H - Earnings call transcript Q2 2019 | Hyatt Hotels Corporation

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Operator

Good day, ladies and gentlemen, and welcome to the Second Quarter 2019 Hyatt Hotels Corporation Earnings Conference Call. My name is Jesse, and I will be your operator for today. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. [Operator Instructions] As a reminder this conference call is being recorded for replay purposes.

to Brad conference Vice O'Bryan, Relations Corporate like host to President, now and today, for Treasurer Finance. would turn over the your Investor I and Senior proceed. Please

Brad O'Bryan

for of some Mark XXXX then earnings the Hyatt's and on call full-year quarter, sharing more for call. Joan, update who morning today and on highlights Good Hoplamazian, Jesse. results, with of in Joan our for will Chief will conference few we’re activities. seeing detail call for recent Chief Hyatt's quarter on by an our you, provide quarter over thank Bottarini, to President I'm Thank on and and you development begin Mark what second I our the a Hyatt's share a joining operating the turn provide highlights second results our insights will Chicago everyone Officer. as will additional couple financial Mark updates outlook and business here Financial as our us Officer; brief well Executive in some topics. regarding then XXXX.

will We your take questions. then

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

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

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

over With call the that I'll Mark. turn to

Mark Hoplamazian

Hyatt’s quarter expectations today we impact Thank here everyone I comments markets. in was books the realized perspective you, Brad. quarter with on welcome my would morning we a the revenue speak XXXX seeing of transient call. my I to was like within The negative soft, begin some to what business second on and the group that it earnings U.S. first rooms are will but our the important the and Good group quarter Easter. picture given the have bit and largely consistent in the into coming with to

we which XXXX previously, and significant is year. has exposure largest group weak mentioned have we been our market in very a As Chicago,

the RevPAR XX% are down through group for same the revenues down in Our upper down in the market market half and room period. quarter overall for Central for the is the X.X% Business hotels luxury X.X% the second District is and and first upscale

almost the on year XXXX The good up on with in looks books Chicago be business the to a group already XXXX. news significant X% strong for that our is in based market pace

We it particular Chicago. first in for of have visibility outstanding quarters high the two looks XXXX to

than having lower we across business rates. was SMERF overall from for U.S., quarter primarily Looking production the the coming and group weaker expected Association participation had

quite seen actually cancellations Turning corporate been up minimal. business and continue group to well hold to have corporate group demand, we've

approximately production is quarter While our up corporate in our X%. second single total in the group down high group the production digits, is

into year flat then business We to and expect most half, in strengthened point, XXXX. second group at approximately versus of which is on the this books the last be

remarkable where our job was impressive hotels driving on of This done and a markets demand an the the business group especially software gaps based the seen teams San in Orlando group our business. true transient down side in transient for Chicago, was created While Antonio. group significant we've convention to business fill revenue have rooms by quarter, hotel like

about X.X% U.S. transient broader Americas leisure was in outside in the up Both Transient certain across in business the the strong hotels our room significant the quarter. currency over and and share full during U.S. gained market constant of particularly and improved service of U.S. X% region revenue demand transient markets and the because in we business

certainty success year. is we and it in difficult but transient leisure going the shorter continue business look through to typically we strong Given transient with revenue remainder the driving have will demand what to booking forward, window, predict believe like the will of

U.S., our expectations the which below to a time in little from I China, in spend came want greater Apart quarter. the on

ongoing will entirely she quarter, our Kong. Joan the close trade tensions Chinese you hotels our the shares affecting showing contraction Greater hear from with results China full As and with is by demand China again some and on weighed U.S. when declines to for travelers inbound in travel. Macau service in Greater for down have combined X% both driven Economic Hong conditions RevPAR

points. with first the RevPAR block casino by headwinds Greater this Macau, room our consistent of the to in addition growth quarter which negatively China relating In continued year, XXX approximately impacted we've basis

XXX constant occupancies and quarter Hong last compared by have year. that in results the to of the and in second X% dropped points Finally, July of with reflect our currency impacted as the expect impact in period demonstrations quarter to we rate June almost basis declines approximately have along third Kong the negatively

indicators, recovery fourth recent on in difficult a Based some RevPAR the third quarter with quarter. expect we Greater in China

conditions forecast caused as economic this that by the of part of in result RevPAR was Kong. initiated at in that in and the reduction see for in beginning a improving assumes we – economic the disruptions that that quarter part stimulus positive Hong year a improved the demonstrations Our fourth

of the further the during these we in place second year. half market be second would between excluding In trade of Macau. new conditions, deal gained Greater the put the during outlook a quarter China phase were and share if the China Our U.S. enhanced challenging into

most Another and capital activity want the long-term brands. owners currently Chinese are that which of of positive put still want time. to are remains development leveraging Separately, assessment Resort Core we as briefly on the increase bullish reductions by core half that guests sign Texas, remained will areas not work cover Miraval per our at very and with business this lodging strength detail. a while impact strong impacting are Joan demand occupied operational at emphasize to for significant want at in I our overall our our in that to construction couple I Those and is Massachusetts. Tucson notably are EBITDA, new strong. comment a Miraval developers of to Most conditions Resorts the guidance adjusted in delays are of items in those associated our Austin, driven related the posted discrete more that primarily to X% two first revenue Lenox, the reduced XXXX. in business.

