Hilton Worldwide Holdings Inc.

Good morning and welcome to the Hilton second quarter 2021 conference call. All participants will be in a listen only mode. Should you need assistance, you may signal a conference specialist by pressing star then zero. After today's prepared remarks, there will be a question and answer session. To ask a question, you may press star then one on your telephone keypad. You may press star then two to move yourself in the queue. Please note, this event is being recorded I would now like to turn the conference over to Jill Slattery, Senior Vice President, Investor Relations and Corporate Development. You may begin.

Thank you, Chad. Welcome to Hylton's second quarter 2021 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 are effective only as of today. We undertake no obligation to publicly update or revise these statements. For a discussion of some of the factors that could cause actual results to differ, please see the risk factor section of our most recently filed Form 10-K. 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 Nassata, our President and Chief Executive Officer, will provide an overview of the current operating environment. Kevin Jacobs, our Chief Financial Officer and President of 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. As I think our second quarter results demonstrate, we continue to make significant progress towards recovery, working hard to serve all of our stakeholders. For our guests to deliver reliable and friendly experiences in a very demanding environment, for our team members to maintain an award-winning culture by creating an inclusive, safe, and welcoming environment full of opportunities, for our owners to drive value through premium market share and efficient and effective operating models, for our communities to remain a positive force for good at a time when it is needed most, and finally, for our shareholders to maximize profits, free cash flow, and overall total returns. We're pleased to see that our diligence and determination are beginning to pay off. As much of the world reopens, the pent-up demand for travel we've been anticipating is happening. While the pace of recovery varies and COVID variants remain a risk, we are seeing significant sequential improvement in every major region. In the second quarter, system-wide RevPAR grew 234% year over year. Compared to 2019, RevPAR was down 36 percent, improving 17 percentage points versus the first quarter, with June RevPAR improving 24 percentage points versus the first quarter and down only 29 points versus 2019. Additionally, 30 percent of system-wide comparable hotels exceeded 2019 RevPAR levels in June. Adjusted EBITDA was $400 million, up 684% year-over-year. Performance was driven by strong leisure demand and rate growth. For the second quarter, U.S. leisure demand exceeded prior peak levels with rates at 90% of prior peaks. This positive momentum continued into July with system-wide NUS leisure room nights and rate exceeding 2019 levels. Business transient also increased meaningfully throughout the quarter, with June red part for the segment increasing 20 percentage points from the first quarter. We saw improving results in small and medium-sized businesses and positive momentum across larger accounts. In June, business transient room night demand was 70 percent of 2019 levels, with rate over 80 percent of 2019 levels. We continue to see progress in July with similar room night demand and rates at 90% of 2019 levels. Group performance in the quarter also improved sequentially, driven primarily by social groups given seasonally higher leisure demand. Overall group demand increased nearly 20 percentage points sequentially from the first quarter, ending June at more than half of 2019 levels. Additionally, group bookings for next year are at rates above 2019 peaks. Approximately 99% of our hotels are now open and operating, including some of our largest urban and group properties. In the last few months, we were thrilled to celebrate the reopenings of the legendary Palmer House Hilton, the Chicago Hilton, and the Hilton San Francisco Union Square. As government restrictions loosen and more people are vaccinated, we continue to see positive momentum in demand and an increasing ability to push rate. For July month to date, system-wide demand is 85% of 2019 levels, with rates equal to 2019. In the U.S., July REVPAR is roughly 85% of 2019 levels, and in China, REVPAR is now above prior peaks. With increasing transient bookings, digital traffic, and group sales leads, we are optimistic about the forward trends. Turning to development, we delivered another robust quarter of growth with net units increasing 7% year-over-year ahead of expectations due to strong openings in the U.S. and fewer overall removals. During the quarter, we added 119 hotels totaling nearly 20,000 rooms and celebrated the five-year anniversary of True with the opening of its 200th property. With nearly 270 hotels in development, True continues expanding across the U.S. and Canada, as well as moving into new markets in the Caribbean and Latin America. We were also thrilled to celebrate the highly anticipated opening of Resorts World Las Vegas last month, marking the first ground-up resort development on the Strip in over a decade. The property features three of our premium brands, Hilton, Conrad, and LXR, and adds 3,500 rooms to our portfolio. With expansive meeting and event space, 120,000-square-foot casino, 40 world-class food and beverage options, and a concert and entertainment venue with capacity for 5,000 attendees, this spectacular property raises the bar for Las Vegas and delivers on our longstanding promise to return to the Strip. Along with the recently opened Virgin Hotels Las Vegas Curio, we now have more than 30 properties totaling 11,000 rooms across 12 brands in the city. Las Vegas is also the first U.S. market to house all three of our luxury brands. Earlier this month, we debuted our premier meetings and events-focused brand, Signia by Hilton, with the opening of the Signia Orlando Bonnet Creek. The property will undergo a multi-phase transformation featuring the addition of more than 94,000 square feet of multifunctional meeting and event space designed for an elevated meeting experience. In the quarter, we also broke ground on the nearly 1,000-room Signia Atlanta, scheduled to open in 2023. Our exceptional brands and industry-leading RevPar premiums continue to drive a high-quality pipeline. In the quarter, we signed nearly 26,000 rooms, up 40% year-over-year, and increasing from our first quarter pace, given strength in the Americas and Asia-Pacific regions. We ended the quarter with approximately 401,000 rooms in development, more than half of which are under construction. We had a record number of conversion signings in the quarter, representing 40 hotels and accounting for approximately 30% of our total signings, including the Conrad Chia Laguna Sardinia, the Conrad Shanghai, which will be our largest Conrad in Asia with more than 725 rooms, and the Hotel 1000 LXR, located just steps away from Seattle's iconic Pike Place Market. Further expanding our all-inclusive and luxury portfolios, we announced the signing of three beachfront resorts in Mexico earlier this month, The Hilton Vallarta Riviera All-Inclusive Resort, the Hilton Tulum All-Inclusive Resort, and the Conrad Tulum will add more than 1,500 rooms to our existing 70 hotel portfolio in Mexico, demonstrating our commitment to continued expansion across the region and to growing our all-inclusive resort footprint. Travelers will soon be able to choose from an even wider variety of Hilton-branded all-inclusive resorts globally. We expect positive development trends to continue and remain confident in our expectations to deliver mid-single-digit net unit growth over the next several years. For 2021, we expect net unit growth in the 5% to 5.5% range above prior expectations given the pace of openings year-to-date. Delivering on guests' desire for more flexibility in their travel experience and solving a long-time travel frustration. Last month, we launched Confirm Connecting Rooms, a first in the industry. This innovative technology enables guests to easily book and instantly confirm at least two connecting rooms. As families and friends begin to reunite, reconnect, and travel again, we're excited to create a seamless travel experience from booking through stay. We continue to prioritize unique opportunities to engage our nearly 120 million honors members, driving value for them through our enhanced partnerships and points redemption offerings. In the quarter, membership grew 10% year over year. On average, our premium members are staying with us even more frequently than in 2019. For the quarter, honors members accounted for 58% of occupancy, reaching a high of 61% in May, only 2% below May of 2019. As we head into the back half of the year, we know it's critical to lead with our culture, which recently earned us the number one spot on Diversity Inc.' 's list of top 50 companies for diversity. We were also thrilled to invite all of our team members to return to our headquarters last week. The energy and excitement in the office is palpable, and we're thrilled to be back fostering a collaborative environment which allows for innovative thinking as we remain focused on our strategic priorities and the bright future ahead. With that, I'll now turn the call over to Kevin to give you more details on our results for the quarter.