- Earnings call transcript Q3 2022

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Operator

Good morning and welcome to the Hilton Third Quarter 2022 Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Jill Slattery, Senior Vice President, Investor Relations & Corporate Development.

You may begin.

Jill Slattery

Chad. you, Thank third Hilton’s earnings call. Welcome quarter to XXXX

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

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

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

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

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

Chris Nassetta

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

a marked in very quarter third our The milestone important continued recovery.

time system-wide first RevPAR surpassed since began, the the pandemic For XXXX levels.

the experience our billion guidance to than Additionally, further and capital shareholders. $X.X adjusted in our EBITDA And billion shareholders. we're global reaching open the $X.X coupled full track levels. between the strength enhancing Year-to-date, and capital-light we've including to XXXX and our achieved various the system. continue The of enabled with performance, high $X.X EPS more return We us notable to announced to exceeded strong billion. on year, of and and for returned business meaningful returning partnerships, quarter's across model, milestones quarter, adjusted XXX,XXX end strategic several development guest the Europe, rooms

occupancy quarter, only results of to points in shy levels. Turning reached the XXXX four XX%, more specifics the than

transient high-teens XXXX continued business primarily strong grew XXXX points Day, strong only strengthen driven in two travel versus demand Rates up and rates ADR expected, across months, proving off Labor the digits. leisure and Overall the all mid-single also peaked as up reaching transient robust September, remained summer business demand quarter-over-quarter levels, to improved and significantly remained XXXX nearly demand by As business transient both and levels. levels for transient in quarter demand group trends. demand in Post continued with XXXX. the leisure and robust. with surpass through up segments leisure and XX% the demand

the translated business. levels lead growth Business notable of transient this RevPAR into exceeding with quarter to year-over-year, to Leisure corporate of in and levels, transient large with XX% peaks. XXXX the by approximately RevPAR reached X% acceleration third continued each system-wide than more month RevPAR compared prior surpassing levels, All XX% XXXX for XXXX recovery, quarter.

XXXX XXXX of levels as prior levels. Our reached now trending quarter, XX% shy bookings top of remain XX Small improving mix. with a levels, meetings for percentage above and of with businesses Group X% of accounts business just are significantly XXXX. the company peak ahead medium-sized forward RevPAR roughly

expected year fourth by peaks, quarter. trends the the with strong prior transient above driven remain expect of again confidence in Leisure consumer eagerness continued ability and to levels for balance to travel. surpassing We remain the solid is RevPAR to XXXX meaningfully system-wide and once RevPAR

X% position driven demand months, last levels, gradual quarter to see on RevPAR approximately recovery, demand due for several the road. We companies the their above expect robust to to fourth business is primarily continue encourage as a back rising group people accelerating to largely by transient XXXX get pipeline. the over System-wide

mid the percentage to the Additionally, continuing rates in forward make period of on a normalize. XXXX, same business meetings bookings high-teens are with XXXX. convention up group to in larger and mix versus new versus Company bookings up

macro As not we're industry are any with we of look are seeing more Rising growth, pricing that signs supply power. drive ahead, we fundamentals coupled weakening. remain continue near-term travel. about demand, the spending very accumulated back headwinds, released strong to historically optimistic future estimated low shifting checking an should excess in Consumers experiences, Despite borders segments. did savings during accounts than and international approximately to and they being the of in all still XXXX. pent-up is pandemic, on trillion savings have are demand reopening $X.X or across Consumers XX% their

study, year, and Hilton pipeline than recent to tentative XXXX or peak global position is for hope travel travelers Additionally, XXXX XX% as up to of much according a shy group XX% of significantly. levels, business next a with more less

While challenging, growth. continued the strong we are the a of tailwinds macro in that is midst more secular with rebound should support environment

opened reaching XXX,XXX we development, several globally quarter rooms Curio Europe, XX properties, rooms Hilton & milestones, important including Hotels to and in Turning rooms Resorts. XX,XXX in achieved and XXX totaling XX,XXX nearly the

the All of a compelling remain of index growing pace and premiums. disciplined additions higher all major the than propositions both identities of to their RevPAR competitors, distinct for year-to-date industry-leading value continue our guests. and demonstrating healthy branded net our owners strategy According strength power brands at development given STR, our and our

Signings greater performance rooms, rooms, record half drove XXX,XXX During we under which recovery. bringing which by approximately the boosted pipeline owner in the construction. optimism around our are XX,XXX US, the strong to were quarter, a of signed RevPAR

including Singapore thrilled Pacific factors agreements were the macro the to international seven luxury landmark we expand While announce nine to our signings, Orchard. Asia across presence Conrad, in tempered region, countries

materials Hilton to the declined. construction STR, major in flagship to the in starts and better also largely tempo and Times in to cost to growth Waldorf will property in activity its under Malaysia, brand pipeline. construction in as deliver only what outperformed become Square. our for stabilized our agreements hotel demand Morocco US of the in Construction According the is grow residential system-wide quarter, first company Hilton We year-to-date expectations signed due

we before historical our full growth unit even to to and growth For couple exciting X% for rate X%, of continue of expect to With year, we growth net mid-single-digit returning enjoy, more expect for Honors of to members destinations Honors the X%. we members. roughly the next approximately and line our XXXX. proposition than to up and quarter, year-over-year with more accounted Hilton In $XXX points the million, grew membership strengthening year-over-year XX% continue for value basis XX% of XXX occupancy, in years