Our outlook for the outstanding reduced remains importantly by net driven our in of rooms’ guidance core business our positive context RevPAR growth. hotel our

of on Speaking of the during hotels growth, Roads X.X% we year-over-year now quarter realized are net that Two rooms’ portfolio. a our part growth the excluding basis of second

XX.X%. the note in that Munich continues. On If Andaz pleased Europe the Hyatt growth hotels two Italy our Vienna. momentum Roads to rooms’ Two in Centric you to hotels, and I'm opening noted include openings was our we earnings our of call, and in were first quarter net two

conversion XXXX. second final Spain two expected signed The with quarter, is first During and are Regency to were in renovation located the that Hesperia in half under the converted quarter. of and completion Madrid Hyatt brand we Properties and Barcelona hotel second the in in open the

added our owners all Collection thrilled Palais palace openings all to of as We France. We're recognized the by with with success The to invest of in Biarritz, also in in developers these Hotel one France to attracting in hotel our have du Hyatt. and a brands. hotels was we only XX continue and of Unbound

the addition to just mentioned, conversions I conversions. In other also to want highlight recent I've

as week just in the Colorado, Vail. Talisa Grand We Hyatt rebranded the last Vail, Hotel

a room us top and reopened XXXX represents addition in destination. of a a luxury resort sea for Just million hotel renovation XXX and significant November after $XX

recently conversion of greater Centric to expected is executed of hotel a completed this which XXX to the rebranding is Hong in be expected convert the also The year. Kong Hyatt Centric We in to room become end third of Kong, Hyatt by first Hong an quarter China. and agreement in the the

conversions fees these along full our of with of the key. per our All high existing pipeline, drive majority hotels that service

of particularly second highlight our performance Well results. Joan are the important. will areas two details of go that want into I our quarter to

The first is market share performance. our

the X little a gained globe. share quarter of You'll in recall across that points we the first over

performance again, of gained During X almost the share the second globally. points we demonstrating brands our strong worldwide, of quarter market

all quarter. regions across market Similar was where in exception the our first quarter, drove the to Americas we select-service share being with gains flat hotels about the world for the the of index only

our The update net item confidence our is Joan room's The will which expectations net us growth. with expand remainder just mentioned year, with strong our of growth XXXX, an to of the openings expected second the for pipeline for combined on provide conversions shortly. room's provide I

We're seeing sustained levels across our and portfolio. brand activity of developer interest

our We also net expect to well record record to only level in the continue realize level believe but year to signings are industry as this We holds, expecting growth we present of are forward. going well. deal assuming openings of not we activity room's a positioned pace lead

the asset a the to related like I'd San we you indicated a closed Francisco. million. and a Hyatt, market. start asset items. commitment. with update billion under previously a had We sold few Joan, approximately just for I'll the sell-down was non-hotel our to adjacent as on the And things of turning store we sale that The $X.X lease assignment asset incremental $XXX Before Grand additional of property sales of on on to retail that

during With a currently to Separately, of those bids that and forward call of marketing the we within hotels are two the the we intended round the other we move sale second third hotels. following one indicated round process expect our on coming have with advancing had to we bids, QX hotel of week. respect

in our close of while has exceeding continue including with agreements our assets. Two signed, acquisition year. to the Interest end are early With both strong results expectations. been cases and have are we both integration still and Roads, the to to final and smoothly progress respect agreements to and pricing buyers working of efforts agreements prior formal been for management no secure It's long-term

in Hyatt we loyalty July. in the Alila Vivre quarter we of hotels completed integration brand We you and second during into of during integrating As the the Thompson of transition the World de completed brand. recall, the just by brand our the are Joie systems program the quarter and first

is Destination migration, integration August to brand take Our September. for scheduled place the of final during resorts, which is and

see to brands. continue the while operating for has been Two strong, we interest performance in hotels developer the Mean Roads and

In fact, developer signed hotels signed during hotel through a in the and our Two conversion be Roads few second upon opening network what deal first a would for Europe we the we've Alila quarter year. this in far so years, three

of Airlines as all hyatt.com, app. with Hyatt of the Expeditions. on-property enrollments XX% benefits drivers well coming Hyatt to One American the very compelling and by of is is our Hyatt performance last of through of enrollments large enrollments quarter, are hotels, over luxury of small in owners. second the of the the our partnerships the up loyalty digital membership mobile year of World World part we gains World World Hyatt driven of revenue which strong as in momentum due initiated and from Lindblad program, from delivery The have

believe scores of XXX half period during share customer to contributed over up basis the World room the quarter. XX% same has transient in points to of during significantly, market and our demand approximately XXXX Hyatt gains penetration increased engagement Elite first to our second of members our We fueled compared night the XXXX. global are and

results a ability and strong around through a penetration market recap, proud a and higher world. environment, growth enhanced I'm slow in share night World with drive transient of Hyatt are our our strong engagement room we As pleased the to to resolving business increased efforts of deliver

brands strong continue we results, that to significant we time reminded as not but net room's only growth. of driving industry growth over daily leading are Importantly, exceptionally are deliver our driving

I that, now the call will turn over Joan. With to

Joan Bottarini

Thank you, Mark and good morning everyone.

