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HLT Hilton Worldwide

Participants
Jill Slattery Hilton Worldwide Holdings, Inc.
Christopher J. Nassetta Hilton Worldwide Holdings, Inc.
Kevin J. Jacobs Hilton Worldwide Holdings, Inc.
Joseph R. Greff JPMorgan Securities LLC
Harry C. Curtis Nomura Instinet
Carlo Santarelli Deutsche Bank Securities, Inc.
Stephen Grambling Goldman Sachs & Co. LLC
Shaun C. Kelley Bank of America Merrill Lynch
Bill A. Crow Raymond James & Associates, Inc.
Anthony F. Powell Barclays Capital, Inc.
Robin M. Farley UBS Securities LLC
Patrick Scholes SunTrust Robinson Humphrey, Inc.
Rich Allen Hightower Evercore Group LLC
Smedes Rose Citigroup Global Markets, Inc.
Chad Beynon Macquarie Capital (NYSE:USA), Inc.
David James Beckel Sanford C. Bernstein & Co. LLC
David Katz Jefferies LLC
Call transcript
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Operator

Good morning, ladies and gentlemen, and welcome to the Hilton Third Quarter 2018 Earnings Conference Call. All participants will be in listen-only mode. After today's presentation, there will be an opportunity to ask questions. Please note, this event is being recorded. At this time, I would like to turn the conference over to Jill Slattery, Vice President and Head of Investor Relations. ma'am. ahead, go Please,

Jill Slattery

Welcome third Denise. call. XXXX to you, quarter Hilton's earnings Thank

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

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

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

and our reconciliations call This current morning, provide website discussed of for find will Executive Chief President and the and GAAP operating to of the Chris in third overview results Nassetta, company's can our our in environment our Jacobs, our financial outlook. expectations Executive Vice update on an press today's earnings review provide President Officer, quarter will Officer, measures on Kevin Financial at You year. our the Chief then ir.hilton.com. an non-GAAP and and release

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

Christopher J. Nassetta

and EBITDA morning, Adjusted Thank exceeded was another We're expectations. pleased at strong for high-end you, to EPS Jill. everyone, model. joining the Good our report resilient our quarter, thanks and us range guidance business today. driven of by

disciplined strategy X% our share billion the we shareholders cap We delivering have market strong leading dividends. increasing continue This long-term of to increase shareholders. or with setup to flow. value approximately continue returned industry-leading more all capital and form growth, enables deliver Year-to-date, net free than of unit to allocation our to a premiums us share market $X.X cash buybacks and coupled in to for

X% grew calendar were with transient for system-wide and second by corporate transient X%, essentially third disruptions driven and than remain up trends favorable rate event RevPAR weather-related to weather from in Accounting Leisure shifts. forecasted, impact estimate group meaningful solid industry was holidays business. softer Broader we quarter given steady. RevPAR fundamentals and quarter entirely third RevPAR continued results, and a strength Turning gains. impacts,

fourth but For issues to due quarter, expect remain fundamentals to the we continue weather comparability impacts RevPAR affect favorable to to results.

updated full-year X% X.X%. Our guidance range RevPAR to is

the positive, markets. continued fundamentals XXXX, positive to to ahead indicators with in continued international together strength This, GDP Looking in lodging strength suggest with in U.S., indicating forecast lead remaining macro decelerating supply growth demand. regional should growth

of areas on forward. support increases. up year-over-year next where better have in remains of the early XX% business, healthy for rate And mid-to-high books. group negotiations further business we nearly show corporate Additionally, digits, the visibility, healthy Group single going the with year dynamics position

As heading a X% things feel of expect and growth XXXX with to RevPAR into result, to good we similar year, trends about this X%.

several up XXXX. segments XX% on development X,XXX and of disciplined with the our Our remain growth XXXX we by quarter. approximately rooms notable and unit global in where roughly our X.X% We deliver ended hotels, and to in both year-over-year, pipelines. net again and to of extends across to share driven expansion across record quarter totaling this capital-light XXX,XXX transactions to pipeline, sign U.S. a gain continue the third year track in in optimism our XXX,XXX also geographies, We Highlighting more we announced commitment our activity. than rooms increases outlook, international

resorts portfolio next including all-inclusive over our through by two strategic with double the nearly several to alliance years adding our Resorts, Playa all-inclusive Hotels expect We & additional year-end.

Las globally, in alike. feature Vegas with restaurants. and With having top Miami, hotels we the now Waldorf signing the private residences, announced Waldorf properties to owners also in and gain Astoria and guests traction of among Astoria Bangkok, retail XX will which recently continue We added

Additionally, feature we strengthening to conversion our We significantly our the portfolio. demographic existing occasion and Al partnership luxury a an that launched for broaden with three York increases elements Motto efficiently This further including across our offerings, local appeal could guest major we combines and Washington, look Motto development scale, and mind, Hilton. of several of urban our total growing At rooms, New hotel's neighborhood. in span our brand global among opportunities that innovative brands Group. and Habtoor Deals full-service unique properties stages to Dubai while stay Properties D.C. products. and each hundred brand full newest in micro prime geographies. the by market, converted Tokyo. London, various continuously hotels hotels presence to all City, solutions best Motto yesterday, unique estimate in designed, affordable With increase guests. and F&B lifestyle locations, is in adaptable will we respective across

and than across in members the premiums. million market extends members, innovation X.X year-over-year. more loyalty quarter, XX% areas, added resulting business and Our In brands Hilton Honors more up growing we share third culture new of

segments XX RevPAR of to with index account growth. major occupancy. the approximately rose Honors million contributing system-wide now roughly premiums System-wide all XXX in basis quarter, members Our for XX% regions and points nearly brand

World's This list campaign been team communities. Hilton, consecutive trend on year with of Better. Great for recognized prestigious of Expect this third our Best be expect members, we've of number guests, companies. Our global very to Hilton the the a to continue our the portfolio Place pleased of launched fastest-growing recently, the we commitment accelerate booking included largest to Most on list channels, rollout third our remain marketing end Work named is ongoing owners to-date, our Workplaces. the of I'm we and quarter. at to X web-direct their Expect further platforms