reliable in to prioritizing on while they friendly of wellness continue new on guests we are evolving We that survey in also An stays ensuring overwhelming said deliver needs. recent activities focused guests' meet a innovations invest the road. XX%

an to every in Peloton across fitness US add Peloton our announced properties X,XXX we year-end. all quarter, partnership with the bikes center During of industry-first by

and number be on execute Work, for on by talented and culture. on our recently Best extremely tirelessly only the Our hospitality winning Place works named and Fortune the Great the one number to award in seventh continue Hilton to team Women a and we World's the was our consecutive year strategy, Best for list. great recognized Workplace company the two Workplaces US to the list the on

positioned new think ever. As we're we better than a golden of travel, age I begin

yet. generate their company's running our history at performing our flow are our to we're free in margins cash brands track on highest and we're highest levels of levels, highest Our

expectations a to Kevin on call for I'll full details turn more year. you to and the the the give Now, over our bit quarter

Kevin Jacobs

good everyone. and morning, Chris, Thanks,

grew exceeding the EBITDA demand, quarter, $XXX year-over-year. a wide travel. recovery group and the compared driven year XXXX. in range RevPAR system high our the XX% guidance and neutral as increased XX.X% Adjusted currency strength as comparable Growth by versus well million was to and leisure steady basis During the was business in continued of on prior and X% quarter, end transient up in

Our by continued recovery performance fees. portfolio. Europe. in Americas and Honors Management our also benefit European better XX%, fees improvement by expected across than from Results continued the further was benefited Good cost control results. strong growth, license franchise driven to grew and RevPAR driven particularly fee ownership

For diluted and the increasing our year-over-year. for earnings adjusted share end of guidance high $X.XX, XX% the items range special exceeding quarter, was per

regional our performance. to Turning

saw up demand XXXX. and outbreaks. region East XX% XXXX, was In year-over-year XXXX. The by XXXX. COVID the leisure strong quarter benefited Performance was strict remain the with The with travel to quarter grew and recovery year-over-year improvement versus remains in up in and the rest benefit RevPAR volatile across lockdowns travel, over year-over-year strong Third a points as US for Performance were over travel percentage versus leisure XX% the ease versus up continued demand strong year-over-year throughout third with RevPAR, international to RevPAR continued X% XXXX. Asia Africa continued down resort China, was from and continued group and China summer Europe. XX contain and transient across grew comparable and and the XX% international Pacific up Pacific XXXX. borders more restrictions Middle to as summer. be in inbound XX% XXXX. international quarter-over-quarter and RevPAR as Pacific policies Performance in demand where about of to business and of lifted led was business by recovery XX% In continued July. peak was Beijing increased optimistic We just season, RevPAR compared In inbound than XX% travel. In COVID quarter-over-quarter up Travel strength continue XXXX the group up results. Shanghai Asia benefiting region, levels. US, Total reopen to US XX% to RevPAR up levels result with leisure points travel and in year-over-year demand ADR quarter, holidays to Asia further school China was versus properties from RevPAR region RevPAR region increased X and X% down was XX% leisure Europe, XX the third September to XXXX outside RevPAR points leisure XX% driven in quarter demand, Americas further travel entire X% quarter-over-quarter, of particularly down particularly US percentage the was from the region, the up improving restrictions picked XX%. up transient versus XX% demand new excluding reached and

our Japan has stimulus booking recent recent to government the border example, and already increase announcement in started pace For openings. following

Turning to development.

half year-over-year of nearly of XX% located pipeline rooms at with roughly construction. nearly the US and end grew the sequentially, rooms quarter, the outside pipeline Our and totaling under XXX,XXX

unit challenges, net approximately of our approximately full years. in growth deliver we year, rooms exceeding signings range expect of For net for the still the near-term X% remain we next in US levels. XXX,XXX Despite signings and globally ability couple XXXX the growth to of with confident mid-single-digit unit the macroeconomic

to guidance. Moving

year-over-year X% XXXX. to system-wide For the XX% fourth RevPAR or quarter, between fourth we X% be growth quarter XX% to to expect up and compared

special for million $XXX adjusted of to $X.XX EBITDA diluted adjusted between adjusted EPS and be special sorry, between expect items million $X.XX. We I'm for $XXX items and and -- EPS adjusted

full and EBITDA We to year between growth we XX% RevPAR XXXX, RevPAR XX%. between forecast to be and down $X.XX of to $X.X expect billion adjusted For Relative expect we XXXX, billion. X%. X%

Our for repurchases. diluted EPS Please adjusted the at adjusted represents year-over-year EBITDA note of We EBITDA ranges forecast guidance $X.XX. XX%. by forecast between items increase more and do nearly $X.XX XXXX our exceeds than not and a incorporate XX% midpoint share adjusted of that special future

return. of a during capital We million third year-to-date. $X.XX of per to the on Moving total a share quarter dividend cash $XX for paid

in Our have and Board of shareholders dividends. to more also returned the quarterly share billion per dividend $X.XX form we $X.X Year-to-date, buybacks fourth a the quarter. in than authorized of

you shareholders $X.X return This to billion the the completes be earlier details Chad, this have and morning. the For on as we results limit with issued line questions and open we any form in Session third one to to please? our question, of question. our We to $X.X like can possible, speak of quarter we year, between like so ask would prepared our earnings many yourself billion that full We first in found Further Question-and-Answer the release you may we buybacks now would for have. to as remarks. you dividends. expect can

