Q4 2023 Hyatt Hotels Corp Earnings Call

Good morning, and welcome to the highest fourth quarter and full year 2023 earnings call.

Operator: Good morning, and welcome to the Hyatt fourth quarter and full year 2023 earnings call. All participants are in a listen-only mode.

All participants are in a listen only mode.

Operator: After the speaker's remarks, we will have a question and answer session. To ask a question, you'll need to press star followed by the number one on your telephone keypad. As a reminder, this conference call is being recorded. I would now like to turn the call over to Adam Roman, Senior Vice President of Investor Relations and FP&A. Thank you.

After the Speakers' remarks, we will have a question and answer session.

To ask a question you'll need to press star followed by the number one on your telephone keypad.

As a reminder, this conference call is being recorded.

I would now like to turn the call over to Adam Roman Senior Vice President of Investor Relations and F. P. N. A thank you. Please go ahead.

Adam Roman: Thank you and welcome to Hyatt's fourth quarter and full year 2023 earnings Conference call. Joining me on today's call are Mark <unk>, Hyatt's, President and Chief Executive Officer, and John Bahraini Hyatt's, Chief Financial Officer, before we start I would like to remind everyone that our comments today will include forward.

Adam Roman: Thank you, and welcome to Hyatt's fourth quarter and full year 2023 earnings conference call. Joining me on today's call are Mark Hoplamazian, Hyatt's President and Chief Executive Officer, and Joan Bottarini, Hyatt's Chief Financial Officer. Before we start, I would like to remind everyone that our comments today will include forward-looking statements under federal securities laws. These statements are subject to numerous risks and uncertainties, as described in our annual report on Form 10-K, quarterly reports on Form 10-Q, and other SEC filings. These risks could cause our actual results to differ materially from those expressed in or implied by our comments.

Adam Roman: Looking statements under Federal Securities laws. These statements are subject to numerous risks and uncertainties as described on our annual report on Form 10-K.

Adam Roman: The reports on Form 10-Q, and other SEC filings. These.

These risks could cause our actual results to differ materially from those expressed in or implied by our comments.

Adam Roman: Forward-looking statements in the earnings release that we issued today, along with the comments on this call, are made only as of today and will not be updated as actual events unfold. In addition, you can find a reconciliation of non-GAAP financial measures referred to in today's remarks on our website at hyatt.com under the financial reporting section of our investor relations link and in this morning's earnings. An archive of this call will be available on our website for 90 days. Please note that, unless otherwise stated, references to our occupancy, average daily rate, and REVPAR reflect comparable system-wide hotels on a constant currency basis. Additionally, percentage changes disclosed during the call are on a year-over-year basis unless otherwise noted. With that, I'll now turn the call over to Mark. Thanks, Adam. Good morning, everyone.

Adam Roman: We're looking statements in the earnings release that we issued today along with the comments on this call are made only as of today. It will not be updated as actual events unfold. In addition, you can find a reconciliation of non-GAAP financial measures referred to in today's remarks on our website at Hyatt Dot com under the financial reporting section.

Adam Roman: Of our Investor Relations link and in this morning's earnings release, an archive of this call will be available on our website for 90 days. Please note that unless otherwise stated references to our occupancy average daily rate and Revpar reflect comparable system wide hotels on a constant currency basis addition.

Adam Roman: Holly percentage changes disclosed during the call are on a year over year basis, unless otherwise noted with that I'll now turn the call over to Mark.

Mark: Thanks, Adam Good morning, everyone and thank you for joining highest fourth quarter and full year 2023 earnings call.

Mark S. Hoplamazian: And thank you for joining Hyatt's fourth quarter and full year 2023 earnings call. Before we begin, I want to express our appreciation for your patience and understanding regarding the delay in our full earnings release and conference call, although we released several metrics on February 14th that highlight our strong performance. I want to note the fourth quarter marks the completion of an exceptional year, highlighted by several accomplishments, including the highest free cash flow in the company's history, a record pipeline, and the fastest-growing loyalty program in the industry. Now, let's turn to our commercial track. Demand for all customer segments remains very healthy.

Adam Roman: Before we begin I want to express our appreciation for your patience and understanding regarding the delay in our full earnings release and conference call.

Mark: While we released several metrics on February 14th that highlight our strong performance I want to note the fourth quarter marks the completion of an exceptional year highlighted by several accomplishments, including the highest free cash flow in the company's history.

Mark: Our record pipeline and the fastest growing loyalty program in the industry.

Mark: Now, let's turn to our commercial trends.

Mark: Demand for all customer segments remains very healthy.

Mark S. Hoplamazian: Research Transient Revenue increased 6% in the fourth quarter, lapping a strong quarter in 2022. As we entered high season for most resort markets in the Americas, revenue for the month of December was 21% higher than the same month in 2019. Looking at the first quarter of 2024, the leisure transient pace in the Americas for resort hotels is up 1%, reflecting lower demand in Maui due to last year's wildfires.

Mark: Leisure transient revenue increased 6% in the fourth quarter lapping a strong quarter in 2022.

Mark: As we entered high season for most resort markets in the Americas revenue for the month of December was 21% higher than the same month in 2019.

Mark: Looking at the first quarter of 2020 for leisure transient pace in the Americas for resort hotels is up 1%, reflecting lower demand in Maui due to last year's wildfires.

Mark: When considering the 2023 actual results increased 22% compared to 2019, we're pleased to see demand for leisure travel remains elevated even with the headwind from Maui.

Mark S. Hoplamazian: When considering the 2023 actual results, which increased 22% compared to 2019, we're pleased to see demand for leisure travel remains elevated, even with the headwind from Maui. Additionally, PACE for our ALG all-inclusive properties in the Americas is up 11% to the first quarter of 2023. Group room revenue experienced impressive growth during the fourth quarter, up 11% compared to 2022.

Mark: Additionally, pace for our ALG all inclusive properties in the Americas is up 11% to the first quarter of 2023.

Group room revenue.

Mark: Experienced impressive growth during the fourth quarter up 11% compared to 2022.

Mark S. Hoplamazian: The Hyatt Sales Force delivered another excellent quarter of group production, booking approximately $500 million of business for all future periods for our America's full service managed hotels. A 32% increase compared to 2022, we set a record for total group production in 2023, booking nearly $2 billion of business for all future periods, reflecting very strong demand for gatherings at our hotels. We anticipate another solid year of demand for group meetings and events, with group pace for America's full service managed properties currently up 8% compared to 2023. Finally, Business Transient Revenue continues to gain momentum, up 14% from the fourth quarter of 2022 and reaching 93% of 2019 levels on a global basis. As we've discussed previously, Business Transient has fully recovered to 2019 levels in many parts of the world, while the United States continues to improve.

Mark: The highest sales force delivered another excellent quarter of group production booking approximately $500 million of business for all future periods for our Americas full service managed hotels.

32% increase compared to 2022.

Mark: We set a record for total group production in 2023 booking nearly $2 billion of business for all future periods, reflecting very strong demand for gatherings at our hotels.

Mark: We anticipate another solid year of demand for group meetings and events with group pace for Americas full service managed properties currently up 8% compared to 2023.

Mark: Finally business transient revenue continues to gain momentum up 14% from the fourth quarter of 2022, and reaching 93% of 2019 levels on a global basis.

