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HLT Hilton Worldwide

Participants
Jill Slattery Senior Vice President, Investor Relations & Corporate Development
Chris Nassetta President & Chief Executive Officer
Kevin Jacobs Chief Financial Officer & President, Global Development
Stephen Grambling Goldman Sachs
Carlo Santarelli Deutsche Bank
Joe Greff JPMorgan
Shaun Kelley Bank of America
Smedes Rose Citi
Thomas Allen Morgan Stanley
Robin Farley UBS
Richard Clarke Bernstein
Bill Crow Raymond James
Patrick Scholes Truist Securities
David Katz Jefferies
Vince Ciepiel Cleveland Research
Call transcript
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Operator

Good morning, and welcome to the Hilton Second Quarter 2021 Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today's prepared remarks, there will be a question-and-answer session. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Jill Slattery, Senior Vice President, Investor Relations and Corporate Development.

begin. may You

Jill Slattery

Welcome Chad. Second XXXX Quarter Thank to Call. Earnings you, Hilton's

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

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

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

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

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

Chris Nassetta

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

all towards quarter I make our progress As we to recovery, of serve continue working second demonstrate, stakeholders. significant hard to think results our

maximize see determination our is for pleased for when remain our total inclusive deliver an flow communities at our force off. our to to safe needed team our profits are demanding a drive environment, and effective members that and and operating experiences environment For to for and cash owners to efficient it to pay reliable creating We're market overall in for most, share welcoming and models, guests of free our returns. finally, culture diligence value beginning award-winning to good shareholders friendly and a to for opportunities, positive time by and very through maintain premium full a an

happening. anticipating of travel world we've demand is the reopens, for pent-up the much As been

recovery XXXX, In quarter, varies versus significant Compared of a pace to first versus region. we RevPAR first the only down are variants RevPAR improvement quarter points second remain grew year-over-year. the and XX risk, system-wide the and improving points While major COVID percentage sequential XX quarter, every seeing in improving RevPAR down the XX versus points with was XXXX. percentage June XX%, XXX%

hotels was growth. Additionally, XXX% rate $XXX EBITDA system-wide year-over-year. XX% strong in was by of Adjusted comparable driven RevPAR XXXX million, exceeded up June. demand Performance leisure levels and

and system-wide across We RevPAR momentum with peak room of quarter. medium-sized quarter, For increasing transient levels the July into rates rate at accounts. with second increased meaningfully momentum quarter, points over with XX continued prior XX% small demand exceeded U.S. demand and with percentage night transient for XXXX This the larger peaks. leisure saw and from levels, US segment business room positive the XXXX first improving leisure results positive XX% throughout levels. and prior businesses nights levels. Business XX% June, also In was exceeding in the June rate XXXX of of

demand and percentage demand. of June night at quarter ending given levels. Overall, social continue seasonally the the performance We Group at rates increased driven groups, in levels. by leisure half nearly sequentially room group sequentially quarter, July, more improved with of in see demand XX% progress primarily similar first XXXX XX from higher to XXXX also points than

the the properties. urban Hilton, and the peaks. Square. year legendary re-openings now Hilton, above few group Union celebrate at are XX% bookings are Hilton XXXX including last were some our House of the Approximately Francisco our rates group months, for the to hotels and largest Chicago and next In we operating, Additionally, open of of San Palmer thrilled

increasing see rate. ability to As are and an vaccinated, people positive in more to restrictions loosen continue push we and demand government momentum

And July bookings, system-wide the roughly increasing leads XX% is RevPAR now US, the XXXX XXXX and group rates to July levels. In levels digital trends. with China traffic about are month-to-date, sales of we With RevPAR prior optimistic forward XXXX. is transient peak. XX% For in demand of equal is above

We quarter to increasing net openings Turning overall delivered removals. of US to another the in development. with of ahead robust expectations year-over-year growth, fewer X% due units strong and

feet and bar in continues broke of The totaling we nearly addition meeting Orlando and entertainment the the resort Las and first added its city. more XXX,XXX Atlanta, expanding property meeting XX the to premier our in nearly ground and focused Vegas Hotels Tru meeting over property opening XXXth Hilton an with In During concert featuring Strip. the hotels first brands, five-year promise quarter, have property. for XXX across than celebrated features the Curio, market by options quarter, now XX,XXX and with nearly development, are the expansive meetings of hotels, on Tru room foot space, properties, XX,XXX on of and anniversary also three and With US all rooms brands strip and we space, premium square Vegas to we event than now venue totaling our in luxury will rooms rooms delivers XXX LXR XX anticipated portfolio, more house World XX of for to world-class thrilled Vegas US casino, our highly the the as Along and three markets ground-up last and a the open with a and Signia also as food well celebrate elevated debut we Virgin this of We event Earlier undergo into Hilton, the and Canada, of experience. return Conrad for Signia XXXX. to the multifunctional in to Las Vegas events, of decade. with square brands. X,XXX also designed recently -- Resorts brands with month, Creek. Las Signia opening moving the long-standing the marking property new on transformation our across multiphase attendees. X,XXX the America. The the of X,XXX a we were Las spectacular month, beverage in the opening Bonnet the Caribbean adds is Latin This development XX,XXX our raises scheduled opened The to capacity

