H - Earnings call transcript Q3 2018 | Hyatt Hotels Corporation

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Operator

Good day, ladies and gentlemen, and welcome to the Third Quarter 2018 Hyatt Hotels Corporation's Earning Conference Call. My name is Tiffany, and I'll be your conference operator today. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. Thank you.

conference being this purposes. for reminder, a call recorded is replay As Vice and would the Brad for Senior turn like O'Bryan, Investor over and I to host conference now Finance. Corporate to your Treasurer President, Relations today, Please proceed.

[0CPPRG-E Brad O'Bryan]

who'll Grismer, thank and Hyatt's you, us call detail taking XXXX. growth today for November Executive President be earnings year call. and for of strategy. on a for Thank Chicago the our Joan in quarter who well call Pat XXXX third joining I'm quarter Chief you our then and here and begin CFO everyone, preview Hyatt's third will with of the Good Pat, Officer; role operating morning, the financial Mark an conference full turn X. Tiffany. results results with Bottarini, our highlights our as Chief update and Financial on Hyatt's Mark Mark over over outlook quarter, Officer; on Hoplamazian, more effective an as XXXX provide update for to our will will

then your questions. will We take

references all and to constant basis. results our discussion included reminder, today a are dollar a As comparable in calculated on RevPAR

differ actual by to on Report implied other and results which from in would made remind Annual cause forward-looking not like described started, Form XX-K and uncertainties, that certain statements our everyone our are comments. statements These statements. get we in facts and as SEC filings, those Before risks numerous our on could I are call or considered this materially to historical are subject to expressed

as along we are with unfold. that XX, release earnings call issued events obligation of forward-looking actual comments only publicly as undertake to any no today, this on and update of October statements the yesterday late XXXX, made in statements these Forward-looking we

archive night's a link website section on find last the for to night's An to this Investor the available and reconciliation our of our be Relations our turn website in hyatt.com measures release. last With referred Mark. at financial earnings Reporting of our in the over release. in can on I'll non-GAAP per days under You remarks included Financial of XX that, will call information call

Mark S. Hoplamazian

Brad. you, XXXX call. third earnings to welcome quarter morning Hyatt's Thank and Good

like that quarterly made I'd earlier on Chief two October important Pat covering be Monday, Before to leaving we as month. Hyatt On a our take comment announced results, we to Grismer announcements Financial this X, will position at Officer Starbucks. that

function capabilities certainly I'd a appreciation opportunity are express to sorry we the and Starbucks Pat has company I to in finance tenure While put the go, value to brought at Hyatt the exceptional evolved great and his here. know about leadership there Pat strategy he my work over going is years is for a He's excited deep forward. has as to elevated the during way. meaningful last to his see we've like of couple Pat provided Hyatt our here

and for to that lead our integral tradition of Pat demonstrated. important effective head with abilities the We has for finance of number her positions, in also and carry the recently finance closely Americas effective XX has Bottarini financial was team become in the Joan region CFO, same of leadership Hyatt November X. the of years many will region. served in confidence as and for that I've key largest operating Joan leadership our on great been worked where finance member a communication our she leadership have with Joan our and organization announced a most has years

related purchase contingent Hospitality acquisition management price possible up additional to an a Turning million, now certain with agreements investment base second announcement, of million to for to $XXX terms of Two month terms the the and $XXX Roads of this the to agreed hotel important we earlier conversions. on regarding finalizing

to if strategy, weeks assets estate three our finalized additional will and expect of to hand. real able available $X.X determination the initial the to proceeds our this billion utilizing within transaction on be over transaction of growth we the consideration, close sell-down are be under the asset-light and with of to of closing. an complete to of We sale any, funding owned capital acquisition Consistent from two coming cash XXX expect the the the days platform fund with of

the luxury new Hyatt and into and XX,XXX XX,XXX well-established brands Roads micro-lifestyle the family are nearly portfolio a currently and collection The rooms to Hyatt our open and brand. of an properties to acquired fold, with distinctive Roads lifestyle of The Two and spans Two portfolio. welcome thrilled We Two approximately team hotel operating Roads combined members than adding what expanding Two more impressive encompasses offers customer all to will in or with our around are of the will Roads segments ability our of the guests. guests which value and base believe world, thus luxury portfolio hotels brands Hyatt XX offerings. current of XXX a our the and World upper-upscale across we serve With this we enhance have properties acquisition, enhance diverse four

to realize capital an with we adjusted EBITDA This yield that XXXX. multiple new is this criteria acquisition large pipeline in with Two high, in advanced brands XX negotiation. consistent deals, approximately number of to by of Based implied as acquisition, growth evidenced Roads expect well Importantly, for has our signed we the as of the for resulting totaling approximately and anticipate Roads rooms the been XX will Two growth times investments pipeline our overall X,XXX significant with stages additional of by synergies deployment. interest transaction strategy in developer their on a rooms

meaningful return into from management record completing accelerate investment of are a which sell-down our a has to multiple our real permanent to monetized EBITDA an high-growth, owned effectively adjusted our $X times we about to capital will a estate capital-light we're time. earnings shareholders. over meaningful average of year proportion This of higher of deploying in out billion We this evolution growth a hotel point portion platform. level proceeds also been further a where would XX.X at that fee-driven of of I expect

to our on Adjusting quarter led constant SG&A. and our in adjusted currency million. say that another with in items, increased the and pleased XX% good $XXX of portfolio on I'm of to by basis, and average RevPAR other adjusted from we management non-recurring driven and another continued solid daily increased solid approximately year-over-year growth Moving transactions rate. quarter results EBITDA leased increases in results, for by franchisees reductions EBITDA impact delivered of a fees, X.X%, primarily System-wide owned quarterly

