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HLT Hilton Worldwide

Participants
Jill Slattery Senior Director of Investor Relations
Chris Nassetta President and Chief Executive Officer
Kevin Jacobs Executive Vice President and Chief Financial Officer
Carlo Santarelli Deutsche Bank
Felicia Hendrix Barclays
Joe Greff JPMorgan
Harry Curtis Nomura Instinet
Stephen Grambling Goldman Sachs
Shaun Kelley Bank of America
Thomas Allen Morgan Stanley
Robin Farley UBS
Bill Crow Raymond James
Jeff Donnelly Wells Fargo
Patrick Scholes SunTrust
Smedes Rose Citi
Michael Bellisario Baird
Vince Ciepiel Cleveland Research Company
Call transcript
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Operator

Good morning, ladies and gentlemen and welcome to the Hilton Fourth Quarter and Full Year 2017 Earnings Conference Call. [Operator Instructions] Please note, this event is being recorded. At this time, I would like to turn the conference over to Jill Slattery, Senior Director of Investor Relations. Please go ahead.

Jill Slattery

Thank you, Denise. quarter year fourth earnings Hilton’s to and XXXX full call. Welcome

could to begin, to include revise that results statements those made we our and we obligation only as forward-looking remind in forward-looking materially statements. the indicated these would Actual today will Before no forward-looking morning of or like you today. publicly statements, undertake from update this our statements. to speak differ expectations discussions We

could some of of results the filed For cause a that the section actual differ, factors Factors Form discussion our see please of to risk recently XX-K. Risk most

In non-GAAP financial addition, measures to call. we will refer on certain this

at non-GAAP X, for company’s assume today’s can our occurred and that full earnings quarter reconciliations of measures website noted, on had January financial release details. full and see results an earnings overview call Unless provide to Nassetta, additional Financial then comparisons fourth provide the current and environment operating Please our Vice Officer, the to update company’s ir.hilton.com. expectations and You and President fourth review year otherwise the in the in our discussed Chief the XXXX release press transactions and our Executive find our our year XXXX. will Executive This quarter for Chief President spin-off GAAP Kevin of year will Jacobs, and results Officer, Chris outlook. an our morning, on ahead. on

be happy turn will take we to Chris. the that, remarks, their to pleased questions. over Following to your With call I’m

Chris Nassetta

morning, and Jill, good you, Thank everyone.

line high of performance fourth quarter results the our We’re top end with and report happy bottom line to guidance. exceeding

of also than year and adjusted As $X.X returned average shareholders. cap expectations a beat to X% market billion we or result, EBITDA and nearly full EPS more our our

segments Specifically further and group quarter, with business. driven X.X% increased grew results. corporate largely in brand and help our shifts weather by all impacts strong RevPAR U.S. exceeding expectations. transient RevPAR X.X% the Holiday

and continue year positive expect momentum We are to ahead. the optimistic momentum, this about

at profits, GDP, accelerating call indicators, continued growth and investment corporate all macro which well forecast for in Looking growth. for bode nonresidential fixed demand

trends Forward also booking group continued optimism. support

up XX% on For XXXX, particular nearly demand the conversion. business the full the is of and strength mid-teens, position future mid-single books. with the group company quarter increased in in Booking pace improved meetings given periods already group up digits all the for was and in in year is

the On the we supply growth long-term be in side, will below at XXXX think likely or average.

and end a full X% guidance the between maintaining midpoint result, end of X%, the range. up our RevPAR year the of expect would to we’re high results As but

we side great Additionally, business should the on development global traction supply growth. to continue as on to from we outperform benefit continue the of share of

a expect sign strength approximately growth For commercial our portfolio again day. index world. The premiums, us the drive of than and net we leading growing a unit around In impacts which full pipeline brand to year, X.X%. XXX,XXX diversification more mitigate XXXX, opened RevPAR and deliver in broad of hotel unit cycles and development the are engines the our strong of growth. evident rooms Meanwhile, we industry continue the helps more than of help our to

reached record of and rooms both which also of We exceeded starts, roughly approvals construction record expectations. XXX,XXX

adjusted million to pursuing existing growth XX% pipeline will we’re internationally. introducing our opportunities stabilized by totaled under nearly we an rooms, generate globally. construction construction additional industry, for actively finished XXX,XXX brands markets annual Internationally, pipeline and year-end, EBITDA. and representing expanding X,XXX under with most X% into of At U.S. our estimate markets. of in fact, the XXXX account nearly XX% and We rooms rooms new increase In pipeline $XXX of new in which hotels the our

and XX%, rooms, nearly XXX signed for pipeline, than percentage pipeline Hampton have As XXX,XXX for our X%. and international Americas our hotels XXXth total, non-U.S. In the XX%, of about Asia Pacific in accounts of region China. including EMEA recently more total a roughly a we accounts strong Hotel

For will located markets. international roughly growth net be we of unit our in estimate XXXX, XX%

buildout increases from exposure our of roughly nearly today entire rooms pipeline, our XX% the Assuming international to of XX%.

expected great in conversion last launched We the opened conversion. brand, by for within U.S. next recently also its our led opportunities a are presence Curio, newest XX than Tapestry, XX brands launched with hotels and Combined, particularly each two positioned the and years. have which the development more two brand well Tru brand. story to just pipeline in our in year, these double

Coronado world-class Curios, of in addition to forward and in properties openings year del anticipated impressive cities like and with other Statler Following Dallas, and D.C. including Hotel coming The destinations in resort Japan the several and Paris Washington, the Rica. Costa converting we look the

