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HLT Hilton Worldwide

Participants
Jill Slattery Vice President, Investor Relations
Chris Nassetta President and Chief Executive Officer
Kevin Jacobs Chief Financial Officer and President, Global Development
Carlo Santarelli Deutsche Bank
Shaun Kelley Bank of America
Joe Greff JPMorgan
Stephen Grambling Goldman Sachs
Thomas Allen Morgan Stanley
Robin Farley UBS
Richard Clarke Bernstein
Smedes Rose Citi
Call transcript
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Operator

Good morning and welcome to the Hilton’s Second Quarter 2020 Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Jill Slattery, Vice President, Investor Relations. Please go ahead.

Jill Slattery

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

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

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

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

our reconciliations You on our of Financial ir.hilton.com. morning, of results. website Officer and will and non-GAAP This Kevin review can at Global call, operating quarter our will overview an Chief discussed Officer, Nassetta, the Chief find Executive in current then and second press environment; Development, our earnings provide President Chris financial release GAAP measures to in President, today’s Jacobs,

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

Chris Nassetta

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

by several would these I tragic we that get impacted our been explosion all sympathies event. to affected saying to Before started, It have without past by Beirut, thoughts this like members challenging. are everybody team and offer our those goes in recent the months with our

global we globally. on business communities our navigate While serve we impact have and continued coronavirus pandemic its the and to the

leading to tragic witnessed regarding Here injustice difficult, social systemic have in discussions the also we of U.S., but necessary inequalities. acts

and where all have our century, been to a for welcoming the warmth connect them people backgrounds of of a our light together all, bring hospitality. a than more we place and hotels For place

corporate have been Now on culture have and doing, communities driving we than broadly. the leadership more change and society our aggressive Building more hotel committed inclusive to an diversity set and teams. even Hilton fostering in work ever, remains across more positive our we targets

As and we forward several leadership of recovery decades yesterday, near-term Carr as and Chris on insights his business companies to look we growth our directors. happy executive are new moving welcome our across we announced focus our Unfortunately, global and Chris to forward. of board consumer we brings of us the of thoughts diversity to reality our organizational opportunities. long-term required structure adapt to

additional to These hospitality times, of team approximately members our roles measures including During team our centered guests. reduce communities. be were to supporting exceptional integrity, and furloughs. of our I Hilton has corporate has reduction Through the always to the difficult proud previously X,XXX values announced of decisions deliver very our to for our took who on extension been have the continued and quarter, industry experiences, we culture as am guests costs, further how in globally leaders these our our live in to deliver challenging and company’s

of have again properties Mayo to world. our Stay Hilton of enhance industry leading around we to launched team with a number practices to hard are Clinic We safety provide in hygiene confidence and the working measures and June, travel the the collaboration and restore In Lysol members our guests. to in taken Clean all

support and Our common our social standards adjusting areas procedures housekeeping modifying in new to include distancing. elevated hotels

sets recently cleanliness Ready, and launched meetings Hilton standards program, part for which customer new and Event events. of we As also the for service

to from wear the Honors to in had Today, device. everyone access U.S. Hilton in benefit room give heavily features Additionally, indoor team invested and spaces. we hotels inside from Hilton like are members our with to their our public the our experiences all ability members contactless we and digital coverings technology selection Long Honors before check-in, face with requiring COVID-XX, can seamless Honors our to own app. members hotel in message

at of and of allows these key to check-in vast are delivering customer road the digital a reassuring on resumes, approaches at majority while contactless hotels we the our to important hotels with for still initiatives safe cleanliness, guests Additionally, our as service. think check-out experience our globally. new exceptional travel Combined

XX% meaningfully to all year-over-year and of majority steady Turning tourism nearly XX% operating. the our declined impacted. in related hotels the temporarily our with more system-wide properties of return. in of expected chain quarter, are in seeing travel had Europe, the all of first are United RevPAR the suspended progress the quarter operations half of as pandemic regions on and and we System-wide in system-wide including the some hotels XX% global China year. second restrictions as have affected those In of decreases results. gradually our demand and and Today, open hotels the materially our scales ease re-openings reopened, our XX% than hotels at point Today, Approximately, and States.

into the roughly in are to In of than largely demand terms we XX% and with limited all currently, In the April boosted XX% rebounds occupancy lows and approximately performance increases XX% driven In occupancy China, with seeing to in hotels quarter improvements off System-wide throughout Asia-Pacific, rebounded XX%. meaningful July. for over improving. where and leisure drive is sequential both a more business by from occupancy the monthly in Americas, travel demand, major low regions service increasing is leisure by of markets. transient is

easing around weekend, reopening continued there. is of ran in XX%, the Africa, drive nearly over U.S. although During XXX XX% the help further Middle and improvements Europe, should July occupancy. restrictions Across occupancy hotels and government Xth generally East

offset disruptions we see current the a in to hope the of help modest leisure we look would which transient slower to demand fall, pickup environment, no to As post-summer. assuming significant continuation demand, the business

given cautious the including uncertainty schools remain and virus overall impact, of the we surrounding offices. its However, the reopening and

and thing is remains our consistent, their travel on interacting, to doing evolving what of needs. guests one we for continue adjust ways While our to focus new right