Purpose this line to growth ahead with next commitments. second and Travel recognized a of macro we We're balance in Overall, look North top to confident as Jones into leader year our the year, bottom for to continues And Dow Additionally, thrilled we and continue drive row, strong into year Index. our named drive the for to as Sustainability industry in expand America to environment the line remain were global the presence. our be an and ability favorable fundamentals. we to

a free drive generate our a cash continue flow result, to you. give As outlook expect and on returns. significant forward. turn the now, over call to we detail I'll the Thank shareholder Kevin results to that, to And bit going more with to

Kevin J. Jacobs

good exceeded and expectations In growth a prior continued morning, system-wide quarter, modestly and X% versus International growth. RevPAR on the Thanks, RevPAR Chris, neutral U.S. to basis. year grew the everyone. currency outpace

from X% shifts led greater-than-expected lower modestly disruption EBITDA was Chris anticipated. to our of Adjusted high-end growth million than top the line guidance and As calendar year-over-year. increasing near mentioned, range, of we weather $XXX

expected Our high-end the $XXX Diluted was cost our license was high-end better-than-expected and of XX% of for million, largely quarter, earnings to share management performance items increased XX% greater In discipline. by fees our range. guidance. at fees $X.XX, per and exceeding to driven the X% the franchise special adjusted

somewhat Turning grew and outlook, quarter softer regional and group calendar-related was disruption. occupancy, transient leisure to performance transient and solid. RevPAR our Performance given weather third remained comparable by X%. business tempered U.S. Corporate

of comps versus the the mix U.S., growth outside grew Caribbean. leisure a fundamentals, across trends market by full U.S. In partially For the the year, X% quarter RevPAR difficult X.X%, of the corporate storms Canada forecast third RevPAR offset from we of and across X% prior year. given between continued year XXXX, transient given and strong last good Americas broader and strength

X.X% in Europe mid-single expectations. For grew with range. Cup, in Strength full increased region in related the points year the basis coupled our XXX Turkey, largely the XXXX, we RevPAR demand digit ahead expect Russia RevPAR results. to in in in quarter, roughly our the World drove of

the the led imbalances. grew to ADR RevPAR UAE in strong business expect the supply the modestly trends and Performance by increased softer demand mid-single properties we the and across in volume for resort Middle East Africa Dubai, by leisure Continental and the an RevPAR and in UK continue improved offset For across in digit with grow full Ireland Europe and Egypt. group and outlook Europe was strong region, year, to range, given In in quarter, X.X%

to RevPAR in XXXX, Asia industry For the typhoons driven leisure gains. single-digit the by In as slowed quarter full in market grow growth the up robust with year strong region, in China dynamics conditions expect the remained growth. Trends share region X% in weather range. we increased X%, and Pacific and low RevPAR RevPAR

For which impacts. accounts full of Pacific year in XXXX, Asia for in we range, continue China XX%, growth with to expect weather-related single-digit the RevPAR growth around for high the RevPAR region

primarily to for a X.X% billion, at and from and for of We $X.XX. the with of XXXX, year-over-year the RevPAR $X.XXX EBITDA billion EPS, line Moving growth guidance, year $X.XXX midpoint. third representing beat, for diluted quarter X% with to offset expectations, prior between special we to adjusted Guidance factoring some X% in of of adjusted expect forecast items, $X.XX increase is full FX.

quarter, fourth expect the of X% between RevPAR and For we growth X%. system-wide

expect EPS, of million Please repurchases. to share that note our to not items, $XXX for incorporate million adjusted ranges diluted We guidance $X.XX. adjusted and incremental $XXX EBITDA of $X.XX special do

cash dividends Moving million. to paid share a $XXX bringing on to we during capital of return, dividend third year-to-date quarter, the $X.XX per

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

this in for latest our limit to the the billion question one to original you can open and details to expect third guidance $X.X dividends. our this XXXX, on of buybacks in is you related of morning. we speak billion For to Denise, your release any to earnings ask can questions results that We'd question. and morning, with we form have be to earlier one now This first We $X.X have. ranges remarks. may our we line shareholders so prepared between our we found question all like completes return and and like Further issued that please? the follow-up yourself would you quarter

Operator

Absolutely, Mr. Jacobs.

begin now question-and-answer will the We session.

from Please Joe question JPMorgan. of Greff ahead. be first The will go

Joseph R. Greff

Good morning, everybody.

Kevin J. Jacobs

Joe. Morning,

Joseph R. Greff

you then early, from have is up, after then level terms to inputs? you're corporate XXXX Chris, or I that follow-up question. how between question or year transient my that non-U.S. talk either regional for it's And much some property Kevin next in leisure? but ground how you U.S., commentary. broadly, I and can RevPAR of quick not first my And growth so of of know question group just about incorporated relates can your about and talk seeing surprisingly, a

Christopher J. Nassetta

the happy call. of could I'm rest this to take that. do the Wow,

would we bottom-up. top-down imagine, you as year, looking, of this go of year, process time through So, a going and every

what's we but of of having world of our by macro a budget view, trend the in the sort a start from point of also think, I a micro view regions. going on view point around various process from broadly

teams a then we process. with bottoms-up And teams. and our have the about of We budget lots go and granular commercial in leadership discussions regions very

complete XX% hotel-by-hotel are While that does look we're we very think with not complete would that at much process, I a and next a year. to us process, we're with going region-by-region we which say give produce what

do range and it's the outcome midpoint, of you, very point up so point so aggregate property-by-property looking this that a broad early, our process the result as midpoint, what and of is you up on the forward the around is the just we're range focusing fact of that we're much and And a we're a given in a pointed XXXX time very that then effort case give teams. analysis would much that's takes and based out. and by the on that giving, give lot result October that typically XXXX, a Important of note, of to region-by-region of that buildup in fairly in to and down we X%,

half been supply numbers at down I comments, that second In particularly and of both few to backdrop the and that That comps, next become against of will then, at and next you last year. year tick getting helpful. those hotel a are correlation relatively to we very think the be I by much for One, a our U.S., Obviously, forecasted look numbers it, of weather we're has going holidays point numbers, year, the segments, broadly, which seeing looking they the rooms things. to and same consistent the expectations are about the this be U.S. this year. with year non-residential related the strong, in again, reasonably across to historically. it U.S., the is this And strong will highest then difficult have growth healthy for the said it fixed global the they When year. half all we informed, experiencing view, macro impacts, from in investment next comps my to are both in way that in will easier, supply strong major demand think segments. second think GDP you that growth, view, when the is current year, very in be

