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Hilton Worldwide (HLT)

Participants
Jill Slattery Vice President, Investor Relations
Christopher Nassetta President and Chief Executive Officer
Kevin Jacobs Executive Vice President, Chief Financial Officer
Harry Curtis Instinet
Carlo Santarelli Deutsche Bank
Joe Greff JPMorgan
Shaun Kelley Bank of America Merrill Lynch
Stephen Grambling Goldman Sachs
Robin Farley UBS
Bill Crow Raymond James
Smedes Rose Citi
Anthony Powell Barclays
Patrick Scholes SunTrust
David Katz Jefferies
Jared Shojaian Wolf Research
Call transcript
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Operator

Good morning. And welcome to the Hilton Third Quarter 2019 Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded.

to Investor conference Relations. like Slattery, to now President Vice would turn over the Jill I Please ahead. go

Jill Slattery

Thank you, Chad. earnings call. Welcome to Hilton’s third quarter XXXX

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

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

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

our ir.Hilton.com. find our non-GAAP You reconciliations earnings measures to release of discussed and website financial on call at can GAAP press in in today’s

Financial morning, our our the Nassetta, an outlook. of an the Officer, year. and the results expectations and Vice operating Executive Executive update Kevin our President will overview provide on for Chief Company’s Chris This our and Chief then environment review Officer, current third Jacobs, quarter will provide President and

their we’ll Following take happy your remarks, to questions. be

And call over turn with to the I Chris. that, to am pleased

Christopher Nassetta

everyone, for and Good us today. joining Thank Jill. you, morning, thanks

our results improve quarter performance. line continued growth Our third drove bottom as the business strength to strong of model solid unit net

expectations in of softer-than-expected spite Adjusted EBITDA performance. was EPS towards the higher end all adjusted exceeded industry of our guidance, our while RevPAR

and engines our points, Year-to-date, commercial basis index by Additionally, all nearly we’ve RevPAR supported system-wide continued drive across our our premium strong growing regions. strong of portfolio share brands increased powerful to market gains. brands all XXX

or drive of to X% $X.X to we of year. market dividends. we’re buybacks meaningful for shareholders billion billion, to in cap our nearly track cash free performance Year-to-date, approximately form full flow billion $X.X $X.X on have the and And to the return returned Our generation. continues

and in meetings. Asia. we X% quarter due softness more increased System-wide was which transient than quarter, by in below group XX in RevPAR company grew strength to the our expectations US RevPAR In system-wide the basis points, boosted

However, of weakening transient trends. across relatively and business to due following short was macro flat RevPAR leisure expectations,

fourth to we with consistent expect quarter, For the remain these conditions trends.

we a year RevPAR around expect of X%. result, As full now

to forecast. look it pace. indicator economic macro growth suggest year the slower all environment regions, a we make uncertainties difficult As but in Most next for major global to at continued

at we full expect result, be year a to As growth would X%. XXXX this point around flat RevPAR to

solid to continue to growth year. range, expect next net to bottom line X% the which in we said, to continue That X% unit performance support deliver should

call. guidance give will you more We our on specific next

robust and rooms in driver for of growth net Our beyond unit development value our year. our success remain to hotels mark of unit totaling track fifth above consecutive on roughly Year-to-date, story the growth opened deliver net remains approximately key broader full This we've X.X% a fundamentals. X%. continued will XXX the nearly delivering XX,XXX year

with of for which signings years. record the of XX,XXX over net end than XXX,XXX the At more remain supports record Developer strong expect we construction to of our rooms, quarter, rooms several rooms and of outlook deliver growth and US brands regions. another year next the unit and for pipeline international totaled growth XXX,XXX continued across nearly appetite our both third our starts

to In full for expectations grow prior are US, US starts the XX% of starts with the signings our the both ahead modestly year. in tracking and nearly forecast now

highest with than of Since a launching We our and the less the existing RevPAR XXX, openings. to welcomed in scale four Hampton, both and continued Tru X,XXXth Tru Turning premier has in index established mid ago as premium brands. years industry. our itself growth demonstrating the new brand XXXth brand

XX a the pipeline end other dominant XXX and Hampton years, brands, hotels. boast remains more our still XXX of of of RevPAR nearly segment. but a is After index one of oldest industry-leading than an its Hampton spectrum the player At in

we and are the in Shenyang the from London. announced our Conrad third Pedregal Astoria additions to included Cabos year reopening Midtown extensive and the quarter, Tianjin we in these Conrad open the the Biltmore more In of than Conrad in property the year, following this on Europe the an Earlier luxury track that China, Waldorf renovation XXXX LXR history. properties the in Los first our York and in Mayfair, Mexico, any grand conversion New

cycle fees our on shareholder trends net development diversified strategy disciplined world significant to parts returns. us around and demand while the positions Overall, think and capitalize our driving we maximizing all of the throughout

half pipeline over net continue good of next delivering unit growth to ability years. the our about our for X% feel With under few we construction, over

goal every world brand in resonating guests. for may for travel need anywhere deliver a Our have, is traveler any most they our to with the loyal

members more XX% basis In for increasing the quarter, than points accounted Honors Hilton of year-over-year. occupancy XXX

