HLT - Earnings call transcript Q2 2019 | Hilton Worldwide Holdings Inc.

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Operator

Good morning, and welcome to the Hilton Worldwide, Second Quarter 2019, Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation there will be an opportunity to ask questions. [Operator Instructions] Please note, this event is being recorded.

I would now like to turn the conference over to Jill Slattery, Vice President, Investor Relations. ahead. go Please

Jill Slattery

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

could to we include that results statements those made begin, our and we only as forward-looking remind in forward-looking materially the indicated would Actual today will Before forward-looking morning of like you today. statements from this our statements. to speak differ expectations discussions

We revise these undertake statements. no obligation to publicly update or

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

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

reconciliations to call www.ir.hilton.com. and You of can in Press our discussed on financial today’s find our Release earnings non-GAAP GAAP at measures website in

current President Chief company’s provide for Nassetta, the results Officer, the year. review Executive Chris outlook. on Kevin our morning an Jacobs, quarter second expectations This then President and Officer, and will environment provide Financial operating update and our our Chief and of Executive the Vice will an overview our

Following be their happy your questions. remarks to take we will

that, with the call to I’m turn Chris. over to pleased And

Chris Nassetta

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

happy report We’re great quarter results. to of another

network I model and our our think the business further power of that of the demonstrates strength effect.

bottom growth our line unit drive EPS with continued net and to expectations. adjusted EBITDA Solid performance strong exceeding

drive Additionally the loyalty winning program RevPAR our sixth market to our growth for gains. distinct outperformed experience share brands, award and to the chain consecutive continue that scales robust industry weighted customer XX quarter, illustrating exceptional

expectations share broader largely the in and and points the quarter, X.X% brands. with Asia grew with in Overall our System-wide in RevPAR our gains across XXX system-wide all choppiness as all gains regions increased year-to-date U.S. index market basis second Pacific. offset our line RevPAR

leisure steady business increased demand, Easter the X.X% good RevPAR holiday Transient shift. boosted and trends by on

softer to in shifts quarter. performance As expected, the contributed group calendar

are growth estimates. outlook, modestly for but with these non-residential bit profit remain previous we than Turning trends, X% fixed Consistent full to guidance year investment corporate RevPAR to our lower GDP, positive, to adjusting a our and forecast incrementally X%.

the of softer to U.S. the RevPAR RevPAR half Overall first we and slightly growth. with similar to year be international half the expect consistent second growth

We transient business mid-point the range. to the system-wide mid-point of business leisure steady and range our healthy continued and towards expect our high-end group towards of

with growth we EBITDA guidance the increasing the Even net our growth significant are and slightly given top-line areas business. strength contribution other lower forecast, the in adjusted unit for year of of

ahead a capital-light ourselves fulfill lodging Longer we term, we for experiences ability disciplined of every and confident hotel to as the remain time. to deliver every growth every guest, business we broader model within continue strategy, in at efficient exceptional an With differentiate industry mission our to deliver the space. our

our culture innovative to platforms, winning and guests, technology unique to incremental us product owners award allow offering our delivering value strategy this Our shareholders. our execute and

months of our continues reaching a Of hotels greater, more profitability brand in just The XXX hotels opening reached owner index than or greater already share portfolio XXXX, to four drive the within average. with opened market XX% strength have and therefore roughly XXX fair those of owner of RevPAR on interest. we

For the construction for on we starts track signings, openings. full remain record year and

full pipeline, to of mid-single signings. increase signings record growth for This of year. supports in than consecutive ninth to XXXX our year in the low Forecasted would in mark XXX,XXX our more development continued we rooms digits which the expect

XX% base. rooms our of Our totals existing approximately or current over pipeline XXX,XXX

for more not to our expect XX,XXX than totaling deliver system, to deals of than the deliver do XX% to hotels, with we we’ve our require capital. of the from XXX system solid use Given net fees. unit strength X.X% us, year. which growth Year-to-date and capital full higher rooms any growth our of drives our to deminimus net More continue added continue

opportunity delivering mid-market, development We growth well secular greatest given to think the index are premiums. globally in our the continue middle-class. by the very in trends positioned an impressive we segment Overall strong we RevPAR leading emerging the driven lies believe service industry given focus

During new Hilton expect Tru celebrate Homewood XXXXth XXXth of XXXX strength hotel, opening legacy across demonstrating and our XXXth Inn, Suites, our Garden the our continued Hampton, to we brands. our XXXth and both

our growth needs gaining is further designed Chinese in to Hilton New the and Asia Additionally, and our Garden Pacific. meet Inn feeling momentum owners better prototype great of guests

as to luxury development properties track year to We also XXXX forecasts for continue year, XXX strategy our luxury exciting segment. we’re in XX% our momentum see than this an grow impressive luxury With year deliver to the we by more previous on in over on in execute portfolio any history.

Astoria four opened Maldives Waldorf this the earlier including we’ve properties, anticipated highly month. Year-to-date