and for the Our continue with RevPAR in regions. our approximately total ended the hotels industry-leading number In quarter had resort variety Shanghai our able quarter Hilton-branded of given the beachfront Conrad more Travelers across a will than All-Inclusive globally. than Laguna Pike XXX,XXX increasing which Conrad the rooms, exceptional Conrad to than Asia in up signing half Riviera Mexico, and the and away earlier the Sardinia, add our announced our LXR demonstrating from all-inclusive year-over-year strength choose footprint. drive be and just signed continued more all-inclusive signings from brands the Resort; located Pacific in portfolio will resorts growing resorts XX,XXX We luxury this Americas with XX% development, premiums We we Seattle's pace, nearly construction. high-quality of the signings hotel quarter, XXX expansion our our quarter, steps be portfolios, rooms and in in approximately will under first Chia pipeline. Market. Hotel of and including XX% accounting month, in which record Place of X,XXX to existing we rooms expanding more Further of soon the a rooms even Resort; conversion to largest XX Hilton Asia from representing Tulum wider to All-Inclusive X,XXX the are Conrad our XX the Vallarta and commitment the region Tulum Mexico an three iconic all-inclusive and Hilton

development expect the expectations next We single-digit several years. to and to the unit mid growth net our trends continue remain in positive confident over deliver

more expect long-time frustration, at last rooms. in a and confirm experience growth two launched to above in flexibility openings on travel easily given X.X% to first guest net rooms, Delivering the we desire XXXX, pace unit connecting the a in For book innovative enables travel their X% instantly month year-to-date. least we the this solving and expectations, of prior guests technology range for industry connecting confirmed

families friends and to again, to seamless from travel excited travel experience reunite, and begin a booking create stay. As reconnect we're through

engage unique points' membership with them grew redemption members through to in are XX% and enhanced We more quarter, the our our On year-over-year. staying driving In us continue than partnerships Honors offerings. value frequently million our XXX for prioritize members, premium nearly to even opportunities average, XXXX.

the May, of of XX% For XX% occupancy, below XXXX. Honors members May for reaching quarter, of accounted only high a X% in

of diversity. know our half -- on last one earned recently XX us companies return the our back DiversityInc's year, thrilled lead into We recently collaborative details the to which the headquarters culture, As in which also of allows we're to invite bright office the it's spot call ahead. Kevin on excitement over thrilled critical for to top our you our I'll our to palpable fostering all to and number for the focused that, innovative to on the is with turn earned week. we we be were future to a team of which members list and and was environment, energy remain thinking, we priorities the The now With quarter. as strategic for back results give more head

Kevin Jacobs

everyone. Thanks, Chris good morning and

leisure rollouts, quarter, year and a as During relaxed driven demand, by system-wide basis, prior and the grew RevPAR accelerated recovery the in restrictions vaccine the XXX.X% global particularly comparable currency-neutral surging U.S. versus on strong government

to XXX%, Management compared rate was resiliency global those restrictions XX.X% demand. in XXXX. second down and was fees occupancy and Adjusted demonstrating and of fee-based quarter RevPAR the business reflect system-wide our largely the Performance was growth. grew mentioned, Chris between EBITDA relaxed model. $XXX travel million franchise As strengthening and balanced results

property helped the Additionally, control both and at continued cost by levels. results were corporate

environment ownership than hotel throughout the segment more continued performed largely a Overall, due to weighed Fixed suspensions of portfolio cost operating operations. the control. to costs the for Japan ownership quarter, better and posted further challenged loss Our Europe on and related due performance. expected, demand

For earnings adjusted for $X.XX. per the special diluted share, items, was quarter,

performance. regional our to Turning

improved the Second U.S. mid-single U.S., the weekday the digits. compared Americas second ADR to XXXX. Strong the U.S. trends with as XXXX down Demand outside drove grew improving finishing quarter quarter XX% XX% transient rate in quarter, increased and June weekend combined throughout down and sequentially year-over-year June. averaging In versus roughly versus comparable in was improvement XXX% XX% down across down RevPAR high occupancy with was the digits business demand, and single with XXXX. rates XXX% rate RevPAR leisure year-over-year

strong demand drove While was versus In grew June. RevPAR XXXX. limited restrictions overall on down weighed easing in trends and Europe, XXX% year-over-year travel leisure international performance, improving and XX%

to and July. quarter Asia While with the demand, XXXX. versus second XX% travel Performance in increased improvement, continued China recovered year-over-year cases strong the region and weigh COVID XXX% domestic versus to less XX% leisure was on performance region, in rising Africa from the was Middle levels Pacific East RevPAR In grew benefited XXXX down as COVID performance. in down than restrictions and down rate month-over-month In temporarily June May. trends RevPAR prolonged and cases and saw April region, to X% now year-over-year with nearly XXXX. XXXX, XXX% in disrupting RevPAR was rising strong compared

Chris tempered India due to rebounded now of above mentioned, levels. RevPAR restrictions rest as with travel region, the since Asia lockdowns the in trending continued China was However, In and Pacific across has Japan. XXXX performance

to development. Turning

mentioned, in net grew quarter, the we Chris units As second X%.

globe. remained grew pipeline U.S. located by pipeline strong developer the of rooms the totaling the pandemic, the appetite quarter, at end of sequentially, brands about challenges the Despite XX% across brought rooms with Our for the outside Hilton XXX,XXX

