Hilton Worldwide Holdings Inc.

Hello and welcome to the Hylton third quarter 2023 earnings conference call. All participants will be in listen-only 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, you may press star then one on your telephone keypad. To withdraw from the question queue, please press star then two. Please note, this event is being recorded. I would now like to turn the conference over to Jill Chapman, Senior Vice President, Investor Relations and Corporate Development. You may begin.

Thank you, MJ. Welcome to Hylton's third 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 discussion of some of the risk 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 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. With that, I am pleased to turn the call over to Chris.

Thank you, Jill. Good morning, everyone, and thanks for joining us today. I wanted to start today by saying that our thoughts are with all of those impacted by the tragic events that are unfolding in the Middle East. Our priority remains the safety and security of our team members and guests, as well as helping in any way we can to support the relief efforts for the humanitarian crisis in the region through a number of organizations, including the International Committee for the Red Cross. Turning to results, we're pleased to report another strong quarter with system-wide REVPAR, adjusted EBITDA, and adjusted EPS all above the high end of our guidance ranges. The strength of our brands, power of our commercial engines, and resilient business model continue to drive strong top and bottom line performance. This supports meaningful free cash flow generation and greater shareholder returns. Year to date, We've returned more than $1.9 billion to shareholders, and we remain on track to return $2.4 to $2.6 billion for the full year. In the quarter, system-wide REVPAR increased 6.8% year over year, boosted by strong international performance and continued recovery in business transient and group. Demand improved across all segments and regions with system-wide occupancy for the quarter reaching our highest level post-pandemic. and only two percentage points off prior peak levels, with September just one point shy of 2019. Group REVPAR rose 8% year over year, outperforming leisure and business transient REVPAR growth of 5% each. Compared to 2019, system-wide REVPAR grew 11.4% in the quarter, with all segments accelerating sequentially versus the second quarter. Overall performance was driven by both rate and occupancy. Steady rate growth and rising demand drove leisure REVPAR up 29% versus 2019, improving roughly 300 basis points versus the second quarter. Business transient REVPAR grew 7% with both large and small accounts improving. Adjusting for holiday and calendar shifts, midweek REVPAR increased increased nearly 500 basis points versus the second quarter. On the group side, REVPAR exceeded 2019 peak levels for the first full quarter since the pandemic, and we continue to see positive group booking trends in the quarter for all future periods. Group position for 2024 is now up 18% year-over-year, and lead demand in the quarter for all future arrivals increased more than 15%. As we look to the fourth quarter, we expect continued strength in international markets along with continued improvement in business transient and group demand to drive further acceleration in rev par compared to 2019. Better than expected third quarter performance and increased expectations for the fourth quarter, partially driven by better group bookings. As a result, we now expect fuller rev par growth of 12 to 12.5%. Turning to development, we saw another quarter of robust signings with a near record 35,500 rooms signed, increasing 80% year over year. Our pipeline now stands at the highest in our history, totaling 457,000 rooms, up 4% versus the second quarter and 10% year over year. Signings in the quarter spanned our portfolio, demonstrating the benefits of a diversified industry-leading family of brands. Conversions accounted for 35% of signings increasing sequentially versus the second quarter. Overall, we remain on track to deliver the highest annual signings in our company's history, surpassing 2019 record levels by double digit percentage points. We also delivered another strong quarter of construction starts with every major region exceeding our expectations. and the U.S. in particular delivering its strongest quarter of start since Q1 2020, up 18% year over year. Roughly half of our pipeline is currently under construction, and we continue to have more rooms under construction than any other hotel company, accounting for more than 20% of industry share. In the quarter, we opened 107 hotels, totaling nearly 16,000 rooms. up 22% year-over-year and 12% versus the second quarter. We achieved several milestones in the quarter, including the opening of our 700th hotel in the Asia-Pacific region, and we celebrated our 60th anniversary in Japan. We also opened our 300th lifestyle hotel and our 50,000th lifestyle room, including the global debut of Tempo by