June 30,				Increase / Decrease
	2019		2018		Change			% Change		2020		2019		Change			% Change
Owned Net Revenue
Yucatán Peninsula	$	180,981	$	200,025	$	(19,044	)	(9.5	)%	$	62,338	$	129,985	$	(67,647	)	(52.0	)%
Pacific Coast	65,061		65,081		(20		)	—	%	21,081		47,657		(26,576		)	(55.8	)%
Dominican Republic	70,226		99,493		(29,267		)	(29.4	)%	35,607		55,641		(20,034		)	(36.0	)%
Jamaica	152,686		87,141		65,545			75.2	%	52,000		109,611		(57,611		)	(52.6	)%
Segment Owned Net Revenue	468,954		451,740		17,214			3.8	%	171,026		342,894		(171,868		)	(50.1	)%
Other ⁽¹⁾	30		343		(313		)	(91.3	)%	35		16		19			118.8	%
Management Fee Revenue	1,568		503		1,065			211.7	%	627		1,485		(858		)	(57.8	)%
Total Net Revenue	$	470,552	$	452,586	$	17,966		4.0	%	$	171,688	$	344,395	$	(172,707	)	(50.1	)%

Nine Months Ended September 30, Increase / Decrease
2019 2018
Change
% Change
Owned Resort EBITDA
Yucatán Peninsula $ 67,087
$ 83,814
$ (16,727 ) (20.0 )%
Pacific Coast 25,451
23,327
2,124
9.1 %
Dominican Republic 17,305
35,174
(17,869 ) (50.8 )%
Jamaica 47,781
25,421
22,360
88.0 %
Segment Owned Resort EBITDA 157,624
167,736
(10,112 ) (6.0 )%
Other corporate (28,519 ) (26,331 ) (2,188 ) 8.3 %
Management Fee Revenue 1,568
503
1,065
211.7 %
Total Adjusted EBITDA $ 130,673
$ 141,908
$ (11,235 ) (7.9 )%

~~________~~

⁽¹⁾~~Primarily includes~~ a reversal on an expense accrual recorded in 2014 related to our future stay obligations provided to guests affected by the delayed opening of Hyatt Ziva and Hyatt Zilara Rose Hall. This reversal concluded in the first quarter of 2018.



	Six Months Ended June 30,						Increase / Decrease
	2020			2019			Change			% Change
Owned Resort EBITDA
Yucatán Peninsula	$	16,931		$	53,310		$	(36,379	)	(68.2	)%
Pacific Coast	6,056			20,956			(14,900		)	(71.1	)%
Dominican Republic	2,908			18,506			(15,598		)	(84.3	)%
Jamaica	10,976			38,979			(28,003		)	(71.8	)%
Segment Owned Resort EBITDA	36,871			131,751			(94,880		)	(72.0	)%
Other corporate	(18,577		)	(18,393		)	(184		)	1.0	%
Management Fee Revenue	627			1,485			(858		)	(57.8	)%
Total Adjusted EBITDA	$	18,921		$	114,843		$	(95,922	)	(83.5	)%

Yucatán Peninsula

The following tables set forth information with respect to our Occupancy, Net Package ADR, Net Package RevPAR, Net Package Revenue, Net Non-package Revenue, Owned Net Revenue, Owned Resort EBITDA and Owned Resort EBITDA Margin for our Yucatán Peninsula segment for the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 and ~~2018~~2019 for the total segment portfolio and comparable segment portfolio:

Total Portfolio


	Nine Months Ended September 30,						Increase / Decrease					Six Months Ended June 30,						Increase / Decrease
	2019			2018			Change			% Change		2020			2019			Change			% Change
Occupancy	84.9		%	87.0		%	(2.1		)pts	(2.4	)%	37.0		%	84.8		%	(47.8		)pts	(56.4	)%
Net Package ADR	$	261.93		$	276.11		$	(14.18	)	(5.1	)%	$	298.32		$	279.62		$	18.70		6.7	%
Net Package RevPAR	$	222.42		$	240.17		$	(17.75	)	(7.4	)%	$	110.45		$	236.98		$	(126.53	)	(53.4	)%
	($ in thousands)											($ in thousands)
Net Package Revenue	$	158,487		$	177,553		$	(19,066	)	(10.7	)%	$	54,719		$	114,195		$	(59,476	)	(52.1	)%
Net Non-package Revenue	22,494			22,472			22			0.1	%	7,619			15,790			(8,171		)	(51.7	)%
Owned Net Revenue	180,981			200,025			(19,044		)	(9.5	)%	62,338			129,985			(67,647		)	(52.0	)%
Owned Resort EBITDA	$	67,087		$	83,814		$	(16,727	)	(20.0	)%	$	16,931		$	53,310		$	(36,379	)	(68.2	)%
Owned Resort EBITDA Margin	37.1		%	41.9		%	(4.8		)pts	(11.5	)%	27.2		%	41.0		%	(13.8		)pts	(33.7	)%

Comparable Portfolio


	Nine Months Ended September 30,						Increase / Decrease					Six Months Ended June 30,						Increase / Decrease
	2019			2018			Change			% Change		2020			2019			Change			% Change
Occupancy	85.4		%	87.4		%	(2.0		)pts	(2.3	)%	37.4		%	85.5		%	(48.1		)pts	(56.3	)%
Net Package ADR	$	262.09		$	273.11		$	(11.02	)	(4.0	)%	$	296.38		$	279.82		$	16.56		5.9	%
Net Package RevPAR	$	223.78		$	238.73		$	(14.95	)	(6.3	)%	$	110.77		$	239.15		$	(128.38	)	(53.7	)%
	($ in thousands)											($ in thousands)
Net Package Revenue	$	134,198		$	143,054		$	(8,856	)	(6.2	)%	$	44,310		$	95,058		$	(50,748	)	(53.4	)%
Net Non-package Revenue	18,779			18,356			423			2.3	%	6,044			13,094			(7,050		)	(53.8	)%
Owned Net Revenue	152,977			161,410			(8,433		)	(5.2	)%	50,354			108,152			(57,798		)	(53.4	)%
Owned Resort EBITDA	$	57,695		$	64,943		$	(7,248	)	(11.2	)%	$	13,070		$	44,272		$	(31,202	)	(70.5	)%
Owned Resort EBITDA Margin	37.7		%	40.2		%	(2.5		)pts	(6.2	)%	26.0		%	40.9		%	(14.9		)pts	(36.4	)%

Segment Comparable Owned Net Revenue. Our Comparable Owned Net Revenue for the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 decreased ~~$8.4~~$57.8 million, or ~~5.2%~~53.4%, compared to the ~~nine~~six months ended ~~September~~June 30, ~~2018. This decrease was primarily driven by~~2019. These decreases are a

~~decrease in Occupancy~~ result of ~~200 basis points and a decrease~~the temporary suspension of ~~4.0% in Net Package ADR. Excluding Panama Jack Resorts Cancún, Comparable Owned Net Revenue~~operations at all ~~other properties decreased $9.3 million compared~~of our resorts from late March 2020 through June 2020 in response to the nine months ended September 30, 2018. These decreases were offset by a $0.9 million increase in Panama Jack Resorts Cancún. Rates in the Yucatán Peninsula have been depressed given several headwinds impacting the market.COVID-19 pandemic.

Segment Comparable Owned Resort EBITDA. Our Comparable Owned Resort EBITDA for the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 decreased ~~$7.2~~$31.2 million, or ~~11.2%~~70.5%, compared to the ~~nine~~six months ended ~~September~~June 30, ~~2018. Excluding Panama Jack Resorts Cancún, Comparable Owned Resort EBITDA~~2019. These decreases are a result of the temporary suspension of operations at all ~~other properties decreased $7.5 million compared~~of our resorts from late March 2020 through June 2020 in response to the nine months ended September 30, 2018. All properties within this segment have also been affected by increased insurance premiums and energy costs year over year which contributed to a $1.0 million decrease in Comparable Owned Resort EBITDA compared to the nine months ended September 30, 2018.COVID-19 pandemic.