As travel opportunities, is restrictions owners gaining regions development recovery momentum. growth focus prepare and ease, activity interest for and on

year, we double-digit the in increase high low to full to the expect range year-over-year. signings For single

X% expect X.X%. of We to unit growth net

balance to sheet. Turning the

billion on During the we the facility. outstanding revolving credit $X.X quarter, balance our fully repaid

details speak earnings the we and have. towards to we morning. confident the leverage. our now As like this this issued our questions of would may we forward remarks. We quarter This in prepared look to target ahead, balance morning. all with open any on release like move second would and in be recovery you earlier our move found you the can Further We completes as for our sheet flexibility, we remain into financial closer line

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

Operator

you. Thank

question first We from will Sachs. begin answer question Stephen now the And the Grambling go with session. come and Please [Operator ahead. will Goldman Instructions]

Stephen Grambling

Thanks.

I'd the peel on You a great more. NUG, onion color to but like some bit back gave

but your brands, financing net unit like around discuss the across as evolved have world? as ads, quarter conversions? Specifically, the changing, Where we we how you comes year over leases, growth Thanks. from beyond? environment look not can this confidence sustained growth is expectations consider And the increased only how things

Chris Nassetta

Good question you. thank and happy more color. Yes. to Stephen, bit little give a

think, of, around about think the goes you development goes probably If the it. way recovery, about simplest development I think the is on so to the the sort so side, world,

more outlook drivers. earlier So really sort why driven the largest what obviously, U.S. expectations largely optimistic, our for we those faster I'd in the have versus by and Asia, in a year the seeing bit were and and of we're is, And raised say China. faster our recovery are in recovery

you prepared in Europe that's much be meaningful see -- we U.S. the we this U.K. If Europe as suggested the we knew is, obviously think as there. at obviously, is point. we'll the as a recovery, about uptick to our China see slope where is, isn't expectation and recovery. contributing where the as that's would and -- steepest But, there continue of lagging and comments, open,

pretty activity openings it's back think terms both picking signings side people development I and the in slope simple steeper, that at of are up on steam. recovery and more much of it So,

modestly On I'd say the conversions, just better.

would calls, had As been -- prior from we've high you we've for note conversions. expectations

view We it's at the a who expectations. are folks happening think great history opportunities come bit ever well levels great have are our weaker have a looking that performance that performed for indicator The into are point both market our folks the into of a fold than independent come convince fold, and of as which to performing at the brands than to little for that's better better is as leading conversion from I highest to system some a share in brands.

And so, signings improvement take to Most year the have area. then had the I of while were would pick in expectations. in them It's what conversion time pretty terms say property some a the like. lot time. next into modestly and we programs than CapEx some quickly, pretty -- things -- expected up some will work, of this and we take of but leading because will some better of high them of

terms I of the mean discuss. there's financing In environment, lot a to

other we I questions. of so -- think can lots to get

think world is, the a it's I answer I simple the big mean place. is improving.

getting rapidly, performance happens years would the US lender in China, and more more I've the up recovering not have from following doing slope and just rapidly an starting community need hyper the recovery, of are of ever to most because starts markets the lenders really but are rate yield. very And back are again, and financing say levels probably So to pick is rapidly, confidence. markets I than Rates efficient. you're to seen have and my obviously XX What this. is low been low, occupancy,

the going go that get it. back and to they're take and on underwrite then and recovery risk be so, they the willing there's the out to that recovery more bit were is the a beyond, we comfort to a further spectrum And little risk afoot, more where

see into a to it's can fall, talk but my for here in go. going look strong belief where at near into as get and in we'll and gradual And have a ways data still sure financing to there this is has you're the available I'll questions. not belief mean about China. to year so, is recovery was, other it our I US. anywhere out And financing that we're US pretty you're the seeing is continue continue it's you improving. The leave very that's fall, markets robust And my I'm to -- expectation to next certainly in the you very, it in increase the going

I a will take think Europe longer. little

sort It's back of where seen of had to was. way it we ways long the But not off what saying, go. floors off. near last a a it's anywhere I'm year. of So,

Stephen Grambling

Thank you.

Operator

Carlo with from is Deutsche ahead. question go Next Bank. Santarelli Please

Carlo Santarelli

and more around, plan Hey, guys. to kind coming it of with talked bit money talk my And that's in of the about outlook you things comfortable little term from Thanks we just you the a obviously, nature. new unit and a financing maybe little use for that that wean spend? could bit start on taking the question. light for guys is about way more growth you and near Chris, in rely it you in away as key get the something environment how then development guys to of

Chris Nassetta

a that's Yes, good question.

are anyway. deals meaning money the bit doing we dry I the numbers, over at think still look you the typically would key is quarter sheet would anything say balance We're had materially -- the that If we are a in higher anything deals. is, that don't not -- of than little I changing not don't we we're spending What using XX% I have. see

any what's now, been broader both long financing the reason in macro time unusual material Nothing right and/or have story environment, in on this that because not money heavier a there's sense seeing super year. key you're little in spend positive come going an have The given the a So, markets. working is a shifted. we've pandemic material way opportunities bit together sort shift things the arisen that of the of that on that for