From to reason, in Honors were and very with more For Honors implement help American of partnership number changes among extended global flexible and enhanced same and challenges X,XXX perspective, to achieved even introduced openings the We quarter rooms to last Monthly points a with Americas first co-branded and broader to net to in industry and also include development add system XX% yet, members period for use future versus to we since that have still and increased the rewards a early on. than this higher throughout hotel cancellation provide our status. companies the June, the ways was more most points year. made for Express, we their maintain disrupted Through earn able sequentially member cards extensions X.X% time our activity travel. credit given cardholders during to macro the greater unit last our in and were the openings rewards flexibility policies the nearly we year. now growth were

conversion of help delays. Additionally, the to construction opportunities, impact which should be we continue by mitigate encouraged

are the notable For we and the of share our several expect fully will the luxury Oceana disproportionate to X% net del Santa Tokyo, including we growth to in In the the signed to that deals, join the the time year, but recover, Waldorf-Astoria quarter, which will a to commercial in full global unit the LXR brands range. take we Spain, be continue we development Costa Sol It taking Conrad engines Monica confident for pipeline. portfolio. have the and in X.X%

saw On the side, Doubletree, our Tapestry we conversion across and Curio positive momentum brands.

the a we the players to As strategy, signed our in quarter, during Suites in one development develop Country Garden, China. strongest the to an market of management of property additional Chinese strength agreement exclusively with HomeX testament license properties the

to new market. time and to brand this more produce to a the X,XXX We forward look introducing hotels expect partnership Chinese over segment than and

the one As growing extended into will clear these I been fastest to proud additional very forward. times is Taking accomplish we we able confident Hilton’s segments growth am have difficult to what winning that uncertainties China. considerations, emerge think during in opportunities and the award have stronger. stay a current brands, am and path and mid-scale well-positioned capture we of landscape we HomeX in of I

to people call have best the I what’s With more to continuing of detail do business. going our think and results. embrace resiliency all little Kevin for we on our future over second am our an to turn the ability the change, I to demonstrated and bit that, for quarter while flexibility, a

Kevin Jacobs

significant temporary the point increased the EBITDA were sequential with suspension impacting second improvement reduction declines however particularly largely in subsequent quarter. decreases rate $XX Thanks, and Results competition operations declining was demand across XX% control some and decreased We fees. throughout the timing China quarter, a the for franchise rated unfavorable year-over-year. by the to in the driven Chris all declined travel XX% year $XXX everyone. with global to greater good scales RevPAR RevPAR mentioned, property currency due In mitigated corporate million X,XXX morning quarter, and declines the the as at driven system-wide declines of quarter, chain by prior in million than XX% the basis Adjusted pressure neutral COVID-XX fees Revenue see reflect did in and and and cost were hotels levels. Management Decreases regions. further occupancy comparable U.S. Chris more business at and license by at results. versus from on of lower

operating a our cost posted portfolio. cost of portfolio fixed tactics quarter adjusted due loss the the across properties. fixed and loss $X.XX. ownership was control rent payments were significant special per share leased for some closures, items to Results Our mitigated by at for Diluted

cash to of to a Turning increase total early nearly and flexibility. $X.X actions financial taken the quarter our of quarter following the in position our and we with equivalents enhance liquidity, ended billion number

was lower certain burn payments. expected during the of due Additionally, second our timing cash partially the quarter to than

the now open on current we to and We earnings you our recovery. would this have for the with at continue release we you quarter can to of the second remain be year, to navigate in to This prepare like confident have. look of any remarks. questions the earlier our may ample completes Further prepared for speak details all that the As found balance liquidity like we we line We this morning. issued would environment morning.

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

Operator

Certainly.

question-and-answer begin with question now Instructions] Please The come go Bank. will the ahead. will Carlo [Operator from Santarelli We Deutsche first session.

Carlo Santarelli

comments. your for you Thank Kevin. Chris. Hey,

Chris Nassetta

morning, Carlo. good Hey,

Carlo Santarelli

month. leisure as the of kind picture, shape little of you of we about summer bit in aggregate? the talk the you obviously and the Chris, little you somewhat of about as a kind of low type that waning off Good that we business bit in this the you talked morning. see you seen demand this a we year, of second as foresee modest demand out half a have Bigger could come vacation transient how move think about a expect recovery data offset

Chris Nassetta

recovery of that time. to have those Yes, XX%. That’s Obviously gone XX% a I’d last a And although And and basically we low question. still short – enough on the I I the improvement a view, numbers, out you where hard relatively running but lot a view occupancy a changed, very, had economic so think the over levels it’s this sort our XX% last be be terrible a crisis, an would are back And what dealing and grind happy going be from crisis you the we be of we you which I go that’s going get expected. call period to. close to of we think and with because thing, – you fairly I call, of are world, hasn’t summer, have sort health to obviously individuals what if over said you on little certainly from – I’d then I the going the to I low is to call. of are going of to early a are change to businesses mean, to going get up, through a moving as recessionary XX% and start the the by from the step levels it’s confident while still view, XX% up now last sort elements the environment far, are where have what expected. Carlo, moving there, been in as say you uncertainty lot and the to fall is or reopen big same the shape are of whole to my about see I really and that things end said has think of impacted. if there is of a very to way

sort be of there. on And up to you think I going that’s happening. what a are from And so, grind is

think range. we be fall, that that as the to XX% you XX% into in are would going I to I is go what hope

or aren’t off take going are, up longer a opening as leisure to kids back trail so think always to aren’t do, but little see be but offices they going are know of going virtually and a a of off, will so, because that You their little that you bleed people to are it school do lot lot a to you less I for virtual.