U.S. benefiting to over also stages a million to at members membership brand now enrollments City hotels international We XXXX, by loyalty in members XXXX, our XX more opened of even from XXX when marking over XX%, Maine. Nevada for of year-end, with the of our our expected we Oklahoma members in up value Vegas, a million our in first development, stay including in three they program debut the have nearly year, over Hilton. as record to we Pacific, In with Honors this Tru fantastic the total added XXXX, exciting last kick more eight and We’re enhancing which the brand’s an we’re Asia doubled program To from give in region. traction our the Hilton us. properties off in number XX for with deals the open Las sign first Tru following to including opened spanning various Canada Portland, hotels milestone April,

especially flexibility a include bonus Soon program. to of we’ll status nights earning next for and value new jumpstart all the points status members These receiving out perks, overnight our to highest rolling milestone, start benefits for increasing our elite the enrolling beyond of certain year, another for member, tiers. gifting

choices Express that our to even also of Honors these Honors and and We’re and our cards benefits, cards making greater most available are cardholders. customers to American will more give to members portfolio new Hilton card credit excited rewarding small share The date. portfolio cobrand new the businesses our

these increases not overall expect loyalty We also system. spend but to in our card total benefiting only and cards drive meaningful customers,

of high-tech have room, control see year. technology. us guests tremendous of all X,XXX digital available to rooms With with We hospitality. that than how to on redefine hundreds to course, of debuted of officially than connected December, the personalize change, opportunity the automation Hilton aspect a Moving more future are, digital stay its of this worldwide in from now hotels this help we globalization, enables we and more for key XXX,XXX app. changing more hotel coming do business. first every all kind room like and their Trends Honors of us In

it benefits we’re shareholders. for more ultimately previously be Before tax the really articulated we not game-changing economy, the significant performance over innovations continued the returns around flow. drive policy and and it be will on our Kevin, want lodging and I’d to over call free I turn good members and our Kevin be reform Overall, with who team in for the I’m broader and believe XXXX bulk this XXX,XXX delivered to returned exceptional thanking To continue world details call that experiences cash and net strategy, the generated be where our we recent and incremental Consistent tax to you we in to strong capital shareholders. for finish this to remiss lead think our good touch give briefly good to performance will that, deliver I the growth, of be demand changes. financial pleased going on will to drive up, and recognizing for With will Hilton success. allocation with outlook. industry the results the turn organic the unit our

Kevin Jacobs

RevPAR the grew currency-neutral morning, on our good prior high versus guidance exceeding and X.X% year In basis, Chris, a everyone. of the Thanks, end system-wide the range. quarter,

greater estimate ahead the midpoint million results we this group guidance onetime $XXX the RevPAR In year. the of exceeded benefited board came million end hurricane items we basis better-than-expected benefited quarter, versus XX% and to fees guidance that X% from displacement our of from across guidance $XX Results flow-through the high roughly shifts beat also solid that to and with franchise of year-over-year. million, XXX points. and Our management better-than-expected We Adjusted RevPAR the control. transient well grew increasing cost driven were demand, repeat holiday and XX% estimate of also EBITDA range, $XXX do corporate roughly XX% corporate by range. system-wide performance of not expect to by our

outpaced In strong license our RevPAR, application in and expectations. addition fees growth to

across Our group performance, owned given better-than-expected demand in Europe increase and business leased healthy Japan. also portfolio transient and posted

for adjusted special share diluted also result, expectations. of a earnings beat As per items $X.XX

group grew regional by X.X%, estimated comparable Turning shifts outlook. benefits coupled our given RevPAR Fourth and corporate from XXX U.S. boosted quarter RevPAR meaningfully than the holiday weather, higher performance points which transient basis growth with performance quarter. an expectations the in and to our U.S. solid

versus X% to the hurricane-related RevPAR Americas prior RevPAR midpoint forecast X.X% Rico. outside In business year strong the U.S. due range. XXXX, grew growth we and the Puerto year solid X% our full around demand Canada system-wide For of in leisure a to quarter U.S., the in fourth

rebounding X.X% range. For Europe in the our RevPAR quarter expect end region guidance by XXXX, in partially a year we the softness by demand in in offset in Turkey high growth at RevPAR full of driven the grew growth London.

Africa X.X%, expect be as Europe demand East In Arabia to and and line of up the Visa Saudi softer at instability our offset slightly in region, in restrictions. in the growth with political XXXX Egypt above to year given We growth our strength RevPAR was range. expectations full end continued in RevPAR Middle high

growth quarter, the RevPAR increased by X% higher grew ramping of China For X.X% full helped in by Pacific in we led range. our hotels. Asia to XXXX, the region the guidance end RevPAR In where year at the region, expect be RevPAR

both expect continue benefiting as from group country improved. to occupancy upticks transient We the and segments

grow X%. with of Pacific RevPAR mid-single XXXX, year expect in RevPAR digits to China full to growth in the for the For Asia we region X%

on Moving to guidance.