a net points for Adjusted diluted negative income with quarter of RevPAR quarter system-wide we and X.X%. million yesterday had EBITDA The our growth million a per second reported of in basis share Easter RevPAR of on shift approximately Hyatt $XX earnings to the for of was growth basis. $X.XX on the system-wide attributable quarter. $XXX Late impact timing XX

constant adjusted or impact Two solid unfavorable Excluding by on franchise Two transactions, addition net XX.X% including and Roads currency the driven approximately real growth by management our room's a growth fueled estate X% timing fee of the X.X% basis. of and This the EBITDA was Easter net Roads. grew of result

results base I’ll now the business where on or approximately a segment of our our incentive X% currency both of deliver franchise XX% with constant to Two franchise highlight the and managed excluding we and starting quarter fees Roads XXXX. second growth in basis compared hotels,

to growth in we growth headwinds comparisons industry-leading net well continues as excess levels international Our tough in even rooms of growth face incentive fees on certain of year RevPAR and last to fee drive some markets.

business the of adjusted from other, of second quarter EBITDA XX% is and earnings mix up of franchised at before Our XX% managed in our and XXXX. from corporate

in growth XX% EBITDA of our as the starting like U.S. quarter. three management lodging the markets category, the each especially The more which segments, X.X% growth to franchising brands where segment approximately X.X%, the service accounted upscale Americas demand second and RevPAR Americas, RevPAR I’d select-service quarter to on continued adjusted for our represented. in delivered full- for additional in with while are supply share outpace of of declined upscale perspective certain heavily

for driven declined by rooms hotels. XX%, Net the Two including was RevPAR X.X% approximately U.S. segment Roads hotels. the Total select-service growth

the Roads, basis. growth constant partially by the adjusted by for approximately room growth Two quarter X% in segment of growth rooms revenue group approximately group decrease EBITDA decreased rate Excluding nights of offset a currency a the X% franchise for on driven increase in Net fee U.S. about Base, XX% a of X%. approximately XX%. incentive drove approximately Full-service and rooms was

to association coming and some growth driven demand similar business QX we group We corporate what in from increases Leisure rate experienced saw dynamic by a in with group business. by lower the offset

all while down in-the-year, XXX our revenue group for from Our X%, for-the-year XX%. was basis in a point bookings the U.S. down were XXXX X% call. is for down drop group earnings pace quarter, approximately years the approximately full-year prior approximately now production second

just Looking booking XXXX, ahead, is up down the of which pace slightly. all for exception years group now with is

room levels. down group solid increase earlier, While Mark mentioned transient the entirely room business an revenue growth in demand nights U.S. by for was filled with gap, driving driven occupancy full-service as the quarter, record

for in Greater driven Full-service occupancy. Moving segment, by XX% accounted segment on franchising Pacific by quarter EBITDA increased the driven in our certain Hong adjusted Macau. of approximately decreased Full-service management hotels Asia to our X.X% and by which for QX. the entirely RevPAR in Kong China increased in and X.X% RevPAR

hotels segment increase constant XX% comparable consistent and growth constant Adjusted approximately incentive an EBITDA growth segment, with first net was drove growth Japan currency and the growth X% Southeast with Asia along delivered the in or overall grew on rooms of basis. in strongest with Roads growth rooms franchise saw was what Net rooms growth Two Greater excluding in the Net for levels. segment hotels. in consistent XX% in base, China in XX% approximately a fees quarter. the the we strong approximately RevPAR dollars.

segment, X.X% occupancy Southwest segment X% quarter. East accounted during approximately Moving franchising to Europe, increases. and growth the by Middle our EBITDA this and driven management Asia of Africa, for our outpacing Net RevPAR or due was Full-service adjusted the increased rooms supply demand. growth while Two excluding results Middle of pressure Europe in to segment, hotels. remain XX% rates much Strength room continued for Roads under East, the increased to in XX% the on drive

largely the constant currency, Base, currency Base, franchise quarter while constant were fee the and franchise along increased X% fees a business of in incentive World management last basis. year fees down for incentive and by revenue East approximately driven EBITDA basis, base from X% lapping Cup a increased and driven of fee cost decreased on incentive to currency a SG&A XXXX. where quarter fees. increased Middle the second is constant adjusted weighted in our X% Segment weakness some the settlement received by fee with in on

I and in owned to QX. and will decreased currency in XX% adjusted and XXXX. other EBITDA our by accounted driven on corporate asset leased for Owned increased sales move for our quarter, business, which and now adjusted X.X% before in X% leased RevPAR constant the segment approximately EBITDA approximately of leased owned

Easter constant impact the the transactions timing, flat was currency. EBITDA adjusted Excluding of for net and quarter segment essentially and

year. leased gains were consolidated points almost and beverage offset and second productivity versus comparable of Our lower revenues from and by margins but prior quarter food owned owned Margins hotels. basis XX X% banquet benefited our in leased group increased primarily business and

conclude outlook my will an I XXXX. remarks providing prepared our by update on for

the the select reduction of guidance the top such guidance on guidance areas range to business million. reducing expect our the now million range to of Given we respect a the we With some RevPAR reducing our of our seeing adjusted This are S $XXX in pressure full-year. in U full-year as million. RevPAR and Greater mid-point X% end range RevPAR demand represents for are EBITDA, of our are the growth approximately and certain of in of we overall in X% to China, to a XXXX $XXX range $XX in

relates construction About and of related operations, year. Miraval two both Miraval delays opened our properties. this reduction to the Lenox at Austin primarily earlier Austin the challenges thirds and stemming from