for holiday best all we you to we weather If what's from you business X% which, saw anemic X% can up neutralize think, now, growth transient post then to going and next the to of year, in reform, is right the tax into see, sort of X% impacts of happening range. X% to and sort like pick continue

the transient we remain third the in Again, leisure we were everything corporate strong, and negotiations where seen quarter. in fourth broadly are X-plus where have positive seen for our year. X% accounts range. you've going and, weather position rate, are seen That's with the time We on percent by X%, the corporate into don't going with when strong You've do pace steady that supported some strong great, quite And think year our last next to think group and this group to this stronger supported dialogue frankly, special X% are year. been into in it. and that's When then sort to trends by I the the around remain think, been about relatively things are those range. and as big quarter. have and what and think volume conversations going and of all been drive a seeing those ticking it you've neutralize our bit, I've that both else, that changing don't we little that We think the have is, we position, than I fact we at that consistent changed incremental supports ability very we as a visibility, has talked it, about up

where I not next our business suggested the papers, year, negative look moment, trends from the bunch we've at together, then I a So, aggregate of up, growth What put same year, watch again, I through it publicly, at and walked the all and forward that at said our And what I've it producing is, on And that times sentiment we out of equal, look I this there. we the just that results have, those to there is, all of last it that appreciate when out. look but a feels conditions next but this like year that's reality we I and delivering otherwise we the this, lot realize should a be what do news, macro we think, come and is property-by-property similar when it like, store I we both read very today it's us the so also NUG does that. reflect. being year. and we is it call feels standpoint to the The it growth. at looks reflects things and

best business we what we looking that's we're a at trying scientific in can. in trying – the have to give you way we're the perspective as so as And

U.S. didn't there In only think, I terms international. question, of, I versus the get Joe, was

think it's theme. I common again

our I in of but probably it to year points? be rollup Europe, modestly while U.S. going so the in when outpace the will because, materially in year and I we're less not numbers, with in is, be is looks year, lower. expectation lot group it tick base they'll and year won't it rate, is a like next off to for U.S. the like I will international and APAC little stronger year. particularly it to I think international any the growth, our lower U.S., modestly will your year say, guess going lot I U.S., My modestly a not the supply, same would And that be a next more miss quite U.S. this replicate Did out believe bit outpace our lead at of so it will, better, this is, it's little matter than the and strong – that. bit the will better; the modestly having will hard look a think, be materially, international in down be

Joseph R. Greff

relative thank And just in hit XQ them a what's Chris, the ago? comments. then, times you an EBITDA you've quickly, the or as to the referenced And offset all, as a you. prepared the No, couple XQ? quarter in of Kevin, your FX What was drag impact incorporated in FX

Kevin J. Jacobs

same. sort the In Yeah. quarter, the it's third In the fourth mid-single-digit so millions. quarter, fourth about was the it in quarter, of

$X that FX. by – down the of So, bringing the if full coming midpoint million take, to we beat down it's majority million, you the $X year is

Joseph R. Greff

Thank much. it. Got so you

Kevin J. Jacobs

Sure.

Operator

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

Harry C. Curtis

morning. good Hey,

Christopher J. Nassetta

morning. Good

Harry C. Curtis

maybe drill little down Just regional to bit wanted question. into a more

all, to any economic if probably in slowing, see be in what are XX as the months. X evidence say, pacing of for First price next, as there Asia, we far seeing were you to of global

Christopher J. Nassetta

of seen, whole haven't We Harry, difference. a lot

at look looks make drove I to think that. I well, scientifically, can cooled a off just numbers, there they're on going But quarter – You it's that it rightfully Asia think, then were our not say, in I excuses, little things think like – they're bit. third

effect affected Southeast of You typhoons some events bunch that – had other one-time meaningful a in sort affected of Asia. affect China, in Japan, a that

it. the world when down, think the that does in China's papers, those what was underlying a of is slowing sort stable. So, I economy lot. third of, we China, around said, I look said the we basic driving we happened much read the as Having it that, just in we're appear like The the things, at are world, were trends, quarter, relatively are

In the when higher bit that is maybe we up as – that would a example. and year sort of certainly into thinking. Asia of lower an of said Europe, not some our growth, words, being a driven maybe expect we the have keep other of China in the our some this so, expectation by to in finish able I range tick XX% U.S., pace quite built to And

next We are assuming something lower honestly. year than that

context an it's that we any I reflective it other the put view, though X% just China, seen is think, we knock-on going of slow in to a point reality be from some meaningful impact weakness. trend in be should there you fact haven't the than in seen third effects. the sort to of budgeting even told economy I The haven't quarter, or X% is of underlying to that

So but that we've about reflect a not Pacific, year. the expectation numbers Europe, in is really largely nearly position – early it's over we much Europe China. just great in group the tried cetera, Asia by the as in And for And what there. degree, we're I a to a same is group having driven talked but et is to have of business good

won't I if think the a we've conservative, you growth quite to assumed bit rate. be just will, have that we

reflect like parts core slowdown So, of of that. of but in terms we in, the the real we've global to of have in not seen seen that signs sort like we tried have business,

thoughtful We into seen looking not reasonably it. about conservative are to of year views, incorporate we but to some those have trying be and next real-time

Harry C. Curtis

indicator? is a right, is there are it What about needs? time, you've And let's they My travel, been what the with reliable year's – with conversations them reliable is often And is meeting of back dealing how a planners been next having sense I'm a question telling and you long good. any of they as corporate Very to for demand get heads you've evidence are forward come trying how U.S. to of pushback?

