Hyatt Hotels Corp

I would now like to turn the call over to Adam Roman, Senior Vice President of Investor Relations and FP&A. Thank you. Please go ahead.

Thank you, and welcome to Hyatt's first quarter 2024 earnings conference call. Joining me today are Mark Hoplamazian, Hyatt's President and Chief Executive Officer, and Joan Botterini, Hyatt's Chief Financial Officer. Before we start, I would like to remind everyone that our comments today will include forward-looking statements under federal securities laws. These statements are subject to numerous risks and uncertainties as described in our annual report on Form 10-K, quarterly reports on Form 10-Q, and other SEC filings. These risks could cause our actual results to differ materially from those expressed in or implied by our comments. Forward-looking statements in the earnings release that we issued today, along with the comments on this call, are made only as of today and will not be updated as actual events unfold. In addition, you can find a reconciliation of non-GAAP financial measures referred to in today's remarks on our website at hyatt.com under the financial reporting section of our investor relations link and in this morning's earnings release. An archive of this call will be available on our website for 90 days. Please note that unless otherwise stated, references to our occupancy, average daily rate, and REVPAR reflect comparable system-wide hotels on a constant currency basis. Additionally, percentage changes disclosed during the call are on a year-over-year basis, unless otherwise noted. With that, I will now turn the call over to Mark.