Center Additionally ago, just its Dubai with pipeline. weeks three stores properties Financial the Astoria a in the Waldorf other three Waldorf Middle opened additional joining the opened an few in East

signing In to the our Cabos the Caribbean, development in Africa will first which the this later Astoria quarter Tapestry we Waldorf open first including announcements growth, the of further Los our in Mexico, expect several we and made exciting year. continue that in Pedregal Canopy to

historic many brand We in our us also to damage come. strategy regions all years breadth extensive Caribe growth should after The were to spanning net hurricane from thrilled Rico, segments development following renovations for of drive and unit to Hilton Puerto Maria. reopen the position

have more the long trends and secular for signing of total feel our over unit no than strength continued visibility very solid years, term. we construction good significant growth with growth few our accounting next the we favorable conversions, and pipeline, under in our repositioning, rooms about into brand and With over net half

anchored is more in proposition portfolio to nearly than in quarter value Honors million guests, leading XXX increases basis points An now overall We members, XX more industry with the to the program. have of occupancy XX% up by integral Honors part engagement. increased Hilton meaningful XX%. than winning our year-over-year award Our

for account members. of than members more Active half global our

number with also members of gaining elite versus and the XXX guests members XX% wallet are same period reaching nearly of the nights, from up those in a year-over-year loyal We up last year. our greater XX% second quarter share most

and With looking earning a and and always Honors of for redeeming better increased mind, first leader rideshare connect coming its partnership and announce provide ride with flexibility now will the with with Honors they Lyft. months. points were and points. that travel to when We’re Lyft can we ability Members they ways in hospitality the have earn points kind thrilled redeem to our in members to

property such our the Connected out Lyft, Honors partnerships our to and like of members Live or the initiatives it’s we leaders Nation are most Room, on continually Whether program. enable evolving as get with to Amazon

opportunities few our with have. provided alone innovations, Anniversary, our celebrated recently travel our members. companies a range the of and markets that history we let momentum XXXth We which wide achieve, introduced team Throughout numerous we’ve milestone new for career a is pioneered

century. We us the accomplished we’ve next are allocation, in approach of very strategy the resilient last world positive a proud we’re we with continuing over the good business century this positively for think well and influence very forward capital a industry model, to around and the all look to Overall, disciplined future. to growth, positioned

results details us to Kevin more going to turn give some I’m that, call over our and outlook. our the on to With

Kevin Jacobs

basis, versus good everyone. In expectations. RevPAR our the and largely neutral the morning in-line a X.X% currency Chris prior grew with system-wide year on Thanks quarter

and results tempered basis by estimate leisure system-wide calendar benefited share Chris slowing XXX demand. Chinese market points. roughly shifts offset group gains, As mentioned, growth RevPAR business from We softer slightly by

Adjusted high our increasing EBITDA of range, guidance exceeded XX% $XXX million the of year-over-year. end

items to was license the timing million $XX by beat performance in expected back cost largely due of greater Our than We was driven year. better the half reverse that the control. and fees estimate of roughly will

franchise and XX% RevPAR fees. to items million, and per increased $X.XX management quarter fees strong net earnings adjusted for share to $XXX unit ahead driven of grew helped by the In other X% growth special non expectations. Diluted

our share growth, X%, by outlook, U.S. performance on second quarter regional the while to weighed shift RevPAR transient comparable group and business. Turning Easter market solid and increasing driven grew leisure

For full macro range, growth. but in forecast RevPAR growth on system-wide positive, modestly based we with year decelerating line guidance XXXX our U.S.

outside which the particularly benefited Brazil, demand due second across market In U.S. transient grew from largely strength the robust versus despite quarter South the RevPAR to America, prior Americas conditions. year, challenging X.X% in

growth X%. X% For in full the to XXXX region we expect RevPAR year to be

quarter, Cup Continental and from rates. which leisure grew by Europe, Cricket increase demand London, X% RevPAR the and benefited rising across favorable boosted World exchange inbound due international Europe in strong the trends in to in travel

full given year XXXX high-end the Europe RevPAR expect growth trends favorable modestly to offset We range, Europe, be above uncertainty guidance Brexit. in our surrounding continental system-wide by continued across of

in Africa and group RevPAR East by positive during performance the region In the quarter strong slightly was helped Ramadan. Middle

the half across mute challenges continue Egypt, to of continue UAE in trend expect year. supply gains a leisure transient to in the back we the However

low single we XXXX the growth region be to down the year full in expect For in RevPAR digits.

RevPAR Pacific Asia largely the X% RevPAR Kong. a in in decline increased ongoing China, quarter, by Hong travel the pressured leisure due softening with to Chinese In in protests demand, the region further slight

full system-wide XXXX For in-line in flat, the quarter and with for we RevPAR guidance, be with potential to softer RevPAR a of year China reflecting the expect performance in relatively region continuation growth trends.

as during sheet, three repay quarter term additional we facility issued to years million extending part balance billion notes senior the partially of XXXX. proceeds loans and $XXX the to Turning our the for of $X used of to that

increase average nearly years to lengthened our and amended two billion by debt. our weighted to also financings negligible reducing at These credit facility our that sizing up $X.XX average We rate. facility, of weighted cost a revolving borrowing our maturity

more Moving and We EPS to increase mid-point. the representing special of of expect for guidance, to X% growth of X% a adjusted $X.XX to diluted of for full adjusted X% $X.XX. $X.XX billion, we EBITDA XXXX items at $X.XX RevPAR billion year-over-year forecast the year than

quarter growth we RevPAR X% of to third the For system-wide X%. expect

adjusted ranges $XXX share $XXX EBITDA $X.XX. our repurchases. of not Please million expect diluted items do We EPS million note special that adjusted guidance of and to $X.XX incorporate to for future

we of paid to dividend second cash million in a per total $XX return, a of on the quarter Moving capital during dividends. for share $X.XX

quarterly dividend a Our authorized Board also of the share third $X.XX for cash quarter. per

million buybacks the Year-to-date returned to and of dividends. form we in shareholders $XXX have

$X.X and buybacks and quarter shareholders found could this we our dividends. form on be second the XXXX Further Earnings morning. return expect to the guidance between issued billion and earlier For ranges to results our billion $X.X of details we Release latest in in

all now to we you prepared morning, would the We to with question. may of ask to yourself our would this questions We so you have. limit like that speak for like completes open any one remarks. This you line

can question have we first Chad, our please.