Notwithstanding of basis, of of year-over-year of a of in Hyatt delivered consecutive year-over-year year same X%, hotel net rooms quarters X.X% to another of pipeline existing and making quarter strong on an XX,XXX marking growth equivalent time of four During the openings, third our deals global we of quarter, net at signed the approximately growth the leader stands least rooms, an rooms last industry very growth. nearly our X% compared about portfolio. increase XX% at

we our what Before our on growth our earnings mean we business. what the driving guest start few These about building third When will service progress of core on by I mean guest quarter calls terms, not Pat on three shared last growth our initiatives by detail our their in a more business. ours. at provides defining guest I with of is acceleration guest regarding on intense engagement two centricity focus heart engagement, drive to engagement. are engagement, and what by on results, that an the talk we're doing select minutes guests we of making the will the Greater I characterized we're China our in sharing spend

allow vehicle to tailored to that has experiences. Our goal a differentiated The Hyatt We develop by delivering a us brands offerings will to us since platform. time. loyalty or directly in strengthen that early World and with guests ways to direct not guests is during XXXX for over in do of believe enhanced with is of to our this number guest engage just stay over given our our of Hyatt differentiated relationship and the relationships for in so introduced and continue members launched the powerful areas. serve World time, approach have We will most

by intent our hotels UK, indicated Small Hotels World several mid-November, European of of I'm redeem which to the members quarter SLH announced Luxury hotels, markets Hyatt independently-owned of including Italy that are World, will SLH, time, Hyatt properties participating at bookings by the earn Greece. for launch of the hotels the to where call, and alliance with second discussed be there in around includes eligible the to pleased with we in recently announce Hotels. able the World luxury points Hyatt and key end participating with significant world year. the our During exclusive hundred alliance or presence fewer an I a At

many The enhancements of member Hyatt add year-to-date World basis our new a months. points in to in markets we are room increase resonating an platform to on continue approximately with leading will to penetration made World night We more the XXX Hyatt coming of in guests, hotels the of basis.

versus enrollments year. new member Additionally, XX% are prior up

part World this of spend. is are the the that late have joined and card in significant driving we the recall you XX% who card credit and co-branded increases Our relaunched will in card Hyatt of since is up this another the Spending June on the year. important members of year platform engagement over relaunch most

We customers. members strengthened We experience of digital the importance new recently welcomed area. the leadership connection our in our team with of also recognize digital and with deep the digital

share mobile year's levels the channels of outpacing expect Avendra booking are direct and we in a for even enhancement our further to in digital portion our activity. significant order direct over add is track are functions booking We digital Growth guests, committing channels next of of the our new to features which months other of drive and last our toward higher from sale XX all digital proceeds entire to of of system the will capabilities on engagement our hotels. we benefit with of platform enhance our

highlight I'd Another engagement is aspect to and that wellness well-being. of guest like

and know, focus of ours, a has been this key last As year. our of acquisitions you leveraging Miraval Exhale

connections on before, they've believe this to our lives. our as in deep drive affords over area area is industry indicated the of based the described meaningful hotel emphasis that guests increased their that loyalty and to We unique our listening our I've time. an ways what in with build and responding to in focus within engage As this us guests position ability in area

into Roads of enhance in Hospitality. with of of we broadening brands With the are World recent One Hyatt. our the our engagement of and is Miraval the acquisition both membership guests example Exhale Two Hyatt, the final how of of value Exhale integration World

quarter for and Hyatt strengthening a I'll year the and differentiating than third call buying. resort markets another the to acquisition, quarter our and Many compelling driving as sharing XXXX we distinctive to holiday which the this Pat. building focus I And a pleased locations, competitive portfolio significantly that, position. a expect power close experiences of ways options good our future I now we the leisure of and further the out an to results of building touched solid saying scale, are we a like means number hotels beautiful that the XX expands of our It's area by us strategic new the With we through in are engagement are adding we number alliances. guest in with demonstrate for entering to relevant over year the investments fourth and XXXX. brands, new new and and with in I'd of direct are loyalty developments are driving more us our brands means our additions forward turn and on a bookings. position of as of as close significant that guests. for look to

Patrick J. Grismer

decrease on $X.XX compared of by our Late growth quarter The RevPAR EBITDA and for for to year a third in income providing then was preview the as update with yesterday, and the I XX adjusted XXXX. of basis. system-wide the Adjusted in on quarter and resulted expectations $XXX attributable earnings we'll EBITDA $XXX of past months reported approximately third million million on you, to morning, everyone. for Mark, results, million Thank $XX of begin well full transactions we diluted quarter of XXXX. XXXX our Hyatt will share share net an detail per quarter a of over impact X.X%. good net a more as

in franchise of evidence to another operating approximately third of we Base, on the hotels. with revenue in taken Americas, profile expect earnings approximately unfavorable our and adjusted on recognition and in third of this management quarter growth on X% a was nonrecurring both fee declined rooms franchised in the of our approximately of X% this franchise revenues bookings in franchised approximately now XX% a up grew our results, which where Excluding Two our base, After segments, in to from for-the-year on the in items, a standard, share QX results, X% for consecutive impacted RevPAR with we've evolution by third each grew also franchise nine perspective fees now X.X% lodging basis. XX% delivered before transaction fee in-the-quarter, U.S. delivered and currency constant high-single for our approximately rooms of increased of SG&A currency and lower nights stemmed for drove to other quarter strong incentive our was Total X.X%, of fee for EBITDA adjusted solid owned from the our of group our solid and rooms and at quarter, corporate constant total RevPAR adjustments This and associations clear select XX% managed and XXXX. our compared the of increasing steps a adversely and of I'll Total of The with outpaced in growth room our led delivered groups, new revenue incentive small as managed growth XX% quarter accounted the we I EBITDA net low-double-digit banqueting business the impact of the in Full constant years while the and corporate rooms growth currency leased growth accounted approximately impressive by RevPAR consistently adjusted the revenue three growth growth management and This RevPAR growth roughly which category. basis by currency of our The adjusted ahead solid of aided now the demand increased U.S. will QX. full about to and and we've segment acquisition Net quarters impact basis. solid approximately and growth the QX business highlight third region to reflecting constant groups related additional quarter, starting the on continue deliberate growth platform. management starting XX% transform Roads for X% fees supported service fees with the will and upscale service supply Americas quarter franchising for and quarter X.X%, in segment levels. X%. group U.S. service growth strong EBITDA the high-growth offsetting is both other, performance growth. In XXXX. now quarter EBITDA from increases business performance third X% basis. quarter rate. primarily the of group compared X.X%. XXXX