Pacific Coast

The following tables set forth information with respect to our Occupancy, Net Package ADR, Net Package RevPAR, Net Package Revenue, Net Non-package Revenue, Owned Net Revenue, Owned Resort EBITDA and Owned Resort EBITDA Margin for our Pacific Coast segment for the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 and ~~2018~~2019 for the total segment portfolio:


	Nine Months Ended September 30,						Increase / Decrease					Six Months Ended June 30,						Increase / Decrease
	2019			2018			Change			% Change		2020			2019			Change			% Change
Occupancy	76.2		%	76.7		%	(0.5		)pts	(0.7	)%	31.2		%	76.2		%	(45.0		)pts	(59.1	)%
Net Package ADR	$	292.73		$	282.56		$	10.17		3.6	%	$	342.58		$	321.38		$	21.20		6.6	%
Net Package RevPAR	$	222.92		$	216.77		$	6.15		2.8	%	$	106.93		$	244.91		$	(137.98	)	(56.3	)%
	($ in thousands)											($ in thousands)
Net Package Revenue	$	56,354		$	54,800		$	1,554		2.8	%	$	18,021		$	41,048		$	(23,027	)	(56.1	)%
Net Non-package Revenue	8,707			10,281			(1,574		)	(15.3	)%	3,060			6,609			(3,549		)	(53.7	)%
Owned Net Revenue	65,061			65,081			(20		)	—	%	21,081			47,657			(26,576		)	(55.8	)%
Owned Resort EBITDA	$	25,451		$	23,327		$	2,124		9.1	%	$	6,056		$	20,956		$	(14,900	)	(71.1	)%
Owned Resort EBITDA Margin	39.1		%	35.8		%	3.3		pts	9.2	%	28.7		%	44.0		%	(15.3		)pts	(34.8	)%

Segment Owned Net Revenue. Our Owned Net Revenue for the ~~nine~~six months ended ~~September~~June 30, ~~2019 remained steady compared~~2020 decreased $26.6 million, or 55.8%, six months ended June 30, 2019. These decreases are a result of the temporary suspension of operations at all of our resorts from late March 2020 through June 2020 in response to the nine months ended September 30, 2018. The performance of the Hyatt Ziva Los Cabos accounted for a $2.1 million decrease in Owned Net Revenue compared to the nine months ended September 30, 2018. These results were offset by a $2.1 million increase from Hyatt Ziva Puerto Vallarta, which continues to show growth in Net Package ADR after the completion of renovations in 2017.COVID-19 pandemic.

Segment Owned Resort EBITDA. Our Owned Resort EBITDA for the ~~nine~~six months ended ~~September~~June 30, ~~2019 increased $2.1~~2020 decreased $14.9 million, or ~~9.1%~~71.1%, compared to the ~~nine~~six months ended ~~September~~June 30, ~~2018. This increase was due~~2019. These decreases are a result of the temporary suspension of operations at all of our resorts from late March 2020 through June 2020 in response to the performance of Hyatt Ziva Puerto Vallarta, which increased Owned Resort EBITDA by $2.0 million compared to the nine months ended September 30, 2018. The remaining increase was due to Hyatt Ziva Los Cabos, which increased $0.1 million in Owned Resort EBITDA compared to the nine months ended September 30, 2018. Group business, which generates higher rates and additional non-package revenue, was significantly lower in the first quarter of 2019 compared to 2018, but was partially offset for the nine months ended September 30, 2019 by a significant improvement in group business during the second quarter of 2019.COVID-19 pandemic.

Dominican Republic

The following tables set forth information with respect to our Occupancy, Net Package ADR, Net Package RevPAR, Net Package Revenue, Net Non-package Revenue, Owned Net Revenue, Owned Resort EBITDA and Owned Resort EBITDA Margin for our Dominican Republic segment for the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 and ~~2018~~2019 for the total segment portfolio and comparable segment portfolio:

Total Portfolio


	Nine Months Ended September 30,						Increase / Decrease					Six Months Ended June 30,						Increase / Decrease
	2019			2018			Change			% Change		2020			2019			Change			% Change
Occupancy	66.9		%	84.8		%	(17.9		)pts	(21.1	)%	28.6		%	72.2		%	(43.6		)pts	(60.4	)%
Net Package ADR	$	196.91		$	193.11		$	3.80		2.0	%	$	226.04		$	210.59		$	15.45		7.3	%
Net Package RevPAR	$	131.77		$	163.72		$	(31.95	)	(19.5	)%	$	64.74		$	152.10		$	(87.36	)	(57.4	)%
	($ in thousands)											($ in thousands)
Net Package Revenue	$	58,304		$	83,849		$	(25,545	)	(30.5	)%	$	31,152		$	46,646		$	(15,494	)	(33.2	)%
Net Non-package Revenue	11,922			15,644			(3,722		)	(23.8	)%	4,455			8,995			(4,540		)	(50.5	)%
Owned Net Revenue	70,226			99,493			(29,267		)	(29.4	)%	35,607			55,641			(20,034		)	(36.0	)%
Owned Resort EBITDA	$	17,305		$	35,174		$	(17,869	)	(50.8	)%	$	2,908		$	18,506		$	(15,598	)	(84.3	)%
Owned Resort EBITDA Margin	24.6		%	35.4		%	(10.8		)pts	(30.5	)%	8.2		%	33.3		%	(25.1		)pts	(75.4	)%

Comparable Portfolio


	Nine Months Ended September 30,						Increase / Decrease					Six Months Ended June 30,						Increase / Decrease
	2019			2018			Change			% Change		2020			2019			Change			% Change
Occupancy	76.1		%	85.0		%	(8.9		)pts	(10.5	)%	36.7		%	84.5		%	(47.8		)pts	(56.6	)%
Net Package ADR	$	197.27		$	194.71		$	2.56		1.3	%	$	180.36		$	213.01		$	(32.65	)	(15.3	)%
Net Package RevPAR	$	150.12		$	165.47		$	(15.35	)	(9.3	)%	$	66.19		$	179.89		$	(113.70	)	(63.2	)%
	($ in thousands)											($ in thousands)
Net Package Revenue	$	45,899		$	50,593		$	(4,694	)	(9.3	)%	$	13,493		$	36,468		$	(22,975	)	(63.0	)%
Net Non-package Revenue	9,550			9,943			(393		)	(4.0	)%	2,579			7,048			(4,469		)	(63.4	)%
Owned Net Revenue	55,449			60,536			(5,087		)	(8.4	)%	16,072			43,516			(27,444		)	(63.1	)%
Owned Resort EBITDA	$	16,787		$	21,549		$	(4,762	)	(22.1	)%	$	2,787		$	15,976		$	(13,189	)	(82.6	)%
Owned Resort EBITDA Margin	30.3		%	35.6		%	(5.3		)pts	(14.9	)%	17.3		%	36.7		%	(19.4		)pts	(52.9	)%

Segment Comparable Owned Net Revenue. Our Comparable Owned Net Revenue for the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 decreased ~~$5.1~~$27.4 million, or ~~8.4%~~63.1%, compared to the ~~nine~~six months ended ~~September~~June 30, ~~2018. This decrease was driven by~~2019. These decreases are a ~~decrease~~result of the temporary suspension of operations at all of our resorts from late March 2020 through June 2020 in ~~Occupancy of 890 basis points, which was partially offset by an increase of 1.3% in Net Package ADR.~~response to the COVID-19 pandemic.

Segment Comparable Owned Resort EBITDA. Our Comparable Owned Resort EBITDA for the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 decreased ~~$4.8~~$13.2 million, or ~~22.1%~~82.6%, compared to the ~~nine~~six months ended ~~September~~June 30, ~~2018. This decrease was due~~2019. These decreases are a result of the temporary suspension of operations at all of our resorts from late March 2020 through June 2020 in response to the performance of all properties in this segment, but was partially driven by Dreams Punta Cana due to a non-recurring gain from business interruption insurance proceeds of $1.5 million during the nine months ended September 30, 2018. The negative press regarding the Dominican Republic, and corresponding near-term business disruption, had a negative impact on results in this segment for the nine months ended September 30, 2019.COVID-19 pandemic.

Jamaica

The following table sets forth information with respect to our Occupancy, Net Package ADR, Net Package RevPAR, Net Package Revenue, Net Non-package Revenue, Owned Net Revenue, Owned Resort EBITDA and Owned Resort EBITDA Margin for our Jamaica segment for the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 and ~~2018~~2019 for the total ~~segment portfolio and comparable~~ segment portfolio:

Total Portfolio


	Nine Months Ended September 30,						Increase / Decrease					Six Months Ended June 30,						Increase / Decrease
	2019			2018			Change			% Change		2020			2019			Change			% Change
Occupancy	80.6		%	77.2		%	3.4		pts	4.4	%	37.0		%	81.9		%	(44.9		)pts	(54.8	)%
Net Package ADR	$	300.38		$	301.13		$	(0.75	)	(0.2	)%	$	355.09		$	322.63		$	32.46		10.1	%
Net Package RevPAR	$	242.26		$	232.44		$	9.82		4.2	%	$	131.43		$	264.10		$	(132.67	)	(50.2	)%
	($ in thousands)											($ in thousands)
Net Package Revenue	$	128,492		$	74,163		$	54,329		73.3	%	$	44,506		$	92,794		$	(48,288	)	(52.0	)%
Net Non-package Revenue	24,194			12,978			11,216			86.4	%	7,494			16,817			(9,323		)	(55.4	)%
Owned Net Revenue	152,686			87,141			65,545			75.2	%	52,000			109,611			(57,611		)	(52.6	)%
Owned Resort EBITDA	$	47,781		$	25,421		$	22,360		88.0	%	$	10,976		$	38,979		$	(28,003	)	(71.8	)%
Owned Resort EBITDA Margin	31.3		%	29.2		%	2.1		pts	7.2	%	21.1		%	35.6		%	(14.5		)pts	(40.7	)%