Operator

comes question ahead. First today from Instructions] Goldman Stephen Please Sachs. with [Operator Grambling go Sure.

Stephen Grambling

Chris I new of the particularly brands. And gains guess to share RevPAR segments absolute you the a any up, How number morning. like brands well are market translate strong seeing from sign-ups and good talk versus the had ongoing quick you looks between as and pipeline in follow some about to in and anticipating as the you in here Thanks the owners on you shift as it the limitations you gains high-end are development of the new? expand? are interest any existing as across there

Chris Nassetta

be Yeah, pleased hard good rest you share be guess But pipeline. know sort gains you really is translating it perfectly gains the you we you fill question then market to to know with the about it I would would into in. scientific and of do share community, profitability. I’ll are be end trying skipping and had. market the talk we’re on that assured, It what to to they as owner impact drive know

exceed know growth second importantly growth. the international And the in brands is both, again year-to-date, we equal in around pipeline all and across of quarters really notable an that growth that we nuance quarter higher can index what’s will is regions is the incremental in good have couple to in expect is and in terms the wonderful so market the the sense would regions that important, that of I the absolute – is know in come U.S., is, we growth which in that you or mentioned absolute index an and a to I I a think harbinger world. all index ago, as our sense things So more and quarter, our you drive it share think first that about the

is growth board know sort and regionally any share are obviously pause they market want talk are are is in what but us by important for of you market that looking brand, know the for, because they it or So when an equally that a owners looking is they the want what looking they sense. to across what brand on at in for sort growth, of absolute brand of share index moment, is absolute and and to being other you important, so the what's just but I the

most pipeline. very simple necessarily growth with pipeline off into have a what translate You great so low that, that the share proud not brands, growth XX by it's out know share There of absolute translates dog off have in the heap we're you market either we into of killer. think to mature, have of I it’s higher the highest been is is that use the example, or happenstance, base, and if are by reasonably and market those best is doesn't strategy category of bunch. a are top a that the and at What growth

good is set talking are owner our about to we for performing you as the at the world the – an brands, is are owners above, So facts talking to level in teams increase pipeline. to the be any the brands any anywhere working which to our we're of development of of know or highest very which time a all

our I again, are market it share the don't this more incremental a absolute that translate investing across better our attract be have if into ultimately market there trends we of profit to unit they a by and growth, continue – direct make pipeline, to share will more continue it but very share it I to growth, I the – think bips capital, to level us of an rooms growth, allow think pipeline have important, going rest will to much equally can't is XXX build assured is more that portfolio brands. connection brand the in performing leading build says able So algorithm industry say and will construction because grow but because high under is we

Stephen Grambling

remarks in made the partnerships Fair of the enough program. loyalty and your you've had mentioned then you some with

and of know fund loyalty Flywheel and are you guess to that we allowing points As know you the therefore drives earning a through accretive those folks some to you redemptions the should that being, opportunities burning I and where or be of biggest are reinvest thinking kind and of reinvestment redeeming points as generally a system see. from more from standpoint, you those,

Chris Nassetta

– a of think I couple are there mean I Well, things.

is not involve points those who creating all, reinvestment. like points provide answer order them riding most involve when margin most the the yes, think which to means case opportunity of Lyft partner you buying partnerships and but for people in in are on the incremental in of I is the of Flywheel know Lyft, it

think larger is twice other way this a when about engagement I really were important the much they think what our and are you base. numbers, off which

half or you If our back in what others XX%, industry, was the ago, years our probably numbers with loyalty go I XX%. of is, think consistent of six engagement of it members lot seven a

are We that? over XX%. now Why is

XXX mostly level with a are it, sort are nights – is to there's and out that honest, Well of or part be people whole a let's engagement are active of they XXX elements bunch they're they you your getting of high but more engaged. staying If they you have but engaged. customers, those year

in about of two, not important costs. been is an five than stay in level direct Honors a more RevPAR so premiums right while obviously it’s they does source business may not as lower way be rather terms much. that's adds incrementally may and that's a indirect, it a members night What and and of that it business engagement more stay three, and of that year the to efficient distribution our can They XXX, getting business

our engagement the so about, broader we addition points to in level heard about lower you Nation ahead level the are terms pulling the only you slider, things know shop you I you ones in some, highest that with focused at one know point, money is done, that level I loyalty, of Lyft, the think incremental been point think astounding want ability get of context know, think to of very you Amazon we’ve what of with terms and getting hitting we points high statistics a you engagement don't about when on of of in our you pretty and use doing, us So things in have to you opportunity. know the for which opportunities when Live music are know are

engaged get and here's just The getting doing and engagement people of system, to about and accumulate as app know not spend the more and we of good we are that for it are of a system, know; our get the wallet part about those us, the points Every about more us. numbers, get. their in be partnerships. that to are getting they lower things money more thing because the they Flywheel Those and active them scientifically them with because so share proven you members the our points these points this the you week that don't are selling with thinking enough more guest bunch can in level to them engagement, get with the using – get are go a potentially in us, more Maldives in as

to will lower a from more level bit and engagement You and what I describing, think see of said customer really but will direct base from continue getting higher having greater as level of the members both more this on provide you're it's that for Flywheel relationships. focused members it I us, our is and

Stephen Grambling

Thanks much. color. helpful Super so

Operator

from question with The Instinet. next ahead. Harry go Curtis comes Please

Harry Curtis

everybody. putting the is hat Chris, some factors affecting to projection like I kind morning on. of XXXX. wanted good This your on Hey, focus of

temporarily put being fellow at to your the you of quarters and degree is about for to that in talked talk of least affected not this of uncertainty? you of spend last for by of trade we've today? As on level guidance couple year willingness least hold to in of and you spend know because half what CEOs, expectations at next think kind any terms only impacting also that CEOs but your there's the at the political any of that, that, year and Do back their