expectations the years expectations remain low-single-digit full X%. about was for-the-year consistent production increase the year group fourth quarter year. approximately the was a revenue marks up the quarter, previous at group bookings. with consecutive our which for are for for-the-year down of and X% in-the-year, business increased all for U.S. Our for In-the-year,

was However, and by XXXX beyond. offset lower into this bookings

base, U.S. XXXX the the group with our revenue of pace transient for full Looking booking displaced the group quarter U.S. with in years up, the targeted strong management Pacific the segment rooms end rooms of and the stood driven group quarter, with was approximately earlier grew our increase providing constant XX% offset net by in RevPAR the ramping segment XX% rate. boost. in out and adjusted constant basis, EBITDA was service with a growth of almost an Greater combination at in franchise books flat Japan on already for of China segment in service now all franchising on strong Full a a mentioned move remains of growth occupancy business for Asia ahead, Net about business by growth in XX% in growth by with in accounted XX% the in room which X.X% segment, I'll Greater in nights excess average. our for by led quarter. for RevPAR growth QX. XX% X%. increased dollars. the was segment EBITDA to this in I XX%, approximately line and drove RevPAR growth decreases of increases. currency that fees rate Adjusted approximately reflecting strong fee hotels RevPAR Together, China. rooms growth incentive significant on and

accounted drove attendance, Southwest an service from an Europe, XX% openings franchise cover before X.X%. EBITDA driven of basis. Europe, for hotel the quarter both owned and and FIFA of and A approximately with X%. Now increased franchising Asia rebound occupancy strong now our and currency adjusted increase impressive third in and for rooms which and Owned business, our benefit East XX%, in during accounted adjusted fee was moving constant RevPAR to growth QX. the Full increases. segment, our the Middle XX% adjusted an for Net of corporate XX% and leased Africa, base, World in and quarter. by continued RevPAR XX% Cup in approximately a our rate a management and revenue increased coupled leased incentive increase impressive EBITDA I'll other EBITDA which new on

transaction adjusted currency. EBITDA over constant leased past down to the year, in segment due XX% activity was However, owned approximately and

have currency approximately segment the X%. of these constant transactions, adjusted Excluding impact EBITDA increased in would

comparable basis prior leased owned year. increased versus points Our XX consolidated quarter margins third and

comparable have approximately XXXX, of and received basis points. interruption owned of would the impact XXX QX margins Excluding increased a business non-recurring settlement during leased

activities. I'd guidance update, recycling Before moving on to comment like our our briefly asset on to

and for million third million. Regency Hyatt Regency the Hyatt $XXX Indian Phoenix quarter, Wells purchased for we $XXX During

well We earlier million adjacent that hospitality sizable as hotel. a Coconut you'll sold under the sold Regency intended the ventures, Point Regency these approximately inclusive some and recycling for for Mexico development we an our Hyatt position fairly several you in million, unconsolidated Hyatt of total joint program which are land investment year Hyatt seller in we dispositions, asset interest year. as a $XXX an this with When see also City $XXX for this transactions smaller net of including liquidation Park of venture in a of combine

from As asset we've net future indicated in depending opportunities. previously, of this buyer position certain a perspective the a investment recycling year could our an in in being result on timing

shareholder to additional through on dividends. Moving approximately on returned $XXX XX, $XXX $XXX shareholders, share million in our has inclusive authorized capital of on authorization. October And an year-to-date basis remains returns; existing share repurchase a board directors of repurchases. our million million we to

successful we inclusive an to growth of combined with by key a updated guidance assumptions I'd disclosed the return Two our adjusted as EBITDA outlook of the providing key to on million. the for our operating Hospitality. conclude my our dividends. our preview well flows guidance cash attractive along capital the our the regarding these for of Two full of $XXX exclude translation. provides, that by are of prepared year with our our cost update acquisition drivers Today reflect of year market buying foreign transactions for strategy, will $XXX the our the to capital Given our of estimates add as approximately approximately Mexico strong acquisition Please we earlier, in of X-K expected we and transaction. mentioned October QX filing Hyatt shareholder the remarks billion, Roads color currency and Roads year outlook for $XXX elements X, like earlier range I are previously Mark year full In City quarterly XXXX $X full earnings recent pullback sale on to increasing execution our XXXX. reaffirming million other opportunity near-term and changes I note Regency discussed and some that million impact

to $XX approximately months. likely recorded XX totaling be cost million next XX to $XX in the integration-related non-recurring to expect over million We SG&A

timing are and amount our of refining expenses. plans affect integration which these We the could

on you as we update will each with date to we However, integration. the quarter proceed incurred costs

closing, to inclusive mid-November a reduction Assuming net $X our of XXXX million of EBITDA, our estimates approximately current integration costs. adjusted a indicate

these integration expect integration-related the on million. adjusted For million to the After to we the the costs, we expectation XXXX, With RevPAR, for X% in million for estimates our full EBITDA growth prior to to our to XXXX provide contribution call be our adjusted where X.XX% improved XXXX expect $XX non-recurring tightening we are costs to system-wide range $XX to contribution February. full net $XX to approximately year. year in of from range end to X.XX% to we of EBITDA a QX respect when we refine be earnings $XX visibility million. including We'll to guidance XXXX given X% the to expect

ahead XXXX next Looking X% of year, to RevPAR year to growth system-wide X%. range we to the full expect be in

are year growth. a we previously guidance growth least open our openings net XXXX for December X.X% that for prior the scheduled scheduled are rooms of hotels reaffirming X.X% have in I we the We at near With respect indication possibility But with also that of XXXX. growth, to would of net note were our of the of to end for to number rooms prior large reaffirming XXXX. X%