Comparable Portfolio


	Nine Months Ended September 30,						Increase / Decrease					Six Months Ended June 30,						Increase / Decrease
	2019			2018			Change			% Change		2020			2019			Change			% Change
Occupancy	76.2		%	75.5		%	0.7		pts	0.9	%	35.3		%	81.7		%	(46.4		)pts	(56.8	)%
Net Package ADR	$	421.88		$	381.51		$	40.37		10.6	%	$	380.91		$	349.98		$	30.93		8.8	%
Net Package RevPAR	$	321.36		$	287.85		$	33.51		11.6	%	$	134.64		$	285.95		$	(151.31	)	(52.9	)%
	($ in thousands)											($ in thousands)
Net Package Revenue	$	54,393		$	48,722		$	5,671		11.6	%	$	34,992		$	73,662		(38,670		)	(52.5	)%
Net Non-package Revenue	11,297			9,200			2,097			22.8	%	6,111			13,390			(7,279		)	(54.4	)%
Owned Net Revenue	65,690			57,922			7,768			13.4	%	41,103			87,052			(45,949		)	(52.8	)%
Owned Resort EBITDA	$	22,772		$	18,061		$	4,711		26.1	%	$	8,167		$	31,798		$	(23,631	)	(74.3	)%
Owned Resort EBITDA Margin	34.7		%	31.2		%	3.5		pts	11.2	%	19.9		%	36.5		%	(16.6		)pts	(45.5	)%

Segment Comparable Owned Net Revenue. Our ~~Comparable~~ Owned Net Revenue for the ~~nine~~six months ended ~~September~~June 30, ~~2019 increased $7.8~~2020 decreased $45.9 million, or ~~13.4%~~52.8%, compared to the ~~nine~~six months ended ~~September~~June 30, ~~2018. This increase was due~~2019. These decreases are a result of the temporary suspension of operations at all of our resorts from late March 2020 through June 2020 in response to the performance of Hyatt Ziva and Hyatt Zilara Rose Hall, which accounted for the full $7.8 million increase in Comparable Owned Net Revenue compared to the nine months ended September 30, 2018. This property continues to show positive growth after the completion of renovations in 2017.COVID-19 pandemic.

Segment Comparable Owned Resort EBITDA. Our ~~Comparable~~ Owned Resort EBITDA for the ~~nine~~six months ended ~~September~~June 30, ~~2019 increased $4.7~~2020 decreased $23.6 million, or ~~26.1%~~74.3%, compared to the ~~nine~~six months ended ~~September~~June 30, ~~2018. This increase was due~~2019. These decreases are a result of the temporary suspension of operations at all of our resorts from late March 2020 through June 2020 in response to the performance of Hyatt Ziva and Hyatt Zilara Rose Hall, which accounted for the full $4.7 million increase in Comparable Owned Resort EBITDA compared to the nine months ended September 30, 2018. This property continues to show positive growth after the completion of renovations in 2017.COVID-19 pandemic.

Non-U.S. GAAP Financial Measures

Reconciliation of Net Income to Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization)

The following is a reconciliation of our U.S. GAAP net (loss) income to EBITDA, Adjusted EBITDA, Owned Resort EBITDA and Comparable Owned Resort EBITDA for the three and ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 and ~~2018~~2019 ($ in thousands):


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018			2020			2019			2020			2019
Net (loss) income	$	(30,461	)	$	(5,422	)	$	13,567		$	33,216		$	(87,458	)	$	1,040		$	(110,014	)	$	44,028
Interest expense	9,936			7,637			34,796			35,151			20,916			10,666			41,871			24,860
Income tax provision (benefit)	1,530			379			(10,025		)	6,606
Income tax benefit													(14,647		)	(1,008		)	(13,536		)	(11,555		)
Depreciation and amortization	29,417			20,138			77,636			51,709			22,400			25,908			47,359			48,219
EBITDA	10,422			22,732			115,974			126,682			(58,789		)	36,606			(34,320		)	105,552
Other expense ^(a)	2,537			390			2,775			1,836
Other (income) expense ^(a)													(4,853		)	(364		)	(947		)	238
Share-based compensation	1,850			1,182			6,612			5,072			2,719			2,014			5,942			4,762
Pre-opening expenses	257			87			548			87			—			202			—			291
Transaction expense ^(b)	1,253			1,447			4,493			7,678			289			1,273			875			3,240
Severance expense^(c)	6			333			139			333			1,246			133			2,444			133
Other tax (benefit) expense^(d)	(318		)	399			484			1,257
Jamaica delayed opening accrual reversal ^(e)	—			—			—			(342		)
Gain on property damage insurance proceeds	—			(203		)	—			(203		)
Non-service cost components of net periodic pension cost ^(f)	(177		)	(335		)	(352		)	(492		)
Other tax expense^(d)													231			443			468			802
Impairment loss ^(e)													25,268			—			41,441			—
Loss on sale of assets													1,729			—			1,729			—
Non-service cost components of net periodic pension benefit (cost) ^(f)													738			(249		)	1,289			(175		)
Adjusted EBITDA	15,830			26,032			130,673			141,908			(31,422		)	40,058			18,921			114,843
Other corporate	10,126			9,322			28,519			26,331			7,606			9,887			18,577			18,393
Management fee income	(83		)	(152		)	(1,568		)	(503		)	18			(551		)	(627		)	(1,485		)
Owned Resort EBITDA	25,873			35,202			157,624			167,736			(23,798		)	49,394			36,871			131,751
Less: Non-comparable Owned Resort EBITDA ^(g)	(1,646		)	6,574			34,919			39,856			(6,456		)	4,842			6,791			18,749
Comparable Owned Resort EBITDA(g)	$	27,519		$	28,628		$	122,705		$	127,880		$	(17,342	)	$	44,552		$	30,080		$	113,002

________


^(a)	Represents changes in foreign exchange and other miscellaneous expenses or income.


^(b)	Represents expenses incurred in connection with corporate initiatives, such as: debt refinancing costs; other capital raising ~~efforts including our business combination with Sagicor in 2018;~~efforts; the redesign and build-out of our internal controls and strategic initiatives, such as the launch of a new resort or possible expansion into new markets.


^(c)	Represents expenses incurred for employee terminations.

^(d)

Relates primarily to a Dominican Republic asset/revenue tax, which is an alternative tax to income tax in the Dominican Republic. We eliminate this expense from Adjusted EBITDA because it is substantially similar to the income tax provision we eliminate from our calculation of EBITDA. ~~Other Tax Benefit in the third quarter of 2019 is related to an asset tax exemption received within the quarter, which resulted in a reversal of the previously recorded expense.~~

^(e)

~~Represent~~s~~a reversal on an expense accrual recorded in 2014~~Represents the property and equipment impairment loss related to the sale of Jewel Dunn’s River Beach Resort & Spa and Jewel Runaway Bay Beach Resort & Waterpark recognized during the second quarter of 2020 and the impairment loss on the goodwill of our ~~future stay obligations provided to guests affected by the delayed opening of Hyatt Ziva~~Jewel Paradise Cove Beach Resort & Spa, Jewel Dunn's River Beach Resort and ~~Hyatt Zilara Rose Hall. This reversal concluded in~~Jewel Runaway Bay Beach Resort & Waterpark reporting units recognized during the first quarter of ~~2018.~~2020.

^(f)

Represents the non-service cost components of net periodic pension ~~cost~~benefit (cost) recorded within other ~~expense~~income (expense) in the Condensed Consolidated ~~Statements~~Statement of Operations. Previously, these amounts were presented within direct expense. We include these ~~costs~~benefits (costs) for the purposes of calculating Adjusted EBITDA as they are considered part of our ongoing resort operations.

^(g)

~~Non-comparable Owned Resort EBITDA~~Comparable resorts for the three and six months ended ~~September~~June 30, ~~2019 includes~~2020 exclude the following: Hilton La Romana All-Inclusive Resort and Hilton Playa del Carmen All-Inclusive Resort, ~~Jewel Grande Montego Bay Resort & Spa and~~which were under renovation in 2019, Hyatt Ziva and Hyatt Zilara Cap ~~Cana. Non-comparable Owned Resort EBITDA for the nine months ended September 30,~~Cana, a ground-up development opened November 2019 ~~includes the Hilton La Romana All-Inclusive Resort, Hilton Playa del Carmen All-Inclusive Resort, Hilton Rose Hall Resort & Spa, Jewel Runaway Bay Beach & Golf Resort,~~and Jewel Dunn’s River Beach Resort & Spa and Jewel ~~Paradise Cove~~Runaway Bay Beach Resort & ~~Spa, Jewel Grande Montego Bay Resort & Spa and Hyatt Ziva and Hyatt Zilara Cap Cana.~~Waterpark which were sold in May 2020.

Seasonality

The seasonality of the lodging industry and the location of our resorts in Mexico and the Caribbean generally result in the greatest demand for our resorts between mid-December and April of each year, yielding higher occupancy levels and package rates during this period. This seasonality in demand has resulted in predictable fluctuations in revenue, results of operations, and liquidity, which are consistently higher during the first quarter of each year than in successive quarters.