Chris Nassetta

other not I part you a impact. know talking sort to, you I you the on which subjectively the friends, to anybody connected talking to going but connected Well, having world definitely you bunch to answer yes. political is whole know of is sort CEOs, world looking I think what's mean is think know just just some answering know you of is of in other the first, scientifically, it trade talk second know obvious which the at you to things

I they're not in going know are the think think little what's you cautious doesn’t means more people are more because more put know mean that going just and out. of not flag I've hiring, a before, are spending, it broader I they bit said they're mean doing things, environment think it they this incrementally traveling, that’s not It on I – they're a that you on. absolutely they caution

said I which is the that, it's again like not say Having what flag, all a red is seen I stop. would flag. like caution have

I of sort quietly reasonably optimistic. know think still people you are

carrying at they it's second your and and subjective although I XXXX of and answer are this our try it's point. and ahead super think the way expectation early I'll year for the half question,

I will time know year. China, opinion Certainly be I doesn't things will trade mean in China fruitful China down, the time this seem for is deal will Like there second those we own the view be of I personal this But My the there be our with some you looked maybe at that like, tell. of our you will think think I sometime business the our forecast week will as same. will suspect know tell. help but settle work more will was half in with and year a

activities know political, coming. with ramping you up there You other but are the the know theater with swirling election XXXX

same really we guidance little anticipated were bit we I better. and what a going comps there best we the the talking bit it equal, easier we our project take half try think or world. was of is it parts the and to the to sort would that it honestly things all So trying look being of world down we to are know the high to second for most ago, reason a half more the the out. when of The be at We in year say now you our to honestly the end was thought to when and trends we see of quarter the you quarters brought things better rest think good do recent of a a things opportunity and to second get We of two think year aggressive at the what do of I sort those say, get be in year, is would right look the no, forecast - trends.

do lead was current fun that primary and XXXX. up have stuff next we're because but our is know of you know my and getting world. the to question intel think XXXX out year. of big to early, to trends a of about say I a is around talking world teams season ready your know, amongst lots and would You the that all and guidance best budget about folks that I I sort answers way teams we I your with to I to and we're in in to know to start give project into the around CEOs go what know you our you lot to would think

going is Now right. Who to that be what happened? knows,

little where incrementally could better, they don’t I mean, know. a could get incrementally they I think – I get

about think but you, I way to the I second like to XXXX today, otherwise. me of would have would the here today? XXXX I doing, sitting this question don't I because year, intel think ask enough I early think about about a think half are if it’s you judge, lot think how what

Harry Curtis

that. Thanks everyone. leave Alright, I’ll at it

Chris Nassetta

Alright.

Operator

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

Shaun Kelley

direct just it Hi, want morning I more similar ask maybe question, at growth. everyone. sort Chris, good to but of unit a

you growth – in you of view I your pipeline remains quarter, for sequential overall saw steady think the but a know obviously know full know year So some this very pipeline modest growth. pretty for amount the we you

developers commentary have out and there people quickly this activity level Just corporate willing and you're specifically out conversion are what on able from what rate deals, to and are signings, you softness any the how sign you do impact growth what's able the just know to of to your a the do from or perspective? there what’s you seen unit

Chris Nassetta

great, I’ll Yeah, on question to a more know of question little as and maybe you well. great follow Harry's answer bit

answer mean point not in I short anywhere of me and is we sort trends seen terms no, signing, have new units the fact in in a of in the this of world at the in starts. excuse terms deceleration

We and be expect starts to globally both in the up. for U.S.

it development if community, at developers us little financing are time in our real work experience the tell bit. our even it So debt markets more done. our you more tightening a look is would are though are getting scientifically, – What says they easily, getting

operating the So are we see development in that described the in yet environment. none that flags I caution environment of

there's to set seeing and this starts to new disingenuous and addition but are right, our sale we're year would if, it to Now, a records depending mean reality be on what period to time it the going lot would sort you economy seep protracted on you of goes where it have through. know of with stand would uncertainty, reason eventually you I said, a in I if know in unit up as signings growth. to of not as new be going

of conversion a have you that prepared So representing more under I record think very visibility the brands very good know a have feel I years base, give and NUG. in huge to good we I half that, I know pipeline to good pipeline my comments, XX% given continue next got that the the do think briefly we to in ability said into is as more deliver given our few you and that already construction, delivering than very we’ve of the about track

the I'd sort to Harry’s follow do I in comment, Now so to given thank and be be Shaun. not opportunity knew a it, of which you saying on remiss I'd

Because our anemic the fees will like unit other and the the some cobrand is growth know and You even bulk right, have to new you is, those an and are for of might X% business is perform those why performing XX% low, license well environment really same and where growth are growing reality in us growth in say you we X%, continue we to things or and X% well. expect store know that? reasonably EBITDA

a even well. know the top and very time growth at we because driving are performing took are that the things in So really where world, you guidance, are we core same the increasing our our down

get thing. about early think will even but we next I environment growth way As year, its to store into it, do same same a you lower know in the

world the yet is are it well, really I as business where net and growth is resilient and understand as strong and have which a this business what recognize been the we same store we has hopefully in that unit think is that do has saying to choppy – but in that because that result, and start that more is resilient business deliver run the line results bottom growth results we been and as environment we year that. deliver we a weaker, these post-spin we will is quarter-by-quarter to very that deliver intend comparable doing people and to will deliver we continue comparable model an of we kind been to