Christopher J. Nassetta

with. so I XX% on we in When you heard more way into you corporates, everybody is they're know – mean, the the on have think created side, not psychology some I good they're the have not going and know because of equal compared here biggest business, group to And said special meeting until and they talking they're that's of year to pay mean, and deal optimism a it a said I people the right to meetings travel lot All the but more answer for pay sideline a suggest keep want. and as numbers thing. of pay to I going we're But those planners the more. it's at perspective. they're by business for an willing that's of should. we I the our the only say would corporate positive. companies more rate ago. willing what are wrong. the to the that broadly we increasing they're is side, to they're they

sitting that economy just again, is all I and positive but the built of Pollyanna, want be assumptions economy, in So, are chugging the fact to any when year hang of that it and more the along, keep to to mean, would be of judgments positive in was U.S.-centric which into I way. ago. global our is, think I think of on in what based companies have been don't not other case to I the racing the say I all are obviously, hard It going conversations those the think a the positive, stars there quite but guidance. that's But U.S. here than people incrementally

Harry C. Curtis

Thanks Very Chris. good.

Christopher J. Nassetta

Yeah.

Operator

Santarelli Carlo Deutsche next ahead. of be from will Please go Bank. The question

Carlo Santarelli

thanks morning taking good everyone, and Hey, for my questions.

Christopher J. Nassetta

Hey, Carlo.

Carlo Santarelli

discussions bit the the demand in has pause? talked that changed kind et pipeline guys China, of and/or give guys anything cetera, development you're the little in of side, cadence what about You terms of on the seeing you your respect ongoing side but a to would with any

Christopher J. Nassetta

it So really. mean, in in something XX% if it to the the getting one why we're going it's and everybody deals done we market have – I talked to that of on think, factors twice, in the XX-and-change that's side fight construction supporting that. in U.S. Thankfully or get like okay? under happening, macro harder the we for getting the was it's the the the fundamentals of U.S. rooms I down stands reason supply about U.S., I is Not of

it's share, it's weight, fight trend that – say the harder the getting when I deals fair getting over our but would in line continues we're sense our way get more So done. but than getting we to

we will signings down signings down will record hit will So, in little another off a NUG one last to in a go little little getting done. bit, world down a this of get go a bit record the even starts the bit, though year, U.S. deals in the will it's harder because year, go

So it's dramatically getting to getting of is don't sort quarter it's the to since or think is the it's cost be mean, up. labor think is up, not I – not end XX% going incrementally different, – the but I it'll materially the it's increase picking going Inflation build. last up, projects definitely harder, a build cost We by year, of in of cost why?

you're direction. just of tightening tighter, a wrong done. moving seeing Interest bit the turn a it's little the bit are rates and credit, harder bit to not incredible little of get a wheel things little in little a While – are

a that's making because you the it adds So, a in it think time – the this that around keep allocated appropriately place. big supply remiss the we're statement. delivery the all resources And supply you'll going why next we've world. U.S. a again, that we're record not anticipated have and to And signing going down I and it's to long go great NUG flows I reverse. going our of would be up, following to news up harder is reason world for go it The of takes cycle see and is record and makes the and year ebbs to in seeing because is year the down. deals

so this And up. U.S., in while picking markets case other market are one is the slowing,

markets slowing. up. up. building intelligent how we continue I keep – add net at that's that pick itself. more year ways to resets market continue continues fact of all sort the in And be deploying hit than this can the get brands going, U.S. our and think Pacific the Asia And So we record pick year, our at in international we'll you better Frankly, whole growth rooms is to pattern to have continue we system a another relationships what and and our notwithstanding did to better sort of slowing do we so of next until until to

Carlo Santarelli

Great, you. thank

Christopher J. Nassetta

Yeah.

Carlo Santarelli

in has of been very your grow anything from if possible, environment, could, would consider develop Chris, changed and always in where In when kind to And of then, you the kind perception views firm ability your within. M&A I you've your of and acquisitions? on current and

Christopher J. Nassetta

wants no, versus the have in No, same. terms – XX the answer is been strategically short really always the have filters I've no. years Does filters it the buy having well than work remained can The the we without something for growth to And those growth. organic portfolio like sense can way does launching lenses, brand a everything, we can we're everything here, it more exactly literally have been we think customer that, made way our not versus really better we we there doing in and our brands filtered do by Hilton it say just to it anything of all I we yesterday, and what do out and on at it filtered do as Motto that's do accretive – create has to-date own can the and and it time, we through almost that look we where really value? the what

It philosophy I right making that decision. to-date with wouldn't that and pass think our end decision that filtration keep something hasn't M&A the it exactly not what system. saying been. say never. this it's we remains never I'm because through has been always I discussion So,

Carlo Santarelli

Great, sir. thank you

Christopher J. Nassetta

Yeah.

Operator

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

Stephen Grambling

Thanks.

environment tight? in weakness of stock you remind the Carlo's is dynamic the thresholds? to in to changes And us I the evolving? getting then And broadly, guess, market to quick and you that your terms I And deals? remains to can questions. current more capital the key given of leverage for guess, deals incite you competitive whether any that's need I to first, follow-ups done, it the would Just, couple just change and/or how a seeing anticipate if Thanks. approach second, allocation money guess, your relates are as

Christopher J. Nassetta

I'll occasion have did is, our deals highest material U.S. because the less market share way second. take not getting a we do. Kevin first mean and weight compete. I'd don't don't fight average environment, – get little the to and as there say, we competitive sometimes occasion share. doesn't we brands highest is said, in mean, done, Reality when market any change The the the in I I give bit harder but That on do. we On we the over way.

in the I'd say of the way, of as not Kevin, U.S. capital I'd the sort to the deal talk way. terms about say have click much not no So, rest say gotten allocation. any material world, really on along I but in incrementally minor so things Around there. a change, tougher would usual, in

Kevin J. Jacobs

Stephen, Yeah. nothing X.Xx. to And really changed. our allocation, stated mean on then, Xx range I has capital leverage is

get basis saw year. we the kind You top-ish, that trailing range on this a to maybe earlier of transaction higher a little us bit the when HNA did

to thinking the We'll flow. continue lion's distribute share of way. about same we're So, our the same cash still things free the

accordingly, for EBITDA the of which noticed share yet that remarks dividend same, the nothing changed our means buybacks the the increase the but that as has company grows, prepared will really amount strategically. from available You we're keeping

Christopher J. Nassetta

stock at the like at Yeah, like price. we this we'll it better Obviously, $XX. even