Mark: As we've discussed previously business transient has fully recovered to 2019 levels in many parts of the world.

Mark: While the United States continues to improve.

Mark: Looking ahead, we remain confident that business transient will continue to recover with 2020 for corporate negotiated rates in the United States up in the high single digits compared to 2023.

Mark S. Hoplamazian: Looking ahead, we remain confident that Business Transient will continue to recover in 2024, with corporate negotiated rates in the United States up in the high single digits compared to 2023. Turning to our loyalty program, World of Hyatt membership grew approximately 22% compared to 2022, reaching a new high of nearly 44 million members. We also achieved record levels of spending within our co-branded credit card portfolio in 2023. The World of Hyatt program benefits are clearly differentiated from any other program in the industry, and, most importantly, are deeply valued by our members. While many other loyalty programs have taken steps to reduce member benefits, World of Hyde is doing the opposite.

Mark: Turning to our loyalty program roll of Hyatt membership grew approximately 22% compared to 2022 reached.

Mark: Reaching a new high of nearly 44 million members.

Mark: We also achieved record levels of spending within our co branded credit card portfolio in 2023.

Mark: World of Hyatt program benefits are clearly differentiated from any other program in the industry and most importantly, our deeply valued by our members.

Mark: While many other loyalty programs have taken steps to reduce member benefits world of Hyatt is doing the opposite.

Mark S. Hoplamazian: We are redefining loyalty by adding more experiences, milestones, and opportunities for members to share benefits with loved ones through our expanded Guest of Honor Benefit. During the quarter, World of High received several accolades, including Best Website and Mobile App from J.D. Power and Best Loyalty Program and Best Hotel Elite Status from The Points Guide. The growth of our loyalty program, in turn, drives higher room-night penetration, making our brands even more attractive to owners, which allows us to grow our footprint and pipeline. Our world-class global development team had the best year in our history, signing the most rooms ever in a single year. Our record pipeline of 127,000 rooms grew 9% compared to 2022 and represents approximately 40% of our existing. The momentum around Hyde Studios, our new upper mid-scale extended stay brand, has significantly exceeded our expectations. We have approximately 200 deals in various stages of negotiation, including 17 fully executed franchise agreements as of year end. 2023.

Mark: We are redefining loyalty by adding more experiences milestones and opportunities for members to share benefits with loved ones through our expanded guest of honor benefit.

During the quarter World of Hyatt received several accolades, including the best website and mobile App from J D power and best loyalty program in Best Hotel elite status from the points Guy.

Mark: The growth of our loyalty program in turn drives higher room night penetration, making our brands, even more attractive to owners, which allows us to grow our footprint and pipeline.

Mark: Our World Class Global development team had the best year in our history, signing the most rooms ever in a single year.

A record pipeline of 127000 rooms grew 9% compared to 2022 and represents approximately 40% of our existing rooms.

Mark: Momentum around Hyatt studios, our new upper mid scale extended stay brand has significantly exceeded our expectations.

Mark: We have approximately 200 deals in various stages of negotiation, including 17 fully executed franchise agreements as of the year end 2023.

Mark S. Hoplamazian: The first Hyatt Studios hotel broke ground in November and is expected to open in early 2025. We also announced a Strategic Cooperation Agreement with the Hangzhou Trade and Tourism Group and the Dragon Group to develop more than 60 hotels in China over the coming years under our select service and independent collection brands. We added nearly 10,000 rooms to our portfolio during the fourth quarter, including the 2,500-room Rio Hotel and Casino in Las Vegas, which is undergoing a transformative renovation, and we expect it will contribute significant franchise revenue. Our inclusive collection portfolio also continues to attract new owners who benefit from our powerful operational and commercial delivery capability. For example, we converted two hotels with nearly 2,000 rooms in total in the Dominican Republic in the fourth quarter, further expanding our high-inclusive collection In China, we entered into a strategic alliance with Mumian Hotels that includes six hotels joining our brand portfolio in the fourth quarter.

Mark: The first Hyatt Studios hotel broke ground in November and is expected to open in early 2025.

Mark: We also announced a strategic cooperation agreement with the <unk> trade and tourism group and the Dragon group.

Mark: To develop more than 60 hotels in China over the coming years under our select service and independent collection brands.

Mark: We added nearly 10000 rooms to our portfolio during the fourth quarter, including the 2500 room, Rio Hotel and casino in Las Vegas, which is undergoing a transformative renovation.

Mark: And we expect it will contribute significant franchise fees.

Mark: Our inclusive collection portfolio also continues to attract new owners, who benefit from our powerful operational and commercial delivery capabilities.

Mark: For example, we converted two hotels with nearly 2000 rooms in total in the Dominican Republic and in the fourth quarter further expanding our Hyatt Coosa collection portfolio in the Americas.

In China, we entered into a strategic alliance with <unk> hotels that includes six hotels, joining our brand portfolio in the fourth quarter.

Mark: We continue to focus our attention on growth that creates greater network effect by providing our guests and customers with offerings in new markets and across more price points.

Mark S. Hoplamazian: We continue to focus our attention on growth that creates a greater network effect by providing our guests and customers with offerings in new markets and across more price points. This drives our loyalty membership and is compelling for prospective hotel developers and owners as we continue to lower our overall distribution cost. This benefits our shareholders because of our commitment to increasing fees per room and not just increasing our room count, as this is the key driver of high-quality earnings. We have several updates to share on asset sales, but first, I would like to start with the unlimited vacation club transaction that was included in the earnings release posted this morning. On February 14th, we completed a transaction to sell 80% of our Unlimited Vacation Club business to an investor unaffiliated with Hyatt for $80 million.

Mark: This drives our loyalty membership and is compelling for prospective hotel developers and owners as we continue to lower our overall distribution costs.

Mark: This benefits our shareholders because of our commitment to increasing fees per room, and not just increasing our room count as this is the key driver of high quality earnings.

Speaker Change: We have several updates to share on asset sales, but first I would like to start with the unlimited vacation club transaction that was included in the earnings release posted this morning.

Speaker Change: On February 14th we completed a transaction to sell 80% of our unlimited vacation club business to an investor unaffiliated with Hyatt for $80 million.

Mark S. Hoplamazian: We've been working on this transaction for more than six months, and we are very pleased to continue to manage UBC under a long-term management agreement. This will ensure a seamless transition for employees.

Speaker Change: We've been working on this transaction for more than six months.

Speaker Change: And we are very pleased to continue to manage UEC under a long term management agreement.

Speaker Change: This will ensure a seamless transition for colleagues UBC members and hotel owners.

Mark S. Hoplamazian: UBC members and hotel owners. Going forward, we will receive management and royalty in relation to the exclusive arrangement between Hyatt Inclusive Collection brands and UBC. We expect management and royalty fees to exceed $60 million for the remainder of 2024. We are very pleased with the outcome of this transaction, as our new joint venture partner shares our commitment to the growth of UVC. Additionally, the transaction simplifies our external reporting and generates what we expect will be a growing level of fees going forward. Turning to asset sales, we closed the sale of Hyatt Regency Aruba on February 9th for gross proceeds of $240 million while retaining a long-term management agreement.

Speaker Change: Going forward, we will receive management and royalty fees in relation to the exclusive arrangement between Hyatt inclusive collection brands and UBC.