However, experience July, available facilities the is difficulties. and the Miraval led in inventory full rooms displacement Effective now construction to of are challenges operational complete end resulted and guests. of and all to as

latter schedule and we expect of remain property portion is a and while losses, for is reasons. open Looking ramp the XXXX. the operating project forward, part resort pick The Lenox to facing to contractual momentum up required of into behind

quarter to XXXX. experience full the guests second Miraval open expect be will We in of the

guidance third driven in other our reduction the of by The factors. remaining is

of which the and impact sale to attributable currency with reduced is and for reduction earnings about transaction to hotel the a referred San RevPAR of by incremental interest EBITDA of year for remainder our a the remainder amounting with an to the joint including million impact sale to the the adjusted venture a headwinds combined along earlier, asset, the $X Francisco to of non-hotel activity driven foreign Mark in First, the year. expectations in

As in that transaction would during now after inclusion in of of we second $XX almost how the out I we about transaction of incremental remainder the over the of I year, effecting thirds in reduction two a the the the in total expect to year, mentioned, year, our the guidance $X look million reduction EBITDA plays out guidance about this first million just half headwinds headwinds of will point decline estimate in of compared the quarter. half When the we impact at third entirely third million resulting reported of earnings that impact you $XX the consider in quarter to XXXX. the the adjusted an back expected

our to range to and to are exceed we the Mark to to mid-point give that million increasing increased unchanged Two the with rooms earlier, Roads. in of of we us the visibility X.XX% confidence prior integration Moving approximately million combined $XXX Adjusted guidance one-time related at growth costs X.XX%. for net therefore openings year scheduled inclusive mentioned rooms range SG&A $XX remains will approximately growth, the conversions. our net

in and expense guarantee approximately guarantee our the or performance end under prior currency. due of foreign hotels expected low to to Our of improved four benefit has $XX the agreement underlying the million hotels relating the decreased to French range

shareholder both dividends a and We XX% and due Swiss shareholders approximately our remains July effective by capital we've in agreement XXth $XXX returned favorable to existing $XXX million pricing also on authorities. repurchase to a share the tax authorization. With expect the U.S. of respect reduction to approximately returns, for XX% tax million year through rate inclusive to our transfer to

at remains our million time. any asset The to primary earlier the shareholder repurchases. full-year on be Our this of updates by for hotel will guidance of returns Mark, sales, share approximately guidance driver described timing $XXX capital expected at

full a release XXXX update our supporting For refer to our on schedule. and guidance, please earnings

results In second conclusion, we are quarter pleased with our and execution.

and drove Roads track world. grew again and in every growth year of group on business by are ramping schedule fees We offsetting the Two cost to by new the demand around strong solid complete perspective integration lower the hotels driven and and delivered underwriting we market a end demand. meet We in from We expectations. our share region transient the

We globally conversions continue expansion to demonstrate our our growth we've by brands strengths key enhanced the of in secured recently. some through driving

growth approved of Given continue to well leader deals in visibility over XXXX. and industry will remainder the the be signings beyond the believe year, expected of we the of

to to franchise our on and you expect month also the share mix sell-down We have in management progress shift expanded towards asset with we coming as towards commitment to fees. more our continue earnings

with turn it to Jesse that back And Q&A. for I'll

Operator

Wolfe [Operator comes Shojaian Instructions] from first question Thank Jared Your Research. with you.

open. is line Your

Jared Shojaian

in on Hi, run annualized Can in XXXX? full everyone. is question. rate Thanks do taking to start how basis? they good XXXX? going then more think a contribution take morning at you how Or guess the tell to generate Miraval much And time get run you what are you losing much my the you is to for us I And Miraval an EBITDA expect of rate ramp? full do it to XXXX?

Mark Hoplamazian

with respect The answer question to X. earnings to Jared. in the aggregate first about is Thanks, Miraval relating to the

So down by into our inventory coming from prior that driven our construction to were really the had, from it's disruptions us guests. available having sell year, to prevented expectations we've the what

that's operating been respect is well. just permitting with and mostly at occurred open have in to in process took work, but able the past And portion ramp have consequence, full resort similarly those up for that’s the time. some Austin. in lag time period delayed Lenox, and sight efforts we a close are some rectification the we a this and – now condition of inventory as some as to delays had – resort to rectification as a We which do full in a With some So point, of us had to to issues and we've being out consequence a caused recently.

demand. that ramp properties third more two to where a ramp of as whereas in are somewhere expected Austin, to that we'll market, period fourth and have then of property ramp begin homeowners a portion of in the of we per the in to we be open certain three we have quarters because the quarter sort the Lenox expect the those until to quarter, the maintain at we two the a Lenox. the will just significant And we're commitments really we probably to between don't we that second the year as seasonality expect will maintain see and had but operating property a in start of So building some property, look half see, at we piece and local operation, next delayed that

Jared Shojaian

Got it.

