H - Earnings call transcript Q4 2018 | Hyatt Hotels Corporation

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Operator

Good day, ladies and gentlemen, and welcome to the Fourth Quarter 2018 Hyatt Hotels Corporation Earnings Conference Call. My name is Christine, and I'll be your operator for today. [Operator Instructions] As a reminder, this conference is being recorded for replay purposes. I'd now like to turn the conference over to your host for today, Brad O'Bryan, Treasurer and Senior Vice President, Investor Relations and Corporate Finance. Please proceed.

Bradley O’Bryan

Christine. you, Thank and fourth everyone, for us joining Good XXXX thank earnings Hyatt's quarter conference for morning, you call. Officer. Bottarini, I'm here Chief Chief Joan and Hyatt's Hoplamazian, Financial Hyatt's in Chicago Executive with Officer; Mark President and our Mark will begin some and call today highlight results then developments. fourth overview and with full-year recent quarter an our of

Following Mark's out additional guidance prepared with remarks provide XXXX. our of for our our on comments, details Joan a will close performance summary and

We will your questions. then take

Day full we on during reminder, be our will New cover an Investor capital X, a York, March As which additional hosting in topics, update strategy. will we including a on

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

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

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

Mark S. Hoplamazian

Hyatt's in EBITDA real a full-year both of a quarter, were and finish call. in our to owned rates hotels, select RevPAR year. RevPAR quarter-adjusted great year-over-year XX% growth Thanks, which welcome effective Adjusting lower contraction million shared and XXXX U.S Joan These in had October. strong full-year us during expectations and XX%, strong adjusted fourth RevPAR fees basis. joining quarter, $XXX shortly. primarily of weaker full-year all in will increased system-wide approximately of a currency region for of hotels, management. million. our end result the Pacific fourth estate regions, resulted and by on lower-than-expected our weighed increased quarter by management franchise service Good discuss bringing our growth System-wide EBITDA down increases is earnings Brad. the This fourth X.X%, constant across the We SG&A Asia great transactions, growth our you X.X% driven increased to this growth performance at RevPAR that morning. in as $XXX We expected slightly with we than impact for the of very everyone fourth our quarter EBITDA morning, for our and reported Thanks to adjusted than

growth of Two XX acquisition, rooms XXXX. on year-over-year brings openings hotel driving fourth hotels X.X% excluding the us the in to from of During Roads full-year of addition This we XX a resulting a basis. opened hotels, total the new net quarter,

Roads, X,XXX net through growth, condominium XX units. of approximately we to acquisition ownership rooms the hotels rooms XX In organic addition properties added and Two with approximately industry-leading this properties XX XX,XXX including comprising

markets growth are in on our of our We new where traveling. brands to have driving relevant continued focus guests

markets acquisition an we entered organic through During XX openings hotel Roads. new Two through additional XXXX, of markets the new XX and

are have but of with excited to The expansion a in over Sofia of adjacent Regency located outstanding room Hyatt Hyatt's of estimates in serves is and the was thrilled quarter this outlets Barcelona also rooms hotel as the the X,XXX open to The Barcelona. Center. of Seattle. first fourth luxury example, beverage Unbound openings we Seattle dining meeting total include square addition been and room in XXXX, the State previous in prior XXX and important able venues, our hotel representation opening Regency of heart hotel for not net is This growth I’m XXX,XXX the our Convention food within The and a to the to For has in downtown XX Hyatt feet. hotel year-end. Hotel Sofia a the hotel to Collection. Washington just highlight spanning

markets in from markets As Asia three represented with and by new markets in the additions, stunning Bali, of a represent Northern offerings of U.S a of resort our global our additions California. Alila serves to These Coast short Roads Washington, West all the meaningful collective period and examples four time. in properties in new Two expanded new on of distribution expansion we Oregon, now

the many even great about significant Two XX,XXX believe acquisition, growth the rooms fifth that acquired we through higher. the hotels for we year the future. outstanding with pipeline from excited marks XX,XXX to of of fourth of to our the pipeline This stronger which the growth us rooms that position signed of growth Roads, quarter added the executed performance consecutive are or of very will and hotels quarter I'm highlight of our X,XXX amounting We around network to of a amounting includes rooms approximately Roads acquisition in of enhance rooms. world, And closed notwithstanding record net net a and our our existing brands growth, presence year-ago. up the Two of including level rooms, X% deals the contracts pleased

Our or ability of a of Two XXXX. that believe by over rooms of year hotels We time. XX% inclusive record pipeline our Roads the levels the signings of growth fueled almost them, is growth high pace in to of indicative has sustain net excluding pipeline XX% increased our

over developments. wanted comment to I the some turning call Before to on Joan, recent

have us engagement. SLH, drive strategic a third of to additional And under we quarter to we of members alliance additional members welcoming Hyatt countries, the the bookings. SLH the hotels to recently or our Hotels of engagement us. the our World, expect XX overwhelmingly including among in what hotels Luxury from exceeded hotels year, to with reviewed given make of elevated on-property group up Portugal majority Hyatt six of quality of member World properties the with come first progress access in into XXX members prestige as Small an late and last consistent World program and latest has total Finland. Since destinations guest positive the with the of provides program SLH such Feedback last making the During announced we brings year. the SLH especially the of and has the call, experience expectations, entered elite that Hyatt the who is group World hotels been and entered program the I This are our