Key campaign to total Better with to Marketing new XXX our million increased along Hilton track Additionally, enrollments this Expect in Anna to year-over-year new connected Honors quarter like Digital and XX the hit and million Kendrick members on starring unique our remain Expect members. Honors XX% member features nearly continue milestone week. attract Room we

Hilton was possible together. without - providing place for two guest maintained ranking XXX,XXX Women we culture named proud members I as strong Workplace nearly US. the service built in ‘am and have number to that commitment also number and the one extremely our not a experiences Our has our and exceptional world workplace best the would customer Best team best be

support footprint live we a the are on where of impact grow dedication With communities the work. our global have and team we members, positive and able to and our

in shareholders. our think driving of performance to growth in it based position capital-light bottom capital it and our guests, fee and with model with a allocation our us to solid diversified line value quarter business we for another great owners we puts This sum continue approach remain strategy. combined To up our confident disciplined our

the call Kevin over to our results the for turn future. more outlook the to on going I'm that, details With for and

Kevin Jacobs

everyone. travel in results. slower and trends, the we grew and on weaker than system-wide currency In of the was expected quarter, neutral Chinese year X.X% greater U.S. morning share. transient as a gain year-over-year. Adjusted the leisure by RevPAR basis, prior to control. Thanks weighed good market Despite Chris of versus macro primarily on Outperformance $XXX driven the X% guidance cost continue increased million mid-point EBITDA softer demand to

per In offsetting exceeding million license the for XX% guidance. Diluted quarter, $XXX increased adjusted the line items XXXXstrong of grew unit share performance. management softer to X% our to strong and franchise fees $X.XX with earnings end fees special high net top

and regional performance Turning to our outlook.

business transient trends. and by as soft grew US were offset quarter RevPAR share Third comparable group X.X%, gains solid market good

XXXX, growth system-wide line macro RevPAR trends. year US forecast with softer on full For modestly we our in guidance based

prior In the Caribbean. year RevPAR due weakness Americas declined across the versus largely modestly quarter outside the the to hurricane-related US, third

For full expect single-digits. low growth we year in XXXX, region RevPAR the in the be to

grew in further across which demand by across driven and good Europe London, Results show trade X.X% Turkey boosted convention international benefited a and by Spain. quarter strong in city-wide increased the calendar and solid were business trends. RevPAR from inbound

Brexit We Europe, expect trends Europe in across full low given by year XXXX offset the RevPAR Continental in continued uncertainty. single-digits to modestly growth favorable be

in trends RevPAR In Similar in to East we've growth pressure the slightly quarter. growth. was year, UAE region, the supply and negative seen continued rate to Middle throughout the Africa the

be For in down full digits. region expect growth the XXXX, we low year RevPAR the to single in

fell intensified trade RevPAR protest In Kong in travel. Pacific as leisure in and X.X% on further Asia region, the tensions the quarter, Hong weighed

As RevPAR a China fell in X.X% result, quarter. in the

low XXXX, the slightly RevPAR down reflecting single-digits, year in in of trends. growth full to continuation with For be we expect China the current declining for region RevPAR flat to a

Moving to our guidance.

of forecast around $X.XX. for of of roughly For items EBITDA full $X.XXX special EPS, billion, adjusted growth year year-over-year representing X% We mid-point. of RevPAR a X% the and $X.XX expect to diluted to XXXX, $X.XXX billion at we adjusted increase

For the expect we be fourth flat. growth growth system-wide RevPAR to roughly quarter, be to

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

paid million during a quarter on of share the dividend dividends of per year-to-date. a $X.XX Moving We return. capital in $XX third cash for total to

million $XX quarter. in dividends in the - Board Our sorry

authorized Our Board a cash quarter. quarterly also

Our Board of buybacks billion dividend in we the shareholders returned per quarterly fourth to quarter. of in Year-to-date, cash also and dividends. $X.XX form the authorized a have share $X.X

to between in $X.X details and earlier the billion the guidance latest our of can and this Further $X.X in we issued earnings quarter and to shareholders billion buybacks return ranges expect found morning. dividends. form XXXX, be of results For our we release third

have. speak to questions question. we We can would yourself you morning This ask first the completes we to of you We have with our our may you would this now Chad, prepared to one please like for remarks. line like open limit so question? all that any

Operator

first Curtis The Instructions] with Please Instinet. go Harry comes Sure. from [Operator ahead. question