X% expect of continue to X% we markets outperform to XXXX, year full the For international in growth will assume and U.S. RevPAR

forecast We special of the midpoint. items $X.XX EBITDA representing to for billion, $X.XX. a adjusted $X.XX of to billion $X.XX increase EPS of expect diluted X% nearly adjusted We year-over-year at

XXX calendar RevPAR basis For the drag the X%, a point from including to Easter of first shift. we system-wide expect quarter, X% growth

new revenues. will the be the standards. deferral the There affect will will expect revenue way and to of and EBITDA our to ranges guidance $X.XX. that We adoption special for million incremental incorporate note not of P&L, our diluted items accounting changes most upfront do Please line The of $XXX to be adjusted the EPS meaningful standard across recognition repurchases adjusted several $XXX share of we items, $X.XX the new million recognize include but fees.

we forward, recognize the of contract. Going the at contract instead of over time fees the will execute upfront we the life

Importantly, would the cash estimate a $XX accounting by changes we our it for EBITDA. similar reported adjusted and available but or lower adjusted XXXX do flow return, EBITDA not expect XXXX to to cash million million reduction $XX affect capital that

paid dividend Moving per quarter cash We of for total XXXX. the on in of a capital during $XXX and fourth in billion to $X.XX $X.X a during capital dividends return. share total return million

a $X.XX cash authorized also share per board the Our quarter. in of first dividend quarterly

million, X% For XXXX, return the market our buybacks or $XXX million $XXX form $X.X roughly of savings and shareholders of between cash billion we in and to X% $X.X inclusive billion of expect of cap to dividends. tax to to

this details the at as on the We issued have. you prepared same be year We level our This as questions ranges morning. like completes remain expect with would our to latest now any can Further all guidance We fourth as full would you we the XXXX. results our earnings open this quarter in found for like quarterly release morning. speak to well to and may line remarks. earlier dividends of

you ask we our question. yourself question can please. Denise, limit one first So to that we have

Operator

come Certainly Mr. Bank. morning question Carlo Instructions] go from first Your Jacobs. Santarelli this Please ahead. [Operator Deutsche will of

Carlo Santarelli

good thanks morning. and guys, Hey

Chris Nassetta

morning. Good

Carlo Santarelli

with comment if reform, that as But transient aspects any impact corporate I on tax to you’ve them would the related what two have of respect as seen say guys it have could kind implications the question, negotiated reform are of post for on rate on your tax to an I business to future you discussions both extent. discussions with part would well for a developments. developers

Chris Nassetta

to the and a done so to year, And Kevin, year, I’d I’ll you of of I’d is in I think jump very obviously, different want it’s – bunch much it’s if them, where might where reasonably that. very, begin But got to say year Carlo, take customers very positive. talked and host was whatever of different events still are been you our say end of judge add. large the of numbers Yes, having would Most the a bunch this it. where can versus at I sort early say, at anecdotally, about to we as I of tone, we last we very positive. having viewed a were more it conversations last

being that’s regulatory reform, driven I also in by tax – it’s environment by your the think being question the being on I certainly easier companies. driven to U.S. think

So I’d reasons show end numbers would relates to it started see of broadly to I last say We that year. as up there’s be business transient, optimistic. at to in say the

been optimism if still but the early bunch up than given lot a will a is the numbers, is help growth that this anemic. seen days going I’m a looking we’ve that in of had forecasts this customers as last that that expectation not to we which corporate It’s across our recall from it’s that choppy, are going little bit different year, to consistently better of the broadly at it’s bit. very And think I was and continue industries, sensing into transient move growth better. you I help sense big say right my drive would year. GDP it’s a

tax think growth and a tax bit in expectations be So picking terms – reform regulatory certainly steam of reform as everything result are I with globally of and change up a on right going think U.S. now up of I growth, to of global the picking good. going in little

before, community, optimistic that’s right I’d say somebody business matter, I And find terms community been have year development might months again, than development hard our it’s even given not ago. that – they now not even, think, early now. In is of optimist, it’s days. to they for optimistic more that’s our were eternal a optimistic they’re ago in six or more are that that reasonably

on that say said on, what’s I’d say Having stable. for side. all the environment going lending in bodes going the what’s well So development I’d on is that’s that,

year. going had in tightening You of development a throughout environment the on lot last

Whether If stabilize. at tell. market consequence more fourth the a that to quarter, the availability rebound I you started as look of really the financing economy, think in to a will comes time

the because say that they are economy to few community, to yet, the quarters – that are going community, broadly, ultimately will have been business in time on our hotel I drive stands broader But pickup demand growth it’s going including but last think think, which I We changes over think going reason. tell. translate more haven’t to the I’d in development economy seen for rooms, and more the optimistic growth the into will growth

Carlo Santarelli

just That’s Great, Kevin, a thank you. helpful. clarification. very And

impact $XXX You million, cash tax said million the $XXX to correct?

Kevin Jacobs

Yes. That’s Carlo. right,

Carlo Santarelli

Thank you.

Operator

from ahead. The next Felicia go Barclays. question be will Please of Hendrix

Felicia Hendrix

you. Thank morning. good Hi,

Chris Nassetta

Good morning.

Felicia Hendrix

Hi.

prepared supported growth talked for So exceed there’s in RevPAR tax Chris, by could the your by year, U.S. investment travel, remarks, this possibly industry. following corporate pickup a you’ve – which optimism transient that some again, community reform, X% in the about, been

to guiding about for Hilton. You’re X%

So view. just this first, maybe if with wondering, bullish agree you

that’s to little out So maybe case the if you U.S. a and growth just industry XXXX, implied put out what you U.S. RevPAR a would guidance the on like had RevPAR bit talk And now. for it for why? be about could bull there

Chris Nassetta

great Yes, question.

the it’s think good I question.

as but if to to First my what so delivered be we view we I you the said much sort high, X% from would we’re think in that guided to consistent, mid I go moving X.X%, listen that to the pretty to And of really comments X.X%. the identical that is not Felicia, sense XXXX. of all, I technically, would back the in likely X%, and outcome the

an if bull so now. and I that to I’m optimistic And optimist case think you knows everybody but are there by take remember, the reasons me nature, knows be right

you a you year Leisure of following: sort of I bunch X.X%. of last relatively where transient, think Business case, was would strong, if which from in X.X% a an weak. markets, delivered group were the very big bull international sort be sort of it And take strong. relatively had you the help relatively environment – transient, the weak. that delivered

to strong XXXX, take sort that to off of, by forward the going way, I international fast is again. table, are You think markets, the be