However, slightly we lower growth. record a see and number a expect I growth in XXXX of rate to the signings strong XXXX a that the rooms like agreements rate, the well should net previously-scheduled strong showing future. higher XXXX we into openings supporting combination accelerate growth would growth and could with years of XXXX, point management two into of out exceptionally slightly net rooms XXXX, franchise

provide the our to at of approximately spending, of XXXX, higher time. million, costs during call. given show underway expect will projects and a expenditures of reducing earnings we for year We'll guidance are $XXX which number nature CapEx QX guidance into we shift full Finally, certain our that reflecting capital year full levels XXXX

earnings updated release. our QX additional guidance can on You our for XXXX in find detail

a Hyatt new Joan that my the to have thoroughly I'd thrilled accomplished and couple I'm this and while to in passing in excited say enjoyed and years at years the and we've of past shareholder capital-efficient ahead. I even team time my And I've as proud of for unlock stronger conclude, growth over I'm more company Before value to what the like position finance Joan on leader been a partnering few a I weeks, call. in be accomplished Bottarini. a and I'm to chapter career, in smooth invite to share CFO to the recent start Joan I'd baton to ensure transition to words an

Joan Bottarini

Thank morning, long-term March you, where excited take and everyone. get X lines, the execute would appreciate the New all on to and on engage we host Mark soon of Investor as in work discuss and with Pat strategy. Tuesday, I to will forward to Along Pat, intend of look that forward I strategy meeting you financial good and an the you like Conference with Chief York, to our begin look Officer out I from and on to to I investment all say road announce on of our we management those both the to seeing team community. role there. growth kind to I'd like well-established words Financial I'm outlook. that and the further

Patrick J. Grismer

growth marked quarter solid To by pleased we conclude, net with RevPAR are you, Thank third strong results rooms growth. Joan. our and very

later acquisition our successfully driving capital toward evolution our strategy, earnings high-growth, heavier with asset-light As we weighting execute base a continue Roads this anticipated we including are Two month, our of fee the closing continued business. to the of

to you. be turn Additionally, returning approximately capital we With it year. shareholders for to billion are $X of Tiffany I'll back that, Q&A. pleased to Thank this

Operator

line question Katz the of from Jefferies. with Your David first comes

line Your open. is

David Katz

good or everyone morning, afternoon. Good Hi.

Mark S. Hoplamazian

Good morning.

David Katz

for all it to the of about the to somewhat it? morning back it's is streams and think go about, the that have should opportunities I a opportunity we embedded grow generates? of acquisition, How Two Good the it would it, and just growth appreciate we on think – we the how And luck can of specifically should about returns unusual. you you which please? about be How to it's to from bit that there us Roads context wanted talk with on I revenue profits an best an that concerned. thinking color

Mark S. Hoplamazian

not Thank By start for it have a very we you, about how will is We're excited so really to a way in discuss back we'll out turn is yet, Pat I'll amongst have profile. what an network tremendous and closed a to about of World representation This globally. guests. the acquisition strong is I amongst Asia But and David. performing talk foremost to interest of reminder, our in think with asked acquisition. with, the about would small additional us and Mark. What we brands make in financial of primary this pipeline developers it start us Hyatt primary Alila really round resorts, embedded and very further we has, that a It's well, business say, but terms Asia, probably you I why about anticipatory. the embedded these brands growth are first that for there strong a we Asia generated I point significant and opportunity that guess, in makes rationale in us. is that for growth of of example, amount with collection the travelers. sense Alila or this would believe in for to significant particular, is the base in brand brings in very, Asia and very

there's growth opportunity forward. believe very the and So growth moving that potential excited very, about we're accelerated

higher-end customer Two of the and by and an guest enhancement base we the look our additional to luxury base represents operate that current significant in brands and the on portfolio, we the range base. rate for rate at derivation customer and hotels and opportunities believe same of hotels within the operate. sort they Secondly, they're is based that knowledge, And positioning Roads daily our of by existing a that our it measure customer serving average

The would is are attractive segments. that say third these thing I

garnering down look boutique very brands believe chain the up lifestyle growing are going at we their outside are it very If on because and that brands final from it's compelling in have would of the good thing our mettle already what's strategy developers. proved asset-light. fits third-party in terms world, say these and is And that The brands interests at I you segments. pace

a buying platform intend to we going and are that's forward. brands management We and what leverage

really frame we the how how we're to see it I thinking what would opportunity and that's about be. So

Patrick J. Grismer

that build XXXX, year immediately funds of we that acquisition to with under average asset to to you estate And, monetized look have valuation multiple is, of to David, more three the perspective, year operations, a be relation from when onetime investment, of integration-related XX.X how it the times. our an materialize. Mark a is just to We significant XX time our of assets investment, adjusted And consider expect this which EBITDA. lot look full sell-down three, real in referred in at accretive appropriate financial transition-related has the we're we of by of perspective Mark thinking growth in said, that anticipated XXXX, believe implied multiple it's program in expected will how when make yields at order which have on about we XX year will permanent even first we and a is from in raised first what impact has the all, that at the an earnings expenses. And to times

Mark our while, the weighting accelerating a our toward said, as this value opportunity in our increases as create shareholders earnings way that we high-growth the tremendous to business. see evolution profile So a fee of for