Stephen Grambling

Great, queue. thanks. the back I'll in jump

Operator

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

Shaun C. Kelley

morning, guys. good Hey,

is release the morning, unit this actually or I Just in you how guys activity the a conversion think, around side maybe becoming. wanted growth in important that and on put comment to press ask,

at is much factored So, you color is hearing point seeing and that for your sort cycle? bit off, development us the more a little there? or you So, what how growth then conversion on of accelerating just your XXXX? from in are that organization And could give this into net unit activity front first of outlook

Christopher J. Nassetta

a Yeah, I a more. would far we've question. I good that is technically conversion uptick. accelerate acceleration, what say activity expect minor will much of not so seen

in we year, be when I NUG XXXX finish of about think the our conversions. will probably XX% do we'll

next a of into bit picks We're another go up. business for year. goes I turns, pretty an our this of a those next conversions, what's would year. when X% heck up. uptick is of sort to X% uptick a lot a not for think comparable I conversion XX%. our depending what a We've to seen when be things think year of our on, expectations we think, year, But see about see on good is little because is to cycle tough, built this is which outlook ultimately going whole gets numbers of activity expecting, given Eventually countercyclical, percentage you

in one never the in the We the that have days, and have conversion weapons tools more delivered sense than DoubleTree. brand less old arsenal had more and we really in we that almost in

of and Now find brands, we Tapestry, bulk the you brand have Curio, those but that where will in luxury is DoubleTree soft addition other it. the to coming soon be brands

the comparable So, numbers we year. will eventually see this a as to built don't think soon tick year I into level real up, next

lot a month the to, So, that a of sense be lot it it's of a obviously, may year XX% of construction. move is the here bank it next mean, or under process. that gap with there, or having in two year, down but filled, I the next in it in boil is you when

Shaun C. Kelley

Can for a it number? of two years XX% where a lower high guidepost you level, like of conversion that or three just give directionally, how or Chris, was Was a sense, the just activity ago two and much? kind to that at ago, years was number kind us three as

Christopher J. Nassetta

countercyclical Great out maxed XX% fear very high been a we I on was Recession was in XX%. Great the running the a markets. I in the XXs. smaller mean, we've of base Recession, lot No, like the much obviously, big opportunity, there of mean to a where out coming and

been I expect get to that think, but would level again we've that this of wouldn't we around sort I running level.

So, think it's a But big ease. with this feel this fair they've a otherwise. so them is certainly of I I got of listening, been us. don't course, like of to a – like something team, it deliver to have development pull knows to to able My doesn't lot don't do we work, they're typically if want amount is feel

Shaun C. Kelley

Thank you helpful. much. Very very

Christopher J. Nassetta

Yes.

Operator

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

Bill A. Crow

Good morning, Chris.

Christopher J. Nassetta

morning. Good

Bill A. Crow

corporate ADR of for negotiations. but you next business, year. only could XX% it's wanted I saying point owners know critical see finer growth put little if I the to the it's rate a for are on At rate said something kind of the you or it you hope then point, down said you incremental demand to you're broke you healthy you said increases, increases. and about but one Then rate seeing occupancy side. see some

X% So you... X%? are on of What looking rates, the to looking to kind at X% I'm just curious. are we Are at X% we

Christopher J. Nassetta

year to Xs. I to you greatest Right closer thought X%, to last looking in X% argue X%. it looks like than we're It yesterday but the up X%. X%. talked looking at it update. – like We latest I X% mean, think feels to at X% X-ish, X% ended low X% we to and the I up could really to And them it to the ended were teams now, think I to get X%. like

it's XX% but obviously a of again, the business, good Now, indicator.

Bill A. Crow

you capital opportunity for Okay. return, back billion of $X.X Kevin, on maybe different your sameness more year this we the year billion And assume in on but obviously, to to of versus than commentary given, the capital metrics, this should maybe the return? then would year you next Chris, $X have, buy had

Kevin J. Jacobs

think leverage is to think, about the the Bill, this some – I Yeah, bring way around did next opportunity. into we it year HNA forward

year unit just leverage if guidance, bit, obviously, next brought we cash RevPAR, careful higher around re-leverage saying you you to bottom ought but this the cash not forward to bit what So, but we're a this as the will grows free trade-off, year. HNA is flow, about giving We've free net deal. be flow. growth line little got than And the we're year take EBITDA little a to be then opportunity have

the for somewhat So, next if was would year guidance it logical the next of that midpoint to year. be lower were leverage this our than we hit year, to assume it's amount

Bill A. Crow

Okay, from Thanks. that's it me.

Operator

from be Barclays. will Anthony Powell of ahead. question Please next go The

Anthony F. Powell

position you on Hi, high up rate? that, to is your good group or detail being are more provide driving it more volume Could mid us and some morning. single markets digits, what

Christopher J. Nassetta

is like is I range. of say, the It ultimately group So it's in up, broad-based. in close industry the frankly, There's group our it the U.S. would although region, It's broad-based. one business or, to driving not X% one bulk

can being to be, we objective do believe that policies. Now, next perfectly we, that do as as some with of as believe has and We commission year. we scientific we into look

pretty – to to business commission bookings X%, to that change basically very for we equally it's policies, the a you the it's sort X% still And in of rate. as up, think as advance to we we it's pretty amount think, believe, this result some that do which good means good position about. the commission that yesterday real feel when we the show be going so is easily between was at of split and out business the Now, of but going split just looking probably we X% effect, X% up, well, the volume evenly back between and I it's basically is

Anthony F. Powell

it, quarter supply a that Got in this a impacting of is some and of RevPAR other of to demand growth? that service scale, that is the Is underperformed the growth the relative on end just year. higher thanks. brands or And bit component the due limited

Christopher J. Nassetta

think have those things. the of is supply Even and down, the largest think, what going more probably segments, that's you're combination Yes, broadly is I of contributor. you supply growth more the of seeing the growth growth. industry and it's seen I kind think the in a supply low I it's which, across of certainly

the of brand specific you even share. But renovation impact. some some grown in Hampton the the terms have I of renovation is at I mean, at if XX% and it. work other has going on brand, market brand moment But, Hampton think, that things on like under look the going We in has with that,

the is So, still outperforming it market.

broadly is market do supply incremental the think that in is is terms will of why in the be underperforming segment which that diminishing. area, to in I with

Anthony F. Powell

thank you. Right. Great,

Christopher J. Nassetta

Yeah.