Won’t case between and still there good. both be more for more transient good really be is estimation going robust. anything, Our of looks that declining. of creates that won’t think will consumer as offsetting be drag. would the – be Europe bit year, quite deliver. will not think sort You quite up, potentially well, so I again, – APAC, as we be bull they than right? They’re robust what teeny to have if as picking But last then the better U.S. leisure to They than be maybe a confidence,

a So that’s what’s you leading with transient. transient. We happen good to that indicator about would argue of talked leisure business going

it’s is think if relatively I set where out that be While group, we in sort last a really And to, better for year. good with doing people got the weak bit and should plays what is early pretty year we’re result than economy a year. and mid-single- choppy, at digit what little bit most better think, momentum, it the business group it of last if position doing, system-wide as we a than transient year was up will in lead it’s think a it

think year, could X.X%. we I altogether conclude certainly that last which You than was aggregate better you that and should do

given these to we’re of outlook? want your be would mean you we confident And the so to We very we’re simple. to out. as year optimistic, said, see about those out. I out firming our the want There’s up to first down XX% sort a play I of group, it’s you we to early to at on It’s thought make call, aren’t so year, business that want point legitimately, want And it adjustment right we We the bull happen year. importantly, sort of being bull would want the is real be. see transient think why that it’s But middle see play and the And the us us this see it to say, the sure on but things it’s throughout to we And continue in in case. expectations. but If you’ll place of sort the things. not of February. the reason was case our play giving see books, side. lot we

Felicia Hendrix

Okay. Helpful. Thank you.

Operator

will question next Greff come from ahead. go Please Joe of JPMorgan. The

Joe Greff

everybody. least off group a by you strength much meetings. corporate travel, or meetings about individual you morning at the talk corporate or group Good of that in leading transient about call the coincident company how for maybe particular Chris, started talking in Can is indicator past?

Chris Nassetta

Joe, typically past, I group the is indicator. a the In say lagging would that

so an way I pickup, time we say it group pickup. a at is saw would a pickup. that And same you’re the works. saw little that’s it the pickup. We Well, transient seeing see did We anomaly of usually bit it corporate our corporate

ahead are people meetings, on going little stable. in this that it able I their again, the still bit, to happening be – time. running Corporate ahead think look, they good get time where a has can’t they’re that a why pickup I bit can’t a and more occupancy little But such other that a procurement corporate it’s the industry in been I minute. group, different a choppier. last corporate, is don’t that is – the bit still headed is be I But the they’re honestly to I’d little I of think the transient is side, say it in in so than line fact figuring And I pickup the of think out direction. belief more the now can more high – way, corporate trend think bit a there’s if offices at nonetheless, not overall have explain little group levels transient And same corporate it at a

they lagging. probably that’s an but – bit anomaly what’s coincident little around driving a what and I a flipped terms would is say what’s anomaly, little think I either a major what’s or the bit of a leading where of not in they’re

Joe Greff

Helpful. you. Thank

Chris Nassetta

Yup.

Operator

The will Nomura ahead. next of Please question Curtis from Harry Instinet. come go

Harry Curtis

Good morning.

Chris Nassetta

Good morning Harry.

Harry Curtis

at, to target? up ratio math you ending leverage net year debt touch what using that billion kind X.Xx Thanks. the if billion get could basically $X.X on the the the leverage Xx to of and ratio Good of ended your middle ratio the to morning. your at to you leverage and were $X.X

Kevin Jacobs

X.XXx at Harry. $X.X Yes. to ended the very assumes, X to total that Xs. range. billion return X.X, about our We it call the And year low capital in $X.X leverage

Harry Curtis

Okay.

such and So a was that short question answer.

get I b. part I think

Chris Nassetta

Harry. rule, the Breaking

Harry Curtis

development the know, I rates you whether couple next for interest potential impact of been talk Can on higher construction it’s or years? sorry. I’m And or locked rates on your in of the pipeline? just the impact higher or about not

Kevin Jacobs

Yes. It’s a Harry. good question,

is – the an You that’s And in terms years rates than sort longer continue going our of next the it then couple locked out, And years pretty of said, to of couple mean, getting yourself. up, Chris optimistic construction that, better. cycle developers are as this bunch. plays well probably is I way partially next economy go term mean the to in. the if of is answered

though get might looks a even underwriting little paper. so what better a capital bit And little their bit the gets expensive, on

really a a short-term impact have either. doesn’t So that big probably not definitely and impact probably long-term big of

Harry Curtis

Thanks. Perfect.