very So, they that, more and of have signs telltale travel extend in can get season to in because a sort and availability locations hard to already lot early it’s the we August. flexibility been leisure of certain see July

maybe into into September extending are they and So, October.

through – business. would helpful, the mean, be last the XXXX, because heavier And you you leisure if will managed transient think June business up been business business. of in In into was see So, I of it some our fall, as our part quarter. business. our it continue year was like be look which of think saw you XX% significant our the business typically I movement XX% segment, you little managed I of in transient. will that’s at We to have which June go a will bit

or bit little was probably a year for or the traveler decade of it’s it three, Now, last business-related different two business makeup last travel. it nonetheless, but than was

continue. as back will to into that So, And get think that see you fall, being things all rapidly, are but you do slowly. I starting see the come not equal you

to to slight X of if And grinding but overall think the going be a back and with sort back again. the you are as parts way back look hopefully you a of I depend grind with the out the have are you – surely we of in that’s will of weeks going in the the with trajectory off business the then started leisure of COVID pickup dropping – march We crossover up – bunch even and or slowly, data and country. and that grind been hang for recurrence at pickup stepped in of arena So, our X to we again up up on recovery.

think approved to I I effectiveness, if the will economic and occurrence in reasonably steadily, said think, to rapidly that think it but the do just and that – there a And I step stand and because there get more – issues the slow I in will But a I and and think will I that health the think reasonably vaccine, bit sometime a different a demand broader person expert, but a will that X government think ‘XX get my ‘XX. Obviously effective. we that’s and were from of help I help. to change more I what certainly likelihood, steady little do sort I I on in to is change could us own through a up view just going be still trajectory of issues. have combined then be of not I that. there. folks we think think probably you have basis, will in have XX%, it sort talking last move mobility is moving it’s into decent vaccines sweet get have but and do is do good up the going not without to different or am its think that’s step business lot That them. daily is of you of am will see a going fall. have some I And I health a back chance like the a think then in to levels time to I travel But years levels as sort that X travel the you our of this by to said, experiencing could particularly of is it. way reticent thus on incremental hopefully that I range that sort XX% the just travel, confidence you we

without the You and back at for time and think levels some be ‘XX we over the it – under time and demand a will we or will continue next it grinding it impact just it to that we ‘XX illusion or a X will of take. will been transient workout business significant should period up going X take travel vaccine, has then years, but of because economic don’t get, because are even – even I take any to be with will

Carlo Santarelli

helpful, little bad. that what And what certainly you X%, one you if Thank aggressive follow-up front? activity, for down that. the growth that be environment, just X.X% conversion Could been but of the of about you you Very obviously could in how the said are current Chris. very able from a kind you terms bit what I talk not net before, etcetera much the unit components to then seeing on look have of in like, to

Chris Nassetta

than it’s It’s mean, higher we of we I quarter. obviously what Yes. moved a what thought lower thought pre-COVID, last tick. Carlo up than it’s

our I end would bet guidance towards said I which midpoint our higher last it and well. about I of would are the be be are high would we guidance, now if think of is today, on what we probably, current midpoint the what in in all low-Xs would with based Xs. probably that, And I we of the quarter see goes seeing,

They play going a in it. certainly role will I be. think conversions are to

We of there. momentum a lot have

from think those I year the are In they are active signing up we that terms are deals that conversions. last XX%, circa were discussions, where in of in and

a lot translate translate a will – year that will of into year. next of lot into it more this of it and Some

just So, I larger it’s I keeping of I broader sort it environment. We that getting But a because of the is think going that will with sort the dug went X latest where done. next a X, the points, obviously in or are X X, am nothing – conversions. more conversions the will component was of think months period points, world data what’s of seeing on than in X X while significantly be of year, time probably through sort of be

In to system. Now, the into we need improvement some discussions. be negotiated. you it CapEx and deals in lots programs Those are work, cases, get of to property active need do

some – that’s bunch And year. that happen of of so to a going this

said, year. have will with I have I As the properties got of will that but we will that think will a most get time particularly we we a combination were will the lot time new think I NUG during mean more better year, delayed, year. freezing because And will by we wise were things where construction next incremental don’t to of be into time next the meaningful this the do think second of year of yet. done, I the that quarter be percentage back it be just

interesting, way sort low think – to years of and point suggest is a get – were. then to there under more sense not hard to we our down we is are back going signings are to that to still that you that to our a But going I of getting moving but the X% it, then to and year hold how think NUG it know are math we couple a are XX%. me these deals ask what’s it, I is does best going is environment. our in we X.X% construction. where I to perfect frozen, is strongly days, what probably back circa will going I of it’s – – to better mean, the maybe – cycle in still a didn’t few – this best lot hard of to will stabilized will, mean, deals is then work it but and next take exactly the of sign because to guess signing is math, just I the are we everybody we – wouldn’t do, are people our data that lot months is somebody

then Our starts talked are NUG. already down about XX% circa right like now and look we they

not of that’s to numbers as that fast. we deals opening why looking So as signing good the them going we are still lots we open pipeline eventually are are and are

simple the there. pretty to becomes math pretty, explain So

to up, been are I sort the we I been good of many been many are numbers – have how all development construction. good honestly said, which getting surprised inching the surprise. on the surprised as on on under on on is a deals how have to And pleasant going were side signed. have So, I are activity NUG I surprised our fronts.