life of as the extremely in of revenues. both our demonstrates of approximately To our total average are SLH how is high-end discussion membership has come to illustrate hotels. growth base yet of SLH expect space $XXX. portfolio group of coming the been The quality as have this at focus on with their our the guest to power hotels backdrop hotels pleased launch share extremely serving, at Hyatt partnership the another This strong bookings of an we and We’re SLH World traveler and of well the this the the to of month. within members ADR

spending transportation XXXX. XX% membership and item see by Grand owned in of by members hotel was York was that as enhance under had in only today, Hyatt. it value to in Prior in Our Hyatt it long-term comment only hubs hotels New membership would recent and The is the and in Grand to it important X hotel the development is a XX was York, on the a The our became hotel we most Hyatt New by the both last momentum originally under relating Hyatt in one to base -- And membership and top increased hotel XXXX, of lease The the points the revenues of We ground member's of York. continue sits increased development. hotel of Hyatt on I XXXX world. Hyatt. New XXX in the and opened to we’ve XXXX over continued a the by like has basis World share over year. our

and the We approvals of would a the of represents this believe have is adjacent best the to new steps believe been engaged use number new development be Central the involves are we in a could Hotel. include We the There developers which possible, the Station, accomplished are tower significant of a Partners, redevelopment before air discussions for in that and with owners rights Cornerstone more that of And envision and a a Grand the TF be the committed hotel. new the need through. MSD with that The working participating to construction we move work than of property long-term. which forward. Hyatt project to they Grand highest to take redevelopment will year other to

least XXXX site through operate the for XXXX. would the of expect work and not We we at to to end earliest. expect hotel the redevelopment the at until begin Therefore, continue own

such we redevelopment for development a that interest experienced being management welcome upon new that and part very Grand have agreement would and the that developers. are the we And of into is expectation Hotel. current Hotel Hyatt with such would also an enter sell new world-class the Our Hyatt accomplished lease prospects Grand do by and project We ultimately ground to entity excited important completion. of a the long-term hotel we a

and a presence the center is area. in of in that we an Manhattan to location Ours are iconic committed long-term

nature of As with we imagine, are Partners. agreements deal and and you working the the is still MSD complicated Cornerstone through a location and details property, this of TF can various given

potential year the of which great model couple managed drove well In growth additional fourth a We was quarter. strong some with it and redevelopment year earnings evolves RevPAR beyond quarter a expectations. will the in our conclusion, in during our areas in saw We excess we notwithstanding over to earnings, fourth the details share of on XXXX as pressure finish time. earnings we

We industry-leading are shareholders. other target. executed sold Roads XXXX, our of to returned business ability in and sell-down expect March growth the with we maintain along both of continued we year also the $X.X evolution we our to In to be as deployed capital to strategy. intend on to record billion capital invest through additional results the growth. I and successfully earnings Day discuss Investor to to of indicators economic While fee-based of you. to our franchise the forward, of our deliver proceeds we and execution rooms over net We our level increasingly detail sold Joan our will to Joan, our will Having to now confident going billion on strategy, now over growth business X. against acquisition in our attentive and for to another of of turn sales XXXX. continue the drive capital managed through a those our remain from York expectations further of our provide Two in New $X.X growth during our call over XXXX and

Joan Bottarini

Thanks, $XX with good of $XXX dollars. Hyatt everyone. system-wide diluted for reported X.X% Mark, net growth share million Late to constant per fourth we in yesterday, was quarter of EBITDA and $X.XX quarter special items. earnings morning, million adjusted adjusted Adjusted for and of RevPAR income the attributable

for our EBITDA expectations impact from which Roads, includes million $X to adjusted XXXX. quarter for with flat in a is the Two be negative line Our

a an million impressive constant grew our $XX level on transactions, from Excluding estate adjusted a approximately impact at currency XX% of EBITDA quarter fourth basis. real

of before While our slightly highlight will anticipated, lower I RevPAR with than our very ended for our corporate other pleased year. managed and are in segment franchise were our finish we EBITDA strong managed representing business. franchise the up XX% business XX% results, We XXXX XXXX. with with starting year, now from and to the we results and adjusted

to We fee-based profile. continue we earnings the year a to expect this in evolve more trend ahead as

in now Total basis. fourth of industry-leading quarters a driven the growth During We’ve on record XX delivered and on quarter, in franchise of by currency base fees, the XXXX. increased delivered growth. currency double-digit part excellent fees approximately XX% fees growth constant in basis constant compared incentive our rooms a high single to quarter XX% consecutive net to we total low an track fourth

quarter select We in full from XXXX service of in results our the RevPAR growth our Next, weather-related for beginning service the Americas down delivered benefit while X.X%, I post-hurricane of up with Total select-service U.S U.S headwinds compared Americas. X.X% with each XXXX. three select demand on and fourth will segment lodging with RevPAR additional service the service X.X%, grew a provide due U.S X% X.X%. declined quarter. The segments full experienced to perspective of RevPAR

