Hyatt Hotels Corp

Good morning and welcome to the Hyatt first quarter 2025 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, we will have a question and answer session. To ask a question at that time, please press star followed by the number one on your telephone keypad. As a reminder, this conference call is being recorded. I would now like to turn the call over to Adam Roman, Senior Vice President of Investor Relations and Global FP&A. Thank you. Please go ahead.

Thank you, and welcome to Hyatt's first quarter 2025 earnings conference call. Joining me on today's call are Mark Hoplamazian, Hyatt's President and Chief Executive Officer, and Joan Botterini, Hyatt's Chief Financial Officer. Before we start the call, 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 be materially different 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 under the financial section of our investor relations website and in this morning's earnings release. An archive of this call will be available on our website for 90 days. Additionally, we posted an investor presentation containing supplemental information on our investor relations website this morning. Please note that unless otherwise stated, references to occupancy, average daily rate, and REVPAR reflect comparable system-wide hotels on a constant currency basis. Percentage changes disclosed during the call are on a year-over-year basis unless otherwise noted. With that, I'll now turn the call over to Mark.

Thank you, Adam. Good morning, everyone, and thank you for joining us today. I'm very proud of our many accomplishments in the first quarter, including strong REVPAR and adjusted EBITDA growth, the introduction of the Hyatt Select brand, and being selected to the 100 Best Companies to Work For annual list of U.S. companies, according to Fortune and Great Places to Work, for the 12th consecutive year. While we began to experience greater macro uncertainty during the first quarter, we delivered great results because of our durable asset-light business model and Heights culture of care. Before I comment on our results, I'd like to provide a brief update on the Playa transaction. On April 28th, we extended the tender offer period until May 23rd, 2025, at which time we will evaluate if all closing conditions are met. We continue to advance discussions for the sale of Playa's real estate and expect to be in a position to enter into an agreement to sell the real estate in the near future. We will continue to provide updates on all aspects of the Playa transaction as we have additional information to share. We're also making progress to sell several of our owned properties, including one that is under a signed PSA, two that are under a letter of intent, and three hotels in a formal marketing process. We've remained under contract for the sales of Hyatt Grand Central New York and Onda's London Liverpool Street, but do not expect either of those transactions to close this year. We will continue to share additional updates as these transactions progress And consistent with the past statements, expect that we will continue to reduce our ownership of hotels. Turning to growth, we were very busy on the development front and ended the quarter with a pipeline of approximately 138,000 rooms, a 7% increase over last year. New signings replaced the rooms that opened during the quarter. And development interest in our brands remains very strong. We signed several exciting projects during the quarter, including the Park Hyatt Tower Mina in Italy, the Grand Hyatt Shualak Hills in India, and a Hyatt Centric in downtown Cincinnati, to name a few. We are encouraged by the continued deal flow that we expect will translate to greater signings and expansion of our pipeline. We achieved net rooms growth of 10.5% during the quarter. We welcome the Venetian Resort Las Vegas in January, and we are thrilled for our Roll to Fight members and group customers to experience these hotels on the Las Vegas Strip. Other notable full service openings during the quarter included Andaz Doha and High Regency Bangkok Airport. In February, we opened the first Hyde Studios Hotel in Mobile, Alabama. Hyde Studios Mobile Tillman's Corner is off to an impressive start. including strong bookings through Hyatt Direct channels and great feedback from guests and developers. We are excited about the future growth of Hyatt Studios and the momentum we are building to expand our brand presence in the upper mid-scale segment in the United States. We expect to further accelerate our upper mid-scale segment growth in the United States with the introduction of our newest brand, Hyatt Select, an upper mid-scale transient conversion brand which we announced earlier this year. The brand expands Hyatt's offerings to travelers seeking shorter stays in secondary and tertiary markets. The Hyatt Select brand is flexible for both new builds and conversions, designed to deliver attractive returns for owners, and offers an opportunity for us to expand our owner network. As you will recall during our 2023 Investor Day, we discussed the opportunity to grow our domestic brand footprint. especially in suburban, interstate, and small metro markets. And we believe Hyatt Select, along with Hyatt Studios, are the perfect brands for growth in these markets. There's strong interest in the Hyatt Select brand from owners who are looking for conversion opportunities and access to Hyatt's powerful commercial platform, especially in markets where Hyatt has significant white