Harry Curtis

everybody. Good morning,

Christopher Nassetta

Harry. morning, Good

Harry Curtis

to your budgets. well on question year-over-year sequentially, quick corporate relatively be as was travel flat what A despite which morning. Good up Yes. looks pipeline, as again

even do – the decelerating this But – developers the to day but still economy, you disconnect uniqueness you the continue? have the a of strong at to to expect end invest in the you the speak of what do and brands maybe or can is, maybe Hilton think appetite it

Christopher Nassetta

Yeah.

for think it we at I do good continue being. is least to it's a expect the the think question. I short And time answer

we're in I US. a I is think working most the of of think bit with But what’s in every particularly going broadly, different developers region that story. folks the on world little the with the

markets largely it large very looking – is they the grow operating makes believe then And are, they group is They and locations in and on that can for sense. with A their a they finance higher And operators. franchise-based. drive on on that of of and ownership side. you trying returns as business a - can then is at higher U.S. diversified again, et with that's drive even we doing look are the part everybody construction where ultimately particular markets in business This business. the both their the running and what still it costs opportunities right grow labor to within both owner particularly ultimately in their unique equity particular if costs, those cetera are they're they brands,

go I are go this go And testament seeing in increase U.S. XX% in what XX% the the so the is US U.S. to right go number up in the seeing. go is expect we’re gave to XX% you mean, that to I in starts for US up year. year, to XX% to to the what the this that U.S. up XX% we we up up

the locations, are is about brands. right What we right are And done. right projects in markets the they talking for in with we're our developers things good the seeing getting

disproportionately category the co=lead – of pack are of are or that beneficiary our a killers share average, lead individual on brands either market in or of terms they that, We because sort we is that very have the in market performing And there from share business. at of level the not bunch a one market point a brand share view. the not is highest in high

best so a way is in development developers basic businesses share selective I grow continue our of the allowing in brands just opportunity and continue the take combined is factually to the out to there. with which desire to business, objectively true think having And highest-performing is that to us of their a disproportionate

If frankly, are you bit pushing our I it we’re coming based would which say teams. job. our the year into surprising a at That's look inputs expectations and is always – my the on

a even bit We are my outperforming expectations.

level will our when think XXX,XXX that my to probably mentioned be bit of terms in history. do finish approvals, think in a close had up highest better XX% new we in I we It will think about have we rooms, signings year-over-year. we'll the we year, deal deal I signings than That's over comments of that. the

yes, environment So more the is challenging. while macro

next well step. Construction that really regard. performing is in the starts which are We obviously

got want build If you to them. you deliver to

You circa know, year's throughout we'll when but we think be US, world out the X-plus in up XX% the the overall X%. percent.

as a same-store everybody is we're, would think all no cautious we giving cautious about sort the what prepared I reasonably bring, I leading why I good are have are that my in you those I comments same-store years next growth debating the very basis. just of, heard think guidance and conditions that's that weakened. say as few There's of Frankly, will indicators. So environment because on said macro

construction But with even will results, able and bottom-line really being to the this the EBITDA this which what sort is net environment, RevPAR you beautiful driven we're even saw deliver thing talking unit in great - drove of by we the about growth about rooms under flattish in be environment model ultimately that is in one-ish growth know, for quarter we year. third modest X% a almost of you pipeline,

for XX-plus X% I if deals what's we we -- construction at to macro think at going deliver right we will what will reasonably we to X% a give post-spin the going in range, we next year and being great deliver again we We’re will signed, guidance deliver the for world the didn't XX% another inputs grow year in face in the -- of weak a EBITDA strength to the will percent, what's model. we X% and of about under full testament And rooms the think even we're moving while - conditions, EPS in do more year, those that which direction. construction keep signing our jobs, under business talking with is

Harry Curtis

If by follow-up the lenders more you for seeing quick that's any ask a in requirement I just are can related, equity? change

Christopher Nassetta

all less terms money would around - say the say out. a after has seen would lending that a a bit we meaning tightening environment, in little been that flatten I scientific. tougher trend - have we what pretty study I

the say it two. this harder a quarters, – last But of got So at is mean, I couple over it over year I year would relatively the last stable. or point quarter-over-quarter or

Harry Curtis

good. Very very Thank Okay. you much.