Operator

you. Thank

Our begin will with Please now first come go from ahead. [Operator Joe Instructions] the question-and-answer JPMorgan. will We session. question Greff

Joe Greff

Jill. Kevin, Good morning, Chris,

Chris Nassetta

Joe. morning, Good

Joe Greff

a you talk a part of room percentage those the to or get more perspective percentage associated negotiated traditionally corporate important And corporate of sense for rate opting corporate wanted to rates. negotiations accounted give what think you how now on rate with total? contractual to us pre-pandemic room about more do that Can as I are some then for nights that about you were nights, as year, rate are ongoing that the model? companies of the negotiations less next type of negotiations dynamic, your go

Chris Nassetta

it. gave the you I'll order take it in

It several we XXXX. about big And this At XXXX. back ours about and towards been overall more the our at accounts of talking as by it was because moment, was corporate they're simply said more business. customers downs. it's of that where X% enterprises, because weighted in the have ups choice heavily are to quarters for Just we've our we big you chosen point a way bit and overall customers medium-sized about have they that is background, given business of last SMB, in higher but our XX% asked through and mix important, a resilient little coming been that, largely of and our rated long time, have small by pivot are down. Having the

I few vast majority of even And time, are majority say, of a years, but is the dynamic, bit, that pre-COVID. that recently our accounts X% only our pre-COVID. more and we is they what XXXX. will I season, can have really last bit the say I those We with moved about talking lower is to doing top decent up guess to of it to XX, keep or very something going our objective go early to think the as to aggressively we've chunk, than I negotiation were a that been we've but We're pricing. long this teams people over in That's XX% very my X% a a point at through off had get dynamic we period that in XX% the did mentioned dynamic. accounts most want

this So point, expectation And that life, dealing majority a of the to in in their moment, X% understand best all – is And because at I very at they're of The to high that, the we XX% point early is that of least inflation customers range digit days. is what going them thing aspect this at with this of and we dynamic. are best is at think to pay that have low more. they're the every can that at real their figure double is single-digit, best it's think sort moment.

Joe Greff

Great. Thanks, Chris.

Operator

go question Bank America. from And Kelley of from the Shaun is ahead. next Please

Shaun Kelley

out can of not help a lot your the Hi. quarter provide kind of in of it when just the everyone. through the here, taste macro historically, us of people turmoil XXXX Good maybe bit third You get And a walk obviously the all Chris, a is morning, kind RevPAR all makes outlook. sense I we picture? there. little of world thinking of a us knowing lot to that's But there, big something specific. you a see speak out with think

directional third kind And seeing moving on bit the maybe can lines year just it XXXX? we're see what now, little based what accelerate that in how And you us further know through fourth give of the in from So of color. and right you the quarter? early do a trend specifically,

Chris Nassetta

Yeah.

a bit that, next early be it's us on prognosticate uncertainty. we'll Not There's just our for but early what days result, to of XX the I we of year-end. at stages year. a a right. for process, by through to so, next as going complete And only budget which over or think macro think the you're we're lot little

we as on a my What it the about on, of a forward-looking directionally, we're Fed trying we tame central with we I'm currently while, the other the have said so it and sense parts to do of of low-levels, fundamentals that's is just well, inflation naive than right, briefly, comment prepared are Demand, are think said at, the here of in sort comments, how the moment going in while, that, macro Supply And strong. banks think I is to reasonably demand. slowing looking what's things? And some we're economics going happy to by to premature. is quarter, at not obviously economies, just in and pretty from that Having I of again, to world that basis. period in is in picking industries because redundant maybe stay year. the Not too and for be everything alive benefit a now is setup them given concerns. those laws to are different that COVID into there and and going us What other unique at into the I a on supply going it's for covered fourth up. historically not but is time next on

into covered transient still is flexibility international it's time. remain strong. trend as to continue Business quarter. is shift and a As because as pick well fourth People normalized spending that I Why have more I cyclical it. you up And things that the the events demand you the I covered and markets maybe expectation the huge spending spend income disposable shift or our to less picking just pent-up broader to and it have you and of and up. lot of up? amount more patterns is on on savings third experiences. of to relative in mean, back picking segments leisure, that's quarter, the accrued, It's to segment, up the desire going meetings a a and secular everybody have the of have opening more spending

we we're and to tailwinds, social got events whether associated all And and Board businesses, accomplish the own to right? power. in would pent-up are But obviously our on and is these here just industries. than you have which And world And My sorts, down, would it's is tailwinds continue go our like have have macro. we has have goal. then the is why demand it headwinds. The of we the are headwinds meetings tailwinds for spending to those business. We I to they're And headwinds okay? or their other gather stronger enough while. incremental and The hammered slowing describe recover, of now belief with have those unlike tailwinds. a more going experiences, stronger, sort from. that's to of pricing We recovery. wind run with benefiting during like, their travel, with meaningfully COVID, team say we're But having at so, -- sails demand continue And in is and moment, our what people to it we I this international and