So, generational. and the key expenditures bigger decades. the largely decades that iconic example be and of system for money resort-oriented been in working decades assets some we've our that are for be They'll will on portfolio,

expenditures of amount by number major money, the key for and rooms any on We've on that platform a Waldorf our years. another existing another to crazy significant. in And or and incredible that here. Not then rooms. deals X,XXX Waldorf over is us. industry Puerto been deals assets that and developed an on Beach with literally been XX in in were And Laguna, The and in in case I in normal which XX working these in that COVID was my another talked then opportunity Tulum, the relative an that and operating for was literally the I've the And hotel The prepared has Monarch between the World, I comments, the massive in about of So, talked happened Strip X,XXX one one what meetings And brand. about I think, of the basically X,XXX addition was to and on rooms the Astoria incredible are the a in brand. system with an player of Resorts PV brand. because working Tulum years Mexico, for with presented a but case existing means, get way the deal that's host three to we're Strip, years only Vallarta entitlements either

so sort allowed going to the have us matter we're that of us in purpose-built on these And incredible the to to would of and hotels in hotels system. or taken enter zone pull XX together have decade months a that a six

resorts that incredible And getting mentioning. come I'm I know that's I some there's the and so going a those of COVID. long ones that's that big And to not us I said those all in around as are others but like just answer view progress then be and by for We're more in often. a aided don't those now them of all-inclusive in few luxury. deals But

XXXX year. relative -- there going maybe spending depressed overall this would next and but a was year to probably our be say to up year I XXXX So, is

I anything I over our to returns and key is with the they're within deals at material. versus like been. to incredibly strategic we honestly, it that ranges really unique sort But nice going XX% are you opportunities important don't -- and we for money be see our If run and very see think even the don't system. these when anything I would have overall think XXXX, CapEx normal be going we think XXXX, And our dry. to look they're We of again, rate XXXX, have us of still

Carlo Santarelli

super Thanks it. helpful. Chris. I That’s appreciate

Operator

Joe The with next go JPMorgan. ahead. question Greff will be Please from

Joe Greff

morning good morning Good Chris, morning Kevin. Good Jill.

Chris Nassetta

Joe. morning Good

Kevin Jacobs

Good morning Joe.

Joe Greff

you're which are the an us looking year of of by might balance you're I leverage in but looking seen thinking at obvious this at the you be given and how timing resuming the end about heading your and what your we've return. give where was how progress significant could Given you're update sheet capital hoping ratios environment on operating

Chris Nassetta

I'd question. I'd figured Great. I Great I figured it it get and get early.

So, we on talked We bunch board our you. about we'll obviously a that's that's to mind. And with. I ultimately have decision everybody's know go a thank it.

still down. that We broader haven't have had be on Obviously, we was but way. would last the next steeper. of meeting. reinstituting We've I pretty even slope call the is But recovery an return dialogue capital confident that I feel said upcoming it the I of program we that pinned year.

the real comments that confident to people. We to our the quarter be and and confident very read that the second that we fall. get the Board. power really lot know commentary we're the think But you're say about first The variant would going to half talk be determined good prepared time I to update world that. results not in a that I to We're our I date color we're and we're We we I will would are going going but improving. The that to we're I next trends see we in that in happen think going do papers should year. feel through time are when the on to of things you that delta hopefully say everything strong the optimistic. in the not should because read So, gave very oblivious to exact and plus to in Kevin talk we we feel of you read of

going. that by And we better is every where and recovery feel about better -- so we goes yes think quarter the I

In flow. our And need and translate mind, should generating ultimately not to into we be significant so we'll because do free better real feeling year about next my return that starting cash own going keep our be use always as I answer growing our been to to said very able it we're with my prior that has belief of hoard to in sheet. balance little capital

back it to folks. going And give so we're to

future. having very program in is our half Board we'll next be discussion So, first of that and some my near expectation the year resume in with will the

Joe Greff

Thank very much. you

Operator

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

Shaun Kelley

everyone. morning good Hi,

Chris Nassetta

Good morning Shaun.

Shaun Kelley

Good morning Chris.

recovery fall. You mentioned couple a talking the that just times about of now in

you're was then I starting bit side. give talked could bit. actually quarter where relative exit how down the is how a But ago? year color much sort are firm that to a up something for in appreciate last we September-October hoping when were about and have share on of you what you the update talk that probably may to be at know XX% little data little be And can about of you it maybe right I of So, range you I cusp dig you trajectory of there an the the it possibly a to about can three kind to but in an and little that months you thinking too we corporate have? early

Chris Nassetta

totally $XX,XXX Yes, is the question. to I everybody figure That's fair think out. trying question

urban in travel it. give wouldn't and That's lagging and our in the even the you we've Trailing an going while I'll was I and system-wide described opinion mean the all our side. leisure hotels, urban has has that on. some greatest occupancy in and obviously with hotels Kevin top mean just markets environment in set. Like bit. we so to in you comp significant delta been recovery I board. of some in as both -- see the across business Obviously, last the continue further the press we've to a we I go XX%, pickup those that, really US some seen things seen, So, open pickup find seven the urban but recovery significant variant of that nice with days strength release, and give night do comments are urban And of -- the you And that been notwithstanding the as on all the example, obviously my in got data I'll have we with nuggets not I gave points XX%. group little and all and the

of last that's mean, have running you a says XX%, we that night, we leisure-oriented to not hotels, we're like hotels. I lot if leisure. what So a have while business-oriented

occupancies Memorial at I literally are mid-week travel seen reflective we've post being Day, of And definitely business so saw sort the funny back. of it, And just level that you shift. mean it's