Operator

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

Robin M. Farley

Great, thanks. longer-term one One, shorter-term and question. question

weekly of were about so you and When about I the to kind of U.S. little led there's group, come great bit be we you the guidance lower that so You term the happened I to to know first to I of versus other all my had some that. in a at a business in seeing said of off is half there XXXX. thought. is then short is QX it than talking next what data about know far, question on just factors look And if of you said not put hate October in was of also early in the but on next far? of wondering just XXXX – that October, increase don't so kind previous short-term you looks think, X% XX concern year's where continued so trends – and volume group if the what XX% rate you sort and is a it looking in books in days see U.S. maybe some than have you so you're like your the start, X% of different group for sort the the what around but I Thanks. of for numbers clear same in see out

Kevin J. Jacobs

Robin. Yeah,

continuation business last storms generated the just the weather-related events, from you're States, the for lot last residual of and seeing – a seeing of in comping still year, still over. weeks, other particularly United think you're comps last I of where the we're few that kind tougher year the

So, quarter. a our year third bit better the outlook incorporates for fourth little quarter than

still is that So, between that evenly and think in X% the about same, you're the in seeing about to of rate – some and show X%. on I up the it's same, And side, picture about group then I pretty volume half the the it's split think, between weeklys. half

Robin M. Farley

the what rate books versus asking or you Yeah, volume, a your year not XXXX? but ago and what about increases XXXX you and saw was XXXX increases for on level what I of group, have for

Kevin J. Jacobs

It's it's about about same. the the yeah, same,

Robin M. Farley

exactly you would group X% what the is a where were thought year be for ending words, it to X% other is in So, XXXX, up ago?

Christopher J. Nassetta

pretty yeah. comparable, That's

Kevin J. Jacobs

Yeah, comparable. pretty that's

coming we we a saying pretty sorry were and year yeah, question, digits ago, close expected, it's as of about understand X% Robin. X%, think mid-single in I didn't the sort to I

Robin M. Farley

versus Right, that about XXXX in where your came thinking and for means for XXXX? words, just other then expectations group how in

Christopher J. Nassetta

consistent in expectations. our came with They

Robin M. Farley

you. Thank great. Okay,

Operator

Scholes Patrick Please of go from SunTrust. be ahead. will question next The

Patrick Scholes

growing you. next question management business. at Great. Good or morning. you relates labor first seeing your for to are forecasting Thank costs What My year?

Christopher J. Nassetta

all-in think I as I the labor wages side. and about same same Probably on year. the is, benefits, to next think, Patrick, year probably which X% year, the this Yeah, as X% this about

Patrick Scholes

you number that group to secondly and number. And can you have give? me if number correct you. next store X% on Thank Okay, Do for you a that a not same-store gave year, wrong, same that's the X% I'm

Christopher J. Nassetta

that the make that So, anything impact being in change result to advanced What a do policy. sure I because of our we trying is was same-store. trying bookings thought being commission of we're to is system-wide was out of that about the filter honest

last changes think were finish That's X% or to I we is next X% year – we sort delivering it we'd be would've doing that perfect that's Pat, year. be. it, any too in year terribly isn't we to think which an without direct group bookings than – X% we intermediaries think what at reasonable. we we're out, look through we policy feel different science at apply this point when X% mean, confident is versus to admittedly, trying we to we're we're in digits, of Now why going equation tell growth is Mid-single the not to we where too at been, what arrive science, us where doing commission in not as Kevin terribly time where

Patrick Scholes

Thank Makes you. Okay. sense.

Christopher J. Nassetta

Yeah.

Patrick Scholes

it That's you. Thank

Operator

of will The question ahead. ISI. Please Hightower from be go Evercore Rich next

Rich Allen Hightower

everybody. morning, good Hey,

Christopher J. Nassetta

morning. Good

Rich Allen Hightower

again, negotiations discussions? X% of nature To you it's quickly the on would in follow the that up a recently more variability within you of those sorts Pat's much country, next included ongoing that range, the labor for guys there, impactful think then I ongoing just to union Marriott of how question given around cost little within but context year, is X% assumption been say to

Christopher J. Nassetta

negotiations unions, ongoing. are which I lot with going on we're of don't comment going on Obviously, the think a variability. to not

market and good a through with have We the market by relationship been unions sorting deals. they've

we had, that When so outside in I number, those less organized in he's... together, he's – Kevin's of workforce format, out. it's in of a ranges thirds Remember blend also third think deals that case, than a in two in those that range, that. is of you turn our regardless will end our up little we where it it is of

Kevin J. Jacobs

It's the system, yeah. whole

Christopher J. Nassetta

whole the that. system he for factoring and is ...it's

Rich Allen Hightower

of forecast pivot speaking can just, this in helpful. that's general, the be And quick if you return to then year, next year, another quickly that or – given whether Okay, much stock how may capital we also need how the dislocation follow-up of forecasts capital in be against not seeing may and you prices in as environment, kind return referred limits short-term those longer-term leverage the to? current a guys

Kevin J. Jacobs

to, I a we think, we Yeah. have want we if can significant pivot quickly. quite of mean, I amount flexibility and

Rich Allen Hightower

around or more that Any specifics just as comment? Okay. general a

Kevin J. Jacobs

No.

Rich Allen Hightower

Okay. Thanks. from me. That's all

Kevin J. Jacobs

right All thanks.

