Hilton Worldwide Holdings Inc.

Good morning and welcome to the Hilton Second Quarter 2020 Earnings Conference Call. All participants will be in a listening mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note, this event is being recorded. I would now like to turn the conference over to Jill Slattery, Vice President, Investor Relations. Please go ahead.

Thank you, Chad. Welcome to Hilton's second quarter 2020 earnings call. Before we begin, we would like to remind you that our discussions this morning will include forward-looking statements. Actual results could differ materially from those indicated in the forward-looking statements, and forward-looking statements made today speak only to our expectations as of today. We undertake no obligation to publicly update or revise these statements. For discussion of some of the risk factors that could cause actual results to differ, please see the risk factor section of our most recently filed Form 10-K as supplemented by our 10-Q filed on May 7, 2020. In addition, we will refer to certain non-GAAP financial measures on this call. You can find reconciliations of non-GAAP to GAAP financial measures discussed in today's call in our earnings press release and on our website at ir.hilton.com. This morning, Chris Nassetta, our President and Chief Executive Officer, will provide an overview of the current operating environment. Kevin Jacobs, our Chief Financial Officer and President Global Development, will then review our second quarter results. Following their remarks, we'll be happy to take your questions. With that, I'm pleased to turn the call over to Chris.

Thank you, Jill. Good morning, everyone, and thanks for joining us today. Before we get started, I'd like to offer our sympathies to all those affected by the recent explosion in Beirut. Our thoughts are with our team members and everybody impacted by this tragic event. It goes without saying that these past several months have been challenging. While we have continued to navigate the global coronavirus pandemic and its impact on our business and the communities we serve globally, Here in the U.S., we've also witnessed tragic acts of social injustice leading to difficult but necessary discussions regarding systemic inequalities. For more than a century, our hotels have been a welcoming place for all, a place where we bring together people of all backgrounds and connect them to the light and warmth of our hospitality. Now more than ever, HILT remains committed to fostering an inclusive culture and driving positive change in our communities and society more broadly. Building on the work we have been doing, we have set even more aggressive leadership diversity targets across our corporate and hotel teams. As we announced yesterday, we're happy to welcome Chris Carr to our board of directors. Chris brings several decades of executive leadership across global consumer companies, and we look forward to his insights and diversity of thought as we focus on our near-term recovery and long-term growth opportunities. Unfortunately, the new reality of our business required us to adapt our organizational structure moving forward. During the quarter, we took additional measures to further reduce costs, including the reduction of approximately 2,100 corporate roles globally, and the extension of previously announced furloughs. These were very difficult decisions as our company's culture has always been centered on supporting our team members who deliver hospitality for our guests. Through these challenging times, I'm proud of how our team has continued to live our Hilton values, to have integrity, to deliver exceptional guest experiences, and to be leaders in our industry and in our communities. We were working hard to restore confidence to travel again and have taken a number of measures to enhance the safety of our team members and guests. In June, we launched Hilton Clean Stay in collaboration with Lysol and the Mayo Clinic to provide industry leading hygiene practices in our properties all around the world. Our new elevated standards include modifying housekeeping procedures and adjusting common areas in our hotels to support social distancing. As part of the program, we also recently launched Hilton Event Ready, which sets new standards for cleanliness and customer service for meetings and events. Additionally, we are requiring everyone inside our hotels in the U.S. to wear face coverings in all indoor public spaces. Long before COVID-19, we had invested heavily in technology to give our Hilton Honors members access to seamless and contactless experiences with our Hilton Honors app. Today, our Honors members can benefit from features like digital check-in, room selection, and the ability to message with hotel team members from their own device. Additionally, Digital Key allows for contactless check-in and check-out at the vast majority of our hotels globally. Combined with our new approaches to cleanliness, we think these are important initiatives on the road to reassuring guests of a safe experience at our hotels as travel resumes, while still delivering exceptional customer service. Turning to the quarter, as expected, the pandemic and the related decreases in global travel and tourism materially affected our second quarter results. System-wide red power declined 81 percent year-over-year, with all regions and chain scales meaningfully impacted. Approximately 20% of our system-wide properties had temporarily suspended operations at some point in the first half of the year. Today, nearly 80% of those hotels have reopened, including all of our hotels in China and the majority of our hotels in the United States. In Europe, we're seeing steady progress on reopenings as restrictions ease and demand gradually returns. Today, more than 96% of our system-wide hotels are open and operating. In terms of demand, we're seeing meaningful improvements off the lows in April, with monthly sequential increases throughout the quarter and into July. System-wide occupancy rebounded from a low of roughly 13% to approximately 45% currently, with all major regions improving. In Asia Pacific, performance is largely driven by rebounds in both leisure and business transient travel in China, where occupancy is more than 60%. In the Americas, occupancy is over 45%, boosted by increasing demand for limited service hotels and drive-to leisure markets. During the Fourth of July weekend, nearly 800 hotels in the U.S. ran over 80% occupancy. Across Europe, Middle East, and Africa, Occupancy is generally around 30%, although easing government restrictions and continued reopening should help drive further improvements there. As we look to the fall, assuming no significant disruptions to the current environment, we hope to see a continuation of the modest pickup in business transient demand, which would help offset slower leisure demand post-summer. However, we remain cautious given the uncertainty surrounding the virus and its overall impact, including the reopening of schools and offices. While we continue to adjust to new ways of interacting, one thing remains consistent, our focus on doing what is right for our guests and their evolving travel needs. For that reason, we made a number of changes very early on. We introduced and have since extended the most flexible cancellation policies in the industry, and we're among the first global hotel companies to implement rewards extensions to help honors member maintain their points and status. Through our partnership with American Express, we also enhanced our co-branded credit cards to include more ways for honors members to earn rewards during this time and provide cardholders with greater flexibility and even more points now to use for future travel. From a development perspective, activity was disrupted given the broader macro challenges, yet we were still able to add 7,000 rooms to our system and achieve 4.8 percent net unit growth versus the same period last year. Monthly openings increased sequentially throughout the quarter, and in June, openings in the Americas were nearly 15 percent higher than last year. Additionally, we continue to be encouraged by conversion opportunities which should help mitigate the impact of construction delays. For the full year, we expect net unit growth to be in the 3.5% to 4% range. It will take time for development to fully recover, but we're confident that we have the brands and the commercial engines to continue taking a disproportionate share of the global pipeline. In the quarter, we signed several notable luxury deals, including the Waldorf Astoria Tokyo, the Conrad Costa del Sol in Spain, and the Oceana in Santa Monica, which will join our LXR portfolio. On the conversion side, we saw positive momentum across our Doubletree, Curio, and Tapestry brands. As an additional testament to the strength of our development strategy, during the quarter, we signed a management license agreement with Country Garden, one of the strongest players in the Chinese property market, to exclusively develop Home 2 Suites properties in China. We expect this partnership to produce more than a thousand hotels over time and look forward to introducing a new brand and segment to the Chinese market. As one of Hilton's fastest growing and award-winning brands, we think Home2 is well positioned to capture additional growth opportunities in the extended stay mid-scale segment in China. Taking the current landscape and uncertainties into consideration, we have a clear path forward. I am very proud of what we've been able to accomplish during these difficult times, and I'm confident that we will emerge stronger. I think we have demonstrated our flexibility, resiliency, and an ability to embrace change, all while continuing to do what's best for our people and the future of our business. With that, I'm going to turn the call over to Kevin for a little bit more detail on the second quarter results.