Mark Hoplamazian

The only other our thing to perform brand. that continues forma I we would Tucson and some well. to the basically from context probably give point very out company you It's just pro the this is for on acquired when

you just by point, earnings $XX Tucson look up from EBITDA the will an we at year reference For a and property, million $XX have XX% level bought approaching this time in it of level of million revenues as and it. excess that's if itself, XX% to the

seen elevated programs no and about brand remains thesis respect – programming. substantive of say brand would the continued some concerns real the their well-being corporate have we because I with of to dialogue also our levels we've key with our and So customers intact that but interest,

factoring we've experiences for way, customers. under of a got number it's initiatives new our that a And of number into corporate designing

the for continue there creating been from street the to a business. has and market XX we intact. the complete are, years strong. The destination where remains until Lenox will that brand thesis and but the been be challenge operates it, we down vibrant finish So with a we're is Miraval has proven. Canyon to Ranch is

can So that building very markets have compete that high we confidence we into very, where are well. proven we're

Jared Shojaian

you I thank to just multiples give earlier compare us much in? how some a those year? And you two and generate? but do Can an are you call, selling. sense annual this, how are that the on in of Okay, hotels, the think called switching the you. transactions overlapping I here properties do if then out How last apologize been process of did those gears just coming I as you missed And to EBITDA multiples

Mark Hoplamazian

to say brief going under for that retail deals. in plus With we're is quality can of those for that the in to San of the two Yeah, that not What owned sale, earlier the respect everyone $X respect I locations is would excellent and specifics two that had point. we've impact million I sold, in the asset the closing we level real this those reflected our comment that's asset in sold and and we marketed on to that two upon been that that year we've we marketing Francisco, and that Joan asset Francisco, $XXX the the of our properties. sale EBITDA JV way are with estate from impact was the sold in San the also year. the effort at sold the mentioned a that say this We'll the million of that being for remainder that interest update are hotels maintained

than interest to a of to JV half – hotel side, than sold. more and that bit the half that's relates the And of that retail bit relates that a less we

hotel much pretty from for was can those decipher JV you earnings and side so, retail the the for what data. level And the

with in and stage Francisco of the on in we're what the assets realization realization sale. our for is the were prior the valuation effort. in San the sell-down happy San range we retail with hotel on in of for happy selling We're the So Francisco the the hotel sale

Jared Shojaian

Okay, thank you.

Operator

with comes question Citi. from Rose next Smedes Your

is line open. Your

Smedes Rose

Hi, Miraval. thanks. on I one you question wanted ask just more to

back is early is EBITDA the you feel price between about and $XXX that the kind talked investing XXXX, I you for that then XXXX, to I that, and that Just by million think looking at you same? do of on think purchased mid-XXs can purchased when time track the back about to total still ramping a you in in construction. total be investment And

Mark Hoplamazian

Yes.

activity be higher in as for in you to slightly villas the Austin that in completion built of for you that the range on that. thank than well Tucson, got we've based construction as some $XXX estimate of My is Lenox. that and the best the total addition somewhere in So, we investment will The number. million $XXX million of

same returns was Our expectation into it overall upon to namely, the the respect able we return with single-digit when rates stabilization remains achieve high came to of to be as deal

Smedes Rose

And recourse no? any with or to kind given delays any on do you of have the the – constructors guarantees construction

Mark Hoplamazian

complex We, some contractors. approval time. of we, issues Austin which to condition processes some of be and amount which construction-related labor issues then matters, to where of weather – site a there that everywhere course, issues, also we've relate a some some But with it's undertake especially significant issues, have way taken had in seems construction set under

think the these happy Massachusetts, approval delays processes now obviously in some jurisdictions, also the that both I to of barriers to about had, the corollary in permits a It's it entry. and positive to obtaining we've speaks negative some we're in but the negative. not is and especially of

ability directly completed. compete projects so the for to limited because into these others or And and upon opening, market to get it's more quite come challenging the

Smedes Rose

relative now. Okay, to SCR it's portfolio. for ask switch seeing kind the then question thanks. versus mean upscale And I of one just several underperformance on wanted gears quarters more you I and

mean the maybe competitors going else mention Hyatt of from it on think is quarter. sort new is that to underperformance? of see in where wise is And be. properties anything market some fourth supply or you relative to share this happen the But relative were I I you did that that causing there

Joan Bottarini

offering members changes our out the gaining we dynamic of XXXX Hyatt we made been our Hyatt pressure. in and about the since increase concentration XXX meaningfully up And penetration have particular that points question. was – been World also and supply direct is have and channel mix of that momentum as has program. World But we I'll Place objective our channel we report and have ultimately talked basis we're as Place in that fourth the this Smedes, is the to and value in is our changes we take brand and it that the under programming started well up in quarter. the markets we those Hyatt brand to been of set we started And for assets Hyatt mix increase pleased quarter at the to achieving of demand these strategies yes, direct our the about Joan, are And are the the outcomes our talking to that the hotels.

near-term. for loyalty rate the program the of our our year and sustainable part over in brand in management better think, and We're So optimized, the providing overtime mix we'll distribution a be of fully and and growth the improve segment – we building moving channel while we with a last over the long-term. more increasing the to strategies expect toward our economics this latter are value strategy owners revenue – stronger we

Smedes Rose

Okay, that detail. thanks for

Joan Bottarini

bet. You

Operator

SunTrust Your next with comes from question Robinson. Gregory Miller

Your line open. is

Gregory Miller

guidance terms Patrick and Good Thanks. and Lenox in Austin on provide Miraval detail more I’m morning. little EBITDA attributable out each if much the could are of a I'm on how property? change for Scholes. could to if you wondering you declines break