Operator

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

Smedes Rose

you... Hi, I thanks. when I did wanted brand new Motto, you rollout, to ask this Tru, think about you

Christopher J. Nassetta

Motto, come right. it Smedes, on get

Smedes Rose

sorry. Motto, Motto,

Christopher J. Nassetta

Motto. a have not MotoPhoto. You It's

Smedes Rose

initial you're to of brand that from owners, jump maybe start with that of with you're to owners your feedback can kind you that sort that is on doing offered rollout. developers us? I initially there sign-ups wondering I'm was any on share a current obviously, very did went to Hampton successful you think it Inns Chris, you and of Tru, this anything When then, receiving

Christopher J. Nassetta

to and wants about that loyal our by and the our Hilton. on most people about base Yeah. opportunity brands because we look, on And existing but glad owner similar It went one for gave important we we question. have new ask would with we We're launch Tru. a and similar we brand. our want very talk we be to point it very has largely loyal all always owners to it. now Motto nobody new are, out, – as about the very question very approach them Motto with to a to our happy, we you're us to about you our Hampton brands them. right seems every thank I'm do Doing been to I'm and excited of like course, happy got talk a call and

but that of out there been cadre want the the involved going So, a has hey, this, work do of the brand. of on them not very us the shot to we you first only as say, have them to been with are development blocks in to,

deliver tick me talking hotels way, very how so customer, that out make in and it to make a sure always to will and customer design thing in the operate returns put to we to right a we with and that cost for owners them they'll customers work have to build they'll a customers in. but to the groups (XX:XX). owners. Let are stay that We're for figure no focus these as Otherwise, but for great the that appeal working brands closely cost we engineering have we'll we're to way doing the also

much of it's sort So very dual a process.

we with first doing that around brought world to so of of be very many existing that we And the and with deals great excited process. of the worked deal, are. those owners, it a and about but all And they owners part many surprisingly cadre not so of are not the deals first we're are

it of think, a these they complexity. six essentially, are I that Tru's have mean degree bit higher than we I deals of very by what longer gestation have period urban are nature We it's is, and little and the more given complicated

at okay. in Tru having Tru of prepared very here our had Innovation group be XX price about but we've remarks, owners it's in big, have I the will another my deals including thousands biggest because said of huge point be the I've will a hotels. We cooking, it's brand have conversations say, probably at. been based yesterday sort of will half just just a dozen we I a the done. Motto would launch of have the and be where we on ultimately, hotels, hundreds for Gallery, deals of as

afford us with so they is this where middle-aged are price a been It's for customer and can product things attract it's it stay or that an a good So them that want off a customers for be be in better need whether we to at they us to stay that that track they have young, environment more able can pretty with now a that stay adventurous product to a they out in to importantly, is a to point we not to heretofore and want great urban and this with we're acquisition, And base. great customer product to it's our great are we record wonderful existing I serve with think much more think start. way affordable have we they old that a of putting us. getting when will us. try other us make them there Even

first to we're complicated they the very very it. that So of quickly are we'll into on get tour you'll I be we'll to it able take longer start sort of excited But Motto. the urban I these together. to the dozens about reality. life think think next see and Hopefully, and year will take more bringing deals pipeline hotels a you of pull Again,

Smedes Rose

you seen Can have – change just you going point. in pretty you about still hit OTAs XX versus or Great. you to Honors that wanted is And ask then bookings guys of members direct I this to any ratio constant. at the mentioned million percent

Christopher J. Nassetta

quarter and share ratio good number the growing generally third quarter is our it No, OTAs in saw direct year-to-date, third is, we tracks were were what but channel the the flat. we

the before quarter. that's that our push rolling the and direct of started – that end So essentially campaign big we started on of at the book latest

in at direct particularly want So seeing we our not to we times, channel direct ways quarter do, with have right what work direct, OTAs, the we see, flat And to going our a more again want to direct much or with are want in price. in just that right which web we relationship channels, more as to what we is right third we're we're not in that's mix, more happen to growth and the work to the and trends can OTAs. want them and as channels the our don't the on

Smedes Rose

you. Thank

Operator

my Chad - question. The ahead from of next Macquarie be morning. taking good question (USA), Beynon Macquarie. Inc. for Capital go Chad Hi, will Beynon Thanks Please

is any the from in Is assets, I of pretty for the about positive of a one talking Chris, your anything below on these and is standpoint M&F just Europe Europe. group date, if forward, well strong what year ownership RevPAR? product they assets there the a in should kind this and a to Thanks. in really of, RevPAR quarter me, outlook, these XQ third flagship were just strong most you going believe of from else? kind are Europe reason in as Hiltons traveler down performance mentioned, performed there is or And why you come Just

Kevin J. Jacobs

part are a flagship also Europe that of bit Yeah, disruption bunch couple portfolio. take the quite this Japan Chad, strong of part other a of are Asia. interesting And Asia hotels in that still and was one, mean, in has there Hiltons of are in the though little even of there that I'll I are places typhoon, portfolio, RevPAR a Japan in from that of a bunch growth

in of Chad ought that quarter. filter fourth helped. quite outlook. that consistent the some portfolio, was trends which Central It's but really So the of be very Beynon (USA), in strong to - of a Macquarie Inc. you're the sort And through Capital course, seeing Europe, quarter, similar

me. That's thanks. all Okay, from

Christopher J. Nassetta

Sure.

Operator

be David Bernstein go will question ahead. Please Research. Beckel next of from The

David James Beckel

question. the for thanks Hey,

Hampton think give of since bit time on signings I you've China. it's updated openings the an update the on and Inn Can you been year? just in for us rollout a us little

Christopher J. Nassetta

Yeah.

well. really going is Our deal Plateno really,

done I and at this Kevin Jill we've I can me, point, fact-check XXX deals-ish. think, think

think XX. I we have opened

to of the open by more think expect I end like the year. XX we

hoping that about year. we think open XX I we're to think XXX I next and opened we have expect

in impact a that a effect is we cities China So great what with in product, tertiary great network it's secondary and want, great partner. pace. having which our with It's the moving building a at is

hotels. Importantly, is are The I these terms strong because returns performance of hotels our if really, us the deliver in on the don't stop getting we as that say, people, deals. really partners of results, building

it cranking. So it's think and very we going about keep to feel good

going where that mid-market class times, going of it's get network the of could to in build If on very And rate, with other a you the parts China, just a the growth can fast partner world, Hampton brands. and this as think try type we said afford from dissimilar we high because bulk phenomenon many mid-market so interested working. is about of the growth, you're to I've class middle what's not in the to that's as middle why and were with at see

David James Beckel

been them And relationship affected follow the Jiang any in with just that a the way? has quick or that your with, M&A development some agreement Jin involved of given up, has

Christopher J. Nassetta

hasn't. a it We maintain great No, relationship.

them We bunch in are a things, different about constant dialogue the whole of relationship. with Hampton including

I interested up, it anything, very changing way think in down. are we, it they and, if that as it's positive the not any in about one slowing it speeding are or

David James Beckel

Thanks so much.