Hilton, Designed with well-being in mind, the brand's first property is now open in the middle of Times Square, New York, as part of the TSX development. Additionally, Canopy launched in the south of France with the opening of the Canopy by Hilton Kahn, making Hilton's entry into the city and the latest addition to a growing portfolio of Canopy properties across Europe. Curio celebrated its debut in Savannah, Georgia. Tapestry increased its portfolio with the opening of the Bankers Alley Hotel in Nashville. And Motto expanded its signature flexible design and local vibe with its second hotel in New York City. During the quarter, we also celebrated the debut of our newest cost-effective conversion brand, Spark by Hilton. The grand opening of the Spark by Hilton Mystic Groton in Connecticut solidified our foray into the premium economy segment. I just visited the property last week and was blown away. I would encourage any of you that are in the area to go see it. Opening just eight months after launch, Spark is the fastest announcement to market brand in Hilton's history. With more than 400 deals in negotiation, we think... This is the start of a journey to reshape the premium economy segment while expanding our customer and our owner base. Announced just five months ago, Project H3 also continues to see tremendous demand with 350 deals in negotiation. In fact, later today, we're breaking ground on the first ever property in Kokomo, Indiana, which we expect to open in late summer 2024. Positive momentum in openings has continued into the fourth quarter with several notable openings in October, including the 540-room Hilton Cancun Mar Caribe, an all-inclusive resort. Tomorrow, we'll announce and open a 1,000-room conversion property in the northeast part of the United States. We forecast conversions will account for approximately 30% of full-year openings. For the full year, we continue to expect net unit growth of approximately 5%. We believe we have hit an inflection point and expect a meaningful uptick in openings in the fourth quarter with continued positive momentum into next year. With forecasts for our highest level of signings in the year, the largest pipeline in our history, nearing the largest under construction pipeline in our history with identified 2024 openings, and positive momentum and conversions, we are confident in our ability to accelerate net unit growth to 5.5% to 6% next year and to return to our prior 6% to 7% growth rate. In terms of fee contribution, our algorithm is alive and well, and we expect fee growth above rev par plus net unit growth going forward. Our under-construction portfolio mix of roughly 60% focused service hotels and 40% full service remains in line with our existing supply. This balanced and diversified pipeline, along with rising rev par and royalty rates, gives us confidence in our ability to continue delivering high-quality growth with increasing fees per room. We also continue strengthening our value proposition for Hilton Honors members. In the quarter, Honors membership grew 19% year over year to more than 173 million members and remains the fastest growing hotel loyalty program. Members accounted for 64% of occupancy, up more than 200 basis points year over year. Demonstrating our commitment to meeting the evolving preferences of our guests, we recently announced several new innovations. As part of our long-term commitment to digitally transform the business travel experience for millions of small and medium-sized enterprises, we will launch Hilton for Business early next year. The multifaceted program will feature a new booking website along with targeted benefits designed especially for SMEs, which account for approximately 85% of our business mix. Additionally, we will expand our events booking capabilities, enabling customers to book meetings and event spaces with or without guest room blocks directly on our website. For travelers who prioritize sustainability, we recently announced an expanded agreement with Tesla to install up to 20,000 universal wall connectors at 2,000 hotels, making our planned EV charging network the largest in the industry. We also continue to be recognized for our culture. During the quarter, we were named the top hospitality employer in Europe and in Asia by Great Place to Work. And just yesterday, we were named the number one best workplace for women in the United States for the fifth year in a row. The strong results we're reporting today would not be possible without our more than 460,000 team members who spread the light and warmth of hospitality each and every day. Overall, we're very pleased with the performance in the quarter and we remain very optimistic about the tremendous opportunities that lie ahead. With continued strong demand coupled with our record pipeline and accelerating net unit growth forecast, we're confident in our ability to further differentiate ourselves from the industry in the years ahead. Now I'll turn the call over to Kevin for a few more details on the results for the quarter and our expectations for the full year.