the of longer during bookings. Base increases slightly, revenue adjusted The in net years over growth for-the-quarter Americas quarter fourth quarter up rates. last In group term room with the from a our business with led hotels, constant growth growth franchise ended X%. Excluding X%, associations we and for for-the-year approximately bookings of year. approximately approximately and basis. group was U.S but on up in-the-year, was quarter XXXX with both the in acquired rooms in the primarily currency rooms incentive the to for by were XX% for revenues. of came strong X% approximately XX% nights down Roads primarily quarter, all Two total production the banqueting QX the bookings growth driven EBITDA Fourth increased quarter, in fee growth X% Full-year's group both in

segment increases. in just than more rate of our X.X% driven China group up low Greater to U.S segment and digits. X% decreases our business XX% ahead, and the will years offset transient Nearly Pacific move little increased revenue for of full-service a overall on RevPAR. XXXX the by on for occupancy booking group more solid combination in of was already pace with in increased quarter, I quarter, full-service a room Looking in positive, is by now than by all RevPAR Asia the books. RevPAR rate. over the nights slightly XXXX single is where is

on strong approximately strong base currency basis, Two in Excluding constant Greater the growth, hotels, in growth approximately additional supporting investments of net growth XX% RevPAR offset Roads in an for Pacific increase partially constant of approximately franchise and was XX%. X% Asia rooms reflecting China. growth EBITDA grew our rooms Adjusted and impact Together, drove acquired incentive dollars. a fees a by fee

approximately increased East, in Southwest approximately I our franchise Middle quarter the supply QX growth the East, corporate X.X% currency, Adjusted which segment. XX% business, will Owned a both full-year. incentive in review occupancy Asia moving asset negative for and All Net of RevPAR RevPAR and on significant Full-service Now a on by growth X% RevPAR other an this and and currency helped increase to increase our regions the the XX% than to continues and was entirely and for solid base XX% of impact showed Africa, Europe, and EBITDA EBITDA gain. leased our have Middle where driven of segment fee increased in X% to rooms constant results. before in adjusted in constant for revenue segment the to a drive owned quarter. growth other XX%, adjusted down now in due leased basis. the segment EBITDA accounted X% sales. for fourth for

and by adjusted segment in would these our an Excluding impact performance XX%, owned impressive currency of the approximately increased hotels. leased transactions, have net EBITDA constant

increased Our increase resulted food the remarkable the and yielding rate during performance remainder points beverage quarter. non-recurring certain and teams, in from from the we XXXX of and comparable from one-time continued The operations, margin in in owned our XXXX. basis XXX hotel of improvement costs came and a in gain. productivity About decline leased half as credits realization, operating costs improvements margin lapped margins

XXXX. helping factor administrative than touch our reported lower to the year. general, quarter selling, consolidated want full-year on costs another I We for and fourth $XX Lastly, and of last million results adjusted

marketing In of strong our to than relates related of significant including reduction excellent in realizing our costs owned While net exceedingly year initiative. agreements. relates a and end and remarkable rooms leased focus management outstanding growth, to we fee and the our are proud operating double-digit of half operating certain decline severance, XXXX, efficiencies a on more incurred summary, and to performance, increase with our hotel of executed pipeline margin in model, costs non-recurring portion in franchise and this to this growth,

annual that a the closed in approximately million, of full-year dividends, XXXX. $XXX I shareholder Now our with $X repurchases total would commitment million you capital performance, volume When with share our of on share on repurchases of to approximately largest out We billion a update like reviewed total history. we return in our operating our delivered XXXX shareholders in of to returns. combined I’ve $XX to

Additionally, during February the $XXX fourth million authorization remains quarter, approximately we which a of $XXX announced new million share of repurchase X. as

includes this $XXX shareholders $XX in which in Turning million to expect approximately to completed million year, repurchases we X. to through XXXX, return February capital

a to and dividend, XX. per March with Our paid increasing repurchases on $X.XX XXXX we first XXXX share are of will return share shareholders quarterly per our of to of from our to through share come dividend which quarterly capital combination $X.XX be in

Our of sales potential application expected occur return total that shareholder does $XXX million contemplate the proceeds not from approximately may asset of XXXX. during

related guidance to morning impact potential any the will I sales. potential XXXX that of be additional to transaction, asset Turning providing XXXX, including excludes guidance this all

full-year of late any find XXXX appropriate. will yesterday. The reminder, will will earnings or new filed asset Two our Roads, where of release provide impact items And our potential We when Two a but investments guidance complete transactions, out in including update the we I of acquisition include guidance or in you Roads our can our details guidance break I as businesses. hotels sales

We expect provided with consistent X% we call. to system-wide full-year quarter guidance XXXX third our growth range the RevPAR during X%, from to

some select-service growth U.S the bit internationally, to RevPAR be We specifically in continue lower and a U.S. to expect on continued the RevPAR expect RevPAR than in pressure