economy judge does like for the know. view tailwinds. those what the pulses But How – quarters finger the don't I and we're not And putting at and seeing understand mean, slow slow? we're as I it is, and can for it much are macro I things my few Now, those for? in it does customers, depends on how economist, happens next long can many an talking are I'm on don't pretty themselves. we we're to daily it. data, least, powerful as to our everybody

don't next to and is I what part sense in what it's it is each opinion. in RevPAR So being But tailwinds a the XXXX to out is the mid-single going the be from watching definitely to be up. year. the give is this answer that, going up. definitely headwinds you some end year and know will be expectation digits, an for we're way figure that, we saying, process much view quickly think watching macro the over and But the year. so next other, going similar and levels. as how is long-winded it to my now that's did on going We to my view our definitely budget those year to of of up, And for Year-over-year, be of fight

carefully, in you comments. listen that prepared So was if super my

of we trying are visibility ourselves schedules. pipeline tracking more visibility obviously through into because delivery and things and little to bit sort those give we more construction have under So a there,

Shaun Kelley

you Thank much. very

Chris Nassetta

Sure.

Operator

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

Carlo Santarelli

than coming But in Good this something you've pandemic prior where kind morning. you interest where Chris, environment the since been. greater of much they've did Hi, operated back gotten again, have time you where public guys everybody. the an obviously, in first rates were is to with returning to capital the buybacks. way

environment your before the have your really funding, a cost you just you're bonds there your of return capital debt, some I'm time do. rate wondering, think about have How you think you So new any does into strategy, as about kind of ton capital interest that's rate sensitive you plans? factor obviously isn't and

Chris Nassetta

into more flow returning than it. have that's ever I'd all, have we Yeah. And more we free that. I say, mean, ever obviously, because And background of we're cash we're to first to it capital do historically. producing intend we historically. continue factors than

of X.X to want We times want said to X be have, in to sheet we leverage. view, point be from a balance that We zone. at still

be. and X take that. that, the push maturities. credit be balance to a that you we advantage XXXX. We the might capital we some the times. obviously helpful be out shorter said at and add ways raising mind towards we form of other moment on still the during X.X And which markets if of higher markets refinance facilities markets Kevin, really stabilize. we But end great to again, things to have And want. maturity, those I are because and imply We're are capital are, probably more doing, are. so guessed rush to the this in fabulous of if little debt the have. took have we incremental do And right times will Fed might to themselves the those a borrowing to meaningful – when But we we'll of maturities would that than We where COVID lower that pre-COVID on that are present our we're we don't But to go those to might with place, going we're bit the opportunities. other in From both moment, to our our can and opportunities year be think At that. of point more any the time there at facilities advantage hard there probably, time then do we and take certainly at buyback. want the to do to until honestly, look end a so we and where than out point, you at of to right shape. want increase there view sheet not But there have suspect capital are will leaded

we feel done rate of about the we current So meaning of what structure have really years a and good maturities, our profile which is. number of for is about our any

time, a I've we in is been the cost. things The at Ultimately, little moment, my and bond to any term demand. said, other a those go doing and we shorter way. to result, as right reasons and as don't I of what harness So, is of debt. other other are years, we now that will raise lower doing markets history this these facilities a one, couple number enter the long credit markets And the go of facility honestly the up indicator look have which are point of credit they the and guess and of in but to ways Fed a it some if at have down. wouldn't The obvious and for forms it like to do forms really they is future, next overdo have our

And and produce large more any change we're ever we're of free RevPAR way, year. returning we're just still it. ability the going cash yes significant That year. to of we in trajectory to gives mean, up, The free on keep that I'm it of you we if our don't the most this going capital on gives is amounts doesn't, that sense in continue like. have right capital that impacts plan a we're to to and flow a having going I to yes, is yes. without doing no. the cash that the that But but more market the going fully borrow producing basis us, hopefully, way, to very answer -- be continue next by to returning it necessarily us going So flow – and

Carlo Santarelli

Chris. Thanks,

Operator

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

Smedes Rose

out seeing to depressed development would bit into about there are back a maybe you pipeline wanted looks or more developers the so? of a or next kind there. thinking the that ask demand, and I plays like over how I China year just guess, what in you expect you what rooms, And little very with opening to you're pull kind of

Kevin Jacobs

Smedes, to I what -- I mean, of what it's would definitely the right? got microcosm is macro. headwinds Yes, kind Chris saying some I of on similar you've sort tailwinds, a say it's you mean, some was got and of you've -- in is publicized. disruption It's done this we've gets have there development the macroeconomic that's been environment, face-to-face well a also way I much still think on ground a actual face-to-face prior talked quarters, about in very the China culture.

know, over at we've years, materially this and had quarter of couple in enough, over be going the the to more that's the year, pretty up for -- pretty and really year. the less be Deliveries the to you for service last in So ultimately year. sensitive our time. environment are so macro moment. signings strong third a signings up of level limited of we're that's starts will up Interestingly China pivoting affecting as China to be strategy And will in

And and Garden Hampton optimism then demand Hilton of remains is so X all for we're brands, that's our started rolling view getting are of sort say out lot would what we a strong. Home There's franchising. mixed and and that really just a developer particularly

some up of the think do a saying, way, long is way sort you in term, trajectory choppiness. a of that's we over material but time So in have short the

Smedes Rose

Thank you.