Thank you, Adam. Good morning, everyone, and thank you for joining us today. We are pleased to report that the year is off to a great start, demonstrating high-quality growth across multiple dimensions and expanding fees from all areas of our asset-light business. Let's start with the latest trends that we're seeing. System-wide REF PAR increased 5.5% in the first quarter, and travel across all customer segments remains very healthy. As anticipated, the timing of Easter compared to 2023 positively impacted leisure travel in March and negatively impacted group and business travel. Leisure transient revenue increased 7% in the first quarter due to strong demand over spring break and the week leading into Easter. As expected, leisure transient revenue was negatively impacted in April due to the timing of Easter. While we expect year-over-year growth rates to moderate, we are significantly above pre-pandemic levels and are not seeing signs of consumers reducing their leisure travel. For example, pace for our all-inclusive resorts of the Americas is up approximately 4% for the second quarter, led by the Cancun market. Meanwhile, group room revenue increased approximately 6% in the quarter, with strong performance in January and February. We anticipate solid contribution to REVPAR from group in the second and third quarters of 2024, and the second quarter is off to a good start with April up 14% compared to last year. We expect another solid year of demand for group meetings and events, with group pace for U.S. full service managed properties currently up 7% for May through December of 2024. Finally, business transient revenue increased approximately 6% in the quarter, with strength in both January and February. And we saw similar trends in the U.S., a clear sign that business travel continues to recover. April was up 21% globally. compared to 2023, and we remain optimistic about Business Transient's positive contribution to REVPAR growth over the last three quarters of 2024. Turning to our loyalty program, World of High membership grew 22% over the past year, reaching a new high of approximately 46 million members at quarter end. Loyalty room night penetration increased in the quarter, highlighting the strong engagement of our expanding membership base. which is highly valuable because our members stay longer, they spend more, and they book through Hyatt Channels. I'm also thrilled to share that more than 700 Mr. and Mrs. Smith boutique and luxury hotels and villas around the world are now available through Hyatt Channels, including World of Hyatt. We now have more than twice the number of properties previously available through our alliance with small luxury hotels with offerings in 25 additional countries and hundreds of new markets. We expect to have approximately 1,000 Mr. and Mrs. Smith properties available through Hyatt Channels and World of Hyatt by the end of this year. We are also establishing relationships with Mr. and Mrs. Smith hotel owners, and we expect this will lead to potential opportunities to expand our direct engagement with those owners. Last week, we announced the collaboration with Peloton to reward our members for prioritizing their well-being. This collaboration joins Hyatt's expansive roster of global well-being programming, further differentiating World of Hyatt from other hospitality loyalty programs. Finally, World of Hyatt received several accolades during the quarter, including being named the Best Loyalty Program for Hotels and Hospitality Rewards by Newsweek and Best Hotel Rewards Program and Best Credit Card Benefits by NerdWallet. Additionally, 55 Hyatt properties were recognized by Forbes Travel Guide 2024, and 355 Hyatt properties were recognized by U.S. News & World Report's hotel rankings. These continued recognitions, in addition to the loyalty program's growth, is driving higher room night penetration and greater owner preference for our brands. Turning to development, we are realizing the benefit of greater owner preference through the continued expansion of our pipelines. Our pipeline reached a new record of approximately 129,000 rooms, a 10% increase year over year, and represents approximately 40% of our existing room base. We signed contracts across our brand portfolio, including luxury and lifestyle brands such as Park Hyatt, Ondas, and Thompson Hotels, and have further strengthened our upper mid-scale pipeline, including our Yurkov and Hyatt Studios brands. There are now 40 Yurkov hotels open in China, with approximately 75 in the pipeline. And in the year since we announced Hyde Studios, we have around 250 hotels in various stages of negotiation. Today marks another milestone for Hyde Studios as we celebrate the groundbreaking of a second property, Hyde Studios Huntsville, which is expected to open in late 2025. Our record pipeline is translating into an expanded global footprint. And in the quarter, NetRoom's growth increased 5.5%. Notable openings include Thompson Houston, Secrets Tides Punta Cana, Secrets Playa Blanca Costa Mujeres, multiple Yurko properties in China, and High Regency Nairobi Westlands, our first hotel in Kenya. We remain focused on enhancing our network effect by expanding our offerings in new markets and across more price points for our guests and customers. The first quarter demonstrates this with new lifestyle, resort, and upper mid-scale hotels added to our portfolio. Turning to transactions, we have several updates to share on asset sales. But first, I want to cover an important transaction that was completed in the quarter with an existing joint venture partner in India. The relationship with our partner dates back 40 years when they developed the first Hyde Hotel in India. And 20 years ago, We formed a 50-50 joint venture, Juniper Hotels, with this partner to develop hotels in India. Today, the Juniper portfolio is made up of six Hyatt hotels, including the iconic Grand Hyatt Mumbai and Andaz Deli, each of which also has branded residences. In February, Juniper Hotels completed an initial public offering on the BSC Limited and National Stock Exchange of India, successfully raising capital representing approximately 23% of the company. The current equity value of our stake in Juniper Hotels is close to $475 million, and we are confident the current value of our joint venture exceeds any sum of the parts analysis or historical assessments of value of our joint venture interests. One other benefit of the IPO is that Juniper Hotels paid down third-party debt, relieving Hyatt of a substantial debt repayment guarantee. In addition to creating significant shareholder value, this joint venture relationship has allowed us to enhance our strong brand reputation in India, leading to over 100 open and pipeline hotels in the country. Turning to asset sales, in addition to closing the sale of High Regency Aruba on February 9th, which we announced during our fourth quarter 2023 call, we have several updates to share. We completed three separate transactions selling Park High Zurich on April 4th, High Regency San Antonio on April 23rd, and High Regency Green Bay on May 1st for combined proceeds of $535 million at a 14.7 times multiple. We retained long-term management agreements at both Park Hyatt Zurich and High Regency San Antonio, and a long-term franchise agreement at High Regency Green Bay. In connection with the sale of Park Hyatt Zurich, we provided $45 million in seller financing. In addition to realizing great value for these assets, we will avoid approximately $40 million of capital expenditures over the next few years. Although the transactions environment has been uneven, We have once again proven our ability to transact with a variety of different buyers, and in the case of High Regency San Antonio, complete an all-cash transaction. We also signed a purchase and sale agreement for an asset that upon closing would yield cumulative gross proceeds that exceed the $2 billion asset sell-down commitment. Finally, we remain in the marketing process for another asset we previously mentioned. We have realized $1.5 billion of gross proceeds from the net disposition of real estate since our $2 billion commitment announced in August of 2021, including the three asset sales completed during the second quarter at a total multiple of 13.3 times. We remain confident that we will complete the remaining portion of our disposition commitment before the end of this year. In closing, we are pleased with our operational execution in the quarter and forward-looking indicators are positive across all customer segments. The significant progress that we have made selling owned assets increases our asset-light earnings mix, which we expect will exceed 80% on a run rate basis once we complete our $2 billion disposition commitment. We remain focused on expanding our network effects and our growth across multiple dimensions, including rooms, fees, pipeline, and loyalty membership. This is leading to strong free cash flow and increased shareholder value. Before I conclude my remarks, I want to say how proud I am that Hyatt was named one of the 100 best companies to work for by Fortune and Great Places to Work. This marks the 11th year in a row that Hyatt has received this recognition and we are honored to be one of the longest ranked hospitality companies on the list. Our purpose, to care for people so they can be their best, guides us every day and gives me confidence in our ability to deliver great results into the future and to continue to create value for our shareholders. Joan will now provide more details on our operating results. Joan, over to you.