Christopher Nassetta

way construction after costs growing by this And do at rates. year low-double-digit high-single-digit, the

that seeing what high mid-single they’re helpful as Our that in the has tempered low-double-digit, growing be in are versus well going we’re the low to to low that costs is – but is single-digit degree. construction best sense to in growing, which to a digits still been

Harry Curtis

you. Thank good. Very

Operator

from question Please with next Bank. go Deutsche Carlo ahead. Our will Santarelli come

Carlo Santarelli

the for year bit construction growth pipeline Good time. morning. last year, it of clearly roughly as it unit growth guys. RevPAR where we last was kind the this little Hey, under above where a next think is was Guys, about the year, and at

the little bit guidance tempered. So for Obviously that of RevPAR should kind bode year's number. well more a next NUG

kind When from other the the into what year some the fees XXXX relative to we you go et this of and things think about from whatnot though that of credit level card, got performance cetera. like of

like slack far? in it's RevPAR you like your that XXXX to looks is Do outperform of gets have more kind allow to thus where to a year Or some we you continue year-to-date fees? us for think of still NUG plus expectations there there would

Christopher Nassetta

Carlo, a it’s deal now we more into play. we the of had down. latter. do That - former rate mean I in come the the ramp-up think with new as had is ramping than believe sort big I growth we AMX

materially above several it algorithm next I you will, will do the believe grow so. in growth if years at not but somewhat

that create really is to called of slack. So as you it sort incremental going it

algorithm I think the of way to think about next year growth. is kind simple

Carlo Santarelli

Great. from and range with about bit from the And How leverage? thinking this sheet where you Obviously, returns Thank to been. the you. you've little just quick follow-up. are guided right implied below previously bit And up then perspective where look to be Obviously you'd as for you be leverage are balance a little to current a the where one XXXX now to capital the a you year. capital out are returns? respect

Kevin Jacobs

about Yeah, it. been in of same the we've all thinking Carlo. It's that about Kevin. way We that think

about think thinking you us high but say I heard way the is level. it So before you've of sort this should

flow of midpoint. You range free releveraging get should be the recurring capital to from with X business return. our entirety think should We're plus drive would still the times proceeds X.X whatever about our comfortable targeting the and the cash we

to finish did of a tick still quarter and the you're balance really a we think recent midpoint, the cash bit timing. is sale this being I that and little the what on sheet, than and that's seeing related Odawara lower

our middle about of range. be better we the in year, for our of slightly right the of the achieve If guidance midpoint we'll midpoint -- return or the capital

So, nothing there. new

Carlo Santarelli

Great. Thank you guys.

Kevin Jacobs

Sure.

Operator

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

Joe Greff

morning, Good guys.

Christopher Nassetta

Joe. morning, Good

Joe Greff

you together Can transient out between XQ and bucket of I highlights? performance business you’re QX leisure know transient? you kind through break them when going

Christopher Nassetta

don't were head. have pretty comparable. in basically But One They plus. They Yeah. were was flat. I flat. both my it both

the Recognizing leisure quote transient weaker. small a I to think part I'm that. was tick. a business it not of tick trying down was transient a and was up transient part candy thing leisure

transient last this There comp more over a year difficult was year. also leisure was that

was I just anemic. answer, to And do I was more it it transient, had mean, with broader weakness. a but business positive, to but just sophisticated I'd that it anemic. was the have love -- On think

that. bit mean break them a we on most did mean we you are theory like sort little color see you in businesses. if We a business of it more medium I of - down look just if larger of segments I We - big impact public. which they're I transient, business, small more saw - at tied by businesses, have in and

and real-time small going a maybe bit tied the reacting on out more is marketplace uncertainty more little there what's or to than in businesses. the They're in rapidly to that medium-sized

we of But sort in but we -- One's of it look That's to they theory. when up impact little. one's basically round the them was more see little -- way down parsed accounts, the we to a a large it, did flat. both as at

Joe Greff

you about follow-up you. that, to these what tied XX of And are markets, percentage fees just about thinking talk your as what your top Thank a quick these late? markets, the can and of to percentage Great. to exposure maybe obviously US seen you. XXXX openings for that's a data it me. in all your level look That's And of at big are where way decel. of this you've STR anticipated Thank markets

Christopher Nassetta

Yes, to happy that. do

top STR of XX a And little We while have view. - in a have XX. point modestly the been the about bit markets, in supplies of in our less outperforming about underperforming the the existing top they from U.S. has been markets data, that those XX%, XX XX% than pipeline our non-top

that. see So some from we would impact

on - that, are we let’s we say. heavy industry, the across look stand you do out of just if side think the I not

Joe Greff

much. very you Thank

Operator

go question Lynch. Bank from Shaun America of Please next Kelley, comes Merrill ahead. The

Shaun Kelley

Chris, my everyone. follow-up broader on just morning for question. maybe environment. taking good Thanks just the Hi,

As takes to to just XXXX. of people and overall zero and the think kind kind about puts outlook start the one about of

us things high help of just some CEOs, either the are customer between you're and side think or what kind other other the talking when about your to fellow you in differentiate Can might of on that corporations low large range?

like extrapolation more of XXXX? be side see could today? you’re of or having to kind any from how about more current could just a might different trying this the what trend a is on of you bit an be green And conversation as Just kind this year shoots thinking little much optimistic of that things up, frame importantly, versus