Shaun Kelley

much. very you Thank

Operator

next comes go Morgan The from Please question ahead. Allen Stanley. of Thomas

Thomas Allen

morning. good Hey,

impressive and are you at to the on hotel remember of going your brand, when I announced now the up it's open XXXX So beginning you this that XXXth Tru year.

other there that As do you are size? you any do to more and opportunities could around more new similar think a brands, come work

Chris Nassetta

We've much launched opportunities. are there other definitely the Well, brands last pretty year. three in

have works, advanced things the of couple a the of skunk in about one more You know talk much sort I’ll other. than we

many sense – on in times this this it. we announced call said brand Tru and is the a of mega when and I've

while of has here I investment think is sort take Tru growth, it get and in to Tru opportunity and demand, it. you the much Reality decades X,XXX that's it'll and the serving the much at to segment and is said built the both beauty is in decades it's of of ultimately be our than in no it a around Hampton done. Hampton. world It’s there know the U.S. all growth, bigger like largest today hotels. us, will be even brand world bigger when of from

time, So brands, serving brands, of largest to XX%, honest, I segment of particular given perfectly period they are long XX% is in all Tru biggest are be talk thousands you demand just potentially a about of to think because its there that know hotels, meaning I'll and of none hundreds segment. equivalent are over it's that demand, but probably the mega one serving

a a would end Inn couple a we think upscale say of opportunity. on more of like large is know it very scale development which as things are space. One are you in I Hilton sort you know of the above a I is for you sort would know working higher – global use opportunity a I know which basis, both There a describe Garden click lifestyle, you or a mixed that urban lifestyle sort on, of

the and of hundreds that think hundreds in potential has that terms of of do around you world. and amount know hotels huge I hundreds a brand

would reception soft our typically we have development We which reception been the lunched before The a launch. spectacular. it already community, do with public has

a we to delivery months and hard just number that in launch development bring probably will the and product as of the next the sometime refine We service table. six deal

a less we would The you that you in decade. the other talked it imminent are a know more is of say working on I We’ve that better about lifestyle. luxury part for know skunk works, one

some be loyalty focus will drive other we customers will as but think we've space, to to eventually want sort we We more scale, these engagement, talked that. larger the to help of effect trying our of opportunity will on that get feed and a we been at but eventually that in and more network

to brands are to not launching So three be every year clear. we going be

remiss we'll at next think in year You in not years couple I'd point statement. know lifestyle be do of probably next I some the and the in making this luxury one

to plenty is just particularly for brands around getting these I brands the propagating know that given the That keep world, the brands. the we started XX depth with said, would days, list Given in and bandwidth destinations two world. we of and that our some have growing many indefinitely, the are breadth that of you in we our early be us are with of that around

Thomas Allen

Helpful, confidence... And U.S. to just thank bit then at par little look you Rev corporate a challenge you. comment, so on we if the

Chris Nassetta

comment? Which

Thomas Allen

the seen on Rev weakest year. was Rev That’s corporate of confidence the mean on show deteriorating. consistent, to month June I idea growth. consistent keeps on growth all the we've of par Just outlook par that the U.S.

So group or it we Thanks. bit. you expecting in seeing talk Rev are a deteriorating that stronger things? production to you is reconcile bookings the growth like when U.S. be two or Like are feels par guys to those just consistent. Can just

Chris Nassetta

on see going things right, has two and third very whether really they say strong quarter would I we'll think One, a particularly simply but I group are we are logical. base.

leveraging we of sort off were that. So of

are the easier, comps is The right. second thing

of that we that reason the for half in better were so the was comps in year, second U.S. thought we the sort reasons of the bunch a whole wiped it would easier that out. of of So the part be

zone. on books, time off and tenth between year-to-date, it of group be most a So two-tenths tick-off. know similar. at easier base with strong being we've I of or we think be rounding. the in you may may be the I'm QX outcome like what but it'll It very It delivered mean will comps we already be that feel a very

Kevin Jacobs

Sunday also has the SPR which evaluating of year, sort are talked to June people June been I the a and in swapped And for think numbers. about Thomas, we this Friday

and of out So you June Talk] made little an at way. we [ a June if bit Cross see – look you look can at

Chris Nassetta

not May and was great – really was but May Yeah, really April that than June, strong. was

yeah, world we the – by incrementally So definitely little and hand same has think wouldn't I saying weaker. view at into of comment, down June. end I from the a guidance mean said on in is world bringing the too are top I the read overall that much other it point my store we bit a our

debating it's by – I in not saw described, you. that the think not going given what year. at forecast to the we we be just property, we We granular I'm the with a we're just know half in look in of factors So first U.S. as to that you similar – way the

as also half the and half I first will the a but if going less in the rest average international and the will Europe be world, lower the international confident. of worse be driving the second particular the had the outperforming to APac, is still but is China in which all second other outperforming be, pretty the than going definitely for year half, we clearly half – so we're strong in we which on first no – Japan It's mean much, to in Europe won't China reason of be of then very than first year, will Continental be think be

Thomas Allen

Really helpful color. you. Thank

Chris Nassetta

Okay.

Operator

from The Please Joe next Greff ahead. question comes go of JPMorgan.

Joe Greff

underwriting the Kevin, One give can you developers it can IRR versus year of morning getting hotel pipeline. increased what everybody. of with requests development, or Thank you an are question helping to or hotel you Maybe two look ago. then you. signings, versus involved? now sense a to be to to Good the And related us extent a at maybe are capital to Chris China. say what in respect the terms for U.S.

