Hilton Worldwide Holdings Inc.

Good morning and welcome to the Hilton fourth quarter and full year 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 touch-tone phone. Please note, this event is being recorded. I would now like to turn the conference over to Jill Slattery-Chapman, Senior Vice President, Investor Relations and Corporate Development. You may begin.

Thank you, Chad. Welcome to Hilton's fourth quarter and full year 2022 earnings call. Before we begin, I 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 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 first quarter 2022 10-Q. 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 and the company's outlook. Kevin Jacobs, our Chief Financial Officer and President, Global Development, will then review our fourth quarter and full year results and discuss our expectations for the year. Following their results, 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. We're happy to report a strong end of another year of continued growth. Together with our team members, owners, and communities, we've navigated through the most challenging times our industry has experienced and are deep into recovery throughout the world. During the year, we continued investing in new innovations and partnerships that meet guests' evolving needs and further strengthen our value proposition for Hilton honors members and owners. We remain committed to delivering reliable and friendly experiences to our guests, and we continue to enhance our network through our strategic and disciplined approach to development, enabling us to serve even more guests across more destinations for any stay occasion they may have. Our strategy drove strong performance for the year, with systemized red par up 42.5% versus 2021, and approximately 1% shy of 2019 levels. Both adjusted EBITDA and EPS surpassed our expectations and prior peaks, with margins of roughly 69%, up more than 300 basis points year-over-year, and more than 800 basis points over 2019 levels. Strong results and higher margins enabled us to generate the highest levels of free cash flow in our history and to return more than $1.7 billion to shareholders for the full year. Turning to results for the quarter, system-wide REVPAR grew 24.8% year-over-year and increased 7.5% compared to 2019, with performance improving sequentially versus the third quarter. We saw continued progression across all segments with leisure, business transient, and group REVPAR all exceeding 2019 levels. System-wide occupancy reached 67% up from the third quarter and just three points shy of prior peak levels. Overall rates remained robust, increasing 13% versus 2019 with all segments exceeding expectations. As expected, leisure trends remained strong throughout the quarter, with REVPAR surpassing 2019 levels by approximately 12%, modestly ahead of third quarter performance. Strong leisure transient demand continued to drive rates up in the high teens compared to 2019. Business transient REVPAR also continued to improve, with business travel up 3% versus 2019. Nearly all industries saw continued recovery compared to the prior quarter. Small and medium-sized businesses remained an important and growing part of our business travel segment, accounting for roughly 85% of our segment mix and enhancing our overall resiliency. Groups saw the biggest quarter-over-quarter improvement with RevPAR fully recovering to 2019 levels, driven by both occupancy and ADR gains. Company meetings boosted performance, improving more than seven points versus the third quarter. As we look to the year ahead, acknowledging macroeconomic uncertainty, we expect system-wide top-line growth of 4% to 8% versus 2022. We expect performance to be driven by continued growth in all segments and aided by easy first quarter comps due to Omicron, meaningful recovery across Asia, and solid growth in US urban markets as group business continues to recover. Comprising roughly 20% of our normalized mix, group is a segment with the greatest visibility. For 2023, group position is up 25% year-over-year and nearly back to 2019 levels. Even with robust forward bookings, the pipeline still remains strong with tentative bookings up more than 20% versus last year, helped by rising demand for company meetings as organizations bring their teams back together. Additionally, pricing for new bookings is up in the low double digits. and lead volumes in January were at all-time highs. Turning to the development side, we continued to deliver on our commitment to capital growth. For the full year, we added nearly a hotel a day, totaling more than 58,000 rooms, and celebrated the opening of our 7,000th hotel. Since our go-private transaction 15 years ago, we've more than doubled the size of our system. Our rooms in the U.S. are up nearly 100%, and our international portfolio is now 3.5 times larger. Additionally, we've added 10 new brands to our system, more than doubling our portfolio of brands. We achieved all of this without any acquisitions, and more than 90% of the deals in our current pipeline do not have any key money or other financial support. In the fourth quarter, we celebrated the opening of our 60,000th Home 2 Suites room. Our 150,000th Doubletree Room, our 200th hotel in Cala, and our 600th hotel in Asia Pacific, including our first Hilton Garden Inn in Japan. We also saw continued strength in construction starts throughout the year, leading to starts of more than 70,000 rooms for the full year. In the US, starts increased more than 9% versus 2021. We now have more rooms under construction than all major competitors. With a record pipeline of more than 416,000 rooms, half of which are under construction, we expect net unit growth of 5% to 5.5% for the year and remain confident in our ability to return to 6% to 7% net unit growth over the next couple of years. Our discipline development strategy continues to enhance our network effect and enables us to serve more guests across more destinations for any stay occasion. Building on this commitment, last month we launched our newest brand, Spark by Hilton, a value-driven product that delivers our signature reliable and friendly service at an accessible price. Spark provides a simple, consistent, and comfortable stay with practical amenities and unexpected touches, filling an open space in the industry by creating a new premium economy lodging option to meet the needs of even more guests and owners. Premium Economy represents a large and growing segment of travelers, totaling nearly 70 million annually in the U.S. alone, for which we have not had a tailored brand to serve. This cost-effective all-conversion brand offers a streamlined reinvestment plan focused on core guest elements and enables owners to leverage our industry-leading commercial engines and powerful network effects. To date, we have more than 200 deals in various stages of negotiation, almost all of which are conversions from third parties. Additionally, we've identified more than 100 US markets with no Hilton branded product, providing a great opportunity for the brand and the company to expand its presence. As a testament to the strength of our system and our continued success Of our customer-focused strategy, Hilton Honors surpassed 150 million members during the fourth quarter and remains the fastest-growing hotel loyalty program. Honors members accounted for approximately 64% of occupancy in the quarter, up more than 300 basis points year-over-year, and roughly in line with 2019. Additionally, we welcomed approximately 200 million guests to our properties during the year, exceeding pre-pandemic peak levels. We remain focused on ensuring Hilton has a positive impact on the communities we serve. For the sixth consecutive year, we were included on both the World and North America Dow Jones Sustainability Indices, the most prestigious ranking for corporate sustainability performance. And for the seventh consecutive year, we were ranked among the world's best places to work by Fortune and Great Place to Work. As our performance demonstrates, our team members have proven that we can handle whatever comes our way, and because of our hard work and discipline, we are incredibly well positioned for the future. We're at a pivotal moment with great opportunities ahead and a new golden age of travel, and we're more confident than ever that our team is poised to deliver in 2023 and beyond. Now, I'll turn the call over to Kevin to give a little bit more detail on the quarter and the expectations for the full year.