David Katz

contracts, to any have similar I in specifically wanted may United if may that And as And them? then you. modeling just the that was the we Thank here in China would we of ask you see a be the detail, structure what can to an for Perfect. management or you mentioned your I about over color just commentary. you relatively seeing are States on since of variety think with up sort that those what and there area it garden follow

Mark S. Hoplamazian

Okay.

cover questions. turn and two there's I'll So distinct questions... the for first to it Pat one I'll the

David Katz

that. about Sorry

Mark S. Hoplamazian

– okay That's on China.

which Latin the are there's that like in agreements respective the the management inconsistent and structured of management agreements agreement now a how so nothing types for types place what arrangements agreements, markets would the see say, the on differs are in of as the portfolio that place. portfolio, the Asia place looks you might right in agreements fully from managed properties for be way the I certain and management but of So, marketplace we it's would look see kinds management management in what these in representative in and are America properties Meaning markets. are you U.S., are at structured that of if they that the in there currently, South different in to management with also and these

your question. that's So answer the to first

talk Pat about to China. Let it turn me to

Patrick J. Grismer

broadly shift hotel in of There There renovations. one-off holiday quarter was Greater the storm some as respect there RevPAR of note to With significant China, a earlier, mid-Autumn for was that growth the segment and in Certainly. I mentioned which impacts QX and were But in number in China Greater China important festival timing some line was the earthquake X.X%. were a our with impacts. the average large business. to it's our

well We capitalize the we're monitoring positioned that where we when We're there we we potential RevPAR to normalize are growth situation concerned were today very QX We So, these long remain for closely. that the the mid-single-digit position normalized growth in about would on was we Greater over acknowledge China but our on potential strong growth long-term items, modest term. not deceleration a confident market's the from like range, that, believe and but onetime of Greater enormous a the represents however, China. in still in basis. actually we

David Katz

very much. you Thank Perfect.

Bradley O’Bryan

to we the next please? question move Can

Operator

comes with question Research. of Wolfe next the line from Jared Shojaian Your

is line open. Your

Jared Shojaian

my question. everybody. Thanks taking Hey, for

sort So I impact as that assuming of asset to on the wanted the you is EBITDA. there well, XXXX done ask sit that's in about for to Roads offset, of going some that you've as And have of the look just as sort any that might you've contribution me reason XXXX Two between here puts the impact we And at then the XXXX, help be outlined given to this maybe the understand year the achieved to this and can you've growth projections takes and today just EBITDA longer-term sort you to that at think the year? that year. XX% X% off next that assets guidance of sold can't you've sales of

Patrick J. Grismer

of When full consider asset all under adjusted sell-down impact you the you, permanent to program, we've year Thank this year Jared. the order that transactions net completed our on the Certainly. is EBITDA $XXX of million.

quarter impact that transaction order which the given remain the Host. outlined; of lot next in $XX to of mentioned, transactions. a be had we to from Setting growth We growth fee our our the timing portfolio to overcome aside particular, with of of growth given very earnings transactions sale confident earnings in concentrated that impacts, on expect us helped first those has the of mid-single-digit double-digit model headwinds million we the you low the as the in our engine, the year strength

Jared Shojaian

the high-single-digit, group helpful. Thank about Great. had had seeing? bit sort all years down just elaborate I production what you really what you sequentially little a X% from in think you you on mentioned quarter. been type more I And think prior been in of was Can quarter-over-quarter double-digit you. U.S. mean That's the changed a running of for range. quarters, I

Mark S. Hoplamazian

both but quarter of terms of equation. guess, itself just on I the comment some first, growth sides a profile group and in the about association on make group corporate Sure. was nights the It of reduction significant revenues. I'll ADR increases that room side in side, on a

So, revenue double up business, the in realized in the for low that's the digits quarter. for example, was association quarter,

while really the In production, and digits. terms was really down it And level we production strong concentrated quarter, the for-the-year was of up of sort encouraging, in mid-single XXXX. very quarter, in XXXX in which total was had for out-years in-the-year, a production

example, which terms And So, is our in point. a very pace range, up what maybe remains in before, of remains XXXX, high-single-digit bit. XXXX for low-single-digit range the this the strong, outlook for in consistent at we said with strengthened

we've to side, continue on future we also group strength and we of for the what at the look in So, bookings corporate seen as continued profile production see very periods. lead good

quarter you would be don't it's anything So, had we us production while in that total quarter, I we the leads – not to see a that not we just that the And group corporate see to was continued significantly. solid side. going mentioned we're performance and the down that I up in third concerned was decline in association to for on that clarity, say

basis, basis. you year-to-date up look If year-to-date is down a a on association and it corporate on bit in at a total revenue is year-to-date

particular, some be the on side. or So, was saw significant to for evidence the cause sectors. strength pharma concerned and in range. Pharma In corporate real in and again, no we finance us the low-double-digit up banking

So, those were all indicators that we feel about. good

Jared Shojaian

much. Thank Okay. you very

Operator

Rose from question the Smedes of next comes with line Your Citi.

line is open. Your

Smedes Rose

better Hi, just a wanted understand Two thanks. I on bit little to Roads.

kind are guess platform," want an and that the the maybe properties they that mean, they management Hyatt. option now So, under destination join are are or managed "independent have not to whether of I I

that Is the sort the seemed key year of related of technology? of sort do some the at money? in say, Like talk high from down and integration that break relative your and little how maybe Is to. first opportunity a how it contribution first you platform leakage to are bit? you does blush I'm the And going cost of least just And kind prevent, costs existing what with maybe wondering pipeline could about it forward? at