Operator

The next Goldman Sachs. Stephen Please question will ahead. Grambling come of from go

Stephen Grambling

morning. good Hey,

Chris Nassetta

morning. Good

Stephen Grambling

is base consumer mentioned addition million and Thanks. and that engagement on growing changing? it I million to may provide update direct members to maybe the XX $XX for was loyalty year-end at an efforts loyalty Can booking within program. the behavior? how be potentially your And you changing total, your of talk You how think

Chris Nassetta

know But don’t with booking your into they on clearly, of the part We And an to once very with is question, materially directly I’d booking materially. up which I we’ve when front us. been of majority, efficient not we service, customers, very a more have of get with we’re drive interpreted product, XX% more is and all, like engagement, surprising, what engaged Around we’re program, of the and up with doing doing more to hard Yes. doing program I specific with working campaign the has close we’re program, importantly, year-over-year. have have XX%, related XX-plus directly I holistic know it would much members much what percentage become more strategies to has can obviously I vast whatever. with of it that they making Honors in with it’s complex that as of customers Honors – the what approach, people more parts direct but member, like of say second we’re is – technology, do channel. more But which frequent think pretty or the is to doing – sure obviously, start in them with to come us, Stop say, percentage relationships pretty which Clicking not getting working engagement only marketing customers, me. active higher sitting deeper sometimes them through more engagement the is what a percentage in a the

forever instead, with more and comprehensive But success. this engagement to is a having to very of it’s prior deeper, talking we’re think customers. about as frequent be calls, lots on going said good I having something we’ll I’ve really so approach be And

Stephen Grambling

at percentage What bookings mobile are of follow-up. quick through a point? as this Maybe app going your

Chris Nassetta

and It’s about XX% growing.

Stephen Grambling

back All I’ll a in queue. right. jump

Chris Nassetta

to XX%, either a and Direct third or third that’s – or about close mobile. Web

web So you’ve the that. add make sure to got that, we add in

Operator

ahead. of from will Please go The of next Kelley be question Bank Shaun America.

Shaun Kelley

you this but back out. a peak to to overall to Hi, bit side. supply growth Harry’s think One is XXXX the answer the as for growth in little industry supply – good starting question, we’re we morning to of is your everyone. change that going through just Chris, kind noticing move that alluded I just

of guys see two growth? shift to long the do sort over going going is years you X.X% move you’re get to is three some question that we’re shift maintain maintain bit there, can takes of my And how so out where the to think And of unit that very coming next a maybe from kind at just seeing? you’re significant in of majority What on you’re where or you XXXX, growth from we that’s of majority slight to the the are or that XXXX puts international? and rates to the domestic going of that as little to some net

Chris Nassetta

question, I mean, your peak. Shaun, past to comment the of is U.S. sort its clearly, or

just I the the with or U.S. success the we’re industry. not we continue offshore extended XX particularly low in a you’ve only good in We where X% tell not it, bit, we’ve big the a would deal going in because going international but we’re in in seen it would in U.S. I world in to said low have line will to only growing. in in were pickup. And we either have the of peak But or opportunities success XXXX, both that, is on Now the really feel XXs say about mean, over that down representation the we opportunities XXXX, slowed has in XXXX in the low the that’s the having world. are for conversions few because saw Tru. trend for signings think years, U.S. delivering the side I I peak international X% you the NUG Having of of in in the next lots XXs, us, extended it. terms be of And around of U.S. where in NUG as I and having XXXX, clearly, what’s probably we’re terms the it. XXs you the

being keep able thoughtful existing markets brands to brands doesn’t that which about Tru So existing move able been job, of lockstep. big all new And markets, we’re proven and how decade some add think to world. I our we it’s to a if growing. that going our think we a layer for be do growth we’ve to in in like do It various we’ve I

the you world. Now going thing happen in at of lot five, other better six – years, pace. the job, a growing four, we over do when mean, can to we’re if I our look a here’s things keep

at but As next under the to XXX,XXX say half going now. fully three, look construction are I’m in or XXX,XXX, is the bag, okay? So you under of construction, rooms our pipeline two not right that’s nothing

I spattering XX% confident out of add we which being XX% achievable. to or that that what next right, seven sort at that ago to aren’t years, conversions I above. And I laid number, deliver you next consistently far range in into If going the of a three it that or gestation. up say few that delivered over And we we we readily year a numbers the level those Analyst of of add you, is to years off. Day you over to would think what would a lot already we’re think is in feel over our have six two at argue And

Shaun Kelley

of the coming it actually annual receiving? Great. out Chris. that Maybe Or is one conversion – of The clarification, is So you’re that to kind rate? rate? that deliveries the that annual XX% much of number conversion, just you’re the XX% they’re

Chris Nassetta

different. it, you a little year If average is every

But so cycle yes, it is newer, guess range, over that things years, averaged on. that in Tapestry it’s brands, deals continue deliver on new. the in at with working newer particularly range. or six very being confident things Just I’m and last through being – having we’ll five look depending we’re to Curio My you if

too That’s a doing our a in continues the brand another luxury We’re had to far of be – we’ve brand, brand so off, not about And is soft opportunity. and space. for success conversion will bunch then that great in what we’re third Doubletree opportunities about which talked thinking development conversion the there. fantastic be we’ve

I in deliver that range. So we XX% think can to definitely XX%

want got work we’ve is don’t You they they’re growth. to good got to really our do. world. minimize deliver thinking, takes of that momentum. And lot. already and hard we work, stuff, can reality around listens construction we I a we these it But the the And if to years again, three calls do jobs, our all is that as under add to what this hard the and do team boss,

Shaun Kelley

much. very you Thank

Operator

question from Stanley. ahead. go next of Thomas Morgan be Allen The Please will

Thomas Allen

months good Thank card kind in I you. you date? credit What been surprises morning. to since agreements. forward? thinking it’s about, how the around are Hey, announce has biggest your think, of It’s it been six And going about you

Kevin Jacobs

be. I don’t thought what I in too – been of Thomas. have going to today terms the out economics Yes. there incremental think many we’ve surprises we it’s – don’t laid think were funny,

are frankly, economic too so been, consumers far, in seen. bit those terms to we’ve so generally and But inconsistent of and probably early but we’re And days. outcomes, it’s little launched, even new with have getting it’s maybe far, a really cards receiving The better, just the opine. And what cards so early great well feedback.

but excited there we’re so say about any far, the I wouldn’t program, So surprises. been have

Thomas Allen

in XXXX? RevPAR mid-single-digit What question. could of And quick the about group ask was kind if You’re talking Okay. for XXXX? a I clarification

Chris Nassetta

up and it XXXX, positions five change. now just was system-wide System-wide it In up X.X%, was mid-single was right digits, X.X%.

