Hilton Worldwide Holdings Inc.

Good morning and welcome to the Hilton third quarter 2022 earnings conference call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by 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 touchtone phone. 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 Hilton's third quarter 2022 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 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 and our first quarter 10-Q. In addition, we will refer to certain non-GAAP financial measures on this call. You can find reconciliations of non-gap-to-gap 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 and the company's outlook. Kevin Jacobs, our chief financial officer and president global development, will then review our third quarter results and discuss our expectations for the year. Following their remarks, we'll be happy to take your questions. And with that, I am pleased to turn the call over to Chris.

Thank you, Jill. Good morning, everyone, and thanks for joining us today. The third quarter marked a very important milestone in our continued recovery. For the first time since the pandemic began, system-wide red parts surpassed 2019 levels. Additionally, adjusted EBITDA and adjusted EPS exceeded the high end of our guidance and 2019 levels. We achieved several notable development milestones in the quarter, including reaching 100,000 rooms open across Europe and announced various strategic partnerships, further enhancing the guest experience and the strength of our global system. The quarter's strong performance, coupled with our capital light business model, enabled us to continue returning meaningful capital to shareholders. Year to date, we've returned more than $1.3 billion, and for the full year, we're on track to return between $1.5 and $1.9 billion to shareholders. Turning to the specific results in the quarter, occupancy reached more than 73%, only four points shy of 2019 levels. As expected, strong travel demand continued through the summer months, primarily driven by robust leisure trends. Post-Labor Day, demand remained strong as business transient and group demand improved significantly and leisure demand remained robust. Overall demand for the quarter peaked in September, nearly reaching 2019 levels, with business transient demand only two points off 2019 levels. ADR also continued to strengthen, improving quarter over quarter and up 11% versus 2019. Rates across all segments surpassed 2019 levels with leisure transient rates up in the high teens and both business transient and group up in the mid single digits. All of this translated into third quarter system-wide rent part growth of approximately 30% year over year. and 5% compared to 2019 levels, with each month surpassing prior peaks. Leisure Transient REBPAR continued to lead the recovery, exceeding 2019 levels by more than 11% for the quarter. Business Transient REBPAR reached 2019 levels with notable acceleration in large corporate business. Our top 20 business accounts are now just 3% shy of 2019 levels with forward bookings trending above 2019. Small and medium sized businesses remain ahead of 2019 levels. Group REVPAR reached roughly 93% of prior peak levels for the quarter with company meetings improving significantly as a percentage of mix. We expect trends to remain strong for the balance of the year with system-wide REVPAR once again surpassing 2019 levels in the fourth quarter. Leisure transient REVPAR is expected to remain meaningfully above prior peaks, driven by solid consumer confidence and a continued eagerness and ability to travel. We expect business transient REVPAR to continue to see gradual recovery. primarily driven by rising demand as companies encourage their people to get back on the road. System-wide group position for the fourth quarter is approximately 5% above 2019 levels, accelerating over the last several months largely due to a robust demand pipeline. Additionally, rates on new bookings are up in the mid to high teens versus 2019 with group mix continuing to normalize. Company meetings and convention business make up a larger percentage of forward bookings versus the same period in 2019. As we look ahead, we remain very optimistic about the future of travel. Despite near-term macro headwinds, we're not seeing any signs that fundamentals are weakening. Rising demand coupled with historically low industry supply growth should continue to drive strong pricing power. Consumers are shifting back to spending on experiences, international borders are reopening, and pent-up demand is being released across all segments. Consumers still have an estimated $2.4 trillion of excess savings accumulated during the pandemic or approximately 55% more in their checking and savings accounts than they did in 2019. Additionally, According to a recent global Hilton study, 85% of business travelers hope to travel as much or more next year and group position for 2023 is less than 10% shy of 2019 peak levels with a tentative pipeline up significantly. While the macro environment is more challenging, we are in the midst of a strong rebound with secular tailwinds that should support continued growth. Turning to development, we opened 80 properties, totaling nearly 13,000 rooms in the quarter, and achieved several important milestones, including reaching 100,000 rooms in Europe, 25,000 curio rooms globally, and 600 Hilton hotels and resorts. All of our brands continue growing at a healthy pace, given their distinct identities and compelling value propositions for both owners and guests. According to STR, our year-to-date net additions remain higher than all major branded competitors, demonstrating the power of our discipline development strategy and the strength of our industry-leading REVPAR index premiums. During the quarter, we signed approximately 20,000 rooms, bringing our pipeline to a record 416,000 rooms, half of which are under construction. Signings were boosted by strong REVPAR performance in the U.S. which drove greater owner optimism around the recovery. While macro factors tempered international signings, we were thrilled to announce nine landmark agreements to expand our luxury presence across seven countries in the Asia Pacific region, including the Conrad Singapore Orchard. We also signed agreements to grow our flagship Hilton brand in Malaysia, Waldorf in Morocco, and what will become our first system-wide Tempo property in Times Square. Construction starts outperformed expectations in the quarter largely due to better activity in the U.S. as the cost of materials stabilized and demand for residential construction declined. According to SDR, Hilton is the only major hotel company to deliver year-to-date growth in its under-construction pipeline. For the full year, we continue to expect net unit growth of approximately 5%. and we expect mid-single-digit growth for the next couple of years before returning to our historical growth rate of 6% to 7%. With even more exciting destinations to enjoy, we continue strengthening our value proposition for Hilton Honors members. In the quarter, Honors membership grew 19% year-over-year to 146 million, and members accounted for more than 61% of occupancy, up 200 basis points today. year over year and roughly in line with 2019. We also continue to invest in new innovations focused on ensuring we deliver reliable, friendly stays that meet guests' evolving needs. An overwhelming 98% of guests in a recent survey said they are prioritizing wellness activities while on the road. During the quarter, we announced an industry-first partnership with Peloton to add Peloton bikes in every fitness center across all of our 5,400 U.S. properties by year end. Our extremely talented team works tirelessly to execute on a great strategy, and we continue to be recognized for our award-winning culture. Hilton was recently named the number one best workplace for women in the U.S. and the number two on the world's best workplaces by Fortune and Great Place to Work. Our seventh consecutive year on the list, and the only hospitality company on the list. As we begin a new golden age of travel, I think we're better positioned than ever. Our brands are performing at their highest levels, we're running our highest margins in our company's history, and we're on track to generate our highest levels of free cash flow yet. Now I'll turn the call over to Kevin to give you a bit more details on the quarter and our expectations for the full year.