However, the COVID-19 pandemic has altered this seasonal trend in 2020. See “Impact of COVID-19 Pandemic” above for more information regarding the effects of the COVID-19 pandemic on our results of operations.

Inflation

Operators of lodging properties, in general, possess the ability to adjust room rates to reflect the effects of inflation. However, competitive pressures, in addition to the effects of the COVID-19 pandemic, may limit our ability to raise room rates to fully offset inflationary cost increases. See “Impact of COVID-19 Pandemic” above for more information regarding the effects of the COVID-19 pandemic on our results of operations.

Liquidity and Capital Resources

The suspension of operations of all of our resorts, which account for all of our revenue, as a result of the COVID-19 pandemic from late March until July 2020, and the phased re-opening thereafter, has had a significant adverse effect on our liquidity. Our cash flow from operations as of June 30, 2020 was a loss of $28.4 million and could remain negative for the third quarter of 2020 and be adversely affected for the duration of the COVID-19 pandemic. As of July 31, 2020 we had approximately $228.0 million of available cash excluding $25.7 million of restricted cash. See “Impact of COVID-19 Pandemic” above for information regarding the measures we have taken to preserve our available cash.

Our primary short-term cash needs are paying operating expenses, maintaining our resorts, and servicing our outstanding ~~indebtedness, and funding any ongoing development, expansion, renovation, repositioning and rebranding projects.~~indebtedness. As of ~~September~~June 30, ~~2019,~~2020, we had ~~$26.9~~$45.8 million of scheduled contractual obligations remaining in ~~2019.~~2020. We have deferred substantially all development, expansion, renovation, repositioning and rebranding projects until at least 2021, with timing subject to the duration of the COVID-19 pandemic and the pace at which our business returns to more normalized levels.

We expect to meet our short-term liquidity requirements generally through ~~net cash provided by operations,~~ existing cash balances, the sale of non-core assets and, if necessary, ~~short-term~~additional borrowings ~~under our Revolving Credit Facility which permits borrowings~~or equity issuances. On June 12, 2020, we announced that we had raised $224.0 million of ~~up to $100.0~~additional capital from affiliates of Davidson Kempner Capital Management LP in the form of $204.0 million of additional debt financing and ~~which matures on April 27, 2022. We had~~$20.0 million of equity financing at a price of $4.10 per share. In addition, we sold Jewel Dunn’s River Beach Resort & Spa and Jewel Runaway Bay Beach Resort & Waterpark for a total consideration of $60.0 million in cash ~~and cash equivalents of $28.2 million as of September 30, 2019, compared to $137.7 million as of September 30, 2018. We plan to fund our remaining development costs for 2019 with~~in the cash we have on hand, cash generated from operations and draws on our Revolving Credit Facility. As of September 30, 2019, there was $0 outstanding under our Revolving Credit Facility. When assessing liquidity, we also consider the availability of cash resources held within local business units to meet our strategic needs.second quarter.

Long-term liquidity needs may include ~~existing and future~~ property developments, expansions, renovations, repositioning and rebranding projects, potential acquisitions and the repayment of indebtedness. As of ~~September~~June 30, ~~2019,~~2020, our total debt obligations were ~~$989.0~~$1,270.1 million (which represents the principal amounts outstanding under our Revolving Credit Facility, Term Loans and ~~Term~~Property Loan, excluding a ~~$2.3~~$6.3 million issuance discount on our Term Loan and ~~$3.8~~$11.9 million of unamortized debt issuance costs). We expect to meet our long-term liquidity requirements generally through the sources available for short-term needs, as well as equity or debt issuances or proceeds from the potential disposal of assets.

~~In an effort~~We are continuing to ~~maintain sufficient~~monitor our liquidity ~~our cash flow projections and available funds are discussed with our Board~~ and we ~~consider various ways of developing our capital structure and seeking~~may pursue additional sources of liquidity ifas needed. The availability of additional liquidity options will depend on the economic and financial environment, our credit, our historical and projected financial and operating performance and continued compliance with financial covenants. AsIf operating conditions do not improve, whether as a result of ~~possible future economic, financial and operating declines, possible declines in our creditworthiness and potential non-compliance with financial covenants,~~the current pandemic or a resurgence thereof or for other reasons, we may ~~have less~~not be able to maintain our current liquidity ~~than anticipated, fewer~~position or access additional sources of liquidity ~~than anticipated, less attractive financing~~at acceptable terms ~~and less flexibility in determining when and how to use the liquidity that is available.~~or at all.

Financing Strategy

~~In addition to our Revolving Credit Facility, we~~We intend to use other financing sources that may be available to us from time to time, including financing from banks, institutional investors or other lenders, such as bridge loans, letters of credit, joint ventures and other arrangements. Future financings may be unsecured or may be secured by mortgages or other interests in our assets. In addition, we may issue publicly or privately placed debt or equity securities. When possible and desirable, we will seek to replace short-term financing with long-term financing. We may use the proceeds from any financings to refinance existing indebtedness, to finance resort projects or acquisitions or for general working capital or other purposes.

Our indebtedness may be recourse, non-recourse or cross-collateralized and may be fixed rate or variable rate. If the indebtedness is non-recourse, the obligation to repay such indebtedness will generally be limited to the particular resort or resorts pledged to secure such indebtedness. In addition, we may invest in resorts subject to existing loans secured by mortgages or similar liens on the resorts or may refinance resorts acquired on a leveraged basis.

Cash Flows

The following table summarizes our net cash provided by or used in operating activities, investing activities and financing activities for the periods indicated and should be read in conjunction with our Condensed Consolidated Statements of Cash Flows and accompanying notes thereto ($ in thousands):

Nine Months Ended September 30,
2019 2018
Net cash provided by operating activities $ 93,050
$ 91,056
Net cash used in investing activities $ (163,356 ) $ (161,682 )
Net cash (used in) provided by financing activities $ (17,882 ) $ 92,119



	Six Months Ended June 30,
	2020			2019
Net cash (used in) provided by operating activities	$	(28,396	)	$	86,076
Net cash provided by (used in) investing activities	$	58,862		$	(88,947	)
Net cash provided by (used in) financing activities	$	227,544		$	(8,972	)

Net Cash Provided by Operating Activities

Our net cash (used in) provided by operating activities is generated primarily from operating (loss or) income from our resorts. For the ~~nine~~six months ended ~~September~~June 30, 2020, our net cash used in operating activities was $28.4 million. For the six months ended June 30, 2019 ~~and 2018,~~ our net cash provided by operating activities ~~totaled $93.1 million and $91.1 million, respectively.~~ was $86.1 million.

Net ~~income~~loss of ~~$13.6~~$110.0 million for the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 included significant non-cash expenses, ~~including:~~

~~$77.6~~including $47.4 million of depreciation and ~~amortization;~~

~~$6.6~~amortization, $41.4 million of impairment losses, $5.9 million of share-based ~~compensation;~~compensation, and

~~$0.2~~ a $11.4 million loss on the fair value of our interest rate ~~swaps.~~

These non-cash expenses were offset by changes in our assets and liabilities through the normal course of operations. Net income of $33.2 million for the nine months ended September 30, 2018 included significant non-cash and cash expenses, including:

~~$51.7 million of depreciation and amortization;~~

~~$5.1 million of share based compensation; and~~

~~$1.8 million gain on the fair value of our interest rates swaps.~~

~~These expenses were~~swaps, offset by changes in our assets and liabilities through the normal course of operations.

~~Activity~~Net income of $44.0 million for the ~~nine~~six months ended ~~September~~June 30, ~~2019:~~

~~Net decrease~~2019 included significant non-cash and cash expenses, including $48.2 million of depreciation and amortization, $4.8 million of share based compensation, and a $1.1 million loss on the fair value of our interest rates swaps, offset by changes in ~~interest expense~~our assets and liabilities through the normal course of ~~$0.4 million;~~

~~Transaction expenses of $4.5 million; and~~

~~Share-based compensation expense of $6.6 million.~~

~~Activity for the nine months ended September 30, 2018:~~

~~Net decrease in interest expense of $6.0 million, which was due to the net impact of the following:~~


◦	~~$2.7 million in capitalized interest, which is an offset to interest expense;~~


◦	~~The paydown of our former Senior Notes due 2020 in April and December 2017, which accounted for an additional $0.8 million decrease in interest expense; and~~


◦	~~The change in valuation of our interest rate swaps, which resulted in a $1.9 million decrease in interest expense. We had no interest rate swaps in 2017.~~

~~Transaction expenses of $7.7 million; and~~

~~Share-based compensation expense of $5.1 million.~~operations.

Net Cash Provided by or Used in Investing Activities

For the ~~nine~~six months ended ~~September~~June 30, 2020, our net cash provided by investing activities was $58.9 million. For the six months ended June 30, 2019 ~~and 2018,~~ our net cash used in ~~investing~~financing activities was ~~$163.4 million and $161.7 million, respectively.~~

$88.9 million.

Activity for the ~~nine~~six months ended ~~September~~June 30, 2020:

Net proceeds from the sale of assets of $58.1 million;

Purchases of property and equipment of $7.4 million; and

Receipt of key money of $8.5 million.