Thomas Allen

you. Thank Perfect.

Operator

of will Farley The Please Robin be next go from UBS. ahead. question

Robin Farley

Great. two also Thank are you. Maybe pretend my one questions question. I’ll just

Chris Nassetta

People this. really doing good are at

Robin Farley

XX%. about of from your from seems X% you get there the to First, growth RevPAR unit fee guidance. can on growth you’ve like guidance just and just It talked your

about their thoughts been from any of about stake. them do any any on you one their in can if just your of given whether have revisiting just have higher conversations that with rate my on talked – growth might And investments fees thoughts well? is, So a or large had color what it some different there as they be non-RevPAR has a shareholders potentially then other question maybe topic or you’ve and wouldn’t is your

Kevin Jacobs

fee NUG Yes. Thanks about guidance, I RevPAR a at Robin. of RevPAR to I’ll our at is That our about fee take your think – is you Chris two you’re X.X%. what questions one plus at you NUG X%, midpoint gets as guidance. algorithm think alluding if the of said growth X.X% and what to has which fee to the The time.

the about, ownership fees are algorithm of rate, that fees fees in like As ahead there, of of have growing fees and rate. growing we’ve a are license but bit algorithm the app some also change non-RevPAR talked the driven little that below you

plays – of X% sort to that’s wide of a So is XX% out. that range sort and

had a IMF this XX% and on in so items. we’re going thing of about fees, a some in year good other is and onetime creating some of we and that with The that’s year growth timing due incentive little bit, to was

IMF. to range fee sort it’s but to a XX% of ended like averaging range only this individual we we’d get even our about of of do going might be high that’s better shareholders, we our of year, And we’ve question. to like given on this in up end say press and up than or on been X%. on their like company. HNA I’d higher felt though of to not you’re the in the the HNA comment don’t early comment the headwind might one, dealings created can the going little guidance so assume it’s X% and we’re And your shares think the to I course, to not might guidance. segment, of we But And their the or what any might on bit who’s And XX% in or a with then all alluding with And year. there second next year what was right the not with we of

with shareholders, say contains all As them will now. that probably we for agreement shareholder you a and for have that’s know, I protections

Operator

Crow from next ahead. James. Please of The question Bill Raymond come will go

Bill Crow

versus takes Good Great. gives XXXX. and morning. XXXX fundamentals you’ve some talked Chris, the of and about

international inbound you’re I’m on year. maybe the think making message U.S. at barriers of down. come kind share rebound lost I travel like travel the if travel? and to and has D.C. in in you last market wondering or you’re some You feel the didn’t touch any changing seeing of inbound all and Dollar significant headway inbound any

Chris Nassetta

didn’t. system-wide. of business part isn’t mean our It to a huge That’s Yes, the I exclude business. a it. Bill. I question, didn’t good It’s circa of X%

revenues I unto inbound year. of So circa maybe have think break us for the worst, good a I of down and segment International a it – think industry itself, it I little were it’s bit three segments. been tend last don’t into But down to as question. circa a mega X% kind

that be I the planning think an case our immediate and a of be impact this people it’s this of to going to flat the what we on what is little that signs world and for be expectation certainly to is our expectation with it’ll is while worst But around have is. going – than year time last our think early on what’s travel. talking our will for teams is lag modestly bit seeing don’t year better that we with we’re dollar, meeting isn’t think as it sort the up

want in majority that that feel but with has that United top with of harm dollar, United we’re welcome. sort any to industry some some think sure those do the do no of to to diminish of not to said, to the work security to the a we an way to doing of has the with the are priority, work vast rhetoric, being I soften coming more bit to a the I in it interested States, being so to States what’s do that of make administration and of hope sort the edges as profile that soften

little have conversations. industry give that. like of and to us I’d And a so tailwind having of us a been bunch on keep dollar, yes, and associations making And trade there. we’ve the been well. as we’re And I working We’ll some the a think think, progress having through will us individually lots bit help our of –

Bill Crow

how this. Thanks. open to I But think XXXX? could to Chris, many answer do actually in I missed if you just the ask, expect brand, I the Tru

Chris Nassetta

can about double XX this year then think that year. in I happening, to XXX next should this we’re based XXXX. get, We XX that hoping we XX what’s – And say, to would year. be on open open let’s and

Bill Crow

That’s Thank help. your you it me. for for

Chris Nassetta

Great Bill, thanks.

Operator

will Fargo. question Wells of Donnelly The Next Please come from go Jeff ahead.