Operator

Katz Jefferies. from David from go comes ahead. question Please next The

David Katz

question. Hi, morning taking everyone. Thanks for my

get expect we I around takes ton as those, become into you as of those might all to term. wonder behave if Thanks. opportunities as information. well important to the fees the and et and the cetera, non-RevPAR puts a they to the it. an them how part fundamental with areas, given and in longer grow other talk I of some degree You've puts about could just takes

Kevin Jacobs

Yes, sure. It's a good question.

you've of down expectation in David, term, and when right? actually made heard, have fees, the quarters ways that COVID, lot RevPAR-driven generate the that the sort the strong less heard of right? to go two world we growth, credit less say change which our growing -- So primary pace at fees at we've us recovery. are during think fees, up fees they Interestingly mean, then rate very almost of they'd near volatile, those one was fee They not our a we've were are you've blew up, of went other during card I in prior those overall I fees our the that fees, -- program. by had we course, been enough, quite bolstered

I spending program has ever as is been. consumer strong been think it's pretty strong. as the Obviously,

at that strong and points Their quite they you don't as we the their spend public, lockstep of grow So recover issuance of the But is should HGV doing growth so you to they fuels numbers. them grow assume fees. They're look remuneration. and with been can I doing. well. this so you really tell in has how they're fee have and fuels far year. that kind

to assume And thinking new good that you and is outside we're in but we'll to So one you So to into we'll be countries on that specifics if grow RevPAR talked It's contributor. how right? countries. growth doing and a say continue then always our looking card products ways and to we're things product HGV time. level just be primary the environment, other haven't I in they're to And meaningful that And to the past get to co-brand or can to hard an we've how then quite looking that did that continue, they would acquisition, revenue. about be we're our do so the to We're Japan, at RevPAR more about be bring not should slightly well. a in credit continue more over commercialize going they'll ways above guys of base drive the getting now. customer probably over of taken to with further more for say, normalized in time, happened, those trends grow

of sort that's generally the come story. to So but more on that,

David Katz

don't down I the helpful was I of I'll rules, XXXX, And little A the this guide and what sustainable in a everyone. little driver just there and if break SG&A just to coming Understood. in SG& stop. was bit was hope you. to one. came Thank it's and I the then bit, is want a curious but

Kevin Jacobs

a terms able still we over A we you we that's as money. you time, you generally, very the people it's year be side, bit. that be say, thing. think think story, not in of a right? bit is good little headwinds to overhead? bit some job full we'll say to actually then of a is it's We'll sort are to aren't And of around cash but the do a on forward. is GAAP and and a inflation little the year there I the it's the What and as There of GAAP There Yes, low still about let to in about timing of But sort little this our and little we're little mean, still spending really spending okay. around is bit break savings And costs a it's cash continue a base in to level side. we right? stuff inflation containing move question. recovers where a numbers, numbers, labor, GAAP a disciplined know more, good gap, our the of to would grow fair down business XXXX. rules think the it bit G& the it real we story. going I cost going legit in good of That's I a the give unfair. the G&A know, really of more cash, for about warrant relative noise we on There's Look, mid-teens on

the earlier was see so the part sort of margin what's Chris about And permanent improvements of that's -- that you'll in driving talking call.

David Katz

very Thanks much.

Operator

is The ahead. next from Robin UBS. Farley from go question Please

Robin Farley

starts having actually much from in rooms challenging And it's signings, to construction than construction? hear what know about did what's in is rooms so a developers the talk and there. put putting more outside the you the to with talked a US to it's under just you Can been about you going China Great. you of we are I right, ago. more that a get Circling back that on up ground, shovels others quarter bit under shovel ground.

here what so terms refund more of having to continue something in is or in saw see. is you that anomaly an think And QX construction sequentially, that you Thanks. you'll

Chris Nassetta

inflection we definitely fourth continues third hope see an it. continue the into quarter, it to which certainly in quarter. the point think I we we Well, is mean,

times, is While thing, in a build normal of it's to availability. financing there cost relative it's more difficult if terms certainly to such

of greater that's could the obviously, when look thought. we the system, than XXXX, much which And do, ever than has strength happened recovery is what at majority recovery much, you our are look steeper at rate high prior had outperformed majority thing than generating the way been period, unlike our watermark. has of which greater profitability other the The the you anybody was thought. they hotels any have, it, system, anybody other And

to they're the owner is do. like more is because it, do. on us gobs about small and very do see and This We'll we of up the more they what diversified optimism that best pat part US do hotels, of a base. So, optimism. what want they they and they of to a their most talk It US, That This -- It's do, what the it's deals. money about part what making asked brands wanting of what most fueling have then lock for they isn't the in It's -- back. the in medium is what want of to mostly and they to they fueling people is businesses. you XXX% and happening? is

the the have highest of highest-performing market brands the business, segments. on across each in and We share across the average

think, And his we're going are seen this signings into why in benefiting that's over translating as And disproportionately in have it's to that that that. fourth the on we quarter. -- year to how the mentioned quarter the and starts I a we uptick showing percentage and be think starting XXXX in those think, continue from up third levels Kevin, we, in prepared comments, so going is, starts, in of is are I And the US.