Activity for the six months ended June 30, 2019:

Purchases of property and equipment of ~~$165.5~~$92.0 million;

Purchase of intangibles of ~~$2.5~~$1.4 million;

Property damage insurance proceeds of $2.0 million; and

Receipt of key money of $2.5 ~~million.~~

~~Activity for the nine months ended September 30, 2018:~~

~~Acquisition of a portfolio of all-inclusive resorts and adjacent developable land sites from Sagicor of $93.1 million;~~

~~Purchases of property and equipment of $67.3 million; and~~

~~Purchase of intangibles of $1.5~~ million.

Capital Expenditures

We maintain each of our properties in good repair and condition and in conformity with applicable laws and regulations, franchise and license agreements and management agreements. Capital expenditures made to extend the service life or increase the capacity of

our assets, including expenditures for the replacement, improvement or expansion of existing capital assets (“Maintenance Capital Expenditures”), differ from ongoing repair and maintenance expense items, which do not in our judgment extend the service life or increase the capacity of assets and are charged to expense as incurred. We have approval rights over capital expenditures made by our third-party manager as part of the annual budget process for each property they manage. From time to time, certain of our resorts may be undergoing renovations as a result of our decision to upgrade portions of the resorts, such as guestrooms, public space, meeting space, gyms, spas and/or restaurants, in order to better compete with other hotels in our markets (“Development Capital Expenditures”).

~~The following table summarizes~~ Due to the impacts of the COVID-19 pandemic on our ~~cash paid for~~liquidity, we have deferred all non-critical capital expenditures for the ~~nine months ended September 30, 2019 and 2018~~ ~~($ in thousands)~~:remainder of the year.

Nine Months Ended September 30,
2019 2018
Development Capital Expenditures
Hyatt Ziva and Hyatt Zilara Rose Hall $ —
$ 1,160
Hyatt Ziva Puerto Vallarta —
626
Panama Jack Resorts Cancún —
3,380
Hyatt Zilara Cancún —
1,221
Panama Jack Resorts Playa del Carmen —
1,007
Hilton Playa del Carmen All-Inclusive Resort 11,873
—
Hilton La Romana All-Inclusive Resort 35,861
—
Hyatt Ziva and Hyatt Zilara Cap Cana 104,666
49,798
Total Development Capital Expenditures 152,400
57,192
Maintenance Capital Expenditures ⁽¹⁾
13,084
10,060
Total Capital Expenditures $ 165,484
$ 67,252

~~________~~


⁽¹⁾	~~Typically, maintenance capital expenditures approximate~~ ~~3% to 4%~~ ~~of Total Net Revenue.~~

Net Cash Used in and Provided by Financing Activities

Our net cash provided by financing activities was $227.5 million for the six months ended June 30, 2020 compared to $9.0 million in cash used in financing activities ~~was $17.9 million~~ for the ~~nine~~six months ended ~~September~~June 30, ~~2019 compared to $92.1 million in cash provided by financing activities for the nine months ended September 30, 2018.~~2019.

Activity for the ~~nine~~six months ended ~~September~~June 30, 2020:

Net proceeds from debt issuance of $199.6 million;

Proceeds from borrowings on our Revolving Credit Facility of $40.0 million;

Net proceeds from equity issuance of $19.6 million;

Principal payments on our Term Loan of $5.1 million;

Issuance costs of debt of $8.7 million;

Repayments on our Revolving Credit Facility of $15.3 million; and

Repurchases of ordinary shares of $2.5 million.

Activity for the six months ended June 30, 2019:

Principal payments on our Term Loan of ~~$7.6~~$5.1 million; and

~~Purchases~~Repurchases of ordinary shares of ~~$10.3 million.~~

~~Activity for the nine months ended September 30, 2018:~~

~~Principal payments on our existing term loan of $7.3 million; and~~

~~Proceeds from debt issuance of $99.5~~$3.9 million.

Share Repurchases

On December 14, 2018, our Board authorized the repurchase of up to $100.0 million of our outstanding ordinary shares as means of returning capital to 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 ~~third~~first quarter of ~~2019,~~2020, we purchased ~~846,418~~340,109 ordinary shares at an average price of ~~$7.54~~$7.35 per share. ~~From October 1, 2019 through October 31, 2019 we purchased an additional 139,649~~We did not repurchase any shares during the second quarter of ~~our ordinary shares at an average price of $7.74 per share. As of October 31, 2019, we~~2020. We have purchased a total of ~~1,536,074~~2,178,837 shares and there was approximately ~~$88.3~~$83.5 million remaining under our share repurchase ~~authorization.~~authorization as of June 30, 2020. As part of our cash preservation efforts given our liquidity position as a result of the COVID-19 pandemic, we have suspended repurchases of our ordinary shares under our share repurchase program until we have more visibility into the longer-term impact of COVID-19 and economic conditions improve.

Senior Secured Credit Facility

Playa Resorts Holding B.V., a subsidiary of ours, holds a senior secured credit facility (“Senior Secured Credit Facility”), which consists of a term loan facility which matures on April 27, 2024 and our Revolving Credit Facility which matures on April 27, 2022. We borrowed $530.0 million under our initial term loan facility on April 27, 2017 (our “First Term Loan”). We received net proceeds of $32.5 million from our First Term Loan after prepaying our existing Senior Secured Credit Facility and a portion of our Senior Notes due 2020 and deducting a debt issuance discount of $1.3 million and unamortized debt issuance costs of $2.6 million.

We borrowed an additional ~~$380.0~~$380.0 million under an incremental term loan facility (our “Second Term Loan” and together with the First Term Loan, the ~~“Term~~“Initial Term Loan”) on December 6, 2017. We received no proceeds from the Second Term Loan after full repayment of our Senior Notes due 2020 and deducting a debt issuance discount of ~~$1.0~~$1.0 million and unamortized debt issuance costs of ~~$0.2 million~~.$0.2 million.

Our Initial Term Loan bore interest at a rate per annum equal to LIBOR plus 3.25% (where the applicable LIBOR rate had a 1.0% floor), and interest continued to be payable in cash in arrears on the last day of the applicable interest period (unless we elected to use the ABR rate in which case, interest was payable on the last business day of each of March, June, September and December).

Effective March 29, 2018, we entered into two interest rate swaps to mitigate the long-term interest rate risk inherent in our variable rate Term Loan. The interest rate swaps have an aggregate fixed notional value of $800.0 million. The fixed rate paid by us is 2.85% and the variable rate received resets monthly to the one-month LIBOR rate.

On June 7, 2018, we entered into the Second Amendment to Amended & Restated Credit Agreement (the “Amendment”), which amended the Amended & Restated Credit Agreement, dated as of April 27, 2017 (the “Existing Credit Agreement”), governing our Senior Secured Credit Facility. The Amendment amended the Existing Credit Agreement to, among other things (i) effect an incremental term loan facility of $100.0 million (the “Third Term Loan” and, together with the Initial Term Loan, the “Term Loan”) that was incurred pursuant to the exercise of our option to request incremental loans under the Existing Credit Agreement and (ii) decrease the interest rate applicable to the Term Loan by 0.50% to, at our option, either a base rate plus a margin of 1.75% or LIBOR plus a margin of 2.75%. The other terms to the Existing Credit Agreement were not affected by the Amendment.

Our Term Loan requires quarterly payments of principal equal to 0.25% of the original principal amount of the Term Loan on the last business day of each March, June, September and December. The remaining unpaid amount of our Term Loan is due and payable at maturity on April 27, 2024. We may voluntarily prepay borrowings at any time without premium or penalty, subject to customary breakage costs in the case of LIBOR-based loans.

Our Revolving Credit Facility bears interest at variable interest rates that are, at the Borrower's option, either based on LIBOR or based on an alternate base rate derived from the greatest of the federal funds rate plus a spread, prime rate, or a one-month euro-currency rate plus a spread. We are required to pay a commitment fee ranging from 0.25% to 0.5% per annum (depending on the level of our consolidated secured leverage ratio in effect from time to time) on the average daily undrawn balance.

The Senior Secured Facility requires that most of our subsidiaries, and in some limited cases the Company, comply with covenants relating to customary matters, including with respect to incurring indebtedness and liens, paying dividends or making certain other distributions or redeeming equity interests, making acquisitions and investments, effecting mergers and asset sales, prepaying junior indebtedness, and engaging in transactions with affiliates.