Chris Nassetta

are two they than underwriting so know I IRRs Yes, or think don't dramatically year a you were people different ago.

a relative what look is returns a bit, has that and I around to the little know free to their rate, all rate risk risk underwriting sort adjusted think different. where know people moved of you are hasn't change but free been you risk

to different returns. are think So people writing I don't under personally

expectations pricing, little forward underwriting adjusting going of that's and affects but going looking market really a for to that of to that their assets they see know is bit so people take I forward development you terms consistent. been think risks, are the existing what what you in terms transaction their of be in are

at pencil on cycle, end any deals contribution you've bit, in Yeah the line in later I require tend those contract second harder get get up that a the deals margin go acquisition are the money. that of costs together, cycle, number Two, the When from And the the cycle little there for money, think late consistent. later know the that's mean you higher seen then little question, deals sorry, look, I one. key earlier to be to a more behavior. in cycle I bit in which the come luxury deals is that remained you but overall us normal largely completely think and the than key have has our pipeline

So been the for any know over of years, that last that contribution two is and the percentage the pipeline has us number consistent pretty you while. about number, deals than had XX% from has a that

Joe Greff

Thank you.

Chris Nassetta

Sure.

Operator

next will from with Bank. ahead. Please Santarelli Deutsche question The Carlo be go

Carlo Santarelli

one then follow-up. a quick one quick just guys, Hey and

for Just in this much kind economic in that second your more your terms half thinking is right the guys obviously activity forward XXXX kind guidance the driving outlook the capital are Chris, And you U.S. of then the guys at are looking of period. about as of of you raise how return pace year versus broadly, just now?

know activity ahead at returns your buyback right about altered think now, looking strategy you you As stance have all. capital or on you

Chris Nassetta

done look prior implied first. forecasting take answer basis. is I’ll let we in short as on second, very The Kevin is, a my it's the our I'll comments, at the take granular

sideways. up, mean going to a have in yes, economy, view on the what's go whether have know we down it's of So a view we or I going of you

need the we be the looking sort probability gave the know but of really I at business do sort able and on we being with by view an overlay based that some of and the our – as the to you making for of of the analysis what forecasting what is. books you would moment think fill pace not property and and bulk to where property looking that we is at of bookings, already the sideways, on assessment of our

it degree what a say position our is we of looking and – So broad it of overview at than economy is would a forward is. just the it is I think much heavier here’s pace

Kevin Jacobs

Yeah.

Carlo Santarelli

you. thank Great,

Chris Nassetta

outlook the And return. capital changed on on then is no, capital we’ve return, answer short Carlo not our

I range year. are the is, you little the in deeper are think what seeing in we bit

the we've we any way the the the think so almost it gets you and higher mid-point And a stock a is I bit thought way it, we're like little sort to tightening is always think our through outlook EBITDA to about range. so mid-point higher solving is halfway for you the – stated year, of leverage about the we are little Our range and of which know at price.

that a the then what, going business flow, be, about the the returns cash to model the modest back of and outlook are free so coming back you re-leveraging by We the for is recurring buybacks and that can know like drive we no buying think plus and combination dividend matter stock that and consistent for think a giving within range, a about returning bit we but will business, largely of price kind outcomes range is of way. think really the we vary vary how you you are we and on know little a in depending capital outlook the of could the the

Carlo Santarelli

thank Great, you both.

Operator

Please Powell Barclays. comes with next The from ahead. go question Anthony

Anthony Powell

in I morning. to China. good a bit more want Hello, focus

leisure be high or Is resorts Tiers there Tier on some it more different the the moderate maybe demand and slower down detail slowed pretty in times. a end in corporate great? demand X mentioned some and leisure that compared more You to few based cities government broad will is

Kevin Jacobs

think pretty I Anthony look, board the so been it’s consistent across China. Yes, in

and in half leisure driven it You know China over is I mean business of countries. driven the is in XX%

So that seen. slowing see but bit haven't we through to reins on spending, so, see economy really back to it flow our their and you when pulling little are and you going the way them the is know of business you sort a

ago. of You are being the business food seeing limited the the years and dramatically constructing know and beverage had sort couple you you a way not know been it

leisure. driven really think I by broadly it's

Chris Nassetta

trade that forecast. trend to consumer deal this Chinese flip you much much held built current extent not I've leisure better to And held – the around in you anywhere business the up part Recognizing Business other has leisure. we up actually we've in know here be has the can the is it more China in the the you than the smaller thing as quickly. a assumed to before, met, what’s the I continue than said world pretty been than the group is probably in China, which through know because of seen there and know that’s is

time but just Now if sort in for we we going I you flip back long reality is, that. least to know know and around be later an enough at there's on know that this you I we is take point, know think you potential you has of the to get this better been and traveling, But it year. a said, mean trade deal some them forecast to where it know you done, that at back, upside will get a thing for can't happen – if opportunity

is But know again you this next to at that who that impossible will knows, it are be point, and the just of assume what know so we that teams week going doesn't result happen.

Anthony Powell

thank Alright, you.

Operator

from Farley question The be go Please will Robin ahead. UBS. next of

Robin Farley

Great.

notice better did of that RevPAR have but been the questions addressed grew lot than RevPAR franchise my a managed I think already, your I quarter. in

Just if call different and there there? to is than a anything wondering out bit the overall trends U.S. little

Kevin Jacobs

there anything Robin. I No, don't there's think

call what you're looking to performed out at, at that than sure RevPAR know but brands, at lower actually I'm not mean of the higher actually the you stronger I in nothing think there. end end number I so terms

Robin Farley

full the I X.X franchise with. that of at and managed would different was be what franchise than service, limited that and to tend looking at a little and service see more to be X.X and hotels managed your that's more bit we tend

Kevin Jacobs

to seeing case hotels level of U.S. in higher do that's Not probably we there necessarily a you're full U.S., the is there. the what necessarily is so – of that’s so extrapolate have not in nothing I managed service franchise actually the think there,

