Hilton Worldwide Holdings Inc.

Good morning and welcome to the Hilton first quarter 2023 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. 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 Brian Cusai, Senior Director, Investor Relations. You may begin.

Thank you, Chad. Welcome to Hilton's first quarter 2023 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. In addition, we 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 first quarter results and discuss our expectations for the year. Following their remarks, we will be happy to take your questions. With that, I'm pleased to turn the call over to Chris.

Thanks, Brian. Good morning, everyone, and thanks for joining us today. We're pleased to report that demand for travel remains strong, maintaining the trend that we saw in the back half of last year, which led to both our top and bottom line results, finishing the quarter above the high end of our guidance. As we move forward, fundamentals remain strong, and we expect secular tailwinds to continue to support growth. Despite continued macroeconomic uncertainty, we're optimistic that the power of our network effect, our industry-leading REVPAR premiums, and our fee-based capital-light business model will continue to drive strong operating performance unit growth and meaningful cash flow, enabling us to return an increasing amount of capital to shareholders. In the first quarter, Systemwide rev par grew 30% year over year and 8% compared to 2019. Rate continued to drive growth up 11% compared to 2019 and systemwide occupancy reached 68% up from the prior quarter and just two points shy of peak levels. Globally, all segments outperformed expectations and the lifting of COVID restrictions in China drove significant recovery in demand across Asia Pacific throughout the quarter. As a result, REVPAR in the month of March exceeded 2019 levels across all regions and segments for the first time since the pandemic began. Given our strong results and positive momentum, we're raising both top and bottom line guidance for the full year, which Kevin will cover in more detail in just a few minutes. Turning to the segment details, leisure trends remain strong throughout the quarter, with REVPAR surpassing 2019 by approximately 15% ahead of prior quarter performance. Strong leisure transient demand continued to drive rates up in the mid-teens above 2019, and occupancy fully recovered back to 2019 levels, driven by the surge in travel in Asia Pacific. Business transient also continued to improve, with REVPAR up 4% from 2019, reflecting the resiliency of business travel, particularly for small and medium-sized businesses, which remained roughly 85% of our segment mix. Recovery in group remains robust, with REVPAR finishing roughly in line with 2019, with steady improvement each month in the quarter and March exceeding 2019 by 5%. Demand for future bookings also remains strong with full year group position up 28% year over year and 3% versus 2019. Additionally, new group leads ended in the quarter 13% higher than 2019, an increase of six points compared to prior quarter. Looking at the full year based on the better than expected Q1 results, the accelerated demand across Asia, and continued positive momentum in group, we now expect full year system-wide top line growth between 8 and 11% versus 2022, assuming some slowdown in the back half of the year due to macroeconomic uncertainty, particularly in the U.S. Turning to development, in the first quarter, we opened 64 properties totaling over 9,000 rooms, celebrating several milestones, including the opening of our 500th hotel in China, our 100th addition to the tapestry collection, and the opening of the Canopy Toronto Yorkville, the lifestyle brand's debut in Canada. We also opened two new Embassy Suite resort properties in Virginia Beach and Aruba. with the Aruba edition marking the brand's 10th international property. And after recently being ranked the number one hotel franchise in Entrepreneur Magazine's Franchise 500 for a record-breaking 14th year in a row, Hampton by Hilton expanded its global presence to 37 countries with the brand's first property in Ecuador. While we expect to see some impact from the current financing environment, we're encouraged by the progress on the signings and starts front. We signed approximately 25,000 rooms during the quarter, growing our pipeline to a record 428,000 rooms, more than half of which are currently under construction. Signings in the quarter outpaced prior year across all regions, And conversion signings in the quarter were 24% higher than prior year, benefiting in part from the rollout of our newly launched brand, Spark by Hilton. The initial interest in Spark has been tremendous. We currently have more than 300 deals in various stages of negotiation, and our teams are working hard to deliver this exciting new premium economy conversion brand with hotels opening later this year. Hilton Garden Inn also continues to be an engine of global growth with 14 new signings across six countries in the quarter and over 60 working deals in 22 countries. Additionally, in April, we announced the signing of the Walter Pastore Jaipur, marking the debut of the brand in India and further demonstrating our commitment to expanding our world-class luxury brands across the globe. Construction starts for the quarter totaled over 19,000 rooms, up nearly 20% from prior year. And starts in the U.S., we're up more than 50% year over year. Our global under construction pipeline is up 8% compared to March 2022. And per SDR, we continue to lead the industry in total rooms under construction. Taking all this into account, we still expect to deliver net unit growth within our guidance range this year and remain confident in our ability to return to 6% to 7% net unit growth over the next couple of years. On the loyalty front, Hilton Honors grew to more than 158 million members, a 19% increase year over year, and remains the fastest growing hotel loyalty program. In the quarter, Hilton Honors members accounted for 62% of occupancy, an increase of 200 basis points year over year. Additionally, in an effort to further provide our loyal guests with an elevated wellness experience, in April, we announced the international expansion of our partnership with Peloton, bringing Peloton bikes to properties across the UK, Germany, Canada, and Puerto Rico, building on our existing partnership to make Peloton bikes available in all US hotels. As one of the world's largest hospitality companies, we recognize Hilton has a responsibility to protect the planet and to support the communities we serve to ensure our hotel destinations remain vibrant and resilient for generations of travelers to come. In early April, we published our 2022 travel with purpose report outlining our latest progress towards our 2030 environmental, social, and governance goals, including our efforts to reduce our environmental impact while creating engines of opportunity within our communities and preserving the beautiful destinations where we live, work, and travel. We remain committed to driving responsible travel and tourism globally while furthering positive environmental and social impact and sound governance across our operations and our communities. All of our success would not be possible without the dedicated efforts of our talented team, and we continue to be recognized for our remarkable workplace culture. Recently, Great Place to Work and Fortune ranked Hilton the number two workplace in the U.S., our eighth consecutive year on the list, and once again, the top-ranked hospitality company, an accomplishment I am truly proud of. Overall, despite macroeconomic uncertainty, We believe that our world-class brands, dedicated team members, and resilient business model have us incredibly well positioned for the future. Now, I'll turn the call over to Kevin for a few more details on the quarter and our expectations for the full year.