Shares of destination resort owner Playa Hotels & Resorts (NASDAQ:PLYA) jumped as much as 29% in trading briefly on Tuesday after ;the company reported first-quarter 2020 results. Shares settled significantly as the day wore on and closed up 9.1% for the day.
Total net revenue fell 9.4% in the quarter to $171.2 million, and net loss was $22.6 million, or $0.17 per share. Analysts were expecting $196.4 million and earnings of $0.14 per share, but that should be taken with a grain of salt given the uncertainty around COVID-19 and a dramatic reduction in travel.
To shore up its balance sheet, Playa's management has announced the sale of two resorts for $60 million and an additional $40 million of borrowings under the company's revolving credit facility. That's aimed to get the company through the crisis and what could be a long, slow rebound.
The travel business could be in dire straits for years, especially for destination locations like those Playa Hotels & Resorts owns. The company's has made progress shoring up its balance sheet and investors are pleased with the results today, but this isn't the end of the story. Watch demand over the next few quarters for signs of recovery, because there may not be as much demand in the coming months as investors currently hope for.