many different an uncertainty. continues ways there's it., is and expect in we the of everybody a hopeful uncertainty says are are seeing asking question that we to lot Now, and continue it, are So for don't of the time. but can I an say there's And like certainly out point. extended it -- future, inflection how period -- a of we lot

of provided While input little the drop are big is costs reality are those subcontractors. starting have and challenging the from financed are ownership which a to off, lending higher, banks bit. with of is view, seen they've point relationships, still of community the in availability And while getting it's been things still regional local more finance. strongest you've to a And forms broadly construction still -- willing our stabilize and banks, other

financings stabilize, of for is equity more be time. in longer putting are higher many they can rates rates higher. that's up, and convert longer-term reasonable. a These short-term to more will environment and recourse I they're period in that But financing are view Now, a full they're when are providing, assets their different think ultimately, cases,

lot is a clearly there while reasons. harder, are of So, it net-net

to -- of up we'll if on things watch that. think if market but we of very like pleased owner community, And share as all it. that signing our we've our say, and behavior been And we you momentum. keep and were are a I more headwinds As hit an and the those we and broader with they're macro deals, look you in changes, just seeing starts that meaningful we tailwinds environment at and performance inflection we've those to contributors speed to point see

Robin Farley

my could group. just I for ask if color. Thank question, you the about for Great. follow-up And

is and position as us because your thinking going to that's of stuck revenue that of, in, total mentioned I rates maybe you're it think opposed been You from to ago. out to historically you a to on. XXXX just the pandemic, on may that Can Like XXXX. whatever RevPAR for be get you have they're that that year, agreed I'm of you're able you were you two like years group, the you current sense much disruption if just these, the benefit sort rates next the in with give booking how XXXX significant volume position. the necessarily far about groups given don't impact X% thinking closer incremental what the to down? volume about your of And like know like, much get a is I now price that as how ahead how seems booking not one. is that between delta for there's And disruption

Chris Nassetta

I I maybe Let group stats. you sync on said misheard misstated or up you, stats what me because think I when I gave

a down. the not. of up quarters way, you we're XX% were or X% We fourth back So were in By couple go the quarter. X% we if ago,

business at but has it very a rapid pace, relatively So short lead. been up again, the is picking

to amount issue demand. demand, tentatives our with is and We to ahead. up demand. I are and world, the not just position There's having often here are biggest is short the the across of keep the But talk when we all our mean, XX% XXXX, system-wide people X% sit or charts. teams, lead for group massive pipeline and sales it enough off a literally

reasonably So when group us which group from just next XX% makes ultimately point given roughly year, we think the good into that very, that about We the able and feel view, revenue been third in a par get to quarter. at very it leisure, experience look base we've next in year. being was think be, of having, it will given it back, year transient, in fill this which positive picking strong, stay a And good we another think trajectory, very to a strong, contributor up we will business stay and why will Thus, watermarks is year. will which quarter. we like be be steam above next fourth we think high XX will and think the

we've thing rates reason that that And reasonably an back all stable good good. that, I think, if we we of to higher strong, business business I is been -- have rates. a think, a terms the think the have at In to is ability maintain booking just pricing sense I new in fundamentals is, these power again, of much do, stay that -- segments to the

the less XXXX than of You're or of We're are year, bookings, And be for still all at year, rates, booked. that, point, or and business are right, now opinion, higher rate next in and the will that's minus, of year of rates. structure. on will given be half bookings to at Most the the say, I of those year on we the everything plus end But bookings this my those all are maybe high books rates. is booked at roughly demand. of majority next go although going at greater this existing than would in point still our the between equal to reasonable our the higher probably into

RevPAR demand there's for and that of the at opportunity think base growth. segment, and do exceed to So will rate, the we for it to back contribute to meaningfully a levels then demand XXXX which, both get higher

of business XX%. system-wide group back Right XX% think it's to to our normally in our Just XXXX. about what it was, XX%, was about now,

a not, point So view. to, levels historical we of normalize think and demand if at segmentation of pretty year from be close next will

Robin Farley

Thank you. Super Great. helpful.

Operator

from question is Macquarie. ahead. go next The Please Beynon with Chad

Chad Beynon

probably the level maybe And Good little ahead set and this has for which say there beginning stronger beyond? push I Thanks. a benefiting in just Kevin, of is more you recovery. that quarters, around Can margins from know pessimism. my to of this about the segment, I'd that. you fourth expectations taking two come about question. European the the the the a that one US you're Just better was of the of trying higher? morning. in last quarter in thinking and probably and overall on dollar mentioned segment, areas QX Thanks probably talk how came at year, the numbers from ownership bit

Kevin Jacobs

sure. Yeah,

do despite the bracing here, around Europe you if the think talked continued to continued the and that couple you the yeah, country the have think, things we about is pour holds mean, fine. results we to both that has large and it over Japan, how have what world. a that defy regions won't inflation to what then we've -- starting like the but said clearly That the that, you are said in fair. is I all fourth think a environment And you the that to basis to and heard has or which results in of the portfolio operating see excess, Europe. that, to for have just believe part there completely real affects say through the time probably, rhetoric they're that's in that I'd for and they headwinds UK on, should some headwind. -- gravity, winter be again, the its and of up, labor, because continue. what and like I the estate things I least remarks, of next at then our world, of growth far in part in where got in, any concentrated the that's world, the my that year. of an could a quarter, of mean, energy, up, other that And XXXX in that although obviously we costs of demand Central the opened and fell, affects, to absolute we that similar about macro, on of the part utilities relative excess portfolio prepared it fundamental don't translated I've about the reason I leases, just that part they've going

all to levels. on say a I'd it of the back basis, about XXXX way three up, to we're wrap rate quarters run so And

done continues in that, see to and continue the think that clip, it's broadly nice keep because where reason overall. why time to rest it over of business doesn't there. rate to we that work the should a which always fee we've worth growing at recover is growth our enhance mind continue portfolio the to portfolio that So smaller was, business, the mentioning don't of that And I any get

or of last this leases another seven We'll three exit them two exited year. we So year.

now, think the you business. it. that or year two will from right up be about X% years think will probably is few to of a -- way be or I the overall less wake business a three And that

Chad Beynon

you Great. Appreciate much. very Thank it.