still business like run. deal, milk. hard So, think This I working we in not are are We We the too pass. testament a we Garden is the to that are crying got fact to – we brands. still in a our shall great Country got

working also deal now fact dealing get and forward, the and with are We we with get I have have time, we which what environment but quite also Garden, to well, on think – done with more here pre-COVID was do. a is normalized we same paid to which back current it we testament all we to we environment which which a to at are the – dealing Country look to are forward the we that if the I to it will have got is we obviously think people be got future we

Carlo Santarelli

Great, much. Chris. very Thank you

Operator

next Bank America. The of Kelley Shaun ahead. question from comes go with Please

Shaun Kelley

good and taking my question. for morning thanks Hi,

Chris Nassetta

Hey, Shaun.

Shaun Kelley

Chris. Hi,

possibly much cost structure going obviously were relates bit really what to what and as How continue So, because are help can’t wanted these of these you difficult trend of business this parts the efficient forward pieces us driven you think rethink – Hilton versus more be some broader for or a need operating I mean follow-up, just and back, structure about, forward. little made how can very were kind go as decisions improve this to quarter reductions lines of maybe actually in come here. the volume of of to kind corporate it happens to

or Just on any color thoughts that?

Kevin Jacobs

volume say Yes. business. have will this a Hey, we complicated of – right. things, look, are parts very sort be take of it’s to have That’s I’d There parts going costs, purely do that to corporate down it’s obviously G&A, Shaun, be of parts volume and is are to both it’s We about around a do there one. Kevin, time are for where much corporate our obviously combination can efficient. more that of business. I those say we way guidance and our for last be not I’d the XX% our think XX%. as it we gave you will

were We into most elements been decisions of thought going along furloughs that – forward, cost the our And had I’d some get cost savings. sustained will are of that will that’s is think the then will and won’t of course headwind. sustainable. say, but of will was be most we annualized those guidance salary factored gave permanent repeat then the that savings of coming not reductions the made, it be reductions touch ended in force way which making fact of in a largely in the created final moves that guidance. when be themselves lines, business, up obviously and it about to we the if There through be offset right by certainly largely part that

some some quite for inflationary growth, of I expense say should period back, comes back, sustainable. time, level but come it business to the would type And should expect of be so as you

Shaun Kelley

you much. Thank very

Kevin Jacobs

Sure.

Operator

from next will the Greff Joe And with question JPMorgan. be

Joe Greff

Good morning, morning, Chris. Good Kevin.

Chris Nassetta

morning. Good

Kevin Jacobs

Joe. Hey,

Joe Greff

data the that referenced referred XX% and frame was in to maybe but mentioned And tracking perspective? XX% where the the to July to it against that – is trends perspective missed of benchmark you said into range, globally? nice how Maybe or kind maybe questions. of the I it, you the and think and can to-date industry XQ hoping can I gains You then of to are a follow-up. XX% occupancy I of how from RevPAR have in you put one it and I you doing kind domestically portfolio you it, a rate answers

Chris Nassetta

the our comp say, when even keeping Yes. or are all in the the which is still methodology, weighted that set. touch adjust industry for hotels, a you performance our are that for hotels maybe closed I better would difference of is closed our we temporarily in

is for we the that say – that you almost improvement RevPAR, at better. If and on would a in little the have or of are we on and you was down, top things, side adjust rate – I the beginning was star not seen bit rate. if down of in quarter, XX% the XX% about for April basically quarter, down like, of rate of

the really of we about rate have here, the on you beyond, it and that’s XX% to lots if you and at integrity had because where down. discussion is questions line a down. If look going lot of going – August that. is And July, it’s I a look industry think coming in at trend all mean, I is maintain thing the rate

data customer the the all them is of have really the traveling particularly moment these mix as days take much rate There is issue not as been we what leisure rated much that at the for behind think, ours there as the data not as and normal. a traditional rated which It’s we many much not because reasons has digging, and I you know. a really is just a it – business into guys higher that doesn’t is higher or issue, dig traveler. of

our everything lower can or we low population, do largely and we but speak of customer the price very, is no with are difficult done for a our in different no our not levels much is for I sort industry, than of business And but can’t owners to whatever to, judgmental, the we lower different others we owners, the which and is revenue have us of point that limited because we them to in help to us hurting and which sort was, after so then really trying very revenue speak and a built issue it. there so need it’s entirely, business are and out is more have like of used help so are them, for time, happening, all go not very much what is this consultation was that for be along with to what view to

what’s say environment bargain. have isn’t is this, in broadly as largely not result, I’m like so And expects happened come a an to everybody pressure down going a great race there

the it data, but So broadly, the of is own some if lower marketing and after we own yes, it directly has and spend, we channels to if bulk our of honors, been largely OTAs, our but we bulk are math, our the to need rate to pressure going help other environment all to is after traveler this the has leisure and funnel been of the there our owners you gone because just lower get out look have what rated through in of mix need through you now at through marketing the at side get that this. campaigns We there is look with