Speaker Change: We expect management and royalty fees to exceed $60 million for the remainder of 2024.

Speaker Change: We are very pleased with the outcome of this transaction as our new joint venture partner shares our commitment to the growth of UBC.

Speaker Change: Additionally, the transaction simplifies our external reporting and generates what we expect will be a growing level of fees going forward.

Turning to asset sales, we closed the sale of Hyatt Regency Aruba on February nine for gross proceeds of $240 million, while retaining a long term management agreement.

Mark S. Hoplamazian: In connection with the transaction, we provided $41 million of seller financing. As of today, we've realized $961 million of gross proceeds from the net disposition of real estate, inclusive of Hyatt Regency Aruba, at a total blended multiple of 13 times. We've made meaningful progress towards our $2 billion disposition commitment and have five asset sales to update you on. We signed definitive purchase and sale agreements for two assets that aggregate to approximately $310 million of expected gross proceeds.

Speaker Change: In connection with the transaction, we provided $41 million of seller financing.

Speaker Change: As of today, we have realized $961 million of gross proceeds from the net disposition of real estate inclusive of Hyatt Regency Aruba.

Speaker Change: On a total blended multiple of 13 times.

Speaker Change: We've made meaningful progress towards our $2 billion of disposition commitment and have five asset sales to update you on.

Speaker Change: We signed definitive purchase and sale agreements for two assets that aggregate to approximately $310 million of expected gross proceeds.

Mark S. Hoplamazian: We expect to close both transactions by the middle of the year. We expect to select a buyer in the coming months for the asset that we noted was being marketed for sale during our last earnings call. And finally, we are also engaged in off-market discussions for the sale of two other assets. We expect to generate total proceeds that exceed $2 billion before the end of this year if we complete each of the five asset sales combined with the already realized $961 million of pros-pros sales. We are confident we will achieve our disposition commitment at attractive valuations while securing durable long-term management and franchise agreements. In closing, beyond achieving another year of record results, I would like to highlight the consistent and successful execution of our strategy since we began our asset light evolution six years ago. We have made irrefutable progress toward our strategic vision and earnings evolution, underscored by three important facts. First,

Speaker Change: We expect to close both transactions by the middle of the year.

Speaker Change: We expect to select a buyer in the coming weeks for the asset that we noted was being marketed for sale during our last earnings call.

Speaker Change: And finally, we are also engaged in off market discussions for the sale of two other assets we expect.

Speaker Change: To generate total proceeds that exceed $2 billion before the end of this year. If we complete each of the five asset sales combined with the already realized $961 million of gross proceeds.

Speaker Change: We are confident we will achieve our disposition commitment at attractive valuations, while securing durable long term management and franchise agreements.

Speaker Change: In closing beyond achieving another year of record results I would like to highlight the consistent and successful execution of our strategy. Since we began our asset light evolution six years ago.

We have made irrefutable progress toward our strategic vision and earnings evolution underscored by three important proof points.

Speaker Change: First.

Mark S. Hoplamazian: Our asset-led earnings mix increased to 76% for the full year of 2023, from 47% in 2017. And we are on the path to reaching a run rate of approximately 85%. Over the past six years, we've realized significant proceeds from the sale of our own hotels and reinvested these proceeds in strategic asset light acquisitions. The earnings contribution in 2023 from our acquisitions was nearly double the earnings lost from our asset disposition, while also reducing the run rate of our capital expenditures. Second, we are outpacing the industry in a meaningful way, growing our system-wide rooms, fee revenue, pipeline, and loyalty program membership at faster rates than our largest hotel competitors. We've achieved a much greater size, but not just for the sake of size.

Speaker Change: Our asset light earnings mix increased to 76% for the full year in 2023 from 47% in 2017.

Speaker Change: And we are on path to reaching a run rate of approximately 85%.

Speaker Change: Over the past six years, we've realized significant proceeds from the sale of our owned hotels and reinvest these proceeds in strategic asset light acquisitions.

Speaker Change: The earnings contribution in 2023 from our acquisitions with nearly double the earnings loss from our asset dispositions.

Speaker Change: I'll also reducing the run rate of our capital expenditures.

Second we are outpacing the industry in a meaningful way growing our system wide rooms fee revenue pipeline and loyalty program membership at faster rates than our largest hotel competitors.

We've achieved much greater size, but not just for the sake of size.

Mark S. Hoplamazian: By growing with intent, we've enhanced the quality of our portfolio, expanded our brand presence in many new markets, and increased our average fees per room. The number of World of Hyatt loyalty members per hotel is 30% higher than our larger hotel competitors because we have deepened the loyalty amongst our existing members while also attracting new members. While net room growth may grab headlines, leading the industry in growth for seven straight years while growing fees per room is what differentiates Hyatt and creates value for shareholders. We don't need to be the biggest in the industry to be the best because we have, and we will continue to play the game differently. Third,

Speaker Change: By growing with intent, we've enhanced the quality of our portfolio expanded our brand presence in many new markets and increased our average fees per room.

Speaker Change: The number of world of Hyatt loyalty members per hotel.

Speaker Change: 30% higher than our larger hotel competitors, because we have deepened the loyalty amongst our existing members while also attracting new members.

Net rooms growth may grab headlines.

Speaker Change: Leading the industry in growth for seven straight years, while growing fees per room.

Speaker Change: Is what differentiates hyatt and creates value for shareholders.

We don't need to be the biggest in the industry to be the best because we have and we will continue to play the game differently.

Third free.

Mark S. Hoplamazian: Free cash flow has more than doubled from $289 million in 2017 to $602 million in 2023 because we are a fundamentally different company. We've delivered on the commitment that we made six years ago to evolve our earnings profile and unlock value for shareholders. Our capital allocation framework has led to exceptional returns on our investments while maintaining our investment grade profile and returning two and a half billion dollars of capital to shareholders.

Speaker Change: Free cash flow has more than doubled from $289 million in 2000 $17 million to $602 million in 2023, because we are a fundamentally different company.

Speaker Change: We've delivered on the commitment.

Speaker Change: That we made six years ago to evolve our earnings profile and unlock value for shareholders.

Speaker Change: Our capital allocation framework has led to exceptional returns on our investments while maintaining our investment grade profile.

Speaker Change: And returning $2 5 billion of capital to shareholders.

Speaker Change: We are progressing ahead of the timeline that we laid out during our Investor day last year.

Mark S. Hoplamazian: We are progressing ahead of the timeline that we laid out during our investor day last year, and I'm excited about the year ahead. The combination of greater asset-laid earnings, growth across multiple dimensions, and significantly higher free cash flow is proof. That our earnings evolution has been nothing short of remarkable. All stakeholders benefit from a much larger Hyatt that generates greater asset-light earnings and free cash flow. To all members of the Hyatt family, I want to extend my gratitude for your remarkable contributions this past year. The record milestones achieved in 2023 are a testament to your unwavering commitment and dedication to the execution of our strategy. I am truly honored to be a member of the Hyatt family, guided by our purpose to care for people so they can be their best. Joan will now provide more details on our operating results. Joan, it's over to you.

And I am excited about the year ahead.

Speaker Change: The combination of greater asset late earnings growth across multiple dimensions and significantly higher free cash flow is proof.

Speaker Change: But our earnings evolution has been nothing short of remarkable.