~~Contractual Obligations~~Fourth Amendment to Amended and Restated Credit Agreement

On June 12, 2020, we entered into the Fourth Amendment to the Amended & Restated Credit Agreement (the “Fourth Amendment”, and collectively with the unamended terms of the Senior Secured Credit Facility, the “Existing Credit Agreement”). The terms of the Senior Secured Credit Facility remain in effect except for the following ~~table sets forth our obligations and commitments to make future payments under contracts and contingent commitments as of September 30, 2019~~ ~~($ in thousands)~~:

Less than
1 Year⁽¹⁾
Due in 1 to
3 years Due in 3 to
5 years Due in
Over 5 years Total
Revolving Credit Facility ⁽²⁾
$ 103
$ 936
$ 161
$ —
$ 1,200
Term Loan principal payments 2,525
20,200
20,200
946,048
988,973
Term Loan interest payments ⁽³⁾
13,333
106,043
94,207
13,235
226,818
Hyatt Ziva and Hyatt Zilara Cap Cana land purchase obligation 10,625
—
—
—
10,625
Operating lease obligations 241
2,027
1,860
3,579
7,707
Pension obligation 39
1,134
1,345
4,771
7,289
Total contractual obligations $ 26,866
$ 130,340
$ 117,773
$ 967,633
$ 1,242,612

~~________~~terms modified by the Fourth Amendment:


⁽¹⁾ i.	~~The period less than 1 year represents remaining obligations in 2019.~~replace the total net leverage ratio requirement of the financial covenant with a minimum liquidity test until September 30, 2021 (the “Relief Period”);


⁽²⁾ ii.	~~The commitment on our Revolving Credit Facility is calculated based on~~modify the ~~contractual commitment fee of 0.5% applied to~~financial covenant for certain test dates after the ~~undrawn balance of $100.0 million as we had no outstanding balance on our Revolving Credit Facility as of September 30, 2019.~~Relief Period; and


⁽³⁾ iii.	~~The interest commitment~~add certain restrictions on, among other things, the incurrence of additional debt and making of investments, dispositions and restricted payments during the Relief Period.

Additional Credit Facility


i.	$35.0 million term loan at fixed rate of 11.4777% (the “Term A1 Loan”);


ii.	$31.0 million term loan at fixed rate of 11.4777% (the “Term A2 Loan”); and

iii.

$28.0 million term loan at our option of either a base rate plus a margin of 2.00% or LIBOR plus 3.00% (the “Term A3 Loan”). Term A3 Loan is ~~calculated based on LIBOR plus~~ ~~275 basis points~~subject to a 1.0% floor consistent with a ~~1% LIBOR floor~~ ~~and~~ the estimated net settlement of the related interest rate swaps. Projected interest rates range from 3.97% to 5.60%. Payments were calculated using the average forecasted one-month forward-looking LIBOR curve.Existing Credit Agreement.

Prior to the maturity date, the Additional Credit Facility does not require principal payments, but does include mandatory prepayment requirements for the Term A3 Loan that are consistent with the Existing Credit Agreement. Mandatory prepayments are required for certain asset sales, casualty events and condemnation events (the “Triggering Events”) that are not reinvested in our business where our total net leverage ratio is above 4.00x. We may not voluntarily prepay any portion of the Additional Credit Facility prior to June 2023 without paying a make-whole premium equal to 100% of the interest that would have otherwise accrued from the date of such payment through June 2022 plus 50% of the interest that otherwise would have accrued from June 2022 to June 2023. Subsequent to June 2023, we may prepay any portion of the Additional Credit Facility without penalty.

In connection with the Additional Credit Facility, we terminated the remaining $15.0 million of unused capacity of our Revolving Credit Facility under the Existing Credit Agreement. The Additional Credit Facility contains covenants (including a springing financial maintenance covenant) identical to those contained in the Existing Credit Agreement.

Property Loan Agreement

On June 12, 2020, we entered into a property loan agreement in the amount of $110.0 million that has a fixed interest rate of 9.25% and matures on July 1, 2025 (the “Property Loan”). Prior to maturity, the Property Loan does not require principal payments. The Property Loan is collateralized by the mortgages of our Hyatt Ziva and Hyatt Zilara Cap Cana properties located in the Dominican Republic and the Hilton Rose Hall Resort & Spa located in Jamaica (collectively the “Properties”). We intend to use the proceeds of the Property Loan to finance the operation and management of the Properties and for general corporate purposes.

Contractual Obligations

As of June 30, 2020, there have been no significant changes to our “Contractual Obligations” table in Item 7, “Management's Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report, other than the change in debt, and related requirements, described below.

Total debt increased $223.7 million from $1,046.4 million as of December 31, 2019 to $1,270.1 million as of June 30, 2020. This increase was driven by an increase in the amount outstanding on our Revolving Credit Facility, additional proceeds from Term Loans and addition of a Property Loan (see Note 11), which was offset by scheduled principal payments. We do not anticipate making any further payments on our Revolving Credit Facility in 2020. Additionally, in connection with the terms of the Existing Credit Agreement, we are required to use the net proceeds from the sale of assets to prepay the proportionate balance on our Senior Secured Credit Facility if our net leverage ratio is above 4.00x. In November 2021, we anticipate that we will prepay the net proceeds, which was $56.5 million as of June 30, 2020, from the sale of the Jewel Dunn’s River Beach Resort & Spa and Jewel Runaway Bay Beach Resort & Waterpark less incremental transaction costs and capital expenditures incurred across our portfolio leading up to the prepayment date.

Off Balance Sheet Arrangements

We had no off balance sheet arrangements for the three and ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 and ~~2018.~~2019.

Critical Accounting Policies and Estimates

Our Condensed Consolidated Financial Statements included herein have been prepared in accordance with U.S. GAAP. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts and related disclosures. A number of our significant accounting policies are critical due to the fact that they require us to exercise a higher degree of judgment and estimation based on assumptions that are inherently uncertain. While we believe our estimates, assumptions and judgments are reasonable, they are based upon information presently available. Actual results may differ significantly from these estimates under different assumptions, judgments or conditions, which could have a material effect on our financial position, results of operations and related disclosures. The impacts of the COVID-19 pandemic have increased uncertainty, which has reduced our ability to use past results to estimate future performance. Accordingly, our estimates and judgments may be subject to greater volatility than has been the case in the past.

We have discussed those estimates that we believe are critical and require the use of complex judgment in their application in our ~~2018~~ Consolidated Financial Statements included within our Annual Report on Form 10-K for the year ended December 31, ~~2018,~~2019, filed with the SEC on February ~~28, 2019.~~27, 2020. There have been no material changes to our critical accounting policies or the methodologies or assumptions we apply under them except for those disclosed in Note 2 to our Condensed Consolidated Financial Statements.

Fair Value of Financial Instruments

Our financial instruments consist of cash and cash equivalents, restricted cash, trade and other receivables, accounts receivable from related parties, certain prepayments and other assets, trade and other payables, payables to related parties, derivative financial instruments, other liabilities including our pension obligation and debt. See Note ~~16,~~13, “Fair value of financial instruments,” to our Condensed Consolidated Financial Statements for more information.

Related Party Transactions

See Note 7,6, “Related party transactions,” to our Condensed Consolidated Financial Statements for information on these transactions.

Recent Accounting Pronouncements

See the recent accounting pronouncements in Note 2 to our Condensed Consolidated Financial Statements.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

In the normal course of operations, we are exposed to interest rate risk and foreign currency risk which may impact future income and cash flows.

Interest Rate Risk

The risk from market interest rate fluctuations mainly affects long-term debt bearing interest at a variable interest rate. We currently use an interest rate swap (see Note 1512 of our Condensed Consolidated Financial Statements) to manage exposure to this risk. As of ~~September~~June 30, ~~2019, 19%~~2020, 23% of our outstanding indebtedness bore interest at floating rates and ~~81%~~77% bore interest at fixed rates. If market rates of interest on our floating rate debt were to increase by 1.0%, the increase in interest expense on our floating rate debt would decrease our future earnings and cash flows by approximately ~~$1.9~~$1.2 million annually, assuming the balance outstanding under our Revolving Credit Facility remained at ~~$0.~~$84.7 million. If market rates of interest on our floating rate debt were to decrease by 1.0%, the decrease in interest expense on our floating rate debt would increase our future earnings and cash flows by approximately ~~$1.9~~$0.2 million annually, assuming the balance outstanding under our Revolving Credit Facility remained at ~~$0.~~$84.7 million and given the current LIBOR rate our debt can not fall below the 1% LIBOR floor.

Foreign Currency Risk

We are exposed to exchange rate fluctuations because all of our resort investments are based in locations where the local currency is not the U.S. dollar, which is our reporting currency. For the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 approximately ~~5.2%~~3.0% of our revenues were denominated in currencies other than the U.S. dollar. As a result, our revenues reported on our Condensed Consolidated Statements of Operations are affected by movements in exchange rates.

Approximately ~~80.1%~~81.1% of our operating expenses for the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 were denominated in the local currencies in the countries in which we operate. As a result, our operating expenses reported on our Condensed Consolidated Statements of Operations are affected by movements in exchange rates.

The foreign currencies in which our expenses are primarily denominated are the Mexican Peso, Dominican Peso and the Jamaican Dollar. The effect of an immediate 5% adverse change in foreign exchange rates on Mexican Peso-denominated expenses at ~~September~~June 30, ~~2019~~2020 would have impacted our net income before tax by approximately ~~$6.3~~$2.5 million on a year-to-date basis. The effect of an immediate 5% adverse change in foreign exchange rates on Dominican Peso-denominated expenses at ~~September~~June 30, ~~2019~~2020 would have impacted our net income before tax by approximately ~~$2.2~~$1.3 million on a year-to-date basis. The effect of an immediate 5% adverse change in foreign exchange rates on Jamaican Dollar-denominated expenses at ~~September~~June 30, ~~2019~~2020 would have impacted our net income before tax by approximately ~~$4.6~~$1.9 million on a year-to-date basis.