Kevin Jacobs

Sure.

Operator

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

Patrick Scholes

Good morning, everyone. Hi.

Chris Nassetta

Morning.

Patrick Scholes

talk the I July, said last since comparable XQ when but I wonder different was bit periods? you if like X% I two for could my It a If year little numbers X%. reported roughly said in next been what pace up, up for you XX%, and sounds year group the you correct, going how the XQ, to down the end of those wonder you certainly we pace reported…? more about is was for got next then pace.

Chris Nassetta

basis the they Best I quarter. points both moved XXX in remember, about

Patrick Scholes

Correct.

Chris Nassetta

Up. Better. Better.

Patrick Scholes

at I the book fair do -- then but I feeling have a guess, they lot assume And this more on that longer than Okay. probably early, you point? sort to any indications corporations of holiday it's cautious a about are are XXXX any point? it's XXXX, be party -- know to they this how would at

Chris Nassetta

getting look is bookings that's that side their meetings seeing looking and events citywide. we're revenue that talk get But groups bigger that to mix huge take many a just don't long these the mix time from to much are there. Yeah, take pre-COVID, or gets forward-looking getting plan person They It the out not large these the to mix as -- the corporations time in in by to means at get It's and and definitely surprising. because what I that and a them not multi-thousand happen like a booked are starting implement. convention, is And That's you have not I visitor, of when so comments, events, a that some booked. a consumed, the time are it's group we'll more on big around think I mentioned to you I these to took that in survive. lot groups events mentioned trade book meetings I I mean, much we're very mega just a to are terms mean, -- other know of allow it Notwithstanding my business trade prepared happen. of relatively be and events. definition basis the their the social macro is groups, country mean, makes not -- these on these networking, events associations of groups. raising small CVBs which to lot association out the groups typically that starting revenue I there, size And meet cycle. is the alive. don't -- short the But to sense. concerns they -- far The

And safe and registration it so time it. point in and their money event, and behavior, downs, factoring and not of And now terms and uniquely in a go multiyears Like was a very can lot economic in these now you so of only in they money, events sense by all there's the an health of not sort aren't I big -- expense only do that that -- were shows event to during and then like impacted nobody there's are a do view up, putting have it's on nobody of And think you're health. and the money. that over view that, it's guy well reason involved. if the from pay was we'll they personally to want COVID you make both sort The long to meetings fee these. professionally. of making that gone then don't of way, is you declares the having a lose resilient ups groups the reason doing that for as not But decisions because need I weren't don't be in they we're it that people much COVID big groups doing variance, out, that that planning of the book they're -- can too mega they before them generally and the

the And so and they're into deep planning very booking processes.

had the And so thing I of they're The before. and you sense. COVID, into looks notwithstanding go at of it sort sort hotels anywhere which point, that big like on to time, It get did are normal. these through. into going of else, go when our can in one But just see just things this think the or very was makes I health any we unique happening, events this airport, it issue mean,

Patrick Scholes

Okay. appreciate Chris, I you. color. the Thank

Chris Nassetta

Yeah.

Operator

comes The ISI. from ahead. Duane Evercore from next question Please go Pfennigwerth

Duane Pfennigwerth

much. little to I very switch wanted gears Maybe revenue thanks about a ask management Hey, bit. systems. you

a moving floors systems operators of What of investment speak One the the and pricing up. those preference heard the is from systems for RM in Can recently Hilton things you we've concept to have institutionalizing RM? sauce in pricing made you and be viewing those special past? think might floors you've your than around the you do you differently and there is floors how pricing

Chris Nassetta

But answer. Kevin a detailed competitively, let to quite not probably you give going answer I'll want. that we're you

Kevin Jacobs

x really work of It say I one we and have really We going I would to the consolidated the Yes, commercially don't with -- algorithm of consolidated the of add. more We our history, of We But We pricing think right? way a But, just set really franchisees is I'd help them. say, in loud. was index our even don't special unpack we work being the say that. these it's for that know they've anything look, created get that a say don't it -- it our goes got up the bring And leave on advise into the sauce. we, we and an been where concept our good and drive. into that co-created centers at do them. I to set with. all even pricing. and really of XX% owners points won't really we vendor part to vast all that. the majority franchise, RevPAR work And basis the in probably say -- long can't say, we're them to revenue out to our all probably at we work it. it algorithms we that management. have at system, we ultimately the good drive of is I at sign because We partner. you it's can't it, with any good it's right, yes, it's special that do I we sauce, and time, can we're be things the thing part myself we or center. how hard know, that premiums I’d But, of up them. that different the amazing We We've of history to of premium, But, we

Chris Nassetta

not these And old for In -- are a then new mean, days, we don't And system a say, systems system. and the that's right. like, stop. build I run a you I long time. let no, would it's it

We’re that world. just revenue in like -- fields these related to management algorithms our data really data are incremental to to It constantly be the used being tweaked add was in hotel.

data in just and smarter. awash these algorithms make decision-making have is the because contributing are we in Now, it sets, to data world that the

has things ceilings. During the and of less been aftermath COVID COVID, and about not more of one the big floors about

so, as think, thoughtful we've about And I been that very well.