You medium-sized even up any shift was businesses business saw and at And where mind medium-sized keep small promise business, is travel to by or forward and what's pre-COVID your that. to the dominated XX% percentage of I of question So going XX XX% points. XX% I going and our by a But weekday XX that's you know business in sort occupancies was night travel or I'm went given way. went right? just on. up small get looking that currently

travel I notwithstanding trajectory the behavior think variants impact not have to delta that. happen to of the the and view to of from August and in because again We've into get I you my as sort out, like. sort is wants going think you're data leisure own in get this, everybody what's the supports going continue seen consumer to massive surge

going transient the always in strength fall bit, and So continued we are be to do, just very in on off have I business hurrah have get going for before limited back of fall people August to -- all to limited because going back think think do, work. they will the leisure. always like as you'll be And and little good -- fun you're right business you they're a as to going when see do data going going you to and finally I of the not stuff. you this lot are out. more But it's And that school the far much sort obviously people a vacations. maybe to last kids traveling

points time XX, XX haven't data you gave days business stats lot I a -- occurred. of is this today. So When get I real the bookings you out, transient that have

of I where is what will it this think into So my view gets happen.

and Day, I look believe the if do like, the through have you after but Delta I believe I we hospitalization them. -- I'm stats a health will to Labor the expert, get talking at powered not terrible. think on really not I'm do thing, lot you they're of a

four right down trailing what's sort you or infection good. have of XX% a the look there three behind patterns at If day They on in quite them, and we're UK weeks are the XX happened now there. over rates basis

going So sort debate I that that. of to And get to we through know, kids optimistic be the power of reasons do or fall, think mean, to wearing not. we lot we'll school. masks think there's when here's I are what a they're whether I we back

pretty open I going they they're may back but different yes places, I'm mean to confident are school that. times. opening. offices and Some in And

their work push baby sitters And Some office, have more you're here want the people at Obviously, in of people you're to when We're going and our have are customers, again, into a But to all which going open. anecdotally, said the when booking I operating that to all at we're kids to of travel. just people going going open school, our -- back needing to things to to both be it pent-up and to you're There's with be they've propensity in there's or headquarters. data with to to we whatever. too at get supports you're customers can't means able give that traveling. out. reading we I with -- talk month you run then fall, businesses. demand you talk if generally far to the do people When to for demand, it's folks it been because and okay,

much They a much elevated be of And get kids see definitely But are a the but forward. because trends will we again, year. is than weren't my particularly period, world. bit longer fourth be been. take living the motoring back quarter a come the will Group still third, booking into leisure school, think time obviously the now a will because while better are they natural for little leisure vacation. into the fall, belief back. transient the as but school. think you in prove can't I we're coming I hybrid are the it, gestation group back will in they've last I business office, we're I And reduction Kids going on in think do don't have always go you're believe so people are as as to do I in in to

said of the of -- back year feel time, of think levels. I sort of obviously, XXXX And I that I be the I by better. XX% last to believe terms In we'd end

do We So while still it's start Camp to We're okay? not uncertainty not want ready so -- here. giving to Runamuck not that. we going I'm to forecast, wait. There's we're not not mean guidance, we're enough I doing do it. do

XX% I say levels probably In We -- current demand at XX%. globally levels levels are our probably demand thinking our to view XX% in and numbers. versus RevPAR probably back I'd US thought. is the circa somewhere And the are our looking

we're we're we again, getting time there. than last I So And -- again thought. -- say been much steeper mean said it much recovery has today. I I

We Just things even Obviously, they'd but knew quickly know optimistic it's than have we thought. the would better been come coming I back. been I've would have back than have more you all recovery about thought.

being this return We're the comes just we because that's us to we're on But shouldn't and be – I rate most think as back. right? team of things, demand, again of recovery rapid the my to be – pricing is that's quickly back demand, surprising And surprising look alive almost of one laws thing a thing of any when although economics other this will But the I of of are well. years about most when rate. most doing relative any it XX unusual this kid how I believe our the do period just really it. smart

Shaun Kelley

for all detail. the Thank you

Chris Nassetta

Yes.

Operator

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

Smedes Rose

to a that. that. little Hi, up bit thanks. I wanted up on on follow to just I follow wanted

color greater in which increase in just around willingness could little were think of those folks' more pretty a was your you that side. groups and kind XXXX, big XXXX the they I a you're And are first more talk think in maybe than your positive the to just group I of you've a sequentially group now is opening on call. this book maybe trending what I about bookings what said your on bit hoping remarks quarter little at you composition mentioned point. rate from seeing And

Chris Nassetta

great than of XXXX. are for What that are – is XXXX all question at Still still our said greater building. rates I that bookings Yes.

time didn't say takes Volume book. rate. volume. off just to build specific be it to because So a is still the I bit

year seen much close In for volumes they in barn is year expectation for XXXX. have later wave because my simply their not about I'm a is the to takes and they get So year to meet. we – – It year. were year. this past people we to anything but They're the get the ever they're get not of They it. burner they're But the year bigger through than season the rate Delta, the you when budget the year bit the before next they're there the not how for the next we'll know in in Delta year, year a and sort money where Again above. closer at this particularly then but we've time worried have. want plan be next in to year

bit to Even pricing. is it's my strongly expectation the we're at a like what so very we're And it this in. health to there's monumental been be issue. a just I've really away. our saying we is all want careful being amount I've what reason to not though demand recession it fill given want been be sure make teams takes we now, going volumes little going don't of It to for honestly, – longer to what's the that We a give –

really my momentum And you sort final in the get on through stages of the of is volume. the required that opinion before getting

be a patient space, disciplined what's can demand And is so be of meeting limited recognizing a there's we're of going there's that that's being and rates why to going bit gargantuan given think super a on. I we amount amount because are up

Smedes Rose

Okay. Thank you.