space for growth. We are very excited about the potential of this brand and the opportunity to provide more options for our members and guests in new markets. Now turning to operating results, this morning we reported system-wide RevPar growth of 5.7% for the quarter, which was positively impacted by the shift of Easter from the first quarter in 2024 to the second quarter in 2025. RevPar growth was strongest among our luxury brands. in line with the trends that we have seen over the last two years, as high-end consumers continue to prioritize travel. Leisure Transient RevPar was flat to last year, reflecting the shift of Easter and increased approximately 4% across our luxury brands. We also saw solid results across our all-inclusive resorts in the Americas, as net package RevPar was up over 4% compared to the first quarter of 2024. Business transient REF PAR grew 12% in the quarter, driven by our large corporate customers, and group REF PAR increased 9% in the quarter as the timing of Easter positively impacted both customer segments. Our strong brand portfolio and growth into new markets and customer segments is clearly resonating with guests, driving the success of our award-winning World of Hyatt loyalty programs. We added over 2 million members during the first quarter, ending the quarter with approximately 56 million members, a 22% increase over the past year. Multi-room night penetration grew 170 basis points compared to last year, as our members realized the benefits of our program, deepening their engagement with Hyatt and contribute to greater direct bookings. We also continue to see strong co-brand credit card spend which increased significantly compared to last year. As we look forward, we are seeing mixed indicators as it relates to future booking activity. Based on what is currently on the books and recent booking trends, we expect REF PAR growth in our international markets to outperform the United States. We're also seeing positive bookings for our all-inclusive portfolio, where PACE is up approximately 7% in the second quarter for the Americas. In the United States, group pace for full-service managed properties is up approximately 3% compared to 2024 for the last three quarters of the year. We expect group to positively contribute to REVPAR growth in the U.S. for the remainder of the year, but we do anticipate growth in the second quarter to be softer due to the timing of Easter. As we look further out, group production for 2026 and beyond increased by double digits in the quarter. driven by corporate bookings, and pace in 2026 is up over 10%. We are seeing software booking trends for near-term leisure and business transient bookings in the United States, which have been down in the high single digits versus last year over the last few weeks, with the greatest impact in our upscale brands. Our larger corporate customers are still on the road, traveling for business. And while transient remains short-term, we believe that if visibility to macroeconomic policy improves, bookings could accelerate from what we have seen over the past few weeks. These trends informed our decision to adjust our full-year outlook, which Joan will review in a few minutes. But before I turn the call over to Joan, I want to highlight the benefits of our asset-light business model in the face of macroeconomic uncertainty. Through our asset-light transformation, We have grown our room base significantly and now have over 80% of asset-light earnings compared to approximately 40% at the time of our IPO in 2009. During the 2008 financial crisis, a 1% drop in REVPAR led to a nearly 2.5% drop in adjusted EBITDA due to our higher mix of owned and leased earnings. Today, as we benefit from a greater asset-light earnings mix, we anticipate a 1% change in REVPAR would lead to an approximate 1.4% change in adjusted EBITDA using the midpoint of our earnings model, which can be referenced on page 14 of our supplemental investor deck. This sensitivity illustrates the positive benefits of our asset-light model, which is more durable and predictable through economic cycles. We have consistently invested in growth as a key part of our capital allocation strategy, which has enabled us to realize the benefits of scale. We believe our broader distribution across luxury, lifestyle, all-inclusive, and more recently, upper mid-scale segments positions us to meet our guests and customers in more places and engage them more frequently. As a result, our expanded reach and growing membership base have contributed to a pipeline that is now five times larger than it was in 2008, fueling the potential for continued fee growth well into the future. We've sharpened our customer focus reinforced our financial foundation, and significantly enhanced our organizational agility, enabling us to respond more swiftly and effectively as market dynamics evolve. Our teams closest to the customer are making more data-informed decisions, leveraging new tools that deliver tailored insights, resulting in quick, high-quality decision making. We remain committed to investing in talent, systems, and processes that strengthen our agility and ensure we continue delivering exceptional value to all stakeholders regardless of the macroeconomic backdrop. I would like to close by expressing my gratitude to all Hyde colleagues who live our purpose every day by caring for each of our stakeholders, especially in uncertain times. Joan will now provide more details on our operating results. Joan, over to you.