Christopher Nassetta

Yeah. everybody like the a It’s there I this good have not this don't in demand and like I'm give I Certainly, drive probably answer, I'll on on think you are that a lot I make people, of and the is which mean, all I question the more everybody sentiment none is drive I of a investing decisions are of customers that good uncertainties doing broadly a hiring in and surprise to decisions hotel the that deserves uncertainties say, would uncertainties. equipment Businesses in mean room for one. but to this sure sentiment a if lot call. I mean, will world don't of what investment, making but I is kidding bigger time. technology, – talked aside, I'm plant when And you. one, trying they rooms. of markets sentiment

have last out. they're that caution I’ve call described the of kind this of flags In on maybe environment, sort

what's on process coming the trade election not and the the going impeachment reading but broader looking and only everybody's year think the Brexit, on. Korea economic with U.S. up with US Japan, at watching what’s wars, in in on going papers, watching an China, issues, I and going

here. again uncertainties of when I'm what I things. that, that people rattled. I of fewer add are people in that results up think obvious you're when all has doing of flags got a seeing all And are a the the, level that I caution think creating you - what of add When think is And the is, you out, it's being up, master - you

hiring I numbers. ultimately in think you'll see it

in certainly numbers. is it see You'll up. showing it investment And

of some They still are a that, be. - we’re as And some they're shorter-term but lead on travelling. otherwise as not just its robust maybe indicator, things, on transient of still still of the trends it decent it's sort they're would doing

in those to have to what happen down. election end, - better So you settling it’s get of it's sort that the not -- like going a mean your lead do would going to little things an to of you're high feeling to some things question I will but the year. late have how that's the bit of until

willing different just to of could have number all these -impeachment certainly a to any down, deals of and to them trade more or It more. number the caution done, think and or more together level a some invest and resolved, boost. in to sort it hire give decision-making, of to think pull want I mean, you a these resolved, But and released way of being thus getting things, getting flag travel see, settle a of getting But resolution. not is and another bit. is, you people I Brexit need people my in opinion could that of a little or one sort

Shaun Kelley

Thank you very much.

Operator

from comes Stephen Please with question Goldman Sachs. go ahead. Grambling Next

Stephen Grambling

Thanks. owners', cycles? second, some how different financials brands or I should Two overseas? then new And we are similar to prior timing about or start the opportunity think existing to of leverage pushing Hi. how the first, guess and levels, follow-ups,

Christopher Nassetta

second the I’ll Maybe take one first.

abundantly leverage levels not people's It going - broadly, as debt then. are I available is recession think is well the into available. lower. compared as it fairly to available I was crazy great I as say, mean would

is the So much as more my of possibility of system slower growth period at a are sense certainly people look within time. we sensibly levered, our

the There's long on The one are try ongoing. around at our patterns In is you the based that's looking opportunities short - short which terms constantly market a we and give answer. one I'll of world is, the distributing the something that demand always around world. brands

may in an and markets, brand demand in We world be stay like as are constantly not that extended China various certain should around example. looking at, introducing the exist creating we even concepts whether

yes, strategically that grow only time, assume we spend over incrementally our should part of thinking that those and is you brands to our in something about. that of portfolio program time lot we and not distribute is to mind a the front continuing we have, so, adding brand And center how but

the will Tapestry for you bunch brand to of continue And you next China likely will whole Europe, see stay you see world in in example, and world. of months introductions that. the incremental parts other us see the and doing examples of XX in the around extended will entering a

And when you look at it, people think about like NUG [ph] and the future of growth.

really international a in time, in just our in are and world, the big terms doing We infancy been we're our footprint at while growth if look gargantuan of there's both really opportunity. we've long our it in you

of even brands a the But regions may distributed more or We also of we've XX our in long fully there seven brands. time. have been most fully distributed where nine and to we're world

only add incremental time grow the of world. down double not have sensible do every opportunity So we in a number and in sort way have those over to region opportunity brands and but to the of we a of brands,

of hotels want world the you continue systematic build will new for So come which it’s way of back a drive owners, support very it these we to us more us. strategic process go we should all very doing we brands them in makes that assume because yes, it we there is how regions new sure that to planting out way. always about in strategic to sort commercially, returns a flags in for But of thoughtful to a can we what propagate are got make

Stephen Grambling

queue. Helpful. to turn so Thanks I’ll much. back the

Christopher Nassetta

Yeah.