Speaker Change: All stakeholders benefit from a much larger hyatt that generates greater asset light earnings and free cash flow.

Speaker Change: To all members of the Hyatt family I want to extend my gratitude for your remarkable contributions this past year.

Speaker Change: The record milestones achieved in 2023 are a testament to your unwavering commitment and dedication to the execution of our strategy.

Speaker Change: I am truly honored to be a member of the Hyatt family guided by our purpose to care for people. So they can be their best.

Speaker Change: John will now provide more details on our operating results John over to you.

Joan Bottarini: Thanks, Mark. For the fourth quarter, Hyatt reported net income of $26 million and diluted earnings per share of $0.25. Adjusted EBITDA was $241 million, and net deferrals plus net finance contracts totaled $33 million. Including the impact of travel credits recorded in 2022, earnings were up 9% this quarter. We achieved a record level of total management, franchise, license, and other fees, up 14% in the quarter compared to the fourth quarter of 2022 and up an impressive 22% for the full year compared to 2022. This record-breaking performance is a direct result of the continued success of our asset light transformation. Our legacy Hyatt management and franchise business once again had another strong quarter of growth. We had adjusted EBITDA of $220 million and significant overall growth in fees, up 39% compared to 2019 in constant currency, highlighting the recovery in travel demand. Compared to the fourth quarter of 2022, Legacy Hyatt base fees and incentive fees both increased by 13%. Additionally, Legacy Hyatt franchise fees for this quarter increased by 17% compared to 2022.

John Bahraini: Thanks, Mark for the fourth quarter Hyatt reported net income of $26 million and diluted earnings per share at 25.

John Bahraini: Adjusted EBITDA was $241 million and net deferrals, plus net finance contracts totaled $33 million.

John Bahraini: Excluding the impact of travel credits recorded in 2022 earnings were up 9% this quarter.

John Bahraini: We achieved a record level of total management and franchise license and other fees up.

Up 14% in the quarter compared to the fourth quarter of 2022.

John Bahraini: And up an impressive 22% for the full year compared to 2022.

John Bahraini: This record breaking performance is a direct result of the continued success of our asset light transformation.

John Bahraini: Yes.

John Bahraini: Our legacy Hyatt management and franchise business. Once again had another strong quarter of growth, we had adjusted EBITDA of $220 million and significant overall growth in Ts up 39% compared to 2019 and constant currency highlighting the recovery in travel demand.

Compared to the fourth quarter of 2022 legacy higher base fees and incentive fees, both increased by 13%. Additionally, legacy Hyatt franchise fees this quarter increased by 17% compared to 2022.

John Bahraini: Our growth across all fee revenue streams reinforces the breadth and depth of our successful growth strategy and the quality of our asset light earnings.

Joan Bottarini: Our growth across all fee revenue streams reinforces the breadth and depth of our successful growth strategy and the quality of our asset line. Results around the world were strong, led by the Asia-Pacific region, which contributed $48 million in fees, up 51% year over year. Greater China Rev Par was up 84% from last year and up 10% from 2019. In the Americas region, fees increased 6%, with RevPAR in the United States growing 3% in the quarter, driven by strong group rates. Fees in the EMEA region declined 3% compared to 2022 due to difficult comparisons in the Middle East due to the 2022 FIFA World Cup in Doha.

John Bahraini: Results around the World were strong led by the Asia Pacific region that contributed $48 million in fees up 51% year over year.

John Bahraini: China Revpar was up 84% from last year and up 10% from 2019.

John Bahraini: In the Americas region fees increased 6% with Revpar in the United States growing 3% in the quarter driven by strong growth rate.

John Bahraini: In the EMEA region declined 3% compared to 2022 due to difficult comparisons in the middle East from the 2022 FIFA World Cup in Doha.

John Bahraini: Revpar in Europe increased 9% due to the strength group and business transient demand.

John Bahraini: Moving to our owned and leased segment adjusted for the net impact of transactions adjusted EBITDA in the fourth quarter was up 3% compared to the fourth quarter of 2022 and increased 15% compared to the fourth quarter of 2019.

Joan Bottarini: RevPAR in Europe increased 9% due to the strength of group and business transient demand. Moving to our owned and leased segment, adjusted for the net impact of transactions, adjusted EBITDA in the fourth quarter was up 3% compared to the fourth quarter of 2022 and increased 15% compared to the fourth quarter of 2019. Although improved group revenue and sustained transient demand contributed to 5.9% REVPAR growth in the fourth quarter of 2022, owned and leased margins in the fourth quarter remained at elevated levels compared to 2019, up 240 basis points due to a combination of higher rate growth and productivity gains. For the full year, these margins expanded by 310 basis points compared to 2019, exceeding the high end of our previously disclosed expectations.

John Bahraini: Improved group revenue and sustained transient demand contributed to five 9% revpar growth over the fourth quarter of 2022.

Owned and leased margins in the fourth quarter remained at elevated level to 2019.

John Bahraini: Up 240 basis points due to a combination of higher rate growth and productivity gains for the full year. These margins expanded by 310 basis points compared to 2019 exceeding the high end of our previously disclosed expectations.

John Bahraini: Looking ahead to 2024, we expect comparable owned and leased margins will deliver moderate expansion over 2023 for the full year, allowing us to maintain a higher run rate margin compared to pre pandemic levels.

John Bahraini: Turning to ALG, adjusted EBITDA was $21 million and net deferrals, plus net finance contracts totaled $33 million in the fourth quarter.

John Bahraini: <unk> segment, adjusted EBITDA results increased 33% compared to the fourth quarter of 2022, when adjusted for one time travel credits totaling $23 million in the fourth quarter of 2022 that did not repeat in 2023.

Joan Bottarini: Looking ahead to 2024, we expect comparable owned and leased margins to deliver moderate expansion over 2023 for the full year, allowing us to maintain a higher run rate margin compared to pre-pandemic levels. Turning to ALG, adjusted EBITDA was $21 million, and net deferrals plus net finance contracts totaled $33 million in the fourth quarter. ALG segment adjusted EBITDA results increased 33 percent compared to the fourth quarter of 2022 when adjusted for one-time travel credits totaling 23 million dollars in the fourth quarter of 2022 that did not repeat in 2023 and a five million dollar impact due to a stronger Mexican peso. Comparable net package REVPAR for ALG properties increased 9.2% in the fourth quarter and increased 13.6% for the full year of 2023 compared to the same periods in

And a $5 million impact due to a stronger Mexican peso.

John Bahraini: Comparable net package Revpar for ALG properties increased nine 2% in the fourth quarter and increased 13, 6% because of full year of 2023 compared to the same periods in 2022.

John Bahraini: The fourth quarter benefited from improved results in Kern County, with comparable net package revpar, increasing approximately 10% compared to the same period in 2022.

John Bahraini: ALC continues to deliver exceptional results during the second full year post acquisition, resulting in an effective purchase multiple of seven five times.

Speaker Change: Before I move on to our liquidity and outlook I wanted to share the reason behind the delay of our earnings release and conference call.

Speaker Change: We simply needed additional time to complete our year end procedures around UBC deferred costs and net deferrals.

Speaker Change: Those procedures are now complete and we expect to file our 10-K this afternoon.

Speaker Change: Our year end procedures were unrelated to the UEC transaction that Mark mentioned earlier.