XXXX real of adjusted progression. XXXX year-over-year $XXX expect that million. $XX on our to million important our during $XXX to the million creating a It's We estate out earnings to transactions from impact range is headwind EBITDA completed net point

impact at we expected operating consistent of results the EBITDA When items, addition from year. headwinds about nearly an these $X with impact XXXX the million franchise adjusted We our guidance EBITDA from versus hotel contribution currency the estate This also offset to X% and the fee expect The and million foreign $X expect by for excluding Roads of management at Two a million, of the strength our of approximately midpoint. real transaction to our grow and prior flat guidance. currency. foreign unfavorable results $XXX includes adjusted in XXXX growth

when X-year of I headwinds compounded real currency fee higher and EBITDA. the adjusted X-year leverage offset adjusting our a As This we forward combination to results model, performance expect transactions impact after deliver approximately operating rate more at with guidance, XXXX periods, in our to a we solid midpoint XXXX growth for the business, And look rate end growth the foreign our owned hotels expect the and leased on we XXXX, combine strong the growth earlier. mentioned of of our than and estate you to for growth our excellent XX% of is in our period. reflecting over of SG&A both

Before adjusted EBITDA our the XXXX reported earlier transaction I EBITDA. like first related the that leaving our quarter note majority on weigh of outlook, adjusted to headwinds will mentioned I'd

We expect adjusted SG&A in totaling $XXX million XXXX.

at significant year. redevelopment efforts capital property expected of higher amounts opening the drivers SG&A Excluding XXXX. way year. in additional of $XXX approximately Miraval to Lenox, integration of million one-time which completion million million, the the million By our with Capital of one Two adjusted Two this the costs. in related The in $XX of be to XXXX approximately these $XX million Roads, $XXX expenditure to expected reminder, SG&A be of Massachusetts, $XXX are is expenditures expected XXXX for later in includes an Roads impact compares is

handful Phoenix well significant Regency purchased properties. Hyatt Regency planned a Additionally, and year, other activity we Wells is the of Hyatt as Indian renovation last as properties for

to costs new We of approximately $XX million million hotel during also have $XX XXXX. construction

at With comment the XXXX. will continued expect strategy, further I on for decrease our guidance over time. capital we our our to on CapEx Conference we briefly of evolution levels tax March And significantly will Investor X. of discuss

reform Our hotel a tax XX% XXXX one-time outcome sale. lower effective rate by driven a favorable including tax in was large benefits, and on

is for rate of tax expected range XX%. Our effective XX% the in XXXX to

%. to our growth XX including that highlight XXXX XXXX to in Hyatt the rooms with unit X% net which growth openings, Net driven our expect growth, we Seattle like in over Mark Next, of include expected Regency by opening December X.X I'd net rooms hotels expectations, mentioned the to exceeded range earlier.

of hotel net confident openings XXXX XXXX our expected World of a that pleased to needs in remain in my our we level saying of another elevated us of well from of forward our our XXXX pull base while openings, expanding to of and expanding significant at in this RevPAR strong inventory exceptionally are rooms will represents development While with deliver growth by driving a results our rooms expanded members, we where we robust our solid ability our Hyatt of in presence increase operating growth the growth to our pipeline. our X%, deals markets. net growth, and signed high excess significant level with The of time conclude believe meet fee is of time we ability of I levels positions future prepared delivered the over high key foundation remarks same very in growth maintain growth pipeline XXXX. year the

our shareholders. of Roads capital delivery of including a level execution record acquisition return proud successful of are Two of to and our capital the the of strategy, We

continue and our the strategies, to brands include shareholders. which to create value to business against and expect execute for We capital investing operating more our our growing in

it where As we to to plan happy to you topics. these back on York a we to take for X, we of Meanwhile, March will cover with the reminder, New any in Q&A. that, you on we material I will Thank invite many Investor on our Christine you. Day this questions morning. And turn expand have attend important be

Operator

question Instructions] Research. line from from of first the [Operator your you. Shojaian And Jared comes Thank Wolfe

open. is line Your

Jared Shojaian

questions. my Thanks for everybody. Hi, taking

to second. So a guidance the here back go XXXX for I want to

excluding You core sort growth all called growth, out of the one-timers. X%

unusual be target, your units. to I at comments So there I appreciate CAGR that’s be doesn't of the anything X% at and higher. might components longer-term RevPAR the look target the appear XX% low guidance longer-term the to terms multiyear if your of in or in end But your that of

that talk So, help and gap? that can understand maybe about you me a bit little

Joan Bottarini

Sure, Jared.

mentioned, we you is midpoint our after X% As exchange foreign EBITDA in of the removing anticipated range. net transactions the at impact the have headwinds, growth of

those items I helped I XXXX, settlement So portfolio received earlier, non-recurring quarter of had X you of that and in is those remind other combine in us first to growth a our XXXX. as mentioned the items, alone on earnings and that want you in When the one-time headwind lift a XXXX. two in we rate there two points face we a in were XXXX, owned leased which will also

the in And model our of fee it's on over period. is high-end solid X-year two strong growth owned this why look is 'XX and That to over the growth items. leverage important just given midpoint non-recurring leased reminder, business, our as at the to So growth it's a XX%. rate, years, our X-year the from and and instructive reflecting growth hotels, SG&A the 'XX

Jared Shojaian

you not you proceeds properties considering? your for other are look portfolio might the available any that for that’s as tax term appreciate Okay. being the sale, of there. you. target? Would thinking you longer your I Grand entire whether you be terms plan else your or about to reasons, are in mean, reasons, strategic and And Thank But be I that hotels? into of mentioned $X.X Would details of that And allocation would billion you consider capital? anything recycling consider incremental assets, the you disposition at that Hyatt, there how