At this time, we do not have any outstanding derivatives or other financial instruments designed to hedge our foreign currency exchange risk.

Item 4. Controls and Procedures.

Disclosure Controls and Procedures.

We maintain a set of disclosure controls and procedures (as that term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) designed to ensure that information required to be disclosed by us in reports that we file or submit under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and that such information is accumulated and communicated to our management, including our Principal Executive Officer and Principal Financial Officer, as appropriate, to allow timely decisions regarding required disclosures. In accordance with Rule 13a-15(b) of the Exchange Act, as of the end of the period covered by this quarterly report, an evaluation was carried out under the supervision and with the participation of our management, including our Principal Executive Officer and Principal Financial Officer, of the effectiveness of our disclosure controls and procedures. Based on that ongoing evaluation, and considering the continuing review of controls and procedures that is being conducted by our Chief Executive Officer and Chief Financial Officer, including the remedial actions and the material weakness in internal control over financial reporting disclosed below, our Principal Executive Officer and Principal Financial Officer concluded that our disclosure controls and procedures were ~~not~~ effective as of ~~September~~June 30, ~~2019.~~2020.

Changes in Internal Control Over Financial Reporting.

There has been no change in our internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act) during the most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. As previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2018, filed with the SEC on February 28, 2019 (“Form 10-K”), we have identified, and Deloitte & Touche, LLP, the independent registered public accounting firm that audited our Consolidated Financial Statements as of December 31, 2018 and 2017, and for each of the three years in the period ended December 31, 2018, included in our Form 10-K and the related Condensed Financial Information of Registrant included in this quarterly report, has communicated, a material

weakness in our internal control over financial reporting that existed as December 31, 2018. A “material weakness” is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement in our annual or interim financial statements will not be prevented or detected on a timely basis. We previously reported the following material weakness in our internal control over financial reporting that existed as of December 31, 2018, which has not been remediated as of September 30, 2019:

Our information technology controls, including system access, change management, and segregation of duties are not sufficiently designed and implemented to address certain information technology risks and, as a result, could expose our systems and data to unauthorized use or alteration.

We continue to take steps to remediate the identified material weakness. We engaged a third-party consulting firm to assist us with the implementation of SAP, which is a global information technology solution designed to address the elements which give rise to our material weakness. As of September 30, 2019, SAP was successfully implemented in our corporate entities, at all of our properties in Mexico, and at several of our properties in the Dominican Republic and Jamaica. We expect to implement SAP in our remaining operational entities in the fourth quarter of 2019. However, effectiveness will need to be successfully tested before we can conclude that the material weakness has been remediated. There can be no assurance that we will be successful in making these improvements and in remediating our current material weakness in a timely manner, or at all, and we may not prevent future material weaknesses from occurring.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings.

In the ordinary course of our business, we are subject to claims and administrative proceedings, none of which we believe are material or would be expected to have, individually or in the aggregate, a material adverse effect on our financial condition, cash flows or results of operations. The outcome of claims, lawsuits and legal proceedings brought against us, however, is subject to significant uncertainties. Refer to Note 87 to our financial statements included in “Item 1. Financial Statements” of this Form 10-Q for a more detailed description of such proceedings and contingencies.

Item 1A. Risk Factors.

~~At September 30, 2019, there have been no material changes from~~We are supplementing the risk factors ~~previously disclosed~~described under “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, ~~2018, filed~~2019 with the ~~Securities~~additional risk factor set forth below, which supplements, and ~~Exchange Commission (“SEC”)~~to the extent inconsistent, supersedes such risk factors.

The effects of the ongoing COVID-19 pandemic are having a significant material adverse effect on ~~February 28, 2019, which~~our business, results of operations, cash flows and financial condition and if the pandemic is ~~accessible~~long-lasting these effects could be severe.

The outbreak of the coronavirus (COVID-19) pandemic has led governments and other authorities around the world to impose measures intended to control its spread, including restrictions on freedom of movement and business operations such as travel bans, border closings, business closures, quarantines and shelter-in-place orders. As a result, the pandemic has significantly disrupted global travel, and has adversely impacted global commercial activity across the travel, lodging and hospitality industries. The COVID-19 pandemic has had, and is expected to continue to have, significant adverse impacts on economic and market conditions and resulted in global economic contraction.

The effects of the COVID-19 pandemic on the ~~SEC’s website~~hospitality industry are unprecedented with global demand for lodging drastically reduced and occupancy levels reaching historic lows. Due to the spread of the COVID-19 pandemic and in response to related governmental restrictions and advisories, reductions in scheduled airline services and potential health risks to our employees and guests, we temporarily suspended operations at ~~www.sec.gov.~~all of our resorts in late March 2020. Our resorts began reopening in July, in stages, based on incremental easing of government restrictions and advisories and increases in scheduled commercial airline service. As a result of the suspension of operations at all of our resorts, we had no revenues from resort operations in the second quarter of 2020. As of July 1, 2020, we reopened 8 out of our 21 resorts and subsequently reopened another 4 resorts. Currently, 12 out of our 21 resorts have reopened. We cannot predict when the effects of the pandemic will subside, or if there will be a resurgence of the virus, and thus we cannot predict when we will be able to reopen our remaining resorts, whether our opened resorts will be permitted to remain open or when our business at opened resorts will return to normalized levels. The longer and more severe the pandemic, and if there are repeat or cyclical outbreaks of the COVID-19 virus beyond the one being currently experienced, the greater the material adverse effect will be on our business, results of operations, cash flows, financial condition, access to credit markets and ability to service our indebtedness.

There also can be no guarantee that when the effects of the pandemic subside the demand for lodging, and consumer confidence in travel generally, will recover as quickly as other industries. Additionally, the effects of the pandemic have had, and we expect will continue to have, a material adverse effect on our ability to consummate acquisitions and dispositions of resorts and our ability to timely complete planned capital expenditures and other projects.

Additional risks to our business relating to the COVID-19 pandemic include the following:

We have substantial debt outstanding currently, and our ability to service our significant financial obligations depends on our ability to generate significant cash flow from operations. Our cash flow from operations has been materially reduced as a result of the temporary suspension of operations at our resorts and will continue to be materially reduced as long as operations at some of our resorts remain suspended or opened resorts are operating at well-below historical levels. We cannot assure you that our business will generate cash flow from operations, that future borrowings will be available to us under our revolving credit facility, or that we will be able to complete any necessary financings or refinancings, in amounts sufficient to enable us to pay our debts and other obligations and fund our other liquidity needs;

The agreements which govern our various debt obligations impose restrictions on our business, including certain covenants under our revolving credit facility which currently prevent additional draws on the facility and may materially impact our liquidity and financial position;

Commercial airline service has been reduced or suspended to many of the regions in which our resorts are located. If scheduled airline service does not increase or return to normal levels once our resorts are re-opened it could have a material adverse effect on our resort revenues;

The economic fallout from the effects of the pandemic on the regions in which our resorts are located could result in increases in crime, theft, vandalism and other safety and health concerns in these areas that could directly impact our resorts or could result in the perception of such risks among prospective guests, which could lead to decreased future demand for our resorts;

We have been and may continue to be required to recognize significant non-cash impairment charges as a result of material reductions in our cash flows from operations;

We may be subject to increased risks related to employee matters, including increased employment litigation and claims for severance or other benefits tied to terminations or furloughs as a result of the suspension of operations at our resorts prompted by the effects of the pandemic; and

In order to raise additional capital to fund our operations and service our indebtedness, we have issued equity securities and we may need to issue additional equity securities in the future at prices that may be dilutive to existing stockholders and that may be below what we believe to be the intrinsic value of our ordinary shares.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

(a) Unregistered Sale of Securities

~~None.~~The Company entered into a Securities Purchase Agreement (the “Securities Purchase Agreement”), dated June 12, 2020, with certain funds affiliated with Davidson Kempner Capital Management LP (collectively, the “Buyers”), pursuant to which the Company sold to the Buyers 4,878,049 shares of the Company’s ordinary shares (the “Purchased Shares”) at a purchase price of $4.10 per share, for an aggregate purchase price of $20,000,000. The purchase price per share agreed to by the parties was based on a 25% premium over the 30-day volume-weighted average price of the Company’s ordinary shares on the NASDAQ. The Securities Purchase Agreement contains customary representations and warranties, covenants, and indemnification provisions.

The sale of the Purchased Shares was not registered under the Securities Act of 1933, as amended (the “Securities Act”), at the time of issue in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act and Rule 506(b) of Regulation D as promulgated by the U.S. Securities and Exchange Commission (the “SEC”) thereunder.

(b) Use of Proceeds

None.