Mark Hoplamazian

detail Yeah, we're I go level to going a think of through. not that's that

year course would, the would in in shifts the lot not in say is change actually half prepared the I second that think those remarks, second total in quarters. the with of million therefore, the remainder we I two aggregate, impact of a quarter realized of the between terms for this about the and $X of seasonality the over shift the be the year in described what of was year

over and the the of of or about year just the the out. of course how it plays course the the that's terms of So measure year outline – the in over profile

Gregory Miller

comparable? the hotels? follow-up gain stabilization Okay, longer these as of a ramp-up to Miraval It's interpret then these the customers acceptance from compared well. and we to a period thanks, a resorts? hotels ramp-up relatively Or there to to on occupancy is should How non-wellness

Mark Hoplamazian

and is ramp-up and of in other two things look to here. number a the three When year hotel. we to – which key likely we new at at hotel drivers, that is example, ramp-up look developments, for depending very comparable the full-service say market typically the we of we nature a would location what a demand of the expect terms would I on and period,

single-digit So that talked had rate I what ramped begin quarter to – the would outlook a when high we earlier, where was that period to from we provided. figures or once three these to what about of for into previously that's, initially We return a projects year And with. we about opened. ramp-up be two it we three lag two said our we are getting came as assume

resort business For more is food remainder very and maybe third for commercial revenue, but which importantly for And ADR XX% Miraval even services base for recognize in the reference, rooms actual occupancy, it's revenue running treatments, a yields – of Tucson, model a model, only year-to-date, Miraval is the at $XXX. the and and that each on represents is statistics, those example, total but over about property. the over importantly than the beverage experiences, economic revenue

Gregory Miller

Okay, thank very you much.

Operator

JPMorgan. next Greff from Your with question Joe comes

Your open. line is

Joe Greff

Hello, everyone.

Mark Hoplamazian

Hi, Joe.

Joe Greff

comments be was you quarter was hoping that think add-on I inverse in down the said difference the X% was could the second group? your about what's other the down Can group of single the you of kind being the find yet in driving up, quarter, non-corporate digits, stuff I to of to kind the high and you in significantly. implying those production would the non-corporate group second trends expect. I corporate group about group Mark, what I talk

Mark Hoplamazian

negative already, start let's we talked to because Chicago saw Chicago. hate this again so of Chicago about about and I with but that half back it come total represents decline. variance we to Yes,

levels or expected. had association – lot we than would not of it that at second predicted or projected of lower of So is we actual that A talk in city-wide wash the half material, so progression attendee is quarter it. versus levels related. about And least, say attendee can't pickup about that I business, was is

we And have what seen. so that's

percent, at representing look U.S. of you couple basis, proportion with again, sort is a of down If group big of on a year-to-date Chicago that. a

revenue, in range corporate that about the of is with probably necessarily up being year-to-date majority of not this the is Meanwhile, vast rate. bookings, – and the X% group, realized higher actually digits in mid-single

– maintain demand seeing demand rooms actually – we're positive. is So and

of in, actual coming revenue the attendance context expected future periods. – rate would've seeing in seeing attendee terms hold up corporate in realization, So we're for and realized the we're and the both of we production in line same what with

coming I in to through look production matters at forward, the where us. looking places So most when it the the I'm

pharma consulting, and well. opposed electronics high realize is in terms the and of bookings, as tech holding revenue up to at as So looking backwards, least,

flat. about Retail is up. variances the you'll is negative banking that corporate significant association really and But So see smurf. are in

at that. seeing the small really are digits. When – fill look we majority that's pace at where Rate a this forward, given XXXX we're but down we're is is of so XXXX that terms is the in that. mid-single point. confident what is up going amount, the opened lagging, profile up And I patterns we'll of feel

to XXXX too So really And out of I'm progression. own about in worried its showing not is mid-single well. is up much point, at this XXXX, holding some far or which terms digits matter as

sort evolution the and that's thing. profile So the of of this

Joe Greff

Great thank you.

Mark Hoplamazian

Sure.

Operator

comes Crow Your next Raymond Bill James. question from with

Your line is open.

Bill Crow

million? is at go guys. stabilizes, fair zero million three Hey, $XX just fair it got real EBITDA Miraval, hopefully. our a Or that is next to year, good that we're when topics I've $XX the we of million two that morning building $XX it step? to correctly bridge or from or quick to so the assume weight – is

Mark Hoplamazian

better ending now timing relative what Austin provide start on But is have we what – year think do question both know able and talking handle we'll this Lenox. that our now this there's up, to and on to about you we're color no in aggregate. where you I once outlook what little for a more the a the be we was is XXXX for

So closer the outlook of least can bit end year. a the for into XXXX detail think we about that's once it, modeling get how about more guide a but we'll of our at for you to get

Bill Crow

Okay.

Joan Bottarini

that prepared I sustaining that, are Bill, losses Yes. remarks. which The one thing in mentioned my in some I would we Lenox, is add to

So as mind in we'll that year. we next give guidance for keep

Bill Crow

And you guarantee, just out can that? anticipate ending? – this year could do we Joan, on us how remind much on total paid And French have that in we when through the will when

Joan Bottarini

The XXXX. of contract ends May in

this very for of are million we guidance close that XXXX. So contract. the we're the The to is providing expense year end for $XX

Bill Crow

that? And Because what go back that of right? was the does a years, few total

Joan Bottarini

to We Bill. front have me, of that. in don’t can you get back on I

Bradley O'Bryan

we get Maybe can you number. back with to that

MarkHoplamazian

been public has so filed, it it's And info.

Bill Crow

Right.