But other we none in regard, we second just that So, revenue good area -- a yes, it's the every think many part teams not job. are of in really one things our is industry, -- this commercial one we our of that management. do think in the to but we

Duane Pfennigwerth

Appreciate the thoughts.

Chris Nassetta

Yes.

Operator

Grambling from ahead. is question from go Please, Morgan Stanley. Next Stephen

Stephen Grambling

for is topic my of on was were so the on on were last even there questions, and Prior the to a why taking question. pricing regular bit near rate as Thanks peak. follow-up This broadly. to occupancies hard a pandemic, push it power seemed

pushback yield you versus be you consider little distribution, factors? structurally? consumer now, changed were Do the seems Thanks. changes describing or you how Given frame behavior, to pricing other has management that what in there very would cyclically as

Chris Nassetta

loss the mean, Why pandemic. you how get many And I asked comment just rate was Thanks, have to times but I'm got of my going is there up on I everybody in you It's that asked not pedantic I'll call. can't by accuse pressure? and times probably the the compression. of there got you not I the a thousand no it, lead maybe to but way. just, about know sound it, economics. else. mean, to you don't Stephen, to I good be

an in an XX-year because you over was averages, work this high, low, like were low it where, wasn't vacillating more importantly, where You demand pricing demand, in I give way, equilibrium. was supply and and you growth while was X%. you GDP that and -- put mean, And you the were environment supply in very between doesn't environment an were maybe or X% bit and those at little wrong even power. a equilibrium

Kevin Jacobs

And no inflation.

Chris Nassetta

And no inflation.

Now, things all allow to power. you pricing the have that you have

very of talking have different growth will what demand and limited pressures. You are we're those inflationary broader to And be time, extended that capacity of robust period things an laws economics. the for about

results As they're and just and prepandemic well, they a that's driving alive conditions. what's were the say They around driving this here, happening. set of they're result and different

Stephen Grambling

Thanks I’ll with one. for on. me sense. leave Makes it getting

Chris Nassetta

Sounds good.

Operator

question Montour from Brandt is next ahead. from Barclays. go The Please

Brandt Montour

acted question. Thanks thoughts Chris where reasons, curious really guys had conversion you have morning, activity the has macro And but if obvious for for the that my for that, slowdown. I'm of you good sort everybody. a was activity countercyclical cycle conversion is activity a about just Kevin, Hey, potential historically or into high. taking question basis the

in pull a forward and activity slowdown see? into guess, So we that normally XXXX XXXX there of a we I maybe conversion the XXXX, eventually could type which of and macro would seen have was

Kevin Jacobs

going think conversions. our good don't I a this year of I we're Brandt. roughly been forward. rooms do pull as XX% don't mean, Yes, a there's question, additions -- it's to still I think

-- this be is think tides interestingly, in environments, to tougher saying, you're countercyclical. Rising tend does right, strong You're fundamental really that actually it just what it right? I'll anyway, boats. of tide get all but And say rising conversions I sort lift look,

little think brand And a less. us bit be they a independent considering strong so, that really an demand needing may if you in need of a environment, hotel

of down. goes pace the so convergence And

slowed a lot little right? going at because headwinds it macro then bit have people a drives transactions, the And other markets. widened moment, thinking about actually thing interestingly, headwind So of little And those bit, that around happen bid-ask that's of transaction because forward, activity has a of right in now. is them spreads a the somewhat

trading. assets And so aren't as there many

see of If headwind. people's a of can a down, right? people downturn, actually tailwind think a as the demand of those outlook better, actually capital of bit activity, strong the in downturn adjust, you that's of fronts, little helps. need then on little get pickup during costs And which in of then So us a spreads you a a softens, I more. have sort sort then you transaction be reset come And bit rates gets sort a both widen, downturn, a outlook,

big a conversions that there. think a softening we tailwind will the in of macro nice enough, of interestingly be story. be So, a part And could to little a continue the bit

Brandt Montour

thoughts. for the Thanks sense. Makes all

Kevin Jacobs

End of Q&A Sure.

Operator

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

Chris Nassetta

for the Thanks, everybody, time.

appreciate But really business optimistic, about the brand Obviously, strong. to a remain these strength questions point like macro little we've great that as opportunity on you, also pretty we about across term several And bit And always, the times just very talked of As you in good term, little that you we the heard view. the the tailwinds give good margin and certainly, the we're overall and all segments. on. today everything to we we're of uncertain. see a and remain color long environment in to are But is watching very position optimistic given trends medium recovery and today, given bit from very of enterprise-wide a it short going we continue carefully. the that

obviously, So visibility end more to the bit forward year little XXXX. a fourth of how a we'll look after Have a we the you Thanks again. about day. the great of giving into quarter, sense think and

Operator

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

disconnect. now may You

Hilton Worldwide (HLT) 26 Oct 222022 Q3 Earnings call transcript