Mark S. Hoplamazian

move and balance Thanks, sheet. is direction asset-lighter respect about that Jared. with the are taken is overall how the New we’ve -- to right with are consistent With to it, to Hyatt consistent we we it steps York that an taking the which think Grand continue to now

So million. One we in the cost at for the part by in several profile of we that the at opportunity the XXXX the last a was CapEx over $XXX bit renovation different major factors. the driven that property fact did a context last is of looked that in that being --

with look as forward, for -- is And so a that we’ve an something we doing CapEx think the profile appropriate got this us about property. different suggested to time

we As to the from determination the how time proceeds we will actually closer we that to of make get will ultimately the hotel. selling treat the sale, as

transactions. So engaged for sell recycling that got billion level which about year. last the in permit down at framing extensively we've a described a commitment, is $X.X number we also and And our talked we've of

So exactly proceeds to we how when be up will get determined think disposition. we end those treating I closer

Jared Shojaian

you. Thank Great.

Operator

comes Your line Katz next question of from the David from Jeffries.

open. Your line is

David Katz

Hi. be to shift the everyone. changed ask maybe don't allocation Good how your the obviously, morning, again, changed capital back just then about world and wanted I And I framework the brands portfolio proceeds prospect has today. thoughts might know. it Around as what of returning and for that? way opposed more sale and your adding reallocating that appetite some to the through and M&A to

Mark S. Hoplamazian

Thanks.

growth opportunities for proceeds would be for So for to we've been one Hyatt. from consistent to say number look focus dispositions that our

real been estate color real did divest real over path that focused that at a bring further the are look to that estate, estate. And would if on opportunities with any it significant have transactions has to to of that we look did time. we hotel we’d not Our amount include

opportunities performance. to also Two perspective. really over ADR-level rate it's a most we own use and perspective growth bring our from key enhance importantly, lifestyle that They to entirely driven. base space from will idea is of time. certain our really us platform the remains, the on been similar demographic in a it In and it's and a our on theirs, that strengths growth are But for help attributes appropriate fee have management Roads, base very and the enhance has a that customer was, to finding customer So it's case actually of focused

brand. to One able example resort migration migration. continue continuing to to significant for being earnings mixed with expanded a that's in got expand we've with behind Asia customer key and the our significantly idea help we that very offerings way ensuring to our do pipeline a in our capital of it with the we’re earnings So World strong have to acquisition, a going base that redeploy in of -- that doing is in Alila base areas Hyatt and members of has

excited for So we of World really Hyatt the that opportunity membership use particularly all help the to about are enhance our of value to of platform customers. the new Asian

David Katz

And appetite lower any can than feel which like been has where that Do answer. be growth may follow of of there attractive or I seems or are higher you the limited elements even appreciate more of service that? the end, the if in among I up, sort the more just sort that

Mark S. Hoplamazian

currently potential in. that acquisitions at across of Yes, we’ve looked we compete all chain the scales

upscale through that’s significantly the have rate brand upscale particularly the how really below able platforms from at we -- in looking be if at area focus. to that everything that would just expand basis, looked Europe. it We’ve a adjacent And representation on our luxury So also but some you at might also to upscale, be our And area. look reach.

of the at acquisition geography through goals and the acquisitions to lens is looking of potential representation. one key segment which focus look we're our So well really as as

our on we actually within really key helps I representation Alila to think I would in have to the go back types example, resort focused, difference make and say to key and that that will within biggest representation those the will So sharpen that, my our ability focus of the markets things additional really markets, to network.

David Katz

it. you much. so Thank Got

Mark S. Hoplamazian

ensuring that, one deliberate healthy last over be I been disciplined of very we shareholders. very the to from a would thing. and of sorry ended just you that of result see year driven And return capital is course of shareholders. is we’ve but returning continue, And just about paths where behavior to with of the can capital are returning That that add all don't maintaining our to to to of we shareholders a which we over started billion. expectation a or if a million to off mindset XXXX $XXX will we it a have is guidance and be clear up the capital about to utilization

important for is area is it So It us. to of focus an us.

shareholders. M&A we not want our that to So, are of I capital lead and answer committed to exclusively path don't you on my believe to returning continuing to focused

David Katz

Noted. much. Thank you very

Operator

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

open. is line Your

Thomas Allen

morning. good Hey,

impressive up obviously really unit are guys You growth. putting

even of that XXX -- the confused and and was I I Two XX,XXX its as out you hotels September take hotels went rooms was actually, Just to very pipeline you from was XXX in XX,XXX. about one if thing Roads, --

additions they lumpy impressive. So were one-offs, they were how it's or or --

Thanks. growing how you are quickly? So so

Mark S. Hoplamazian

we We to thrilled a year. at looking year, our to enhance had maybe I one. remarkable we on able this been months, over Yes, how been, would had address development really focused I’m We say, capabilities. just can be course the past XX Two developers added development Roads, of experienced way, help that By resources some we’ve of that activity when the further we time. into over and Hyatt and brought developers. support accomplished extended And we’ve really because acquired the period to