Robin Farley

great. you. Okay, Thank

Operator

Crow from is of Please James. Raymond ahead. next Bill question go Our

Bill Crow

goes segment. engagement reinvigorate statistics, whether in morning. got to they million thought options past just luxury own to release the with Chris mismatch with And footprint over of it members the dramatic a press why in one on your seems luxury about luxury get it. took all the and kind me to a growing and more momentum you it's growth capital limited capital to the brands the and I've Honors in XX number back quicker capital, good positive growth week commitments. you the have the really It putting Hey, of two-parter I'm there, about first long wondering use that have in to your so really of and their a your points

Chris Nassetta

sort this not and finally, up. years of we deals that two luxury. of reasons. This isn't you’re takes Release focused I it Since of question. – company, new that bunch it I we've The make agree pounding would luxury. We’ve with door appreciate as hotels on here's decided any XX obviously fundamental it of was I so are ago, on have been happen, Sunday about time Press focus don't the on in opening cool but about very Bill. read you these not say. what I long our for been been we a the the to something describe, on focused day a entirely, you finally me, we walked chest to know I

at you The some know I – right. different a our mean first want is our lot times. of customers of it,

on an lot time is we to from it's loyalty The have of in the system second of think for important, it. so point it spent we aspirational a view,

XX and or to while or point, gaps, having objectively hotels. more have We're hard went are some say tremendous years What have have We important incredible making are I this we XX we the the would in do using luxury most captured those we urban filling our on a open basically to say at from gaps. occasion very markets. We but resort progress, balance working most at we do, and sheet. yes of lot is XXX incredible we've I'd we pipeline want progress. made nothing ago

engagement question, right it be we're occupancy look say, so disproportionately said luxury rate, at statistics a the I key Honors very money reason. reasons mean sort level Bill you commitments your I it you working, what and rate leading If is weigh it, is obviously we for we loyalty the of of doing in that. I'd that would in it’s our there's right, But have, for would bunch to have market program, outstanding the say because implied amount loyalty, and working, growth defensive. of in not whole to of

than what working; What that’s what these going with to One more two, right. they in the you have mundane aspire is it the things the their Maldives and people for what while go strategy their York I remember traveling they like they not is life you behavior, all their tournament and do know at to they or you a to for know the for is husband you needs use using to – do satisfy not, actually luxury the a to New think do their things, the wife and soccer weekend likes. business earned if Pennsylvania kids That is with Reading, on to personal behavior. with going look point their or City

And think so a we you about when it, not it start-up. this think like about way, are

We X,XXX have in at needs. redeem around lot the XXX That satisfy can a that of people can hotels right. countries globe,

XXX resorts a around or have We open we great almost the pipeline world. XXX have luxury,

upscale respect If you with we that don't. our the at upper and most to end who luxury of of all competitors would some call upper look

the of Hilton brand, upper-end XXX hotels. the that's or take another probably So XXX

those XXX by needs, in everyday meet X,XXX that categorization needs. of other So the have most their luxury of to in broader of a of we of resort reality, sort would them or out the XXX in hotels of X,XXX sort meet addition

we're focused progress. on great luxury, we're And making so

and or it. If you encourage went any I’d Waldorfs that newer opened, of luxury Conrads the have saw

of but to really we creating are a is would network impressed, think great be effect to members that I proposition. get a it you value broad loyalty sort allow

is it's it. parts ecosystem all honestly in it's terms small part of numbers, not a it that important, of our would is other part drive argue – the I of but it the while as loyalty. relatively reflected and argue of is in it, I would Luxury of It help

Bill Crow

answer. and thorough a satisfying That's

So appreciate Thanks Chris. I’ll I it. leave there. it

Chris Nassetta

offline. Alright, it we’ll debate

Bill Crow

Yeah, you got it.

Chris Nassetta

Alright.

Operator

Our Donnelly next with Please from go ahead. Fargo. comes question Jeff Wells

Jeff Donnelly

Kevin. One, guess could. one I guess, follow-ups maybe for is two I if this

to it billion year? is structure Looking There next is and shapes, incremental much but cash think realistic slowing or capital you RevPAR of return to repurchase pipeline flow, about in $X.X $X.X a certainly the growth billion how expect I'm growth activity bit. how how to return. wondering the XXXX, capital that

Kevin Jacobs

pipeline so you the return in Jeff be dependent. guidance. sort it's mean the our do to more about earlier I it's a say think know is responsible if look store probably hey dependent Well, early it, bit early, thing said model much growth should capital sales But today on I Chris and call, lot you little and a same of giving less

Our for pipeline is do not growth and is think unit we slowing. our growth record net not slowing the

those thus, will the So they'll enter fees. system, pay hotels

available slightly you to re-leverage free it our return than and slightly capital that cash continue – will shareholders flow and will our or business, look does assume you flow to so cash ought very similar free Our to ought year. the grow to higher know this to

Chris Nassetta

view, every then and store thing one same Yep, technical a about it’s $XX I in to where million broader impact flow. the of million cash agree. has perspective RevPAR point of Keeping in $XX free assumption being

covered I again So move think needle abundantly base this, and – on clear. we we’ve that in but are of the worth end it sort it's way on a the broad the to covering does make not to probably sure

buckets. return One, share three say flow. free cash capital, and we in of it would On put I buyback,

that You of buy which cash and are then on we to to flow all our we the back our intend don't that every always you to should year free minor assume rest deploying dividend just increase do stock.

to you normal our this sort re-lever, sort mid-point the continue of resilient X also EBITDA with of to as range. be will everyday of in we that You to X.X the assume to approach should know grow circle model

financing X.X take at shocking transactions did, the X.X. for it just that If the gets look you where we us does X.XX, it year, and the for the