Speaker Change: Now moving to liquidity as of December 31, 2023, our total liquidity remains strong at $2 4 billion, including approximately one $5 billion in borrowing capacity on our revolving credit facility.

Joan Bottarini: The fourth quarter benefited from improved results in Cancun, with comparable net package REVPAR increasing approximately 10 percent compared to the same period in 2020. ALG continued to deliver exceptional results during the second full year post-acquisition, resulting in an effective purchase multiple of 7.5 times. Before I move on to our liquidity and outlook, I want to share the reason behind the delay in our earnings release and conference call. We simply needed additional time to complete our year-end procedures around UVC deferred costs and net deferrals. Those procedures are now complete, and we expect to file our 10-K this afternoon. Our year-end procedures were unrelated to the UBC transaction that Mark mentioned earlier.

Speaker Change: At the end of the quarter, we reported approximately $3 billion of debt outstanding.

Speaker Change: For the full year of 2023, we returned approximately $500 million to shareholders inclusive of dividends and share repurchases.

Speaker Change: From January one through February 15th we've repurchased shares of class a common stock for approximately $30 million as of February 16th we had approximately $1 $1 billion remaining under our share repurchase authorization.

We remain committed to our investment grade profile and our balance sheet is strong.

Speaker Change: Before turning to our outlook I'd like to call attention to the announcement. This morning regarding our reportable segment realignment changes detailed on page four of our earnings release.

Speaker Change: As a result of this realignment, we will have three reportable segments manner.

Speaker Change: Management and franchising.

Joan Bottarini: Now, moving to liquidity. As of December 31st, 2023, our total liquidity remained strong at $2.4 billion, including approximately $1.5 billion in borrowing capacity on our revolving credit facility. At the end of the quarter, we reported approximately $3 billion of debt outstanding.

Speaker Change: Owned and leased and distribution.

Speaker Change: <unk> with our first quarter 2024 results in May.

Speaker Change: As part of the UEC transaction mentioned earlier, we will recognize UEC management in royalty fees, and our management and franchising segment and we will no longer report net deferrals, our net finance contracts.

Speaker Change: In connection with the realignment, we will now report the results of Mr and Mrs. Smith, and the distribution segment and commission fees and SG&A will now be reported within distribution revenues and distribution expenses.

Joan Bottarini: For the full year of 2023, we returned approximately $500 million to shareholders, inclusive of dividends and share repurchase. From January 1st through February 15th, we repurchased shares of Class A common stock for approximately $30 million. As of February 15th, we had approximately $1.1 billion remaining under our share repurchase authorization.

Speaker Change: We intend to publish historical financial information that reflects our new segment structure, along with our revised growth model before our first quarter earnings call. We.

Speaker Change: We will also host a public webcast to address any questions that you may have.

Speaker Change: Now I'd like to discuss our full year 2020 for outlook.

Joan Bottarini: We remain committed to our investment grade profile, and our balance sheet is strong. Before turning to our outlook, I'd like to call attention to the announcement this morning regarding our reportable segment realignment changes, detailed on page 4 of our earnings release. As a result of this realignment, we will have three reportable segments.

Speaker Change: The full details can be found on page four of our earnings release and I would also like to direct you to schedule a 'twenty two in our earnings release, which provides a bridge from 2023 full year reported actual results two illustrative 2023 result.

Speaker Change: That adjust for the sale of Hyatt Regency Aruba <unk>.

Speaker Change: The UPC transaction and the change to Mr and Mrs. Smith revenue and expenses that I just mentioned.

Joan Bottarini: Management and Franchising, owned and leased, and distribution, starting with our first quarter 2024 results in May. As part of the UVC transaction mentioned earlier, we will recognize UVC management and royalty fees in our management and franchising segment, and we will no longer report net deferrals or net financed contracts. In connection with the realignment, we will now report the results of Mr. and Mrs. Smith in the distribution segment, and commission fees and SG&A will now be reported within distribution revenues and distribution expenses. We intend to publish historical financial information that reflects our new segment structure along with a revised growth model before our first quarter earnings call. We will also host a public webcast to address any questions that you may have.

Speaker Change: We believe this schedule simplifies comparisons between our 2020 for outlook in 2023 historical results.

Speaker Change: We expect full year global system wide revpar growth between three and 5% compared to 2023 and formed by our visibility into group bookings and our confidence that business transient will continue to recover while leisure transient demand levels sustain.

Speaker Change: We anticipate higher revpar growth from international markets, notably greater China with the U S near the lower end of our global outlook range.

Speaker Change: We expect net rooms growth between five 5% and 6% and we are confident that we will see another healthy year of portfolio growth driven by both organic growth and conversions.

Speaker Change: We have added management franchise license and other fees to our 2024 outlook, which are expected in the range of one one to one $1 3 billion.

Speaker Change: Adjusted SG&A is expected to be in the range of $425 billion to $435 billion, excluding integration costs.

Joan Bottarini: Now I'd like to discuss our full year 2024 outlook. Full details can be found on page 4 of our earnings release, and I would also like to direct you to schedule A22 in our earnings release, which provides a bridge from 2023 full-year reported actual results to illustrative 2023 results that adjust for the sale of Hyatt Regency Aruba. The UBC transaction and the change to Mr. and Mrs. Smith's revenue and expenses that I just mentioned. We believe this schedule simplifies comparisons between our 2024 outlook and 2023 historical results. We expect full-year global system-wide REVPAR growth between 3% and 5% compared to 2023, informed by our visibility into group bookings and our confidence that business transient will continue to recover while leisure transient demand levels sustain. We anticipate higher REVPAR growth from international markets, notably greater China, with the U.S. near the lower end of our global outlook range.

Speaker Change: Adjusted EBITDA is expected to be in the range of $1 170, 521 225 billion.

Speaker Change: When considering the illustrative 2023 historical results outlined on schedule 822, our growth model is intact for all elements of our business, except for ALG vacations as we are lapping a record first quarter due to unusually high demand in 2023, we expect ALG vacation profits to decline.

Approximately $20 million compared to 2023.

Speaker Change: All in the first quarter.

Speaker Change: And this has been incorporated into our full year outlook.

For the full year 2024, we expect free cash flow in the range of $6 $25 million to $675 million and capital returns to shareholders, including share repurchases and dividends between $550 million to $600 million.

Speaker Change: The five asset sales that Mark mentioned are not contemplated in our full year outlook and we will update our outlook as additional asset sale transactions close.

I'll conclude my prepared remarks by saying, we're very pleased with our fourth quarter results, which we believe demonstrates our unique positioning and differentiated model. Our teams have delivered exceptional results. This past year and we're all looking forward to an exciting year ahead as we continue executing our strategic vision.

Joan Bottarini: We expect NetRooms growth between 5.5% and 6%, and we are confident that we will see another healthy year of portfolio growth, driven by both organic growth and conversion. We have added management, franchise, license, and other fees to our 2024 outlook, which are expected in the range of $1.1 to $1.13 billion. Adjusted SG&A is expected to be in the range of $425 to $435 billion, excluding integration costs.

Speaker Change: Thank you and with that I'll turn it back to our operator for Q&A.

Speaker Change: Thank you as a reminder to ask a question. Please press star followed by the number one on your telephone keypad.

Speaker Change: Interest of time, we ask that you please limit yourself to asking one question and one follow up thank you.