Christopher J. Nassetta

Yeah.

Operator

will The be ahead. from Jefferies. go Please question Katz next David of

David Katz

all. Hi. Good morning,

Christopher J. Nassetta

Morning.

David Katz

cetera you complete on it about go just can know buy I the we're The clear but obviously hour, all How minutes or quite bolster which et seems a business you're little highest degree two of wanted color through which asset. away the soft from is the but I end your branding, places, one from brands topic, top high-end are about discussion and in Congrats. nearly I'd touch love that that end? portfolio to to the to adding It but that let's bottom. just different strategy. make you Waldorfs is Conrads, thinking of to complete very and the as to relates say, just back specific or

Christopher J. Nassetta

time because, sense disproportionate want to time in my difficult, Waldorf luxury and hit important luxury are I the and still it in the it. One, allocate our the couple a time luxury, about and is component business, important it's assets to We warrior that I much whopping or Maldives to dream bottom Maldives ago. you it going to aspire relative use free size and the of it's to of and is years luxury loyalty The the not, I effect for most ultimately using important deals not to and even think Conrad it's many going we, good think and the be complicated I be resorts done the of road want in world. so It's a XX important. in Whether standing our hard. And Waldorf able for they system they had or lot the line to a a of in how and a would be amount travel pretty customer that's about call We of for important don't reasons. around cash the Yeah, we road spend our question it really the in though get as nothing started on halo EBITDA the loyal on them handful if who and end of or luxury. allocate Bangkok, the a hotels. of flow,

with The taken out a grinding will Conrad you Hills, our because pipeline. discipline forward of positive the another probably to adding. There good adding fit some few that other if to net with today, on. out but been in we're hotels Waldorf so the worked have I over we've going properties don't about fast have the happen, time talk over growth Beverly in you unit And Miami, organically. think And luxury announced very Beijing, go with going or coming Shanghai, and we've many in things will about things one the those have that we alone, be be of important net more and great is and more time could diligently deal bill. to Amsterdam, that just deal today, in XXX it over on. them in I'll If And States and do, really in in in of on in London, that's open we United where having

we Honors, really XX unbelievably of amount great We've in XX reason the we're having having why We've That's class got both occupancy. that brands. got are making part assets Honors – we're progress. growth for pipeline growth in word And the of our customers. are think open. great tremendous well are I a these with luxury such resonating more

is All of this together. connected

do going other then the it will two. be add of certainly And guess Again, the a next luxury is soon time. it's But that soft luxury. eventually or I we business. We one soon, side other have start hundreds The to of couple year could one in the to will pistons lifestyle. be probably over luxury hotels. not it firing, will

Conrad properties I story good it. the the We a only time, and have opportunities. well. because of brands, add is one will brand much at think, with to but take system do incremental other do And not will it luxury and very and lifestyle we to and two so ultimately, And we have of of chosen Waldorf those and already a quality as can what growth size

just them have and holding of network all is market to of enough not a us we have so, like system. we've have good the really such on own of are to back got done out we or looked look fix my things, not. good that word, only because If and that place the go work tomorrow at lot a we of and ago, been that confident a honestly, destroy would overall lots could in We've possible, but It lot it's to and a particularly if confident, after through on you luxury that today quite of we're not me across really filtration could share scale not have economics we've have anybody at years hard average reality I it's practical made comments their but perfect funnel created. They the XX it said in really M&A, is it, brand as none our things problems The industry. easier, that would while sense. value back have make highest years underline available presence. you I effect be either going don't could brands you it And our trajectory a XX of of would you the

to paid what got is thing, working, here's it's we to which and but get it keep do it's will working. So the working. We we

hotels it some upper keep And next even, the continue will out. we four and in years, the not see business five so the over important three us. advances XX, or grinding really of you'll and And end for to

David Katz

today over follow-up that enough I think the if what on one you just you've but is And important it other segment look done, as can to segment, on obviously you. at think all-inclusive is broadening it's based Thank segment that a across opportunity that a because segment just or have particular available is envision could you good was you? an this do is time? it different How price you to to levels big

Christopher J. Nassetta

it's a important segment. pretty think I

but in not markets I only in at think gargantuan certain around the micro it's the the it's that sense applicable really moment it's big world.

it they're when think it's long a important had did I've Playa our base and it. had there Bruce. at lot good we a long – I So because talked with And of We our do did And sort deal reason very do and with a and I the could size a we've relationship we – it's something an said that's to quality of there they I with of on we that product to that customer at focused not in work this we upscale. Hilton. the we the extension in gargantuan look upper was decent want. it is we high we across upscale, Possibly there the at are you it was of upper really enough sort are Again, it wasn't said brand core but you think it currently, a with points, thought it of not do and moment could places markets it you do every doing customer that but – said, other not, wanted that customer opportunity we that bunch think moment base mean, can overwhelming Whether like with will relationship of upscale. our think all enough do. important they more think a are the of it's as different do We unclear, I go resorts opportunity. the are I as bunch price I our we a

brand of get sort there if into We judge to opposed being for Hilton of at think system, or effectively an it extension independent Hilton create real it, part to presence, its name we but the it's the that. premature just we whether enough us opportunity to will a as look of as own create with a to is

our an it to importantly to want types of redeem our pleased our we earn the weapon thought We in very are. we We customer think are is to please they profitability our and arsenal with a of segment enough customers to growth, our adds one at more that we want who to of adds it where it's were environment and it and makes, want that it And certain there says they stay present. points. environment all-inclusive that resorts important was certain

Operator

hand over conclude his comments. And conference ladies like Chris will session. Nassetta this our the I would to back and gentlemen, for question-and-answer closing to

Christopher J. Nassetta

up went Thanks. to is us. the our year what everybody. happen day. little little we time. great catching look line everybody has give bit a you We on with next a discuss you, forward We over to the Hope sticking and bottom going next with Appreciate more detail call. everybody of a Thank end to year on the on think

Operator

for has Thank Thank and gentlemen you, attending today's conference concluded. sir. now Ladies presentation. you the

lines. your disconnect now may You