Operator

of move Our Farley is on go next your which Morgan be line UBS. ahead. next with your Go Stanley. Please right. question Robin from question to end. muted Thomas will ahead, All is Allen Thomas, go We’ll ahead. perhaps Please our

Robin Farley

is comments Two think leisure transient being that up. in comp QX. not year's that the One last Thanks. first back on QX to being tougher circle Great. you've because questions. I time about to or soft I I wanted talked that know had that And it's your

much into trend. us of the give two-thirds insight underlying sort comp any is can of the about But think how trying of was QX visibility you an with quarter? actually tough to it how looking versus Just on

the do about leisure And I out if transient a whether or know trend think don't a know were are those this of business is you or transient? same issues comments the comp? you bunch talked uncertainties those macro a Just the think more about trying Thanks. about for lot tough that's there. - issue a to I

Christopher Nassetta

if honest, I think comp, of of trend. being I'm think it's - I but somewhat a a tough more

think fourth is that our as tough well. I expectation will be quarter

the Now are much trends just but aren't comps an the issue, broader weaker. as

before leisure that at we’re numbers think you numbers I If retail in were the and sort quite they were suggested the look out some coming reflective of what but of weak trends. September, strength, seeing September retail of

which is reasonably as you of opportunity for Again, I confidence, high have uncertainties still to in get think think I not it's still drive to leisure - we some the extent some the consumer transient. been high growth of out reasonably air, as of the reasonable plenty

but leisure is will they weak. right our running of will be and generally, now both sort But think be our We weaker. under reasonably assumption expectation - current be positive business conditions they'll transient

Robin Farley

below Thanks. were think Great. I fee follow even Kevin could licensing highlighted, RevPAR then make That's bit had was just a up the if range little still And helpful. fees I your for question guided a growth which range. able why though about you to

color think can licensing predictable. if should any about that or us like It not can I that fees? licensing don't know there's to seems you necessarily fees as I about how give guess How we think going going be to one-offs forward forward.

Christopher Nassetta

Yeah. Sure Robin. I'm happy try. to

comps lapping the similar to are before. is It - was we mean message over I I the very overall, program its think actually actually as up. year - last ramping think I much – stronger

that's continue. And that's clearly a going so to trend

on the not in was an did license little of we’re License impact driven but were quarter. made our our quarter. fees - outsized one the sort actually we not fees with fee and why other did bit this growth We this fees a RevPAR quarter reasons better, didn't that some line expectations have non of

you're quarter the And the over quarter quarter so for lapping fee the be fee growth some - of in think of which I why bit and growth that'll we're is guidance the fourth fourth a little fourth into continue XX% seeing because last year. lower

acquisition overall for mid acquisitions XX% to So fine of - going more the full quarter-over-quarter, sort we think – program year I'll by the but in year. because lumpy up you year the on teens is about to spend high the way focus it be Card can doing the for be know is the

lapping you're comps So the and program from year. fine we're that last seeing over just just really is going tough

Kevin Jacobs

And the it these stable. to a Yes. you're going quite that actually new mean thing years say big of add I - on that's sort the would program. is, ramp-up of I'd only thing lapping I only is is,

the years. quite coming arithmetic, So stabilizes the expectations because as of growth in is but the bunch actually of contribution rate our down to it terms stable programs just growth is of the next in of

Robin Farley

very Okay. much. Thanks

Operator

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

Bill Crow

Good Hey morning. Chris.

repurchases. the a of dealing next and beyond the And think, the a up higher possibility potentially against backlash be realm not election year share brought it's we with and political environment uncertainty. that You I could tax

a change whether in capital in environment, open you repurchase of trying - share be to just might more think I'm decisions to about rate growth how that may So external allocation sort your low-interest lower environment?

Christopher Nassetta

creating and year. written been for And capital believe restrict with I've political that, about strongly about -- there’s know all no I read hard buybacks lot Everything make Having about any makes and in a I while, the arguments sense. the against question Interesting been strategy whole of personally it, them would feel to to for know allocation things Bill. buybacks. It's have would said happen legislation don’t money eternity. bet time the swirl, we going what's good that and it our it I sense. next political around

is And not the it, free right I to so And don't I lot it. to it flow don't in think form ultimately over obviously want change buybacks strategy really If answer. shareholders I'm to grow have to that we I - dividend business but I a an think think we the how to don’t on strategy. time need think we'd a of don't cash of will. have about the return modest were our that

If the stick We’re wouldn't. going we obviously to with law prohibits, it it.

next result I the result But again, I you the capital XX, the going happen. as that a be deliver run we result the X, years And that can is would - think that strategy. XX, would to XX best allocation if models over of doubt

Bill Crow

Great. I leave you. it will Thank there.

Operator

from Citi. with Rose Please Smedes is question go ahead. Next

Smedes Rose

along at - And of past the you capital you of range Thanks. that this continue the of wanted RevPAR year. the that point? this Anything In same sort outlook done on and you could changed follow-up pay sort for what you've return your you in just today's think repurchase guidance to to dividends indicated question. I or about

Christopher Nassetta

allocation It bears you a because Kevin No. mind. it we're say, doesn't. capital something is front and our again, we going perfectly way it repeating. produce I and oversimplified how think mean, about to a - in job I'll But of it, He about think year know, everybody's with on flow, that but amount mean, do it. program every free way to got we've doing is okay, it. cash did said certain our the center fine I an I this

can We lever we've within and the we could have about. opportunity also lever ranges to beyond talked that, We the that lever okay?