I’ve the saw and what beyond opportunity short major we potentially H&A, about, for and an did up know also bit opportunistic is side an say that repurchases you more a sort is There it would of for to dislocation highly where de-lever a be of it, period would with major the wanted then I occur of accelerate environment time time dislocation. we of advantage a that and company that we but that even take of to the and which periods lever more talked little

buyback, and every you day doing think flow level all a and to ought like out in are about I year, So cash our this day conservative stock. what free and re-lever use buyback to we think our relatively

dislocation, that, I if think you a we beyond big Going there's certainly would consider. know

to decide this something and talked But which around advantage third You those free of of and doesn't dislocations of about in lever-up it's we’ve a would our market. look take to allow the year, time, you buckets, to the obviously down, in two cash board for the know it’s which lever because of three the experiencing you have time are period sort incrementally table, won’t likely. of flow the obviously

Jeff Donnelly

end kind the of if acceleration it horse, of like second you up that year and this a the much like comps in you don’t tough to the half steady half to said, growth, And you annual to assume Chris, to because guidance pull need let’s X% the unlikely half beat internationally want if of but of will? of to because the the just are top RevPAR, year, what's in would is and the facing now X% just I getting first you your feels dead year, U.S. path year back the

Chris Nassetta

as Yeah, I right. we’ll up middle, that somewhere end the always mean in I the narrowed do, I think range. I we mean

really who Reality point We think we a happen. are should usually of we always have it you range, ball. think because I at range the assume crystal that knows, as is the know don't middle can't you you one, you should what to narrowed is, will we two –

would the a get little Do pick think bit. what know to we you have it at would it's The I two? No. looked have to likely? could. it Could mean mean I happen? up where scenarios I U.S.

because to particularly The You’d it sort of the stabilize. choppiness, perform to have on mostly going have is transient group business in book. the

the You’d sort in caution of U.S. in back to pulled flags have have the

Sure. possible? Is that

the China, better, You can to really In get little could bit with trade know we more, little bit and people not a people feel you impossible. was off it so get spending a it a not table. done it's two. traveling, to could start why to I view which mean is the it possible is three, the to possible get our took deal

it possible. is I think

not know China. huge things be know it higher much, to other a level. part of our system, overall it China, while that it's would contribute you was The growing would a you much at

it’s So or going have too flat down impact. some does modestly

took the little could you a with China in. if you around bit you few know flipped in said So to? stiffened caution people up Yeah. a U.S. deal, a flags be and trade

a Do just X.X, be around gave honest halfway why range feel and more range point you we a to that's I No will we know prudent. didn’t year, than through I we when just to think we will? tighten think are the trying be you know

Jeff Donnelly

Great, thanks guys.

Chris Nassetta

Yep.

Operator

go Group. of Please ahead. will Smedes question next Rose be The from Citi

Smedes Rose

you. thank Hi,

you. ask I them, You’ve gotten of just but to wanted most to

the do coming put the that and on the to of your continued You is there to you and or gain more gains segment you RevPAR of at the know the see outsized any focus relative Hampton wondering, it's containing mid-market brand think expense brands segment. of growth noted we just Inn do think footprint expansion to you traction. I’m just other your other the Tru in strength up – and

Chris Nassetta

swim it some think lot about a don’t. say designed compete We don't but keep commercial different strategy you can't and we of I that the time markets spent at go-to-market we how No, how segment, that that's a it its in to all, is is they I mean it. on in lane. really

if share I why look is Hampton think you it is at too. Tru gaining gaining, and

up Hampton’s not seeing, go So brand Hampton share, have. go down, you're average and gaining not, Hampton the and share like is that we Tur is Hampton market highest

an So sense sense performing incredibly absolute an both at and is it high level. a growth

everybody well, Why Tru else to offense out about is I think that think no segment, doing to there. honestly is

we brand that it was at think doing reason we consistent, a that service well. didn't is product, delivered launched simple You We delivery clean didn't there a because competitive are that and in from is resonated with that Right know think was flocking we that in Tru customers right. scale the just finding cleaner we're is to customers the segment it’s because anybody with share good and product I think newer, what folks it's what Tru were taking set. a better,

Smedes Rose

I do And when own? little of looking they development gains then are down access system you capital, fee take smaller just back development within the U.S. a more say to more do are cycles, major when does the know mean mean to banks brands require or pipeline? look bit overall your see you likely prior a I lenders, let's Chris the like relative within maybe thanks. economy you developers shift. Okay, a at

Chris Nassetta

is There me question that have the beneficiary the I even that’s to standards or lending we've Frankly last case. that as in think a been tightened. no of two huge years three

we worse market lending know an and sheer I an financeable. know have Why? years of Hilton think pat already that less are this been we them better easier on a think talk are XXX gets they ask we know We we just share. myself yes, – we so taking up, institutions think I you pounding, drive Because to profitability, I go share and underwrite, back, the development. numbers they and more In and environment you to as that’s me amount I wide view. go will, premiums mean the drive are I long we've I are. system unfair our continue market doing risky, dozen as it's they always mean better to drive share we their are

Smedes Rose

Thank Great. you.

Operator

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

Chris Nassetta

Thanks everybody.

time to friends Get the some with the you Take care. time. As We'll enjoys be the with everybody and family. to and taking always of appreciate we talking forward hope third rest look relax and you summer. after quarter your

Operator

conference The has sir. today's Thank you, Thank now for you completed. attending presentation.

disconnect. may You now

Hilton Worldwide (HLT) 24 Jul 192019 Q2 Earnings call transcript