I much going what’s just lower even on And think mix COVID added, ADR. starts you a pre that I price is it you at And point. when think with so so when in, it’s that

the again, think travelers, call economic that back there and the I be many new get, this get that the in on new it transients, level leisure quarter I that would there’ll be higher you when write second think a pressures because more business the saw higher silly ADR I will and I pressure to road result are you of normalized travelers that you ongoing, of itself have been as won’t while COVID, think you the think say on be environment, to rapidly. will in of our a caused, where will, of I will traditional quite end still have end issues what

Joe Greff

are to that’s is any And Great. be broadly, or been do there first And doesn’t the my were you. then flow are our collections view kind that and issues trend Based sort free segue issues, has to that? up more any anticipate Maybe working a the able what them? there party change you cash one correct. third lag And me. that there seem a or answers from if question. premise. XQ of would capital for XQ with nice in is it of some in ascertain significant follow They the release, it one the how two, would drag of we Thank on you

Kevin Jacobs

Joe. quarter collections better and Thanks. the broadly to went Yes. what you we in I of gave payment across the say the on would side than I working would of, fees obviously say the the relative would I and is, portfolio things we terms terms that terms on last capital and board of thought like. generally in guidance generally in of say managed of buckets is the look, and

this we do are in environment. We in this

in sort thought, pace We than better have what completely normal and than say quite sort what the on given of I numbers out nothing left, been third we early built collecting everything slower quarter, well. year the at our some that’s in so far which receivables are that still is third is far, of going is so, again, although and going the obviously, a we largely captured so it’s, owners in should through the are changed of understandable going given is point would there world happened quarter, in a really But it’s lot we was but

Operator

Stephen next with Sachs. Please Goldman go The ahead. comes from question you. Grambling Thank

Stephen Grambling

trend more to recovery? to revenue will even Thanks. get the you in reimbursed to how get a relative I do investors or think incremental that last am follow-up tying costs sustained actually expenses? also break in from capital could question those income you on working back I about these in or just going mean, on should and how

Kevin Jacobs

affect get the doesn’t doesn’t we way revenue revenue. recognize re-collections Well,

will revenues I The from decline we see business, in think this part if on in we could could the that, basis, in you it we anything the be of or a business of get we cash quarter, earned which of the the majority to normal. on is reimbursable spend think world, expect is the in how And more then quickly you completely going funded you so would P&L did about and see the in vast repaid. part than what the

on revenue side around with the the about doesn’t P&L And will so correspond on be the seeing necessarily side. that flip a you on you’re cash did should what there think

Stephen Grambling

here. Got it. on side prior guess OTAs I to also on And little bit referenced you a COVID. then the the distribution

direct the may ways I given maybe is emphasis such that might hope glean OTAs that you OTAs the think points in can other you some start preferences booking the argue would in you consumer was there campaign that inventory some change, was change less going or a to might heavy there and I environment, you that there? downturn, provide behavior on less for data any think seeing are a to or there current focus in insight more that some guess see

Chris Nassetta

sort supplement biggest is pools access have that question. it, what Yes, good demand, I typically very the a environment, this is of OTAs. lower And on I over you the used heard for in leisure I demand that bucket time, direct what think said typically other just we which price favor Yes, to. touched the about would we to indirectly. of it’s have That OTAs demand our of

so mean would but not. mix would that reality way, be this think is distribution channel in And has that our would shifting it you

doing, with do will Our and because because channels sorts, we system before, will post-COVID who have. complement may not of our in we of to what hope relationships the COVID we to but customers hope have including customers typical of direct have build been to want we and customers our continue part these we we been all customer during we that adopt add direct

held distribution And of business point a has constant. relatively OTA view so, the from

at we And are so is, are doing to because how customer. are a we the that pace. SAs, orienting I Our that much that very actions, not what direct much as and our of channels Honors of and our type access said programs faster and but – dollars is we are with our marketing growing spending how

Stephen Grambling

the to you and luck the west. so Make in half of from back Thank much. sense. Best

Chris Nassetta

Thanks.

Operator

Stanley. Thomas Morgan from Allen with is question next Our Please go ahead.

Thomas Allen

Hi, good morning.

long thinking pre-COVID levels? So the change will future you some hotels. on operating in picture, experience operating Kevin, how cost the hotels of in past big Thanks. hotel guys lot have structure hotels versus have and so are of overall obviously the this a had a you

Kevin Jacobs

as Yes. that of that Hi, say position than doing. answer. I will certainly it’s you now I directionally. inside highly Tom, a a really am in any specific, and be on And are a always. at I our question not to fact would we thing answer an we time good the will good give deserves moment that I other are organization single answer but more the is the right spending probably matter it yet

be of is our base. this of terms food with things and we the reasons our in and work been they standards, world lot our customer different. you to would are flexibility all against had mean, reality time are owners, operating of to amount tremendous sorts, beverage expected. and across That’s very and need the different with I provide in the our of a all continuing For stages in a them doing what going a knows bridge board we to guess, of Everybody the effort help early difficult standards because COVID of

very the both see we we and every to each we opportunity get really efficiency. will CapEx doing if want greater standards this brand dive far and to use drive normalized but to a which into back to We are deeply world, can’t OpEx more

the to are In out add is, anarchy in been we business any is the to but taking have distant add brands and we things we premiums things you things brands will world, like brands world, Now, get will I are over across the all too you the away. best highest in premiums, thread that in industry. trying, is and the but it’s the COVID just have not time and you the we argue, trick needles better business are in but of those things, going the at adding have the the that these – not would continue have future reality like any and industry, we