Joan Bottarini

XX-Q… I If had

MarkHoplamazian

And the Ks in all we filed. that

Joan Bottarini

Yes.

MarkHoplamazian

go it's So We don't there. a figure can here. and that, we but research have out

Bill Crow

properties? performance I'm And you curious you it's where tell the all enough? part the you against and just then bucket, I'll and select-service RevPAR problem? on said was flat And is, reinvestment the same Hyatt other – the us I the newer older you driving whether that Index brands, the properties finally Or at? to doing it Okay. all the and assets, of enforcing was me for are are Can flat. Marriott in is Hilton enough are ensure that the these mean of and thing

MarkHoplamazian

really Are is So you the that a are… what we what what need first asked question asking at? flat When you clarification you're ask are as you asking? to question, just

Bill Crow

You in is RevPAR XX? XXX? flat XXX? right, was Your said quarter, your the index Index, it

MarkHoplamazian

XXX over what at of Is level are premium asking You're we? you're that what asking?

Bill Crow

Yes.

MarkHoplamazian

yes. Okay,

acquired thereabouts, as our of ago, above as were being So I we've We a – the think that. launch range and to young that's that's flat, consequence us to where recall, LodgeWorks five the XXX respect now, And I us a years somewhere really in maybe the Hyatt – the prior we – of ago brands investment, of period. in that's we years are the brands. about six that House. business With are led little

than an model higher And capital a but evolving been we've it's also strong owners, we've really for Since index even select. the total brand in it our Hyatt the evolved operates success invested then, return House. refined in very had with that and of and at great on

look revamp was of significant doing think we did Place, Hyatt when itself. last work year I at what a a when we're of brand – lot I with that we the the

year-over-year. and of XXX purposely enhance was earlier got designed and really it's drive referenced but Hyatt basis channel strategy She the higher World Joan what we've that's and mix, to that up that's both mentioned points – precisely penetration also of food programming done. the internal to Hyatt offering World distribution dramatically drive a And penetration we've that beverage

like. changes business product terms wasn't in of made – move the we significant offering. by very profile we what of that the the a in it But driven So and largely what our was it looks the –

started urban this brand, share and really this when even for were before when the gaining locations really, taking platform you of launched how So brand, we we accelerated in I share? we the – asked; So and we the established are growth remember Board really brand, the was our

ensure made you're not And down we're and of what the constant entrant And commitment what reevaluation the that going a we are to to some at practiced the do road? of you time other victim doing. that we

or the of footprint, executing we've through the we've Place build a House. reduced So number either space Hyatt Hyatt a changes. a reduced for We've rolled

drive to to instance All enhance sure that evolve it recent was from making attractive F&B channel the of it in in we've fourth which And perspective, the that responsive year, achieved. mix the offerings the continued developers. was was which was not of offering to an also in particular. but most last just we've to shift, investment that, And really quarter distribution

Bill Crow

Okay. Appreciate Thank you. time. the

Operator

Your from David next comes Katz with Jefferies. question

open. Your line is

David Katz

answered. My much. asked and question very Thanks been has

Operator

Rich from Evercore comes ISI. question Hightower with next Your

Your line is open.

Rich Hightower

guys. there out morning good Hi,

MarkHoplamazian

morning. Good

Rich Hightower

X-parter on the a pipeline. got here I’ve

the you us higher-end pipeline upper in total versus portion pipeline how couple predominantly five. about not what new three, from financing in sensitive luxury talk economy? And and next maybe in segments, upscale and construction of developers a in and conversions peers your part, those quickly, that's has relative out, remind the the but can First in years builds? some for to place second four given segments and are in you what the question concentrated the of fluctuations just one, to years Maybe the of of comes then can the composition Hyatt

that your you guys impact relative peers? some of would to how Just

MarkHoplamazian

Sure.

year. predict – nature of the it actually first into the don't is room’s pipeline that very or visibility. conversions build limited it's respect and to our is with On growth the expectations for The we into have that question, answer you our net

thing major – activity our we've activity ramped up that base the seen around – just conversions is the level year think I has that evolve significantly. this

others we've committed are bringing thrilled about the are phenomenal and amazing of under that given is open now hotels on. I and conversion, we're each them and what every quality location or the of especially brands asset. an to, under which and mean we're recently that, one operating So renovation of our some

So seeing. what we're really happy with we're

we're think base, our three and Two I – our I this conversions that's having customer out Roads we've the to Two think seeing ability other why kinds high-end that also together new focus of such point partnerships these that's want we've year an results around an the Roads that got, developer the relationships of some the the – through hotels of luxury network actually and Hyatt well. of I signed. exciting and on effect the conversions yields have that small World and hotels, through that proposition now of come intense And actually and I bringing value and owner from to impact our as very

didn't be as didn't would that, that actually we've are. didn't forward were that we able conversions we to would idea impact gotten the We the growth model those expected or – leave that coming the count out meaningful that always we but brands, of ones on have of as going

what to change hotels definite full-service so types front. pipeline, our hotels that around XX% So of on this respect first, that's frame our is With are got year of building world, we've in developers by that a kinds way this in just of I think reminder, a and comment. that'll pipeline we're is the seeing there – conversion the owners the of the

is that with and had or extremely financing. the There other. depends riding it's not who have on financing China really a been waves not be that in other capitalized a the Historically, developments riding, are wave are developers My may the we've quick well we're in. answer but markets they're it one way lot that

stack of lot of it to the capital type with has With respect other been the created. regions, how hotel a and do has the to

much and convention maybe market rise really one that. back as not you've contiguous location the emerging with it's on it's some in hotel of right a think where is in the that's resort an got Portland, like fall like as now that's and financing center, or projects headquarters project I in something that a built a being cases the going to maybe

that our with that's a maybe is in respect developer would a I that model it the say to have do of experience I developing upscale think financing is core for shovel the although significant to really their run impact we that think decision probably does developers segments, segment base. I put and more the than and other that are they in, So that the have ground, they upscale

Rich Hightower

you. Thank Okay, color, Mark. that’s great

Operator

Your from Michael comes Bellisario next with Baird. question

Your line is open.