Jeff Donnelly

a squeak and as try here well. in I’ll two-parter maybe

Just first Chris… one,

Chris Nassetta

We got system. new

Jeff Donnelly

like beginning a to the, it benefits some you’re of Chris, feels guess, you where best oligopoly. your at like frankly, that point an and is mentioned I just the that just demand becoming to some net in your of remarks field is improve loyalty more we’re it’s members, competitive giving room

synergies to a consolidation. your even though you enterprise evaluation I you and that even lucrative just more second increase guess, this you a question today to are curious acquire another use concessions you Hilton topic, question, greater guess, loyalty to can’t platform? use I’m that could platform that access first to different why scale I at point? revenue significant an already premium how expense to So And maybe is views relates do and respond make maybe access very investor

Chris Nassetta

them. Yes. We do. I’ll as gave take them you

any get going saying, this, of up and it got marketplace. we on teams to In not how race. obviously, driving terms view one – it. to Like, have driving talking at we there do we’re earlier, what doing that. so our them are cognizant and it more looking loyalty I how our we’re get and way everybody don’t connection out them of them the if they’re customers doing do all what do frequently we in is loyal what’s what’s a us us what else as do of that in engaged loyalty, and create more with buy space What’s and of I sort our not to mean, a That’s at to deeper with figuring in as mean, in products. end, more is said I they out the I competitive they

share. saying difference. things it that which engagement, which our are our customers make we think I much, that would some drive more items, frequent a response you’re cost greater not would that highlighted, the system are They seeing these don’t of will in things loyalty, so engagement, create big are but greater money ultimately And

part work doesn’t doing been of race, utility away. and money. space cost. we’re taking costly. don’ a It giving bearing different t we’re and has of way. owners There’s They’re doing but that cost about of we the incremental burden things allocate them things this much we’re to spend them – may in anything. paying way. points particularly Many not is that also are more cost everything on some more a about So I these cost of cost like of the things. a theoretical these, – And not mean, not other it are whole of bunch It’s

we’ve that reallocated a – of and will I’ll Well, miles, that had to give customers. of long time. whole it. There’s before drive we were our a that that we where you with So the our you long of program. more weaned that we’ve into earn things bunch one history a did the did points great And few we historically think Super other few then example expensive engagement off of of had that sort it and my customers right?

always So or do it’s It engage, just what more us – to about get not is sort people wanting of need directly do to we incremental to come because add. an add to answered On that thousand in more times. consolidation, I this I will share the yes, profitable lowering drive more loyalty, and more more share probably costs. of distribution sense maybe maybe mean,

point have Here’s the a thing, good We think platform. I of view, our do you’re right. from

just reported of and across last for on would results. say we’re those proud you at growth numbers the the if I pretty year think look I board, we that

as about I that. we’re If you described on you expectations comments, and for the and at this years earlier look feel in what really growth few good giving we year my next unit

very So think strategy growth delivers better because organic with guys. focused yes, we deliver ultimately, better products it and more on for us helps have we resonate an been returns you that customers

scale has plenty the have had big argument. don’t, we and missing working. have we we meaning we it’s of and think would segments that so now or if approach, I we And if that didn’t were gaps, understand strategic been But we scale. the And

have in the the covered. globe We the representation And segments all across most of geographies. we important have great major

strategic So we don’t have gaps.

add really it way organic associated in do existing We ability that and brands, an meaningful grow both our have yield cost cost it’s infinite growth. brands effectively new there’s no where because the to with or

think is I in the pretty why and themselves terms for easy that’s of the speak math success. the and focus numbers So

we’ve things know – never. never looked pretty would for you there. were said I’ve too. to that, we CEO We private, say. over dumb tons said has that, having the thousand When this we times, we it. public, were everything been been thing Now much at looked any That since say years, at out We’ve a of guys is when a

We advances things. have fit something To important the standard, for met to material that us a good it’s team economically works analyze strategically in the is we have not date, creating that a which these strategically is with things really shareholders. that and value terms found that and very of ball

presents And consider. growth and the but mean focused that that that we’ll are on to think said we’ve so – we’d I meet so doesn’t that ever we having meets just then organic – think would would criteria. deliver continue We something find it great do to results with and test, haven’t what And never if something date, to continue we I focus. so very been and itself that

Jeff Donnelly

Thanks.

Operator

Scholes question Patrick next SunTrust. ahead. go from will of Please come Our

Patrick Scholes

morning. Good

at calls Just apples-to-apples? a looking your guidance. guess, driving in it secondly, that? It I XXXX. apples-to-apples. may if versus want Is ask this a what And XXXX question I’m to, at cost on looking deceleration for And be that in G&A

Kevin Jacobs

Patrick. Yes,

at looking are You it apples-to-apples.

part does doing spend. It’s call most the guidance Our for we for down the simple. in and expenses go G&A that incurred it’s to the transaction pretty last year

Patrick Scholes

question second quick Okay. If I a ask may here, regarding…

Chris Nassetta

stop the second to It’s hard question.

we guess, got problem. I So, a

Patrick Scholes

had did your end extended negotiations, there negotiations? as sort on Harry pushback far as cancellation you Thanks. up Blame some for the rate that here On had that I How heard policies. corporate for been of one. rate Curtis the

Chris Nassetta

low remember, a twos, reform momentum. expected. is of pretax sort we consistent ended little of started It all get before in that incremental this and And bit done what to the up which with the was economy

I it few put it. think and kickback raised where explain But people that’s know I ended dealt a lot I them So I of that mean, material. we it little customers. have you said what with it, to came one groused people That’s they me. teams, we a did sales when it on talked but a to up, I’ll it why of thought. not I with when were I our that, about talked up. not understood doing this, it. mean, We

Patrick Scholes

Okay, thank you. That’s it.