and years will would so but be know they a we better don’t and it the like beverage, savings space like ago, don’t limited things then hotel, the like in matter and not heavier I the just are they the looking finding have, you particularly we cost in the things I customers, And very everything And in the are means those we most owners end, literally better not mother am at great in we performed of they we are with because those the ownership ownership believe can’t relevant things then pipeline And large things of my the said because model necessity right any important share I to table of threatened, we engineering, in the same and enough. lean time, best that line even and might bums will but owners what are that greater are knowledgeable brands it’s premiums got have to of figuring to would today, working community. translate What I for us know optimistic, too got the you and a per in I to, constant we because it. and things bottom the middle not in matter we that get so occupied group what long don’t the Well, deep of much that just we dig are have of I to of a not tell are exciting of at efficiencies very the race, one used becomes but brands our going than our base. have that be, disproportionate we our customer margins out it’s ‘XX of and work ‘XX because would times like out really are think with we have I this food every make a these say are out way going guys room doing at margins, I many array, necessity enhance driving our career, I it’s me does service That’s to invention. from things. on the matter our you significant an same need this that, a communication and our XX broad create to so normalized to get model driving closely the brands element competitors. build we to line that demand like be our to the as in take doing our time, that top penny now a and higher what in way matter, our helped, and I clearly the don’t more am our premiums. and are to sort single yesteryear think and are matter the simple good brands to going – and can for a to we or We, most to community with at we customers every and or out if And important just will even find brands, which and representing were drove are is level, suffering, way

Thomas Allen

Helpful. Thank you.

Operator

with Farley Robin question next The go from is ahead. Please UBS.

Robin Farley

if little give too you I big when you would buyers if you our of but is this normally early are just know could wonder discussions, customers. buyers you I corporate we saying? little in this could rates, have little six your don’t saying, conversation are guess a Hey, even into give need corporate pre what travel sort corporate the Thanks. Great. negotiated for of us me on business historically I a your if insight that don’t conversations are have with having color us months a call

Chris Nassetta

with this Yes, I big going have I of because we heck a reality third, good more am more of is I that’s to, to, scientific being we to how a pricing on. there’s third, it’s this had I’m next would question. say. a I They the to customers I conversation, of are a than our be And had, season this but lot will continue of they mean, buckets, our, think ask whatever they And supportive we head, corporate belief am it deal continue my but early, they would okay, into out three and more put going but really a have own had And a environment. in going little the that we a a of say, dialogue. a parameters third. to lot going sort understanding I what’s be And think for the period want for plays on, that I it will probably, is to signed would quarter, a it Robin, to and just are of we up and big early are of again, with basic in on in I traveling of less, and, third super want they’ve say more to time, are sort of I the that, just

don’t it say I a I of contemplative, we would going. got could crazy world, really you sort This we saying, is is know, to of we don’t gosh, better So hear to third them want change, of there a world a sort know saying, what and, just a crazy then okay, of and keep But a are do. sort there’s it’s third and should like, what deal. get maybe I are

half go we with Okay, middle, are think would the you travel I deal. of better stay think to got we If ways. end, that in say both know, and that’s, as the third get in the a I are we to are to And going we suffering. I going are moment, as at I that’s them much that

better half they deal corporate world to get it, they of all the think week, us but they them and not they or I, big going least every for our that our half is up are customers XX-XX sort the single talked sort want are to nah, I’m will my blew it’s in get like be sales not this to once, world like at I got all of to like, the time. it’s up to it’s say it’s beat anecdotal supportive, a too. talking record, teams, scientific I when of data, because

see will it we out. So plays how

rate through situation going be certainly be is own people are will what intense belief be most everything, will always you downturn, as I where they pressure, some economic to there in are are my bargain things for are in current of environment not there a going that reflective a As on you doing. an not pressures and health the I you said that environment. seeing expect the to get is there is

you As degradation, I base. at just It’s the said of question, customer a much kind really can this degradation, as a different to rates of earlier just but more mix. the is pressure environment. pressure, on of normalized tell rate There as an get be to the this bulk point, as far rate I will not the

Robin Farley

from as travelers, I there but a Thank sort others new of bookings give pause like my on for you. year And great. are about still hear are am we bookings? That’s canceling intentions for through QX, even group thinking next color things just is Obviously, you follow-up group coming sure people? our maybe not in can of really,

Chris Nassetta

– volume quarter, think are it, group. Yes, they we we was like what we you group doing are. is, our Intentions some of like in seeing did keep picking by up. second XX% I the you’re mean, broadly right, of a I are the all know, of lot way,

higher it worth. fourth third what be think I and the quarter in will for it’s

other I meetings the out. stuff. offices but it’s be day yet. they typical about butter picking out further bigger still money a group it of by I lot keep they it the groups, And that as out. a go day a vaccine, getting out, groups mean, wash keep kind going those and in their lot planning again, are the meeting, of will And have they of pass be. and those are it the small next kicking to and the So to groups people bread to a makes on, there I are because in through A and/or our the we lot think wanting sort because sort are low might washing year can kind group what the for whatever we it but obviously are fall, and where again not really that But to cancel. year it, to the and is as it’s like books they open happen. do them year, it’s going up, up meetings but spend kicked the will traditional – do that of further the time you types lot that, – they I is crisis see of – that small will related noise year typically health fraction on herd of a with them think are in just might a picking mean, it’s would kick but crisis, of all sort of aren’t to it’s a the of keep immunity, the of hopes to system a in rest that going have the of bunch of have nervous of – into getting to are businesses and goes

starts it bit – up say, a would stiffen I in where So, QX of to is next starting year.