sort increments. would I it three about way the of So think is in

any rest first it our going have are buybacks. will with say going But do cash from flow? dividend. I is the We to intention a we said, and again to modest current levels of don't is to and pay all do it increase free we've we're to its what use The

pretty regular of in to so X.XX levels saying, be handle assume in basis on will midpoint relevering the returning would that to the because X again the We also I We’ve X.X leverage business a want that want be and leverage consistent We to be say capital. easily. market. within been can

than sort the think we X.X, to leverage, part If but in of dislocation. and as makes X in market really certainly sense. that that business more be circumstances leverage range could We would would handle the consider of more

nobody averages know when that maybe is like indicator of below market we sort long-term it. there would that at that a be – of would are And see metrics an leading be valuation dislocation opportunity. sort we'll looking It

a stage consider we and roughly moment, of at the X all than to as so three, that implement to moment. We Stage continue midpoint more flow to and sort targeted of moment And our stage a have now. and we relevering both leverage okay, willing will two, our right cash levels. free are don't the at just view

Smedes Rose

anyway leisure in down out China was just overall Thank of was calls? prior market quarter. just kind too, ask with on about you you in of versus that on kind X.X% Hong weakness talked can in that you. Is to want break you've Kong-driven there how the what’s I you mentioned going much that of if

Christopher Nassetta

us. down Kong that quarter. Hong little can. Hong if did was obviously a for less you I tough Mainland China And was Yeah, X%. had math, than down the XX% a means Kong

Hong at obviously think full in deliver we of look still year, the Kong you will what in is sort play. we If

down We think think we X%. Mainland said, and so point call down XX% a Kong that think Greater that. Hong XX%, like will down China be be I something single as China Kevin, will sort something digits, low flat of like it to

Smedes Rose

Okay. Thank very much. you

Operator

The with Barclays. Powell next Please Anthony comes ahead. from question go

Anthony Powell

good Hi, morning.

bookings before period impact lot a How the did transient And the quarter. quarter? talked in pace year the about the in your for does third next look You guidance? how group

Christopher Nassetta

fine month-by-month robust, choppy. has -- not pace definitely and would and been Group say, been week-by-week been - not it's I

with from commission. We're where the has X% went XX% to periods to change. do that Some lapping a a of over we commission

- great. this pace would okay, year. not so say creates issues creates it comparability some been it has I And But - generally for year created last behavior which

about would As felt it good time I say, at we for feel have we last good look not at year, reasonably as position would year. we as this next

numbers we're up So if system-wide the at look you in of single-digits. low kind

If comparison this we in single-digits. the by to up that you mid were compare last time year

year So X%. we're Last like up like were we up X%.

the feel of year us level the we've higher part last position makes group Now we going of group this RevPAR. of deliver into a up expectation we year what of to -- being for in X based X% X position guidance had upon in would year given in good time that meaning, much sort we've

guidance for we the that supportive think of And group Obviously, view given is RevPAR year. year. the different and we is position next have the we've up for a overall

Anthony Powell

continues? in the slowdown of just be and How And more. in projects risk a maybe delayed project Thanks. segment? of saw Francisco San one can the much at luxury overall owners pipeline those liquidity And some your We if Waldorf due challenges. the to environment the is

Christopher Nassetta

It's Yes X% it's amount. minimis in a one change. de

year. a San San know We've public became part we've of the about a or So it part small known for relatively Francisco -- that week. Francisco. pipeline. our I better very known of they But it's about got this overall the

to that projects most are construction but San for Projects is and are pipeline been the they'll -- be that expectation important Francis And pipeline -- challenges that had not a that delivered. in long that in them every important has have really not San of us are we are time. many under Francisco

Anthony Powell

Great. Thank you.

Operator

ahead. SunTrust. The go next Patrick Please question with Scholes is from

Patrick Scholes

and Chris Hi. Good Kevin. morning,

Christopher Nassetta

Good morning.

Patrick Scholes

Good morning.

-- the travel. group as year Thank far what right business are on leisure expectations color you. you are softness about some as now thinking traveler. specifically given as You’ve leisure? And next for what trends well as in your what seeing Wondering you're in

Christopher Nassetta

of comps transient like I of lapping covered over numbers the third for that just just -- in flat the – some trends were leisure were transient Happy, retail mean that. to but down weaker business to slightly was think of a starting leisure was in quarter We're recap we seeing it. September. I in just tougher that already Part XXXX. down. Part

fourth but for to more earlier transient leisure -- what going the growth anemic I into business Our both one side. in could an was expectation built of is the is positive quarter change that? plus the and reasonably into asked What have our same the and that the we'll assumptions flat expectation question of

any not world or on that business the of getting if that could is rattling of Obviously strategy. or resolved helpful. are is of all rattling in a of one things any be markets those uncertainty number terms But going the any in hope the those and

think, for what sense of we've based we tried on both year which what conditions, weaker. give quarter So been a next to of you do sort and current is have

earlier my and not still unit have given year in said and to this give not EPS to going I comments, X% cetera. we while deliver again, growth, fee XX% we're that growth guidance, EBITDA And et growth expect only growth

what anaemic we in have another good be next to year We growth. quite think of very year will this expect and even same-store the face

Patrick Scholes

Okay. Thank you.