Operator

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

Thomas Allen

Thanks.

So back up putting to on And in growth you pre-COVID? were X% helpful can net guide you you unit gave X% if and the some you growth, think great of earlier. color do But to some progression unit get obviously you've your seen terms so when?

Chris Nassetta

I probably Kevin? it's Yes think I do. and XXXX sometime between XXXX And

Kevin Jacobs

Yes.

Chris Nassetta

of also Development. Kevin is Head

XXXX I to – in you us starts. in for mid-single got more before last couple So in three make the play you if And the he's just – because him. think sure think I XXXX. business XXXX, I commit it's that you of if think nearly I of next through not in get in Yes, or up Probably to I digits And the want were to starts at then when we we'll look if we're through ramping that's gets you'd as at done X% as at year back look what in you the bottom. year, sort just the see – last much down be mean And last you'll This year look be starts. range. think down in the and then next two I progression modestly, think years to year I starts. year we'll you're I that's sometime X%

Kevin Jacobs

Yes. old construction rate. in period got your if X.X you've years, the the get or be years time three gestation you run the bottom, three past average is X.X before pipeline to or to back or

Thomas Allen

you. Okay. Thank

Operator

Farley from from UBS. next ahead. question the Robin And is go Please

Robin Farley

to ask you about Great. as Yes, I well. the pipeline wanted

and of you what digits in three you theme year? pipeline, next And the it conversions for that full of percent then years. that was the mid-single just be maybe wondering you said of XX% You for were mentioned signings. what to QX on think mentioned the openings expect I or I'm two

in had was up some range might given this that be maybe construction kind than catch you lower of quarter X% last year. said XXXX the but year to of there think this X% that I just kind

So some in and see continued lower I'm Does through you fact kind XXXX. for year than is we'd into to next carry X% bringing XXXX the it open slightly unit here the maybe growth with higher in X% XXXX, that of wondering to so of acceleration or sort that rate still that in things Thanks. closer XXXX would rate thought bring XXXX? forward into forward

Kevin Jacobs

good I've try it. thanks. got order. to I'll Robin, All Yes, go questions I think in

on last remember lower. that percentage we the were they of front was I think of exact circa say conversion the were quarter. were year XX% timing. XX% of And the openings don't XX% I'd openings openings. just for I but sort

a even given or will signings higher in second of that I be we had it think maybe bit number the this little the year sort quarter. of

And regionally. about Very that's think independents, are I in soft And quarter, the doing we nice really happy way -- brands, from second hard a more conversions to brands, conversions think the look between brands it. so with good conversions conversions. from other that's mix

is well. that as deliveries happy up pace going But builds said, with our that. new So very of of

move. that's a next being mean it's our for a -- of the hard conversions. So a The think sort not bit of little idea to into the bit by affected that baked of timing one to of be do course, is percentage pull idea more what as going of it's harder expect all much. XXXX forward I And third I little outlook. I'll XXXX we bit maybe about little replaced --

several And about picked when we're year specific the years is mid-single X% on of up saying which yes, to now X%. then And next any mid-single So were we thought. said digits. is same to digits X% to for X% as X% one said we the you course we XXXX pointing we not to X%

more but net the is about what bit So hearing think of a been lately. given growth going optimism it's you're unit I about what's on the little same future

Robin Farley

Great. Thank very you much.

Kevin Jacobs

Sure.

Operator

Bernstein. Next Please question is from ahead. go Richard from Clarke

Richard Clarke

thanks for question. taking Hi, my

side efficiencies working with there ask able some levels. drops level? to commentary other sort wanted in the much that, of is realize to labor truth this whole of across the bigger the shortages And the how US. actually sort there's being by on Just or is you some But your opinion service Obviously, your less it's on in working been hotel thoughts in industry. around way

Chris Nassetta

industry is your but question. supply that that Rick. service dealing about of Yes day. great is lot real a issues and you're and every Labor thanks just biggest probably definitely shortage all chain with issue that -- single we're Hilton It's industries a for a issue, reading the not manufacturing

of next complex quarters interconnected lot of enough think I it. level, of this All resolve I behind At reasons to that itself sort having a not there of are it largely think is couple in sense a the over high will labor. the

as health. workforce impacted had kids to still particularly now already we like feel of important don't opportunity they they're it's back because `been of There most have -- should because dramatically schools, it top-up and the for in in right about is this been crisis Delta federal in depths care so last September. year now take that day aren't a the kids. some but to really their some women the is government home health worried care. work, insurance then employment And away unemployment were the stay are there's in don't people that or important People they Some we that of the of early goes have of that obviously have with programs variant to of where haven't ton when -- effectively as go