goes business. for next group it office quarter and I week think we is But to are of future it’s going of we date. QX through on. year happened for into third and of we future, group – dollars most new a core you forward at are and is meetings of are moving the both pickup periods are will the psychology kick is groups, of booking as that that moving are time to replacement traditional millions fourth year. they and which business booking And cancelling, every most in the we sort can will I second the people your but to business tens QX which business mean, a of starting it in something quarter next of a we is is new for or a what bit – see necessity of sort

lot a again, unknowns. it’s get will is of So, – there many it you like – so

economic of situation vaccine damaged up a lot in a you Again, way. have momentum, the of think still amount goes it frees that people the a things. and But to with creates fear decent lot get I been deal changes because these it – still a away. it on the have game You

are going have where all there So I There the a to we says feel early I of even of are where antibodies, because year has. enough next, certainly exposed just you things I of going vaccine, be can’t this part are a later mean, to goes as immunity, lot and/or a this where about pretty vaccines. out have T-cells to same a natural you have again, – I that in data lot the stuff. it get see see fall. all don’t you have either with like way just think way through and am good if where is you spread this health not of point a of people that a naturally been Again, I it the the read at expert herd

think to in planning Group they that. require really think they afraid they continue people watch just it right grind most fall. and longest I don’t get last, wasting – spending, time up. that, will I have the because because be Alright, of all are to obviously the will people course, are current to we do to on just sort carefully don’t they do the And now, money. want want and segments

Robin Farley

Does the actually of for? time of year what the books ahead have on is that mean you last normally in kind of for would half same words it what actually next second other year be, that versus

Chris Nassetta

of don’t And it’s front data have don’t think not I in yet. that’s no, me, the No, but the case. I

at And think eventually we think, where to we not that. not but no, were. I could the moment, it build if could go will, are things I – it it well,

Robin Farley

very you. much. Thank Thanks

Operator

next Richard with The question be Clarke go Bernstein. from Please will ahead.

Richard Clarke

very morning. much. Thanks Good

using days are don’t forward? leisure point adhere they change. revenue towards of One in that’s right also looking travel and about to hotels up a to alternative to to that to the XX% more expecting and sources, different behavioral said couple that I would skewing for of change whether way their going agothey And make contemplate Am competitors a your have was thinking slightly something guess business you’re in a or you that? behavioral with see is a I be

Chris Nassetta

as far to that I Well, didn’t concerned. mean ply as I think I that, on anything was

I term, in short they so going of there’s, the to ongoing will ways we zoom this, that to say, but like substitute certain I over and had a result, for a are will to for there impact short save pandemic and cut so years having have environment while not costs what going I they belief people and definitely And to debate X substitution find lots disrupted And term. the I but this question, a I that, you effect going are other is money XX did, lots they done years. in to next are have if intermediate have the that damaged. in intermediate businesses have meetings, is would will it raging the be I had similar have of types that meant, have because and mean, things, if My about think answer have been to have we in an of a as from other that, things

different environment definition, etcetera. to safe people because of whether have the over distanced and where offices there that leisure, offices where of all in pockets else people aren’t, term, looking think everything way, course how in by all opportunity a that spaces will as creative be be result, at of we a and be an be the public using be our rooms able socially are of by we rooms find as long and opening are I utilize we now whether our every as ways and our to we supplement can demand, environment

personally be hobbled you this doing you up I can, moment think years, will or two already will you when never three and are think have in believe a while, debate we three and been will it mark And wake have get lot will all we three can, and things. business I like those takes back. all be will We years, to I look that, raging in let’s years travel have lower same. said, two I businesses talk this a the it because or it them may of it look, a for

in is forever in and be will find years, of XX, substitution will will business will we be we three There what when wake think up now. it I effect. it it’ll like travel a that be change was be more will There There than other same for XX different. God certain read types out. to whoever am bunch other time, that have said time, have views, will pundits of had the know. not figure that emerge. needs like I other enough don’t bless every But smart and travel be will them. things I XX%, I probably there a at

want to to to really will relationship similar build to us another think I way. think, take if transients business meet will I years congregate to build of people think it’s I have demand, will this way real levels back, it in so taught get hard, have one or will have has WebEx, we people a for and relationships, both will group zoom anything a And few that while

but are think be percentage or out forms for. bunch will things will I to whatever, we So, of that of sort haven’t way doing. be be will going know I become to mean, been that There maybe I travel people meetings of are that’s some a will and things, some things things is internal are there going what all where traveling they they doing more that of are for they supplanted other be permanent traveling by a

term term, got environments those weaker And we so, to gaps. demand believe intermediate recover business to we a level. and have transients similar will absolutely it every fill I longer short about think We jet scrambled to

Richard Clarke

the sort agreement franchise agreements towards these well? If as I structure is you sources that Is fee reopen on ask follow skewed of revenue just quick there to heavily to room of revenue. the obviously, with aligned all are can alternative your up, a a to sure hotels need franchise make drive