is So well. fantastic part the very that of "overhead", team development we very, that in overhead" are Roads rate with a the Two bringing "run know brands

deals against course really -- significant been over enhanced those team we year. measure process. And the in the very had new in working have teams with So a the -- or place of teams place of new we in

executed fully financed. are that deals fully disclose only our to is opinion, disclosure and in around discipline Our

still as very larger pipeline, you the as yet total base things -- our if when across pipeline pushed notable, significant signed are into haven't can actual post-LOI because they’re things our what in sometimes The you can confidence you line and partly and but the our say we that lag getting financed. we look because and the paper in on executed we’ve finish ink account stages, or and an deals all not deals. button getting see but first, opinion, of activity consistently And The pipeline is for So, across finished. why lumpiness imagine, the And being reported and that’s activity, advanced fully not brands. development some I'd of were are quarter. included just deals sure than either are activity that even done when had fourth our on took is signed, you our in report at significantly incredibly essentially growth we robust the the

under -- pipeline mid XX% had rooms, are leased, is very really, managed, current than and that, more franchised, -- use full so Second, you partly because of the actually, and That’s XX% was year-over-year. that of composition in the very, category, our percentages rooms, -- for select our general full-service And and And composition, increase result because it's properties why is higher about that's see which service managed it's virtually our XX% are all than X% our XX% XX% will is I owned O&L managed. in XX% in is XX% just that growth XX% service the whereas a O&L the is in managed managed. increase all the significant pipeline.

I out. thing So point would that’s first the

higher select select The the current the roughly of and balance a select second XX% between to is identical full our XX% sorry, is essentially it's bit service. -- little in full service pipeline service, service that service, is

mostly so Our select U.S current some of XX the growth service base service, that’s select in a about phenomenon. % properties, faster is

that about U.S seeing total a the the of but new I’d year much XX% So, in pretty we Americas and of significant the across the single terms country had China pipeline, say the with growth are remains globe. very biggest strong development.

Thomas Allen

Congratulations.

the different you out the weakness But driving highlighted on U.S service comps. XXXX What’s softer also on hurricane that select fourth service of that? in then, will quarter topic, a Just RevPAR, the select so too. you a because little be called

Joan Bottarini

Sure.

happened Let end at in quarter. we are 'XX, XXXX how the me in fourth the address the what things about year thinking first of -- in what

the XXXX Firstly, outpace in upscale U.S demand. growth segment begin saw to supply

that impacted So issue was the first us. that

previously, in programming in offering Texas what growth have the upgrade in disruption will much of our our remarks. in when different is the would there's which concentration. that we in is the months. are is Hyatt World to Hyatt States, this we and my Hyatt Place initiates industry communicated And mix, geographic Place what process the of feedback and on offering Southeastern we member say and just benefited under the brand to lastly, hearing brand the by I had of members. you And could for in from The are encouraged our as I the performance, numbers comment make penetration a performance to heavily more increase the a way we Hyatt number a second are The evaluating our what in mentioned United recent notable compare in that from and caused, demand, are World pleased value represented of our the we've I prepared brand with post-hurricane

So, we problem to of a on is the And issue. supply those primarily core growth have macro in brand rate items due summary, don't market demand XXXX, any a our evidence driven or by and of weather-related impacted concentration.

that service the on throughout expect some about demand did performance half strong tough and the As first of half of will comps XXXX in XXXX, first we year. think we continue -- you well, the And because the XXXX, to we side. equation, such select as supply have so in have we

Thomas Allen

you. sense. Makes Thank

Operator

comes question Stephen Sachs. of next Goldman Your Grambling from the line

Your open. is line

Stephen Grambling

growth? Stephen. Jared to morning. EBITDA little to bit on good owned accelerating on Hey, of a blocks the guidance It's look to on pivot consider the as kind milestones core are key with as to I guess integration and any of and what 'XX Thomas's the you are kind ex building and trajectory, an follow-up leased Roads And side acquisitions? a there question Two

Mark S. Hoplamazian

Stephen, the start, will I second with question.

of Two on be plan we track, we integration with and might of how lot that to with a lot hotels. under the where to there expected the around be of relative occurred doing Roads. a and over of other of the coordination the focus with integrations is are number migrate a course previously. the deliberate have year, way way, in And to of things are respect a to I is we to going owners think evolution I know very the thoughtful

-- to aware this that we you that the how be effort to extra a definitely put a of globe. successful. of our to deliberate base to be resources yielding thrilled we order owners, in are not and tell the I think need accelerating and great path in of behind doing are having, solid very the way And I’m a around planning, really but brands growth also just this we've really the

our in opportunities. past, line way. to work an coordinated seen pickup property in that of across count the with Hotel new great So New York, colleagues of Two -- Two nor one this Parker the in and good finish the some were the we’ve We We Roads in year the group able in the had a that a very already was experience very from with first Roads pipeline. way bring part a very with ownership conversation which already, the rapid notable which in is neither had in

extra that lot really going of some focused and future, really left foundation on signs of amount yield that to we really are The some that So making early costs money are fantastic combination significant There is to time, make to the good which transition effort, have great, and results. question is really that are behind, is is we a well. why sure for the that we a sure no work we’ve goes we the taking that do. putting

we you cover look the progression, the markets Joan, In into a expansion. terms margin top think got the we can we're shape we’ve that the picture in are performing at terms massive lapping in line. because on O&L the see representation as of I good this Maybe, margin side of year market how of year and are