Mark S. Hoplamazian

various this fact which acquiring additional the circumstances Joie and to construction that that part. the open their with or in very tommie open Alila management individual brands base We're is the little We've platform comes the and in are the time. is excited The me to at there finalize there look on. four currently portfolio, will in purchase Two say potential asset a potential groups this operating place. the and no which to But Those a deal ownership the has which the micro-lifestyle operating are through four Thanks, hotels base, and Vivre, let two Destination contract which hotels Thompson where Hotels that primarily they've Asia, existing consideration respect like topics point. consideration, of segment. back and contractual said is the brand Smedes. they're to working relates got the de I'll operating their There Pat what entering that bit are hotels and that assets to turn a it With called brands. start second we we've that and is exact portfolio price nature and largely Hotels. more that at agreements close we disclosed are under address granular means the and we and Roads be about platform additional are

structured no Two optionality underlying we topics contract we identified areas price. purchase in is of variable there which so part the group we ownership needed more to Roads to respect And spend time the in on, with base and that the a with total

with So, how close the exactly how great managing that's together we're and final define portfolio. visibility and we will on

back me the let rest. it Pat with for that, So, to turn

Patrick J. Grismer

Mark. Thank you,

say So, $XX referenced I costs, that there integration-related to the relation $XX to million Smedes, to buckets. with would million respect I are in four primary

as encompass The the integrate associated restructuring into would Hyatt. of organization reorganization relocation severance with costs, the both first and which we would be it

services seamless into integration transition to the to from provide bridge be Hyatt. would and team transition the existing Second us to a

to as our affiliation. the be, look Hyatt (sic) would conversion fully the some IT-related The hotels costs can that systems, we as they third brand you with onto the Roads costs. [fourth] so derive benefits And third be mentioned, would selected Two bring associated

there number that integration gain a our are that ability in there So, of full realize the of company. are with to the we to this value fundamental terms buckets of synergies

Mark S. Hoplamazian

based Pat it. just me clarify how just described one let thing on So

brands. continue – is Our five to current operate to these plan four actually

consolidating any not we So, brands We're point. at not retiring brands. this are

no have we plans to do that. So,

support We to development focus are the brands to on going company the the we and are forward we division management establishing as how within are lifestyle going and segment working a efforts through towards organize the moving well.

we So, first more about And and the close future. detail to describing we'll in that we'll be more in forward. move that to we have as need say

wanted I intention So, about just the to the brands. retain to be clear

Smedes Rose

any in was Were buy Okay. highly particular picked I to and into (XX:XX). and recycle Phoenix markets, due kind of your markets contracts your interested appreciate some of just there? this there is that lock wanted pricing way with underlying that sort Indian to Was those be the seasonal the motivator coming view? the the brand? I on I maybe there you you that. Wells ask too to to and was would down just attractive particularly decision

Mark S. Hoplamazian

batting you're thousand, Well, Smedes. a

there I we that term contract issues think first, were were facing.

Phoenix, of we in with each markets Second, of renovation additional some additional are is maximize those of some two further as – those especially believe properties, Wells capital in that in hotels we Indian by the respective opportunity potential changes enhance that and programming relates markets. to believe our business of way group performer it a the with their they to in strong the will of ability to application area case the

to that recycle combined pricing So time. it the fully would contract term I of these expect enhance value. properties that a was – a expect just future we we would reasonable to and types with things of And issue are combination that add types opportunity fully over of

of about by base. bought not thinking are our permanent these a estate real So way to addition

that So capital planning are they'll once be we those projects we for through for properties. get the available recycling

Patrick J. Grismer

that what add ability at to restrictions existing said two had properties has to management agreements development is would that those also capitalize our the I what opportunities. impeded Mark new on Smedes, And, growth

clearing gone, So, purchased the to for advantage opportunities. now as are we've take of those restrictions those those hotels, us path

Smedes Rose

your luck best of All you gig. right. Pat, to new And, Thanks. in

Patrick J. Grismer

Thank you.

Operator

comes the of line SunTrust. with from Scholes question Patrick next Your

line Your open. is

Patrick Scholes

Hi, good morning.

Mark S. Hoplamazian

morning. Good

Patrick Scholes

your first on points on the global you'd the specifically said RevPAR, questions; onetime hotels were issues. Two margins, in domestic morning. excluding margins, X% How Good XXX is your those the of quarter? owned XX roughly comp basis some

Patrick J. Grismer

the perform part in relation I last How your catch I'm to. sorry, those hotels question. didn't Patrick, did of

Patrick Scholes

No.

your breaking for was here. owned How up domestic did the – quarter? what margin growth in I'm you if hotels the hotel Sorry,

Mark S. Hoplamazian

U.S.

asking So, non-U.S. properties, that U.S. right? versus you're is

Patrick Scholes

Correct. Yes.

Mark S. Hoplamazian

asking tough Sorry, clarification. it's just you, why for we're a little that's hear to

Patrick Scholes

Okay.

Patrick J. Grismer

the our properties. U.S. is don't dominated you performance versus we will that and for Normally, yeah. What is Patrick, question. thank international the say within out portfolio by – the portfolio. of I U.S. owned break Normally leased

of I properties U.S. release a believe what so our did and hotels. disclosed our leased what international than in of U.S.-based owned that highlight is and What this we perspective from And out the for is a growth we performance would we RevPAR earnings see seeing happened reflection largely did leased our you're owned and I better in

have those would at well. as better we a so performance hotels margin seen consequence, And as

Patrick Scholes

Okay.