Speaker Change: Our first question comes from Richard Clarke from Bernstein. Please go ahead. Your line is open.

Richard J. Clarke: Hi, Good morning, Thanks for taking my questions just wanted to start on the UBC disposal, just wondering whether you could tell us how much free cash flow you VC generated in 2023.

Richard J. Clarke: How much.

Richard J. Clarke: It's expected to generate under the new structure, and then maybe how that kind of gets us to the 100 million valuation I guess on EBITDA. It looks like it's only two and a half times EBITDA for why you were happy with that valuation of UBC.

Joan Bottarini: Adjusted EBITDA is expected to be in the range of $1.175 to $1.225 billion. When considering the illustrative 2023 historical results outlined on Schedule A-22, our growth model is intact for all elements of our business except for ALG vacations, as we are lapping a record first quarter due to unusually high demand in 2023. We expect ALG vacation profits to decline approximately $20 million compared to 2023, all in the first quarter, and this has been incorporated into our full year outlook.

Speaker Change: Thank you Richard.

First of all.

Speaker Change: I think the key elements of the transaction and begin with our JV.

And the structure of the JV, we have a JV partner and we who are both focused on and committed to and benefit from that.

Speaker Change: The growth in the UBC program and so we have a great deal of alignment with.

Speaker Change: Our new partner.

Speaker Change: Secondly, we have received upfront proceeds as you noted.

Speaker Change: Third there is an ongoing fee stream driven by net contract.

Speaker Change: Net cash contract revenue.

Speaker Change: Management fees and royalty fees.

Speaker Change: Which.

Joan Bottarini: For the full year 2024, we expect free cash flow in the range of $625 to $675 million and capital returns to shareholders, including share repurchases and dividends, between $550 to $600 million. The five asset sales that Mark mentioned are not contemplated in our full year outlook, and we will update our outlook as additional asset sale transactions close. I'll conclude my prepared remarks by saying we're very pleased with our fourth quarter results, which we believe demonstrate our unique positioning and differentiated model. Our teams have delivered exceptional results this past year, and we're all looking forward to an exciting year ahead as we continue executing our strategic vision. Thank you, and with that, I'll turn it back to our operator for Q&A. Thank you. As a reminder to ask a question, please press star followed by the number one on your telephone keypad.

Speaker Change: By way of reminder, in our Investor day, we laid out.

Speaker Change: The extraordinarily high correlation is over 99% correlation between the growth in the program and net rooms growth for our <unk> hotels are all inclusive hotels.

Speaker Change: And we've been growing and expect to continue to grow in the low double digits per annum.

Speaker Change: And so that gives you a sense for I think our outlook for how the fee stream might grow over time.

Speaker Change: Finally, it simplifies our reporting with increased clarity and focus on fees cash fees actually received by Hyatt.

Speaker Change: In terms of cash flow generally speaking.

Speaker Change: Key elements of the UPC business.

Speaker Change: Include three.

Speaker Change: Key drivers one is adjusted EBITDA, which tends to be either modest or negative.

The <unk>.

Speaker Change: Deferred net deferrals and net finance contracts, the net finance contracts.

Speaker Change: It reflects changes in debt finance contracts, which is not cash and the net deferrals represent cash. So if you go back and take a look at it schedule a two.

Operator: In the interest of time, we ask that you please limit yourself to asking one question and one follow-up. Thank you. Our first question comes from Richard Clarke from Bernstein. Please go ahead.

Speaker Change: We're 83 I can't remember I think it's a too.

On the on the earnings release, you will be able to decipher that for yourself in 2023.

Speaker Change: Yeah.

Richard J. Clarke: Your line is open. Good morning. Thanks for taking my question. I just want to start on UVC disposal. Just wondering whether you could tell us how much free cash flow UVC generated in 2023 and how much it's expected to generate under the new structure and then maybe how that kind of gets us to the 100 million valuation. I guess on EBITDA, it looks like it's only two and a half times EBITDA. So while you are happy with that valuation of UVC, thank you, Richard.

Speaker Change: Was there a second part of your question that I missed.

Speaker Change: I guess, just I guess the only other parts of it was really like how on the basis of that $80 million. So the 800 million Oh, I'm, sorry to that being the right.

Speaker Change: Yes, so I think the simplest way for me to help you is firstly, we did receive upfront proceeds. In addition to that we have ongoing an ongoing fee stream I noted what our expectation is for the remainder of the year this year.

Speaker Change: And these are.

Speaker Change: These are fees that are all cash.

Speaker Change: Our in like fashion and manner to the other fees that were reported as a company.

Speaker Change: And I I don't know what the.

Current.

Mark S. Hoplamazian: First of all, I think the key elements of the transaction begin with our JV and the structure of the JV. We have a JV partner and we who are both focused on and committed to and benefit from the growth in the UVC program. And so we have a great deal of alignment with our new partner.

Speaker Change: If we look at those those sell side analysts who cover Hyatt and apply the multiples that they have applied in the past to our fees I think you end up somewhere in the mid teens range.

Speaker Change: You can do the math yourself in terms of how we thought about the value received are retained.

Speaker Change: Through the transaction.

Speaker Change: Okay, Okay, and maybe if I could just ask a quick follow up.

Speaker Change: You're working with.

Mark S. Hoplamazian: Secondly, we have received upfront proceeds, as you noted. Third, there's an ongoing fee stream driven by net contract revenue, both management fees and royalty fees, which, by way of reminder, on our investor day, we laid out... The extraordinarily high correlation, it's over 99% correlation between the growth in the program and NetRooms growth for our HIC hotels, our all-inclusive hotels.

Speaker Change: As UBC getting merged into a big loyalty program or an entity in the JV. The client will somehow benefit from <unk>, saying exactly the same but now just kind of sitting off your books.

Speaker Change: It's the latter.

Speaker Change: Okay alright, thank you.

Speaker Change: Our next.

Speaker Change: Comes from Joe Greff from Jpmorgan. Please go ahead your line is open.

Joseph Greff: Good morning, guys.

Joseph Greff: I think I can piece together, but.

Joseph Greff: I'm not sure. If you actually said it is explicitly is how I'm going to ask it but can you talk about the motivation and the strategic rationale.

For selling.

Mark S. Hoplamazian: And we've been growing and expect to continue to grow in the low double digits per annum. And so that gives you a sense for, I think, our outlook for how the fee stream might grow over time. Finally, it simplifies our reporting with increased clarity and focus on fees, cash fees actually received by Hyatt.

Joseph Greff: A majority interest in EDC and IC. The subsequent benefits from it that you talked about obviously, we agree the market agrees today, obviously, but.

Speaker Change: But that would be helpful to kind of just hear that from you.

Speaker Change: I think first and foremost.

Speaker Change: We thank you for the question Joe.

Speaker Change: We wanted to we have tried.

Mark S. Hoplamazian: In terms of cash flow, generally speaking, the elements of the UBC business include three key drivers. One is adjusted EBITDA, which tends to be either modest or negative; the other is deferred net deferrals and net finance contracts. And the net finance contract reflects changes in net finance contracts, which is not cash. And then net deferrals represent cash. So if you go back and take a look at Schedule A2 or A3, I can't remember, I think it's A2, on the earnings release, you'll be able to decipher that for yourself in 2023. Was there a second part of your question that I missed?

