Hilton Worldwide Holdings Inc.

Good morning and welcome to the Hilton Third Quarter 2020 Earnings Conference Call. All participants will be in 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, please press the star then one on your telephone keypad. 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 third 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 factors that could cause actual results to differ, please see the risk factors section of our most recently filed Form 10-K, as supplemented by our 10-Q filed on August 6, 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 on 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 third 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, and good morning, everybody. We appreciate you joining us today, particularly after what might have been a very late night for many that are on the call. Our third quarter results continue to reflect the impact of COVID-19. However, I'm encouraged by the progress we've made over the last several months. Travel demand is gradually picking up around the world, and occupancy is meaningfully up from the lows we saw in April. As a result of these improvements, I'm pleased to say that we were able to welcome back most of our furloughed corporate team members last month, and we've been able to successfully navigate the first phase of reopening our corporate offices. We've reached important milestones with the vast majority of our properties around the world now open, development deals continuing to pick up, and customers starting to feel more comfortable traveling again. We remain focused on sustaining our recovery and driving better results for our owners. Turning to the quarter, REVPAR declined approximately 60% year-over-year with performance in urban. Full-service hotels remaining particularly challenged due to the lack of meetings and events. negligible international travel and local COVID protocols. System-wide occupancy increased sequentially throughout the quarter, with all major regions showing improvement. However, momentum slowed in September, with occupancy only slightly better than August levels. In the U.S., occupancy increased roughly five points month over month in both July and August, but remained largely steady in September. Over Labor Day weekend, roughly half of our properties achieved occupancy levels of 80% or higher given strong leisure demand. As expected, we saw leisure trends slow post-summer, offset by a modest uptick in business transient into the fall. Asia-Pacific led the recovery, driven largely by domestic leisure travel in China, with occupancy levels reaching nearly 70% in August. the highest since December 2019. Performance in China was further boosted by local corporate transient and domestic group. In Europe, positive summer momentum stalled in September, given a rise in coronavirus cases and tightening government restrictions, resulting in relatively stable occupancy levels of around 35% in August and September. Overall, these trends have generally continued into the fourth quarter, with fairly steady occupancy as more hotels reopen and ramp, tempered by continued uncertainty surrounding the virus. With more than 97% of our global hotels open and operating, we estimate the vast majority of those hotels are running at break-even occupancy levels or better. As we look to the balance of the year, we expect trends to remain relatively steady, resulting in fourth-quarter red-part declines generally in line with the third quarter. On the development side, activity continues to pick up. In the quarter, we signed over 17,000 rooms boosted by better-than-expected conversions, which increased approximately 50% year-over-year and accounted for roughly 20% of our total signings. Year-to-date, we command an industry-leading share of global conversion signings with more than 9,300 rooms signed, representing one in five deals. Recent notable signings included the Waldorf Astoria Monarch Beach in California and the Conrad Abu Dhabi Idiot Towers. These conversions plus new development projects like the Conrad Rabat Arzana in Morocco will further enhance our global luxury and resort footprints. In new development, we continue to see strong interest across our focus service brand with signings up roughly 32% versus the second quarter. Additionally, we recently celebrated our 500th Hampton signing in China. At quarter end, our development pipeline totaled 408,000 rooms, representing an 8% increase versus prior year. Additionally, the high quality of our pipeline with more than half of our rooms under construction gives us confidence in our ability to continue delivering solid net unit growth for several years. We opened more than 17,000 rooms in the third quarter and achieved net unit growth of 4.7%. Openings in the Americas were up more than 31% year-over-year, driven primarily by conversions. Notable openings in the quarter included the Conrad Punta de Mita in Mexico and the Hilton Beijing Tongzhu in China. Additionally, we were thrilled to open the Motto by Hilton in Washington, D.C., marking our first hotel under the motto brand. For the full year 2020, we now expect net unit growth to be 4.5% to 5% with continued positive momentum and conversions. Additionally, we look forward to celebrating our one millionth room milestone in coming weeks. Since our team came in and implemented the company's transformation, Thirteen years ago, we've doubled our size in rooms and number of brands, driven entirely by organic growth. Our commitment to delivering on our customers' evolving needs and preferences is even more important now than ever before and calls for even greater innovation and agility in the current environment. To that end, we were excited to launch workspaces by Hilton, which provides guests a clean, flexible, and distraction-free environment for productive remote working. Each of our day-use rooms includes a spacious desk, a comfortable ergonomic chair, free Wi-Fi, plus the use of all available business and leisure amenities. We also announced further enhancements to previous Hilton Honors Program modifications that will increase flexibility for our more than 110 million members, including reducing 2021 status qualifications, and extending status and points expiration. Decisive actions, relentless determination, and unwavering commitment to our core values have helped us successfully navigate what has been a challenging and uncertain environment. They have also helped position us well for recovery. We're confident that our business model... coupled with our discipline strategy, will enable us to further differentiate ourselves in the industry and emerge stronger and more efficient than ever before. With that, I'll turn the call over to Kevin for more details on the third quarter.