And my I'm cellphone, please know Okay. on you if me a me. please. hear actually then follow-up question, let cannot

X% reasonable X% year, a owned RevPAR to growth year the flat, about assumption? think it As of relation in basis to that we flat – year fair this your margins RevPAR guidance on margin in think down, next to XXX% quarter, next X% points approximately XXX the is maybe slightly is approximately slightly third up,

Patrick J. Grismer

would that's this stage. assumption I say a reasonable at

we've RevPAR X% to said around As we before, growth typically target in our order flat. hold margins

those initiatives years of sustaining However, next launched here. last in into see the years. have been benefited the few from couple that productivity we've We significant also initiatives

guiding earnings entire we'll we're QX breaking least is full margins for though even But fact, in anticipate a year what that owned we leased, guidance call to estate, guidance, out our and February. to the X% So, flat. on would specifically across be do provide range not RevPAR X% at XXXX in conservatively next growth further of

Patrick Scholes

Okay. Thank Very good. you.

Patrick J. Grismer

Thank you.

Operator

of comes with line the Morgan Thomas question next Your from Allen Stanley.

Your line is open.

Thomas G. Allen

Good Hey. morning.

just RevPAR trends? had high thinking Americas full or can the in prepared I hurricane of a declined. backdrop of it you're on Americas? function about you about and Thanks. service segment, growth, general you U.S. strong RevPAR kind And are select the your Just mean the of highlighted and of level was in talk but remarks? kind you growth, supply how you U.S. thinking just comps? of the Is current the how function here which service state that a backdrop the Obviously, is

Mark S. Hoplamazian

to group. managed was If account in would say third high-single feeling business overall up little I of good into digits. which that Thomas. very sort we transient across our a really mid- demand in Thanks, levels the quarter look about we're corporate the we strong, further, at and dig

at continue base really as demand of of ADR the run results to over we is is good. into relatively rest business higher-end the based we this so, the resorts. resorts our portfolio. the looking is – in selected And to of we course we've of that which customer We're good the The than And said that traveler traveler. previously, think quarter, levels third higher health resort see on a the think reflection a our tend some

derive is And so, of we believe – that that segment. there continued the that from we health

So we demand. good I about think feel

demand at year year primarily is I service the XXXX. in tapering exceeding we're and select seeing point. think significant a across growth. growth in supply is which growth We that most in On side, what the see is of a do it XXXX in of this supply-driven supply markets supply, And particular, is

Thomas G. Allen

buyer Thank in are thinking or your of more use you single that you Thanks. hard transactions, you how transactions for I a tax you talking clarification, Helpful. asset? highlighted other can be And M&A? about – net then, remarks is next assume but Perfect. a property asset brand more you. year. kind about And buying you're how prepared just only and hard asset are brands there physical could benefits

Mark S. Hoplamazian

Thanks. Okay.

net First and therefore, future all, Pat part recycling buyer of be asset focused the talking yes, real a assets. is respect estate for was then assets transactions about bucket on to asset exchange to and asset. in of With as estate sold applies periods, when to other potential a the to of in like-for-like he investments. redeploying the single us doesn't more to only real which apply estate real XXXX opportunity, It tax profile, exchange, being referenced

Patrick J. Grismer

next excited to platform. then, months And Two existing the portfolio, that acquisitions, bringing to integration acquisition like something here. successful the Hyatt's the tremendous on. are we for and the look in management But integration Two opportunities that involve Roads a would question complementary are several of fee company the brands over our focusing at new other continues We're while remains opportunity future with brand your be as that on about there to that will focus regarding appetite Thomas, very Roads,

Thomas G. Allen

Great. Thank you.

Operator

line with Your America. Kelley next question Shaun comes of of from the Bank

Your open. is line

Shaun C. Kelley

afternoon, Hey, good morning, everyone, guess. I or good

the domestic to probably trends compare detail, kind X% give kind to you but Appreciate of too how sort your what don't to want in just XXXX is bit wanted to high-level touch of just baseline for sort of outlook just your international break it in a could us you you closer, think trends? thinking of little thinking the X%, about terms that So of on out that? much

Patrick J. Grismer

you, Thank Absolutely. Shaun.

will I what our full us. X%. are this low-single rate pace range guide point uncertain range corporate to We of relatively time business it's that this revenue we X% will stronger U.S. X% But the of up digits have negotiations, relatively and the say anticipating reinforce that would we business in believe the be at currently within expect, fact given that to the deliver a that X% group business just softer appropriate X% growth. also is rate international relatively that to is and ahead of environment our conservatively X% and in year to to But we the

our bit a will will very international be that softer and with recognizing feel again comfortable be we markets the So U.S. a stronger. outlook, that bit

Shaun C. Kelley

that, terminated by these Roads. at think And Thanks certain can Two really second off building area was types Great. but – on be owner a contracts for Pat. I of couple main clarifications is circumstances. of just The sort question earlier, or then often thing of was will the a in this

others guess, the is is I Mark, to referenced, that Is there does terminate? is churn that may baseline assumption you're may and kind guess I $XXX in some million, that that's built the $XXX simply, consideration, into I that stay contingent trying you include that million? into a question properties of some say? So that that have what the So, built directly around really

Mark S. Hoplamazian

go processes. we I really what's consideration. how how of this it's Hyatt we is point well World at that say relates and all, that to leverage application sales base worked We so is is We current the significant impact on make first are to the we customer doing assessed performing, the impact. We an ability portfolio that will immediate at of can't What the and of the have which hotels also will and important. such our composition potential a brands that about and additional organization, have similarity believe can we that details through revenue the into being look are believe systems, the our feel of management based working

and finally, And reservations front, things that have both structure. implemented channel rapidly. and in the the improve commission And these we number purchasing. also distribution we We believe be centralized can service a benefits that mix on of think we can

plan the And stability with about portfolio extended it will appropriate with solid finally can to so, also right place a of believe this going feeling, be we the we be for which our that and seamlessness we – with and through to much to period our is going do muster, accelerate that in as to very planning for means have continue that the brands. way, position growth it, and that the not to in sentiment will existing we're our property in an time, we able we're as rush migration, we close

mechanics into the I I'm say not So, about about additional and to can detail consideration. prepared go all of that's more the

Shaun C. Kelley

going everyone, that in both called or out? stripped EBITDA cost, adjusted included in is definition to be to that Or plenty. that's That's of of clarification And the $XX million out for to one your million is and something integration $XX be but guidance? going just SG&A

Patrick J. Grismer

be But therefore part be called EBITDA, we be likely definitely those and EBITDA recorded costs part also items. be will transaction-related integration but will will the as adjusted and, those separately. adjusted quarter Each will our will numbers net out. sit therefore, that it special SG&A will I called be there of be our income characterized below that some as would of will Well, mention called number anticipate be costs out and will out. that will adjusted impact

Shaun C. Kelley

much. very you Thank

Operator

of the line JPMorgan. from Greff comes question Joe with next Your

line is Your open.