So past when -- back the get early kids Delta the with these I think in last we in wave insurance school, hopefully away and fall. you get goes unemployment

labor see side. a of on easing significant to the I think you're to the going start issues

awfully on service. are working that And In issues we a are margins terms good doing the to difficult given I we're of, very we're impact there deliver circumstances. to great its think what job having given service are us obviously able hard while all of -- --

it We less are doing labor. with

high because cost. you ironically, get you thing. margins unbelievably that you're cases had And labor less just the so consistent demand with what so are are you and the given price before a rates is ability have can't getting That given many to the effectively demand and in obviously, temporary

more we for model housekeeping then experience other a that and crisis different testing great the change You're operating things it in more done think said ways things, particularly going have terms the ultimately relates of a in to to learning of host efficiently. whole Having do we've we it where bunch hotels. of food our deliver on and labor in smaller beverage and customers long-term the to and and can as

and this across it think we're other I labor developed I about on have major brands. through to issues when so and gets we flushed have side of And a higher-margin on talking businesses all plan all stresses the through strains the and the think we're the

I spending as but issue. I big a it's -- it think yes, adage on shall We're so goes a the old And lot this do too pass. of time

Richard Clarke

Thanks much. very

Operator

from Bill Raymond next Crow the is And go Please ahead. with James. question

Bill Crow

A June Thanks. down as pivot in the I and numbers. Jill. be to relative fourth is to And business say a quarter did closer The XX% was was to you XXXX Good think to question. in going we you clarification. morning, that it XX% clarification mentioned That's RevPAR that clarification down travel? the

Chris Nassetta

did. I Yes

Bill Crow

just do business leisure I'm your The declare or integrity surge? goes we until travel over any we victory surprise. can we beneath rate right, in to have I'm where being what discussion -- about the I at really question guess rate recovery wondering this wait maybe for a we're biggest if the already point get into time to lies first and see

Chris Nassetta

Yeah.

you it, one first the But -- I I talking didn't well, you. That's the to said over yes on apologize first. first was I question. the hear, because clarify and maybe what answered On I

long I and point. rate. under what through want this time of You so be promise my is don't a to deliver doing I I been what meant atypical. Bill, I a yet seeing little I've at to know declare life, theory very this I me bunches on said. been over mean And in recessions is victory I'm tend

improvement. fall believe have and the So year next going -- robust into to and do and continue we're that I to demand

Bush for my earlier carrier. the aircraft about W. to work I on as that's on story didn't rate an did recovery comment, George declaring here, it in don't when back difference think the it I It but think be I him. victory. look I real out we So going said in know

Bill Crow

didn't work well. out so It

Chris Nassetta

It's -- it's a listen see. But just to you then but to of nice again it's how nice price being smart demand. in Yeah. function it's see, demand. do It's

Bill Crow

Thank All you. right.

Operator

Truist with Securities. is question Please next Our from Patrick Scholes ahead. go

Patrick Scholes

Good morning everyone. Hi.

Chris Nassetta

Good morning.

Patrick Scholes

ballpark with this to to due staffing here percentage there, answer. and a question just, Quick of the right unable inventory But issue are out labor sell your hotels what full sort of, is shortages? now for looking

Chris Nassetta

just bunch don't labor are data say was talked out Dallas and of some I the was -- definitely But with the what can't but a -- relatively there atmosphere. you. portfolio. of small atmospherically that -- can't some a I about. we it. answer scientific you definitely owners and would I've I'm have probably percentage I hotels don't giving I topic, I'm owners I this for don't talking to because our I a It of one don't I week think -- everybody's -- our because -- it's on it's not number have

issue. not also but reducing it's which to the some I think a and where markets not with it's it in can't helping to Bill it done occupancy when actually can by only -- were rate way issue rate, the helping declare profitability. we manage that capacity we victory is because degree by a we significant driving recovery, way but an rate we're versus best really drive maybe they're about with how the they to back smart rate, Crow And that

is are So many of in I a having the think success in in hotels moderating top incremental where they the are of to the having great I -- and had higher. just up then down them, more if net-net they opened the can their making line. they talked issues labor profitability on few than levels driving who it and they're just capacity. money They're and occupancy And

and they'll we But has hotels. in of obviously, labor sort. we're think point There think do I Long-term, it's already need unique mean, I labor owner capacity story. that we more get small sort, in cases, to an to my make bad gave want to deliver sure a percentage. opportunities of have a bunch from do a relatively all doing at view not answer. things the our access to it's limiting the system deliver, I So the the some issues to labor are but I ultimately are service we moment many

Patrick Scholes

the you Okay. Thank for color. Thanks.

Chris Nassetta

Yeah.

Operator

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

David Katz

everyone. taking questions for if Two I question. my Hi, Thanks good morning may.

particular and and in if that what I those line straightforward. that a where franchise much fees Kevin you Within there just should is card right? was had larger of us. assume insight to other is item, in easy are little model credit welcome? either number know There's -- there. a be could in on would be But little are us we modeling moment for we're there, the and fees franchise things fees nothing some But in to a than a I of flow it's there one how Getting in there give the that royalties pieces candidly

Kevin Jacobs

license all fee Yeah. a basically is, overall mean, was hard fees easy David, growing are -- RevPAR short time. question. it's they're real that's and overall strongly. growth way I And the really the at the bit same lower growing. your than answer By growth yeah, the

fees like that's a lot RevPAR something think at quarter, up license I XX% growth the less XXX%. obviously in than were but second

than And being a so up bit just little less the math ends RevPAR.

basis be it should going lower period we long-term of about growth of the because to than bit little one And comps, when -- be really RevPAR this so in at being growth. when rates elevated a we're these crazy we're fee On to one. a

that's lay So I can it the easiest way out.