Speaker Change: Tremendously.

<unk> achieved a lot in helping to explain the mechanics of the business and.

Speaker Change: And how you can think about the value of the business.

Speaker Change: I think what's missed in the conversation constantly is the is the integration and the vertical integration of our model versus how other companies are operating all inclusive resorts or resorts period.

Speaker Change: It is an integrated model and that's why a long term management arrangement, where we continue to manage the platform.

Speaker Change: And where it is exclusive to our <unk>.

Speaker Change: All inclusive brands are key elements.

Mark S. Hoplamazian: No, I guess just, I guess the only other part to it was really like how, on the basis of that, you know, $80 million for the 80% stake or $100 million. Oh, I see. I'm sorry.

Speaker Change: Of.

Speaker Change: The structure of the deal with that being able to secure that.

Speaker Change: And being able to render the actual cash generated for Hyatt every year in a very simplified way through fees. We believe has the benefit of simplifying this tremendously and really eliminating any potential confusions no matter how much progress I think we made with a lot of people and understanding.

Mark S. Hoplamazian: How did you get to that being the right value for this business? Yeah, so I think the simplest way for me to help you is, first, we did receive upfront proceeds. In addition to that, we have an ongoing fee stream. I noted what our expectation is for the remainder of the year this year, and these are fees that are cash and are in like fashion and manner to the other fees that we report as a company. And I don't know what the current, but if we look at those sell-side analysts who cover Hyatt and apply the multiples that they have applied in the past to our fees, I think you end up somewhere in the mid-teens range. You can do the math yourself in terms of how we think about the value received or retained through the transaction. Okay, okay.

Speaker Change: Got it.

Speaker Change: There really <unk>.

Speaker Change: It remained.

Speaker Change: Some measure of confusion and frankly extra work and we're trying to simplify your lives to.

Speaker Change: As well as our.

Speaker Change: Our shareholders lives.

Speaker Change: And I think finally.

Speaker Change: <unk> created a deal.

Speaker Change: They're our partner and we are 100% aligned on the growth of the program. We have we have great visibility to what that growth is likely to be because we have a pipeline.

Speaker Change: <unk> has a several year run rate associated with it.

Speaker Change: So when we showed there is a there is a great chart in the Investor day deck that shows the correlation between new members and new rooms added to the <unk>.

Mark S. Hoplamazian: And maybe if I can just ask a quick follow-up question: the partner you're working with, is UBC getting merged into a bigger loyalty program or an entity in this JV that Hyatt will somehow benefit from? Or is UBC basically saying exactly the same, but now just kind of sitting on your book? It's the latter.

<unk> portfolio and so we think we're set up for success going forward with a simplified structure with continued control over the management and vertical integration in relation to the business. So those are all compelling reasons.

Speaker Change: Great.

Mark S. Hoplamazian: Okay. All right. Thank you. Our next question comes from Joe Greff from J.P. Morgan. Please go ahead; your line is open.

Speaker Change: Okay.

Speaker Change: Thank you for that and moving on to asset dispositions.

Speaker Change: You laid out.

Speaker Change: These additional assets that could net you whatever another $750 million gross proceeds.

Joseph Greff: Good morning, guys. Mark, I think I can piece it together, but I'm not sure if you actually said it as explicitly as I'm going to ask it. But can you talk about the motivation and the strategic rationale for selling a majority interest in UBC? I mean, I see the subsequent benefits from it that you talked about, and obviously, we agree, and the market agrees today, obviously. But it would be helpful to kind of just hear that from you.

Speaker Change: How at this point are you thinking about the use of those proceeds.

Speaker Change: And whether that's just it.

It allows you to do more capital return or are there things out there.

Yes, there are more fee generative and brand related that that you can purchase.

Speaker Change: Yes.

Speaker Change: Yeah, I think Joe we're continuing to pursue many different flavors of expansion.

Mark S. Hoplamazian: Yeah, I think first and foremost, um... We, we, thank you for the question, Joe. Uh, we wanted to, we, we have tried tremendously and I think achieved a lot in helping to explain the mechanics of the business and how you can think about the value of the business. I think what's missed in the conversation constantly is the integration and the vertical integration of our model versus how other companies are operating all-inclusive resorts or resorts, period. It is an integrated model, and that's why a long-term management arrangement where we continue to manage the platform, and where it's exclusive to our all-inclusive brands are key elements of the structure of the deal.

Speaker Change: Our ability to convert.

Speaker Change: Properties and even groups of properties. This past year was at an all time high for us.

Speaker Change: <unk> represented over 50% of our total.

Speaker Change: Gross room openings in the year.

Speaker Change: And it was across our brand portfolio interestingly, our destination by Hyatt brand represented at the Rio the.

Speaker Change: J D V brand represented in the <unk> deal.

Speaker Change: And so our collection brands are continuing to attract and garner a lot of attention.

Speaker Change: I'd also add that hard brand conversions have also occurred over the course of the year.

Speaker Change: And so we are looking at and experiencing an increase in opportunities that don't look like traditional acquisitions. They look like.

Mark S. Hoplamazian: With that, being able to secure that and being able to generate the actual cash generated for Hyatt every year in a very simplified way through fees, we believe has the benefit of simplifying this tremendously and really eliminating any potential confusions. No matter how much progress I think we made with a lot of people in understanding it, there really remained some measure of confusion and frankly extra work, and we're trying to simplify your lives, too, as well as our shareholders' lives. And I think, finally, we created a deal where our partner and we are 100% aligned on the growth of the program. We have great visibility into what that growth is likely to be because we have a pipeline that has a several-year run rate associated with it.

Speaker Change: Portfolio transactions in which we are affiliating ego through management of franchising our group of hotels.

Speaker Change: And so we will we will make investments in some of those but they will not look like very large ticket.

Speaker Change: Big scale acquisitions of large platforms that will look like relatively smaller investments in either smaller brands or management platforms.

Speaker Change: Or other kinds of capital deployment to secure and facilitate.

Speaker Change: Some of these portfolio transactions in many cases, they require cap of capital expenditures in order to bring them up to high standards.

Mark S. Hoplamazian: And we showed there's a great chart in the Investor Day deck that shows the correlation between new members and new rooms added to the HIC portfolio. And so we think we're set up for success going forward with a simplified structure with continued control over the management and vertical integration in relation to the business. So those are all compelling reasons. Great. Thank you for that.

Speaker Change: And that's typically where the application of capital is applied therefore.

Speaker Change: We find it inconceivable.

Speaker Change: That if we do execute against all of the dispositions that we talked about that we would not increase.

Speaker Change: Our return of capital through share repurchases, especially given how undervalued. The company has been for an extended period of time.

Speaker Change: Thank you very much.

Speaker Change: Our next question comes from Shaun Kelley from Bank of America. Please go ahead. Your line is open.

Mark S. Hoplamazian: Moving on to asset dispositions, you laid out these additional assets that could net you another 750 million gross proceeds. How, at this point, are you thinking about the use of those proceeds? And whether that's just, it allows you to do more capital return, or are there things out there? um, that are more fee-generative and brand-related that you can purchase.

Shaun Clisby Kelley: Hi, good morning, everyone.

Shaun Clisby Kelley: And just wanted to say from the accounting perspective at least thank you for for finding the solution for <unk> I, just think it simplifies everybody's lives a little bit.