Joseph R. Greff

Hey, guys.

to both First wishes Best off, you. and of Joan as to congratulations Pat well.

Patrick J. Grismer

you. Thank

Joseph R. Greff

comment at the million or costs? or Roads, process the yield, a dollars or With an And a Thank you do basis? $XX is for then, EBITDA compare of it $XX that you. this look times million you or system-wide to on premium – you your discount? that And million $XXX the X% competitive managed about that bids? competing integration Two how and the million a portfolio existing can $XXX to on Roads, the your created Was does RevPAR of to that the include Is franchised with with when respect XX deal? How XX a it talk multiple of just to was transaction and (XX:XX:XX) background regard generate XXXX on Two about to sourced? other should

Mark S. Hoplamazian

the cover much of owners say the first to second. points leave about respect think They to more a to I'll third ran and financial had was process, to and a that. not Okay. did competitive advisor deal it the And process. as the With the a and I Pat company answer we, process.

the that by are On front, Two ranges mentioned at base operate I in very our the luxury earlier RevPAR region. under hotels Roads the that to ADR similar hotel level the brands upper-upscale and

ADR similar you an look we where region country, or are out by to matter. they if So, it very as break by

depends on brand. it As a RevPAR the matter,

at brands have are occupancy. levels, the of Hyatt branded levels Some others our or the lower around somewhat and

And or leave by Pat might individual just RevPAR describe depending thinking yield, to assets we're With profile vary on to of how so respect about that. brand. the location I'll

Patrick J. Grismer

so the clarify to transition-related to costs. and EBITDA not that onetime include XX XXXX, give Joe, the to XX times for year effect would transaction or

So, will to million million. range anticipated incremental relation our investment, we're EBITDA $XXX to strictly from looking which in adjusted at the $XXX

Mark S. Hoplamazian

slide. $XXX where based million million was, on or how transaction. the that $XXX question and we will it $XXX expectation change our we between on is end is answer the our based $XXX minds it in your structure answer million, doesn't is million The depending up on generally And

Joseph R. Greff

you. Thank

Bradley O’Bryan

question last our take we'll think I Tiffany, now.

Operator

comes Michael last with Your line question from Bellisario Baird. of the

open. is line Your

Michael J. Bellisario

morning. Good

Mark S. Hoplamazian

Good Michael. morning,

Michael J. Bellisario

World penetration higher for the of at I mentioned, range see peers the runway XXX increased that your there? move today? of we You then, of Hyatt still are you guys to guys that closer points and few in a the guess, get Are guests. to basis eventually from low-XX% what's And where number

Mark S. Hoplamazian

been penetration, might the way think about And a about of you we relate night a track companies received year the in in measuring figures to what Michael, that's that are at But over we I we over had the proposition leaves conform you XX%. which penetration to to beginning say back so doing and room bit the past, provide it if XX-K room range running And to how for right night now us measuring bit disclosed in to then, respect on we on we this now than information We'll comparable next done progression, that to XX%. solid more of more changed had be right are the changed time. forward. the basis filing. are a additional detail we've we Hyatt has work our major on which of in the enhance growth our our over hospitality with going provide basis continues We on basis ongoing XX-K, measuring been to would are value a other going World it. how

we we we've we on continue path forward got this work which provide on and appropriate. continue that to updates believe so do we that initiatives other going absolutely will when will And

able some momentum business really of as Hyatt leverage now, business virtue perform high the the during fact our group us – fact time you have we need and of that with going that stay And, you that critical mix, us competitors levels talked are business. a travelers that structurally over significant have to levels. that looking of sizable It we that differences transient be group further. eligible and for would we that room course, penetration group lower we a higher of But there of and So, a that in structurally, true got by ultimately who positive of penetration important such how to are by about larger actually night base strong of some is degree we'll are at take fact which to that to and that members World structurally have in more into have occasions. compete a we than account proportion and think we about business, virtue also is we are to terms be the have we simply confidence penetration who think we've measure of to leisure from

Patrick J. Grismer

we've we're room in to the the all said, with on build you a highlight we improvements new partnerships like with a all how a that Mark alliances we of consider today that these loyalty other And, that of sustain night of and the program penetration on from basis. very about things have our we Michael, excited itself net of continued of in to about And the amount and we pipeline, been Hotels recent years peers we're has like through RevPAR making rooms where from will think Luxury program that have program mentions. our even perspective consistently when consider our and World outperformed enhancements have have, you key the the one to and at things is headroom as growth to Small we or the where what have with improvements you I'm that growth rate outperformance. perspective and help Mark outperformed I

future going win. great date, is for loyalty a continue coming the excitement the think to to progress pike, more lot our on of how enhance down program and to I this ability improved So, to

Michael J. Bellisario

very helpful. That's Thanks.

Operator

now will over presenters. our conference to I the turn back

[0CPPRG-E Brad O'Bryan]

Tiffany, look you talking joining everybody and our to Thank to you, thank today. to call for forward you We soon.

Operator

today's concludes conference This call.

disconnect. may You now

Hyatt Hotels (H) 31 Oct 182018 Q3 Earnings call transcript