~~The following table sets forth information regarding our purchases of shares of our common stock during the three months ended September 30, 2019:~~

Total number of shares purchased
Average price paid per share ⁽¹⁾

Total number of shares purchased as part of publicly announced program ⁽²⁾

Maximum approximate dollar value of shares that may yet be purchased under the program
($ in thousands) ⁽²⁾
July 1, 2019 to July 31, 2019 345,164
$ 7.53
345,164
$ 93,165
August 1, 2019 to August 31, 2019 365,689
7.42
365,689
90,453
September 1, 2019 to September 30, 2019 135,565
7.93
135,565
89,379
Total 846,418
$ 7.54
846,418
$ 89,379

~~________~~

⁽¹⁾~~The average price paid per share and maximum approximate dollar value of shares disclosed above include broker commissions.~~

⁽²⁾ In December 2018, our Board of Directors authorized the repurchase of up to $100.0 million of our outstanding ordinary shares as market conditions and our liquidity warrant. 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.None.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

None.

Item 6. Exhibits.

The following exhibits are filed as part of this Form 10-Q:



Exhibit Number		Exhibit Description

3.1*		Articles of Association of Playa Hotels & Resorts N.V., as amended.

10.1*10.1		Fourth Amendment to ~~Executive Employment~~Amended & Restated Credit Agreement, dated as of ~~September 23, 2019, by and between~~June 12, 2020, among Playa Hotels & Resorts N.V., Playa Resorts ~~Management, LLC,~~Holding B.V., as Borrower, the Guarantors party thereto, Deutsche Bank AG New York Branch, as Administrative Agent and ~~Ryan Hymel~~lender and the other lenders party thereto from time to time (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed by the ~~Company~~Registrant on ~~September 25, 2019)~~June 12, 2020)

10.2*		~~Amendment to Executive Employment~~Credit Agreement, dated as of ~~September 23, 2019, by~~June 12, 2020, among Playa Hotels & Resorts N.V., Playa Resorts Holding B.V., as Borrower, the Guarantors party thereto, Cortland Capital Market Services LLC, as Administrative Agent, Acquiom Agency Services LLC, as Mexican Collateral Agent and ~~between Playa Management USA, LLC, and Alexander Stadlin (incorporated by reference~~the lenders party thereto from time to ~~Exhibit 10.2 to the Current Report on Form 8-K filed by the Company on September 25, 2019)~~time

10.3*10.3		~~Amendment to Executive Employment~~Loan Agreement, dated as of ~~September 23, 2019, by and between Playa Management USA,~~June 12, 2020, among Hilmobay Resort III, LLC and ~~Kevin Froemming~~Playa Dominican Resort III, LLC, collectively, as Borrower, Hilmobay Resort Limited and Playa Dominican Resort B.V., collectively, as Security Guarantor, PHR Lender LLC, as Agent for the lenders and the several lenders party thereto from time to time (incorporated by reference to Exhibit 10.3 to the Current Report on Form 8-K filed by the ~~Company~~Registrant on ~~September 25, 2019)~~June 12, 2020)

10.4		Securities Purchase Agreement, dated June 12, 2020, by and among Playa Hotels & Resorts N.V. and the buyers listed on the signature pages thereto (incorporated by reference to Exhibit 10.4 to the Current Report on Form 8-K filed by the Registrant on June 12, 2020)

31.1		Certification of the Chief Executive Officer pursuant to Rules 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2		Certification of the Chief Financial Officer pursuant to Rules 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1		Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2		Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101		The following materials from Playa Hotels & Resorts N.V.’s Quarterly Report on Form 10-Q for the period ended ~~September~~June 30, ~~2019,~~2020, formatted in XBRL (eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets, (ii) Condensed Consolidated Statements of Operations, (iii) Condensed Consolidated Statements of Comprehensive (Loss) Income (iv) Condensed Consolidated Statements of Shareholders' Equity, (v) Condensed Consolidated Statements of Cash Flows, and (vi) the Notes to the Condensed Consolidated Financial Statements

104		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

*~~Indicates management contract and/or compensatory plan and arrangement.~~ filed herewith

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.




		Playa Hotels & Resorts N.V.

Date:	~~November~~August 6, ~~2019~~2020	By:	/s/ Bruce D. Wardinski
			Bruce D. Wardinski
			Chairman and Chief Executive Officer
			(Principal Executive Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the undersigned, in his capacity as the principal financial officer of the registrant.




		Playa Hotels & Resorts N.V.

Date:	~~November~~August 6, ~~2019~~2020	By:	/s/ Ryan Hymel
			Ryan Hymel
			Chief Financial Officer
			(Principal Financial Officer)



Cash consideration, net of cash acquired of $0.1 million	$	93,128
Ordinary shares (20,000,000 shares at the Acquisition Date closing price of $10.77 per share, €0.10 par value)	215,400
Total purchase consideration	$	308,528



	June 1, 2018 (as previously reported)			Adjustments⁽¹⁾			June 1, 2018 (as finalized)
Total purchase consideration	$	308,528		$	—		$	308,528
Net assets acquired
Working capital	(1,665		)	—			(1,665		)
Property and equipment	304,299			(5,950		)	298,349
Identifiable intangible assets and liabilities	(449		)	—			(449		)
Deferred income taxes	(25,582		)	5,099			(20,483		)
Goodwill	31,925			851			32,776
Total net assets acquired	$	308,528		$	—		$	308,528



	Balance Sheet Classification	Estimated Fair Value			Weighted-Average Amortization Period (in years)
Management contract	Other intangible assets	$	1,900		20
Unfavorable ground lease liability	Other liabilities	(2,349		)	22
Total identifiable intangibles acquired		$	(449	)



	June 2, 2018 - September 30, 2018
Revenue	$	31,961
Net income	$	1,714



	As of September 30, 2019
Minimum future lease payments
Remainder of 2019	$	241
2020	991
2021	1,036
2022	1,074
2023	786
2024	652
Thereafter	2,927
Total minimum future lease payments	7,707
Less: imputed interest	(1,330		)
Total lease liability	$	6,377



	As of December 31, 2018
2019	$	1,199
2020	1,031
2021	1,016
2022	1,044
2023	745
Thereafter	3,394
Total minimum future lease payments	$	8,429



	Three Months Ended September 30, 2019		Nine Months Ended September 30, 2019
Lease expense ⁽¹⁾⁽²⁾	$	636	$	1,942

Cash paid for amounts included in the measurement of lease liabilities
Operating cash outflows for operating leases			$	473



	Less than 1 Year⁽¹⁾		Due in 1 to 3 years		Due in 3 to 5 years		Due in Over 5 years		Total
Revolving Credit Facility ⁽²⁾	$	103	$	936	$	161	$	—	$	1,200
Term Loan principal payments	2,525		20,200		20,200		946,048		988,973
Term Loan interest payments ⁽³⁾	13,333		106,043		94,207		13,235		226,818
Hyatt Ziva and Hyatt Zilara Cap Cana land purchase obligation	10,625		—		—		—		10,625
Operating lease obligations	241		2,027		1,860		3,579		7,707
Pension obligation	39		1,134		1,345		4,771		7,289
Total contractual obligations	$	26,866	$	130,340	$	117,773	$	967,633	$	1,242,612



	Total number of shares purchased	Average price paid per share ⁽¹⁾		Total number of shares purchased as part of publicly announced program ⁽²⁾	Maximum approximate dollar value of shares that may yet be purchased under the program ($ in thousands) ⁽²⁾
July 1, 2019 to July 31, 2019	345,164	$	7.53	345,164	$	93,165
August 1, 2019 to August 31, 2019	365,689	7.42		365,689	90,453
September 1, 2019 to September 30, 2019	135,565	7.93		135,565	89,379
Total	846,418	$	7.54	846,418	$	89,379

~~Standard~~

~~Description~~

~~Date of Adoption~~

~~Effect on the Financial Statements or Other Significant Matters~~

~~ASU No. 2016-13,~~ ~~Financial Instruments - Credit~~Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (as amended by ASU No. 2018-19)

This standard amends current guidance on the impairment of financial instruments by adding an impairment model (known as the current expected credit loss (CECL) model) that is based on expected losses rather than incurred losses. Under the new guidance, an entity recognizes, as an allowance, its estimate of expected credit losses.

January 2020

On January 1, 2020, we adopted ASU No. 2016-13. We determine our credit losses by applying an expected loss rate to the outstanding balance of accounts receivable for each of our reportable segments (refer to Note 15) and our corporate entities. The ~~adoption of ASU 2016-13 is~~expected loss rates for our reportable segments and corporate entities were determined primarily using historical credit losses, which are not expected to have a material effect on our Condensed Consolidated Financial Statements. Our financial instruments that are subject to credit risk primarily include trade accounts receivable, which are short term in nature. Further, we evaluated our historical credit losses of trade accounts receivables for the years 2014 through 2018, noting that they were immaterial. We do not expect our incurred losses to significantly differ from what is currently expected over the life of ~~the~~our trade receivables.

The adoption of ASU No. 2016-13 was immaterial to our Condensed Consolidated Financial Statements for the three months ended March 31, 2020.