Playa Hotels and Resorts Completes on Sale Two Jewel Hotels in Jamaica

Main Photo: The Jewel Runaway Bay hotel

Date: May 2020

Location: Dunn’s River and Runaway Bay, Jamaica

Names: Jewel Dunn’s River Beach Resort & Spa and Jewel Runaway Bay Beach Resort & Waterpark

No. of Keys: 250 & 268

Seller: Playa Hotels & Resorts N.V. today announced that it has entered into a binding agreement with a third party to sell the Jewel Dunn’s River Beach Resort & Spa and the Jewel Runaway Bay Beach Resort & Waterpark for a total consideration of $60 million in cash.

“We are extremely proud of the team and the performance of these two spectacular resorts and the ability to execute this sale during such unprecedented times is a testament to their hard work and the attractiveness of the Jamaican market,” said Bruce Wardinski, Chairman and CEO of Playa Hotels & Resorts. “The sale of these two resorts will enhance our liquidity at a superb cost of capital for our shareholders. The Company will continue to maintain a significant presence in Jamaica and we remain committed to being a leader in the Jamaican community as we move beyond this pandemic.”

The sale of the two resorts is subject to customary closing conditions, and they expect the transaction to close in the second quarter of 2020.

Playa Hotels & Resorts N.V. (“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. Playa owns and/or manages a total portfolio consisting of 23 resorts (8,690 rooms) located in Mexico, Jamaica, and the Dominican Republic. In Mexico, Playa owns and manages Hyatt Zilara Cancun, Hyatt Ziva Cancun, Panama Jack Resorts Cancun, Panama Jack Resorts Playa del Carmen, Hilton Playa del Carmen, Hyatt Ziva Puerto Vallarta and Hyatt Ziva Los Cabos. In Jamaica, Playa owns and manages Hyatt Zilara Rose Hall and Hyatt Ziva Rose Hall, Hilton Rose Hall Resort & Spa, Jewel Dunn’s River Beach Resort & Spa, Jewel Grande Montego Bay, Jewel Runaway Bay Beach Resort & Waterpark and Jewel Paradise Cove Beach Resort & Spa. In the Dominican Republic, Playa owns and manages the Hilton La Romana, Hyatt Ziva Cap Cana and Hyatt Zilara 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.

Playa had made losses in recent times, and they declined to say whether it would make a profit or take a hit on the sale, which comes shortly after a rating downgrade, amid the Covid-19 travel lockdown. It first acquired the properties two years ago from Sagicor Group Jamaica.

“While I cannot comment of the specifics of the sale, it is amicable for all parties involved,” Sullivan said. Sandals Resorts International, when contacted, would neither confirm nor deny earlier media reports that it was potentially interested in acquiring the hotels.

“Sandals Resorts International does not have a comment at this time,” said Sheryl McGaw-Douse, group manager for communications and public relations at Sandals. Founded and chaired by Jamaican Gordon ‘Butch’ Stewart, Sandals operates 15 resorts in six Caribbean countries, according to its website. It’s been reported that the Sandals chain itself is up for sale – with Bloomberg speculating last September that the resort could fetch US$4.5 billion – but the Stewarts have never confirmed it.

The Jewel hotels to be sold by Playa account for 518 of the 1,238 rooms operated by the Mexican company in Jamaica. In June 2018, Playa acquired five properties and land from Sagicor Group Jamaica and its affiliates, which included these two hotels as well as the 225-room Jewel Paradise Cove Beach Resort & Spa, and the 217-room Jewel Grande Montego Bay Resort & Spa of which 88 rooms are owned and 129 are managed, as well as the 495-room Hilton Rose Hall Resort & Spa.

Playa’s debt is estimated at seven times its earnings before interest, taxes, depreciation, and amortisation. In March, rating agency Moody’s downgraded Playa’s corporate rating and revised its outlook from stable to negative.

The resort group’s senior secured term loan due 2024 and its US$100-million revolving credit facility were downgraded from B2 to Caa1. The rating revision followed a downward revision of Playa’s earnings outlook due to concerns around reduced occupancy at its resorts amid the COVID-19 pandemic.

The top shareholders of Playa include Farallon Capital Management, with a 23.1 per cent stake; Sagicor Group Jamaica, 15.1 per cent; and TPG with 6.6 per cent.

Buyer: Undisclosed

Price: US$60m

Price per Key: US$115,830

THPT Comment: Let’s hope this does the trick for Playa and would be interested to know who the undisclosed buyer is….Good price for the buyer.

First Seen: Jamaica Gleaner

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