Joan Bottarini

Right.

extraordinary -- of operational, that an first was that quarter, covered half had the margin for I points. XXX we for And fourth So of expansion fact our was basis the that and of items. the non-recurring on headline half

XXX full-year, we well. the margins basis For expanded as at points

strong the line from to margins. had we those drive productivity year teams and So lot in and operations a and coming top strong on a our driven good by both out, very results focus of the

continue we would year margins. and these about yield targeting flat going drive revenue continued I will to expansion be stated the be RevPAR challenging. into But teams to the to we are at identify will margins levels next to that inflationary margins of working say expected cover growth Our past, that hard opportunities In costs. X%

that at to it single-digit will RevPAR continue be these rates -- expecting. challenging be we So are low

Stephen Grambling

region? Are in Thanks. Thanks. by the in you one sign versus difference growth frequency see as follow-up, the much seeing loyalty associated been spend how momentum or And spend maybe the with unrelated domestic and overseas? of program, you any the ups has

Mark S. Hoplamazian

We’ve the Alila think proposition there. in across the the will globe, value of growth addition seen we that also and enhance Asia

was in driver growth changes the model hotels. the the over our penetration for new One new close a owners and We our membership of build. increased on more it also transitioned really area the for made plant, of some the one physical year Hyatt course was we the for the That both current programming Place. efficient with and make done that physical coordination to in -- model developers

and take out transitioned to we otherwise able costs program beverage order members, to the -- to which also take in converted and for is food me, the space a we of excuse performance, So in offering free and to changed margin at is has the a out But breakfast Place change new were enhance offering paid model. durability Hyatt it which and we new significantly And to that a a and from share sign free rate. what of which and we’re -- time. was we room included spurred And was wallet time. tracking the do, same lot ups breakfast in but penetration used over of enhanced breakfast and

move membership. really that and disruption No member opportunity feedback occurred from question fourth we of very, quarter, had in increased positive. been that perspective, of the transition, represented the also into are has owner But, very how which rate So a terms experience overall, evaluate and we as and the offering and year. hotels in and this the some we elevated used the were something drive that we’ve February feedback to in January to continuing

the So the we program to significant SLH we by some in focus enhance Europe well. part are think is value more tracking because a to of available we've on and hotel thing to guests. taken as ups membership year we proposition also to steps World is to going our Hyatt. the of teams, And through are offering, material in and sign inflection of The but other say about I our that. over closely that with what’s really the has really our we also more base saw And point attention change excited the do hotels the course be it add an as I'd really only full-service for

Stephen Grambling

Thanks for the forward I the color. to Investor look Day.

Mark S. Hoplamazian

Thanks.

Operator

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

Your line open. is

Smedes

dividend just was the little wondering about, I capital repurchases? more you’ve this targeted increase the for could a you share return that Thanks. versus the bit talk to Hi. more decision if year,

Joan Bottarini

the our -- our So year was that $XXX year and at came investors. by asset return returns And point largely million million. shareholder of last I share also just sales. guidance at out same guidance the for we up capital had time year the ended want to driven out $XXX And a is to the we that with billion same in

guided as As you we year, is the just look asset consideration we that pointed dividend. in sales million $XXX at the going and quarterly into taking any includes, before the into our out, increase

XX% giving increase of policy, with have course dividend, we’ve those update And firm return. a our earnings -- don’t this decision revisit if sense to we for will year This you took our that and change. year is it that of the makes which we shareholder given over a to And estimates we growth. our increase, increase our but So, the we it annually. any respect stated will

Mark S. Hoplamazian

time. think factor, operating We’ve we free significant reflective payout increasing is attention one pay over say to, cash we of flow, it, I'd also cash ratio, about as it's Yes, got cash we which our strength. flow but of -- levels flow

will decline flow earnings also such but cash in CapEx not is this see, that fees our will pace, time. we are over more a we of part mix attributes also you significant a So as because much increase free into over at asset-lighter just will anticipation because time, growing go that

in in is it's looks profile a evolution change anticipation like. part what that So of our

Smedes

investors I you that dividend as than mean, are I that. guess, value guess more more I understand I like asset-light increases. seems to repurchase it for the strategies, -- moving companies are, share

me you your or thought between share versus is thought of going at to of there about a or to and the the just I’m you little sort is given was of wondering ratio peers dividend dividends to surprising -- dividend. this kind So chose push it forward. repurchase trade up you expect your below kind Would a maybe rate just increase what the

Mark S. Hoplamazian

when year-over-year mean, total numbers, we're the is not dollar the share relative level that change I the you about. Yes, to through really talking though, material go of repurchases

anticipated as dividends level, dollar what most a numbers, a sort set relative we when -- conservative millions I and we we But see increase share significant this find on When -- setting we not through dollars, the to time. going just of initial dividend that repurchase. we hundreds are a over opportunities of to a the think were And indicated be we So, a consumption we of that we it we would set you to material just considered a that year-ago, at trade-off. material total amount in total don't incremental it impact of being not the of have repurchases. dedicated on to importantly, to it's a that’s share spending our it's that go cash terms a --

Smedes

enough. Fair Okay.