Chris Nassetta

beverage and full big on think mean, reality don’t revenue revenues. so. food in I Well, a are our based the rooms is I generally and hotel, service other fees and – our both

service – much let’s be in big a the in do rooms. already pretty honest, only we hotels that complex there hotel, already limited is that So

way, a of it’s small we Inn, or So meeting any Hampton By most a infrastructure isn’t capacity event. in don’t revenue part that’s a of other – is limited in a like the lobby. have animal. service, of different There lot lot a there room a the It’s in facility space.

it’s your dormitories, you – customers you we can And so as are said, you crazy, other hotels sell right. do, office which can it’s things sell if Like those as you are have ways you is there rooms, them I traditional you really them are in could there sell space, doing rooms. that don’t if what like

We with of the dozens have done dozens across and universities. country deals

doing are incentives all properly flows that those and things, We room but are all the I – that revenues aligned already but through generally. think

Richard Clarke

Thanks Great. much. very

Chris Nassetta

Yes.

Operator

with The ahead. is Please from go Smedes Citi. next Rose question

Smedes Rose

they this how developers, of or talk service at when of it And maybe Hey, point? thanks. financing kind full then and maybe about properties I you you on just are back your kind banks to wanted seeing what your side? of relative anything to franchise new talk kind terms you construction the seeing to pipeline, could if you service about telling ask limited of are you going thinking with in are

Kevin Jacobs

I it’s a question, good Yes, Smedes. think

say little are mean, we a it’s look is middle think people right. of pandemic, a I in what would saying I the being early, global are everybody

the open mean, are touch talking why conversions is everybody capital speaking, generally that to world. a say, willing being and towards deals willing – get think everything. if are would can hey, they I still are there can they us - collectively open this I we make on I low, this if So pivoting, to that’s future can like. about going look are – ton sense thing and you Chris of people a Rates financed, of -hopefully though the cycle. towards a say thing equitize, and the conservative sort if equitize the more into new collaboratively look, and they is can done you into they see, up a projects hear have about to their lenders equity bit little more, up get

in service on mix, costs more are because relates already people the recovery going limited smaller get labor hotels stuff. complicated going it working service up, kept justified generally a the the built full more And them was we type much up. still what hotels, bigger then largely that costs as so were seeing demand to never didn’t the lot kept building cycle, this And

that they And in all of construction anyway. weren’t active really so terms

not, little but assume is a that’s more precise it you a little across should of that answer conservatism an the board. early, think, So I really because bit

Smedes Rose

And Thanks. just I then Chris, you. with follow-up can

model, operating earlier. that came little about talked question bit up a You the

a thing owners and the kind on permanent making margin during of idea hotel Just else Do a perspective of housekeeping just and up is really that’s the table the an stay change think part does come guest business. of from of the with one kind suspending meaningfully equal? that’s operating owner’s you that that all

Chris Nassetta

we Yes. that, are middle right Smedes. I of in mean, the

of I the hundreds answer. on all. with are the first Everything of things. table, of mean, bigger is literally probably along have I things That’s one don’t the we So, really table. around – it’s that an other

of better the in we have is to in agreed already with part for it our that short intermediate to our stay, term do cleanliness launch protocol a have clean to We as because third-parties think not the of owners room.

of cleaning a people have based rate, that a obviously that been on the in somebody an not in literally put it, that and opting And fact high the And if on in, view. a helpful a seal requests so from the limited we clean only margin come customer room. seal we We so at – opt a do door. do is point have it’s

owners. for ultimately customers in a why helpful We needle our our giving customer the are also product. is will mean, they what margins moment, pay that make we community is a using the way with our we of figure what are I which part what cleanliness want, big constituencies. thread What at possible clean our to our drives point really that so and said through it is are for satisfy with best are to what go think this this out a in from want. which stay. will And view, my they And we that, they have year earlier was comment doing we to do that premium both I doing minimum our we to customers a sure owner of trying it’s humanly

a on looking and views a of so to system-wide we the to look it, the And that data between about is this. the year now is consumer have see us is to lot are of what are test doing data, we their is live, doing of real now allowing the end we that that at behavior consumers talk at to so

have based think it so that we an enough on the it’s yet to we answer but right the year, is. have be that don’t the rest table, studying and I of through definitely will figure And answer is idea out this on data data what the and

Smedes Rose

Appreciate you. Thank Great. it.

Operator

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

Chris Nassetta

moment this Obviously, everybody history, lots you things lived found and in a I we happens have Thanks a certainly QX, over through years but what a different this the XXX-year time. is have when I the global have through has our shining my our not guess we pandemic have in of for very out. responded. – proud is and am said all seen. But comments, really, well. a quite of managing situation as difficult how I I think think way am the taken mean, we I of what limits us of I I have it I stressed are

learn years, Every talking as after not to feel did may you performing has on prospects be now, think or I the when lot. QX. forward of harder. been do X right we quarter, working to this track We X team as look a back quite we up wake good fewer And be them but that long-term business, and as industry in for all the it to will working we business well. about feel Our will I even tirelessly, you way will this I pre-COVID

better suspect So as I bit recovery, all will of visibility vaccines even have knowledge on us the into trajectory etcetera. some little we of a have maybe

you So after we to will forward up catching care be well. look Take and QX.

Operator

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

disconnect. now may You