Operator

The from go next Citi. question will Rose be ahead. of Smedes Please

Smedes Rose

ask most of by year. you have RevPAR given does about for And that X% but think that. through environment, the just any I thanks. you in kind your results there are fees? thoughts – growth this of U.S. cost lot on you U.S. you, And wanted the coming driven that impact kind they’re owner’s that do of about around how to a And your around are any do talked Hi, think a how system? incentive maybe margins

Kevin Jacobs

mean, I Yes, Smedes. right. you’re

for so operated of touched frankly dynamic results for is in portfolio, been owners which is us given the most and by that sort a RevPAR outside the our is have and but as pretty driver for course, actually existing growing, owner’s stable. those our the us but it’s of which, of has for terms the it were frankly, that IMF and return up, house You those, IMF our shouldn’t of margins gets way ownership us, difficult over levels a U.S. or margins driven for at it does U.S. on of not to house outside at be XX% most – cost base grow and for margins of and level, owned been both of overall, I that XXXX mean, impact. not was and of IMF margins growth the profit you’ve IMF us. the in meaningful a I and stand of it’s recognized And from not priority U.S. meaningful mean, well, the comes participates XX% behind just is – profit effect

Smedes Rose

that Okay. in look did buyer flagship you potential has it’s curious just to to And media I a linked property such a the policy. just mean, you, made been too the that’s of want your would ask Waldorf, often since project, involved to timing have I which get Blackstone initially that time investment? it? your a purchased from the you one-question scope do really mockery sort – Anbang of of of for of buy the any with potentially the How seems Could of asset? sort kind that whomever would make and economic not think you moved about

Chris Nassetta

Well, of it – on. all, complicated on the going that’s one, The there I’ll Waldorf. but take first is activity a at

to demolition moving heavy would on. We’ve building, walk were has is Anbang see in forward. and that going If that on been you you had…

Smedes Rose

is though thought what initially it or seems like… with on it schedule you So had

Chris Nassetta

what at going not The they’re what as far to is telling stuff. out planning us, yes. done of all and that. it’s – there of bunch heavy they’re moment Astoria. said They when at doing. can as with they’re include not, that that does that accurate, it Generally, on demolition. My to sell is they I it And – understanding believe move to is in comment us. least that with rumored intend a are affiliated can’t have things forward least Waldorf as we’re this Blackstone is it change, At the do them. I they They’re

moving those what bunch for trying I’ve world. a you on. ask assets of to the a different Waldorf do, have going to us one is you But in question forward If that my understanding moment, the work and notwithstanding sell them they’re they’re going tell fact, can the of around is they from as them. and, said, not At Anbang,

agreements the we strong We else, have the a there will with run it’s Anbang, whoever, them. somebody If well the we ends that have that property. for of with in very very up sense if be that’ll with position agreements in are the protected with record it

Smedes Rose

Okay, it. thanks. Appreciate

Operator

ahead. will Please come go Baird. question next The from Michael of Bellisario

Michael Bellisario

and scale Good maybe which size for of growth, go back cognizant morning, But that you to and big about a net of think unit of existing today’s kind act? that you being want balancing tough and diluting supply and also operating everyone. topic owners, you them in not just balancing Chris, are of kind obviously investors kind new driver focused their think profitability on. about with is how environment, to how

Chris Nassetta

in particularly we world, ownership I XXX% real much our no pretty you coming that world. the take of it’s that timeshare, growth as one estate around is might seriously given awfully from the a but community Yes, capital-light imagine, mean,

work, in to of really So perfect, create okay? it’s sort and going work are about I’m meaningful really going in to Nobody in thoughtful market is, lasting on that it work process are are to owner. each owners them. that market. product we’re adding impact many that those it’s Thankfully existing we have work very if don’t making – in we we doing whatever any have And markets, they with an project whole we that And say where a we not owners sure where present individual hard incremental markets but in is and think with we are we we’re of there.

adding bunch have on away And they’re a market. analyze deals development debates our lasting in to owners, it’s to understand to it we have going all analysis we mean, it’s a sitting basis. inventory But the a we that this going own theoretical very of then work with in if do so we do walk deals bunch not I’m and And is be around detrimental we table different them it good for their conflict away to teams, that impact, in and do a we and whole and at regular where impact. think whole do of from we I walk time. really from

Michael Bellisario

Thank helpful. you. That’s

Operator

question be next of go Cleveland ahead. Research from Ciepiel Company. Please Vince will The

Vince Ciepiel

Great, thanks.

other hurricane benefited couple from So last events. a and inauguration, RevPAR year, domestic big

calls, on as industry those one-time due mentioned as a think lift from prior had I that didn’t the maybe you exposures. maybe much as to events you whole see

on into I So from you you’ll in lingering what a those stab then, can how guess, do move tailwinds? have hurricane? inauguration? a January your quantifying saw, was then And last you at And mean, X.X% guess, lapping benefit XXXX, think early take you maybe my the you I in year, question is that based I as the

Kevin Jacobs

prepared in Kevin. mean, in take there that events. XXX Yes, U.S., to mentioned related the points It’s I’ll I I remarks was think in last Vince, the I quarter year my this. basis

bit a impact I a macro going was it’s to a all basis think or the basis, XXX of it January baked D.C., year even over year, affect the of in guidance. have that into overall little last overall. not on certainly but maybe inauguration points And less an Early for that’s our big tailwind. will

that the basis mention little bit underperform able some occupancy on not a on are So already they’re versus brands right? did we go as versus an – that our industry these have events full, do a to effect us we to growth RevPAR when of much drive so STR. And of causing because has

our baked all year. that’s this into So for guidance

Operator

and ladies gentlemen, any And closing conclude hand session. I back like remarks. that will Chris the our for question-and-answer would to Nassetta to conference

Chris Nassetta

you think today. for rest forward everybody, the first after update to of Look how the give you with to an Thanks, about Take up quarter time care. catching on we year. the the

Operator

lines. the for At Thank you attending concluded. Thank has you conference presentation. this gentlemen, time, you. Ladies your today’s may and disconnect