David Katz

it. Got

Kevin Jacobs

Like, we said it's hard though. to model

that. Sorry about

David Katz

biggest as don't in be mind take. model. on helpful That's It's okay. part may question the got if not well. and will I leased. you asking within whatever not out around, ask I owned that No and recovers But grows similar you any If the -- of certainly of, color a my sort would future your how sort

Kevin Jacobs

in in and of places particular behind mean, fair trajectory it's is UK, I Central straightforward. that in portfolio totally prepared sort the that remarks concentrated Japan just telegraphed I it's our in a mean Yes, pretty of like little again Europe question. the bit are recovery.

the than see happens. And quarter. So obviously the obviously there. of and business. last recovery of just probably because thing there's core to quickly in And we quarter little what talked think what's is needed It going just up going recovery grow say nothing dependent bit. behind. then to world. the I'd loss-making opening structural Again level parts about things breakeven-ish on the it's all next we world it's We'll more will those be this sort loss-making of and the was a the it's It's it's QX. be It of in

going be it's it's positively to our going going a because to base. growth forward So much off contribute lower of growing to

David Katz

Perfect. Appreciate Thanks. the help.

Kevin Jacobs

Sure.

Operator

question Research. next with Please go from Ciepiel Cleveland is ahead. The Vince

Vince Ciepiel

taking Honors to back for high. the I come contribution wanted Thanks question. which my to really sounded

is I which business under said off. points you a all think around is XX%, XXXX. few still And transient think XX while I points that's maybe

I direct. think that usually over-indexes to brand

over this the impressive. seems through curious there's just contribution you share, do How of think like narrative how it direct So direct is evolves the next year? take OTAs really course business evolves Usually a think you but that pandemic. the your it

Chris Nassetta

I Well, to over probably Yes. -- next the it's harder year judge.

the Over continue for obviously, enhance member of to the is of objective a to crazy a I've our been sort you're next proposition several as years, saying not such Honors value for that Honors. long to be time

the technology. You get all

a You of little bit get discounted rate. a

points. the get You

buy travel staying you're and an just you're create sort value. giving It's value. the And opportunity treatment use to and concert you're world of mean shop of spa rooms away or a I you're can to much or on member sort if not effectively food You points at Nation, ticket whatever. or very silly, a with because get an the Honors us Live and Amazon, beverage go

XXX for trying relevant a years which sort think because, relevant happens represented and currency the two for frequent infrequent it's travels so that sure just a sort that many five occupancy made probably we've low Obviously, I it's for a not of loyalty, to a over lead which think effectively and of, done, proposition be by helped as us to days somebody and industry to there's three last that's about And And we've of our that on them. the most the these and a is calls, works been XX we've value been times I've or year travelers days program high well. year percentage but it us or it's in go that what's travelers talked most really game-changing true. years as over I make

pre-COVID. we effectively it that about I'm and in continue to set core started we our not XXXX. letting Why different I things. only how opportunities. also higher were to is And but June it's I would in core COVID were sort our COVID traveling weren't provided back. really pre-COVID marketing much hard couple lower were customers. so we come own And that two specific we strategies than for Number up. customers XXs want my think back, being in travelers mean that we you and One I points our in pointed mean My during were goals view and of be traveler we running shifted the out back? is in Well our are to upper not that COVID May funnel funnel that. I into system of think the two as us for worked attract May core a when

a Honors And and bunch good were I sign is really value member say, to those an of so we this able then to get proposition. gosh, to up a realize folks would and like be

in believe we great obviously one system. And the really basically wasn't proposition hard after our you you member keep hope staying. really say, during and sure customer and has when we've then comes one Honors got that understand whole our wasn't then to they go maybe get value value the COVID together customer when So core make a been them thing let's to the core, the put back proposition they're three. And and an

were distribution -- better the a to the Because where believe And the get back so Like more experience be objective better for because it's that Why? that. to the significantly customer. beyond to objective wasn't From pre-COVID. not lowest are. the they get would The we -- our distribution have. we they our It's are. the view ownership the of and cost we happier lower channel the with the experience proposition the system technology distribution point channel happier It's costs. lowest better value an we

And has to us So direct or it reasons accelerate the to right those three belief us everybody I when while is two COVID afforded a industry in we want think an to years you obviously the continue time for difficult in do for relationships. opportunity including wake some efforts. all been my of build very up

Vince Ciepiel

Thanks.

Operator

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

Chris Nassetta

about appreciate those time time that we're and with can our day. into are all reasonably company. the Obviously, but very after tell not relative QX of we pleased the to bullish quarter. there been we're just we Have look you out very recovery XXXX Thanks oblivious third everybody where up to the from for catching today. think know manageable of the obviously comments we care. territory -- risks there about covered we'll while look to Take beyond. a as are lot We my the not second has great forward and probably a half business and industry-wide And and we're bullish and forward very finish we year, bullish everybody go about we

Operator

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

disconnect. may You now