Michael Bellisario

morning, Good everyone.

at Maybe, changes your frame-up then to further this you to or still group seeing booking back comments go point? book you're people's short-term all what maybe to out and the either the it willingness there any on want Just can is window, side. and noticeable

Mark Hoplamazian

Yeah.

profile we're terms is in of the what So uneven. would I just of describe sort – seeing production as of

our XXXX and in pace bookings temporal a bit. in pretty significant that XXXX quarter didn't changes XXXX think the issue. to is XXXX also production the the in has the a So – bookings number that over itself, time. just is significant We'll saw as in overall, and expected. which were the quarter have groups XXXX, I pick we up same remained for XXXX XXXX, level And track coming Again, in the in had that impacts that we And have wash led healthy. a didn't that decline down

provide I an than terms of of more in this say – issue. issue as uneven. has would have in mentioned profile, so don't many association terms you that bit more a at it's theme SMERF and segments, much I this corporate to So times, a been And really just I we know I to point. a – can't mostly been

Michael Bellisario

That's helpful. you. Thank

Brad O'Bryan

our take now. question will we Jesse, last Okay,

Operator

Your last Vince question from will with come Cleveland Research. Ciepiel

is line open. Your

Vince Ciepiel

helpful. was to contribution. as you which first At us Day, it that XX% about you there of could if few the grow from Investor update Great, would year? talked if And through was Curious XXXX. room points about you're update I nights, Any thanks. of this a loyalty the think you've be up continuing looked half

Mark Hoplamazian

the XXX very A of year. A first half lot Sure. part significant new Yes, on points up by report of of the is is property over that that enrollments. that is penetration enrollments. thrilled driven basis to

and So Lindblad Expeditions, as hyatt.com and created developed the then as small on app. – luxury that and Airlines of Hyatt hotels on through American property with about thrilled the and enrollment partnerships much the launched we been and has we talk and we're of under digitally World and now the activity our majority through with side

So our having of becoming our core just we're not members simply and seeing virtue outposts, come additions sort people through who affiliations our are of partnerships. by

I simply additive, And of they our think great good solid in is value think the the ground sign but terms that that will partnerships, start we're of health primary know we once to I the a driver. additions members, on base. time. to deliver I they to of our levels membership it's these think that that yield that And that as over is will the enhance enrollment not

was of really ahead tracking as focus we're we and area penetration, what frankly So focus – us forward. of thought the excited we're of really terms this, on it go in about possible moving a important needle remains but for we

Vince Ciepiel

of think with do model roll going know some year just that to of in big growth Miraval some in you next those issues kind abate dispositions, you things, then then move EBITDA and you maybe and into FX, thinking lapping are one-timers, I you targeted these a laid the trajectory. there's year most pieces off, way to for picture construction as the delays, that is XX% you think Great when growth adjust And X% this but a moving of core out? about the and the about of recent growth fair the forward? lot

Mark Hoplamazian

to that Joan? Do take you want

Joan Bottarini

and items core to quarter suggests track all expect XXXX end beyond, the we X% full net into Yes. it reported projection we – Vince, Day that we year that rooms in so still growth, and we have cetera. RevPAR we be the you for – model growth Investor to on presented the relative still growth, the lower our with confidence growth of of those excluding and to at are of growth for range that forward the mentioned, model and at et our and going be

Mark Hoplamazian

maybe put maintain number move key fee-based to actually so growth, I look at or our as number that fee enhanced one sustain and is we've of in you by of of I a sustain what which of it's expansion tell come reminder month forward is add a construct and got I momentum pieces that. way fees even meant a in with now area long-term to place as more growth growth net of is Yeah, growth time. rooms that overtime Two that the the way rooms we're And be a that hotels the quarter or we our But the driver on which we've the that predict key in expansion, of to that that of Roads, the model of extended feel that acquisition model of would not growth is that year. just drivers net sort the model, we've places a and the and we network and is the from can over going focusing the we can

to we get over time assets. fee-based sell as We will down more continue more and more

up conversion ends look that and activity our into pipeline, being you that level confidence fees. key then high of at focus. the our And growth is So the net rooms my when

intact doing. we're So I you and is what to sort long-term for designed about framework can is a think think be it model the how of

Vince Ciepiel

thanks. Great,

Operator

This concludes I call any our session. the for closing to remarks. the Q&A back turn presenters

Brad O'Bryan

the thank thanks, Jesse. taking right, you to time And join for today. to everyone All call just our

Operator

conference today’s call. concludes This

disconnect. now may You

Hyatt Hotels (H) 1 Aug 192019 Q2 Earnings call transcript