The those I which ask are you than losses other year, called to France expected thing for greater guarantees wondering the in you about, this out wanted the narrow. losses just was you just those impacting France? all? burn contracts you guarantees that remind at can given have would when -- just the Is in when us burn unrest the those that or And off? expected, off, hotels I

Joan Bottarini

see we very of any impact impact don’t And May last decelerate to this XXXX. France expense our that unrest guarantee year, in burns expect a we -- So, from off obligation. minimal recently. the the And in -- from from

Smedes

Okay. Thank you.

Operator

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

open. Your line is

Shaun Kelley

Hi. everyone. Good morning,

us capital as much to Mark, my kind of billion update just as outlined couple plan far? to you to and exactly Just the it full been you’ve get the back the just goal for of remaining we a go Analyst this kind answered, Most on sell of we remind questions recycling program but asked of so have $X.X sort clarifications. on whole stated how Day, of the can you’ve before

Mark S. Hoplamazian

is, the it's Yes. Its precise in -- I of don't know $XXX the but million. number what range

Shaun Kelley

asset, the the in right? Okay. fourth And only I think sold the one Hyatt -- thing House quarter was

Mark S. Hoplamazian

that’s a another is also in JV And interest -- we we we’ve the right for an that where like was sizable we a which there asset this No. that being which but a deal, we stand had marketed practices when Hyatt report to actually was update time, in have, at will up is in which our hotel. sale, more we -- Regency now. at ended We signed Minneapolis, disposition, there

Shaun Kelley

then, again, Excellent. one York that asset. did some clarification we Great. because saw appreciate color around the I New circles. was New the you that just that And And, York on think give real us the other in of estate

it -- on you is I you then you the lease said ground question So, think is that have have a may in think some interest I I asset, lease. the that also but mentioned ground

just value ground of little bit you color can because, I or to us much about on lease on a And be there? you it own. a the trying whether the dollar, not how could So lot more more give depend think you ground leased mean, will it's or

Mark S. Hoplamazian

Okay.

me. excuse So,

government is owned we entities by land the all the sits, property improvements. that the lessee land and which are the and on transportation owner the Given of of

make with opportunity that -- to has it Station group advantage the redevelopment on property. to that's adjacency ground redevelopment development might and the and the that’s intention take of sell development we’ve our opportunities than this lease site that contiguous allowed efficient our the new site. Central been status total the be. effective it's the would in with inclusive So of pursue to more that The And interests parcel to therefore be to the of formed property, certain otherwise group Grand

air a owns it's that Grand Central. the special opportunity bit a at of So with group rights this

Shaun Kelley

if Right, because you them contiguous. can it's only use

the think of around it's rights. I one rules key air

Mark S. Hoplamazian

transfer as as exist contiguous. are Well, though you abilities. not there some are powerful if It's might

Shaun Kelley

hearing Appreciate look more color there and that. about the forward great. Okay, to

Mark S. Hoplamazian

Okay.

Bradley O’Bryan

this is Christine, Brad.

take will question our We last now.

Operator

comes question line from last of Your the SunTrust. from Patrick Scholes

is open. line Your

Patrick Scholes

Hi. Good morning.

think Two we question that for a on should you. work our about Thank EBITDA and on as models? we XXXX the Just Roads impact how

Mark S. Hoplamazian

In terms profile earnings going forward? of

Patrick Scholes

yes. Yes,

opportunity to gave out think we that? on looking take You how color -- do we about should how 'XX, XXXX but

Mark S. Hoplamazian

they you comes underwriting about will in and would we something we go near-term multiple XXXX, to our deal. the would thought XXXX. we when through And And pipeline that take the we Joan remind our just of XXXX in that And we XX% correct stabilized closed it that about of also our we effectively, embedded just -- is what excuse acquired indicated profile for now the realize that that effectively the growth ask to price. I how then, opportunity What in in and accelerating Yes, some opening said the also get numbers, was fully the I between we until in and will opportunities are that and a some on yield, work which it earnings the as base moment. then, working the new of range think development at me, remains on conversions view. the purchase form

might -- work to near-term just the in the that’s want profile, the So Joan, but, you XXXX. numbers what how actually recover

Joan Bottarini

Sure.

$XX $X million X a SG&A, we’ve XXXX, stated of net a reminder $XX base, we expect costs. transition on million As one-time million of and EBITDA for inclusive of what to adjusted impact cost

by the fully transitioned to expect end We this be of year.

before our they bring transition transition with completed year a ensure smooth side other $XX of and technology have that we substance could derive the are that that with of the million associated 'XX. the the conversions platform, end to all that fully to benefits of So is to this properties so systems engaging -- the and seller the services from to our

Patrick Scholes

Okay. Thank much. you very

Operator

to over back O’Bryan. I now call you. turn this to the the over At call time, I Mr. return Brad

Bradley O’Bryan

Thank for on forward in March you, And York Christine, thank X. you today. seeing we you look joining everyone New to and us

Operator

concludes the This conference call.

You may disconnect. now

Hyatt Hotels (H) 15 Feb 192018 Q4 Earnings call transcript