Operator

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

David Katz

a over sound in months. everyone. direction, morning not And because negative Good few of just ask the wanted up, Hi. it's headed that's a as may I past I'm times case. come something it to the number but though

the So model I your business clear, little is preamble. think so that rest of crystal with

what ask within to and we to out upside portion wanted and of leverage is is the I line downside leased figure owned that item. the try about sometimes Because, do the the and P&L. where the

up and just Can about down help -- that about how leverage within the base us expense the owned you talk actually or how think works?

Christopher Nassetta

Yeah. David, I'd works say, it the way. generally

companies these of behaved been really right? working, owned are hotels. long you've sort hotels like covering used to time, because for are So, it estate real You're a that

released. At are then have most them rent of the GOP payments, And margin level they it's because about XX%.

bit a And so leverage. little which a operating the touch lower up end margins of being adds

in the going is so labor those is reality world costs hotels expense real around the it base X.X%, about the is the But labor half in model way are world. the estate broader the and growing, growing call where X% it's up, expense

Inflation is X.X%, world. going growing -- around up up X% of kind the

our of hotels. base it's profitability of And levels these the the RevPAR, hard And expense at to increase so is growing.

XX% segment the is over overall It's said than our EBITDA. time. getting That of less smaller

of leases. lot a of smaller out strategic transitioning are less the We

I plus going this hotel owned leases four selling. think to we're in year, out that of Odawara transition one we're

X% rest clip. a little The And of smaller. X% so, business the getting bit that the growing is to is at part business a of

the And time, you're so answer a you're that business X% expense amount reasonable just It's segment see the going work the going going are dynamics even over overall within less. what to of of overall. time to affect same. going revenue is, to the see And to be

David Katz

very Perfect. Thank Got much. you it.

Christopher Nassetta

Sure.

Operator

ahead. go Research. Wolf is Jared question next Please Shojaian with from The

Jared Shojaian

flex guidance you color the to The a you if Hi. you end. do how now? continues How right little my Good the share thinking the for high on can And taking Thanks everyone. have morning down came G&A questions. about any on year, XXXX G&A, at weaken? much RevPAR for think side you're

Christopher Nassetta

We because as some can do continue range. of seen we've got RevPAR try can. be down mean better. lower just coming to better. efficient we down, done to we've And it within we a as coming the is Jared, bit I as Yeah. it

a we now overcome X% amount expect number if And -- do going have we RevPAR we're years that's that should we've it's going enough continue X%, there, the we going sort but to goes to certain it think Not zero? Now you can we to continue than do overall rate really business less of to better. can in and of of inflation to do consistently at that over and that. grown a now expenses a G&A I

Jared Shojaian

about the say ability you if guess, from environment cause would of I over risks I good Chris, may. to What be are there over net Great. year? kind And the Thank one to next one below I you. several X% feeling softens you growth beyond quick deliver what here? I more years. think next heard if unit your you're X%

Christopher Nassetta

material are largely recessionary I feel of environment, or the because is about Yeah. the go mean, great great inputs good risk but in it place. another you sort into another recession I

that into weaker even less. get environment environment what the is is over stimulates under not activity would you conversions and to in pipeline only than hotels today. is are other are experiencing These a if agree one. more The we're number actually much all conversion, which a slower So go that I almost construction completed going input half

than complete with incremental that maybe conversion. don't the under and for that that and fall it, construction might happened, more rare compensate that if would some reason is hotels few out that I for very we for would So bet

for why, feel So unit ability X% in X% I inputs because are that's say, net about didn't few to the continue place. I drive over next growth, our I lightly -- the to think largely years good

there's So, downside. mean, I always

do good but staring it. me I do we but – we Counsel didn't I feel feel it, because General about will – – down, I said, feel about say Our be I it good we we feel if –

Jared Shojaian

Great. very Thank much. you

Operator

remarks. and session. closing this would like back conference question-and-answer over to our for Ladies Chris the I any turn Nassetta to gentlemen, concludes

Christopher Nassetta

everybody our forward today. continue out line going great the to time fourth results. And first in a Look to in quarter last lot good to Hopefully, part February. Obviously for everybody. on the we'll we've our have year Have in night those tonight. night. day. won World history. bottom Nats fans And therego for summarizing Anyway a we'll do environment, Nats, Washington the the Series carefully watch Thanks drive in thanks

Operator

The conference today’s presentation. for concluded. has now Thank you attending

You may now disconnect.