Shaun Clisby Kelley: So my first question would be then to kind of go back to some of the analyst day targets, a little bit Mark and if.

Mark S. Hoplamazian: Yeah, I think, Joe, we're continuing to pursue many different flavors of expansion; our ability to convert properties and even groups of properties this past year was at an all-time high for us, represented over 50% of our total gross room openings in the year. And it was across our brand portfolio, interestingly. Our destination by Hyatt brand represented it, the Rio, the, um... J.D.V.

If we just look at a couple of the Kpis you gave but your revpar outlook and your net unit growth outlook, they're both a little below the ranges provided back then and probably the Investor group is a little bit more focused on the rooms growth side, but maybe call out what some of the differentials are or what could move you back to within the ranges you provided.

Mark S. Hoplamazian: brand represented in the Moumian deal, and so our collection brands are continuing to attract and garner a lot of attention. I would also add that hard brand conversions have also occurred over the course of the year. And so we are looking at and experiencing an increase in opportunities that don't look like traditional acquisitions. They look like portfolio transactions in which we are affiliating either through management or franchising a group of hotels.

Shaun Clisby Kelley: Back then just so we can get a sense of whats changed at the margin.

Sure Sean I'll I'll start with the Revpar target and maybe Mark will comment on the net rooms growth.

Shaun Clisby Kelley: At Investor Day, when we had provided the 3% to 7% our current expectation at the time for 2023 was 12% to 16% for 2023, we ended up.

Shaun Clisby Kelley: In 2023 at 17% so that was a full 300 basis point above the midpoint of our range. So the acceleration that we saw over the course of last year certainly factors into our 2024 outlook now visibility that we have now we mentioned the pace going into 2024, which is healthy for group.

Mark S. Hoplamazian: And so we will make investments in some of those, but they will not look like very large-ticket, big-scale acquisitions of large platforms. Instead, they'll look like relatively smaller investments in either smaller brands or management platforms or other kinds of capital deployment to secure and facilitate some of these portfolio transactions. In many cases, they require capital expenditures in order to bring them up to high standards, and that's typically where the application of capital is used.

Shaun Clisby Kelley: We also mentioned that the shorter term visibility into leisure is also very strong and encouraging and to our resorts.

Shaun Clisby Kelley: Mark mentioned, the one exception, we have with Maui, which are short term. So we feel like the 3% to 5% is a very solid outlook for this year and there is there could be some room to improve and we will update you as the year progresses.

Joseph Greff: Therefore, we find it inconceivable that if we do execute against all of the dispositions that we talked about, that we would not increase our return of capital through share repurchases, especially given how undervalued the company has been for an extended period of time. Thank you very much. Our next question comes from Shaun Kelley from Bank of America. Please go ahead, your line is open.

Shaun Clisby Kelley: And on the net rooms growth side.

Shaun Clisby Kelley: As I mentioned in 2003, we had a very outsized amount of conversions.

Shaun Clisby Kelley: We do think that 2024 will include an elevated level of conversions not at the level that we experienced in 2023.

Shaun Clisby Kelley: We are.

Shaun Clisby Kelley: Our outlook really represents things that we have some visibility to as opposed to a plug number with respect to <unk>.

Shaun Clisby Kelley: And just wanted to say, from the accounting perspective, at least, thank you for finding this solution for UVC. I do think it simplifies everybody's lives a little bit. So my first question would be then to kind of go back to some of the analyst day targets a little bit, Mark. And if we just look at a couple of the KPIs you gave, both your RevPAR outlook and your net unit growth outlook, they're both a little below the ranges provided back then. And probably the investor group is a little bit more focused on the room growth side, but maybe you could call out what some of the differentials are or what could move you back to within the ranges you provided back then, you know, just so we can get a sense of, you know, what's changed at the margins.

Shaun Clisby Kelley: Our guests.

Shaun Clisby Kelley: If 24 unfolds.

Shaun Clisby Kelley: The way that we.

Shaun Clisby Kelley: Experienced the marketplace in 'twenty three.

Shaun Clisby Kelley: Any incremental both.

Speaker Change: Portfolio deals and or conversions would be incremental to our current outlook and so I guess, what I would tell you is.

Speaker Change: We are trying to stick to things that we have high confidence in providing our outlook.

Speaker Change: But if you ask my overlap overlay on my judgment I would say the marketplace feels the same and I think we will likely see the same at least for the first half of the year and we do have a number of things that we are working on that could.

Joan Bottarini: Sure, Shaun, I'll start with the ResPAR target, and maybe Mark can comment on the NetRooms growth. You know, at Investor Day, when we had provided the 3 to 7 percent, our current expectation at the time for 2023 was 12 to 16 percent for 2023. We ended up in 2023 at 17 percent, so that was a full 300 basis points above the midpoint of our range.

Speaker Change: Actually pan out into incremental rooms growth. So I guess, what I would say, it's a matter of confidence interval rather than belief in.

Speaker Change: Sorry confidence interval in in visibility.

Speaker Change: As opposed to.

Speaker Change: A change in our in our fundamental belief about what our run rate growth rate.

Speaker Change: We will be going forward.

Speaker Change: This is at a time when our new starts remain.

Speaker Change: Lower than they were.

Speaker Change: Prior to the time that well.

Joan Bottarini: So the acceleration that we saw over the course of last year certainly factors into our 2024 outlook. Now, you know, the visibility that we have now, we mentioned the pace going into 2024, which is healthy for the group. We also mentioned that the shorter-term visibility into leisure is also very strong and encouraging for our resorts.

Speaker Change: Pre pandemic I guess in prior to the time that interest rates increased.

Speaker Change: You are seeing.

Speaker Change: Think very limited.

Speaker Change: Upper upscale and luxury starts or construction underway youre seeing.

Speaker Change: Also limited more limited start construction starts in.

Speaker Change: In upscale and upper mid scale.

Speaker Change: The one caveat to that and the one one counterbalance to that is the <unk> market is alive and well.

Joan Bottarini: Mark mentioned the one exception we have with Maui, which is short-term. So we feel like the 3 to 5 percent is a very solid outlook for this year, and there could be some room to improve, and we'll update you as the year progresses. As I mentioned, in 2023, we had a very outsized amount of conversions. We do think that 2024 will include an elevated level of conversions, but not at the level that we experienced in 2023. We are, our outlook really represents things that we have some visibility into, as opposed to a plug number with respect to a guess. If 24 unfolds, uh, the way that we experienced the marketplace in 23.

Speaker Change: Availability is high spreads are narrow.

Speaker Change: And so we're seeing CBS deals get done both large single asset deals, but also portfolios. So that's really one thing that sort of bridging us to a point, where the banks actually start to get back involved the only place that we see banks actively involved right now has to do with.

Speaker Change: Relatively smaller deals are Hyatt studios developments.

Speaker Change: Those developers are leaning on community and local bank and sometimes small regional bank.

Speaker Change: Relationships in order to get deals financed so we think that the that access to capital that form of access to capital and the quality of our developers for Hyatt Studios will allow us to see more and more Hyatt studio starts.

Mark S. Hoplamazian: Any incremental deals both portfolio deals and or conversions would be incremental to our current outlook. And so I guess what I would tell you is we are trying to stick to things that we have high confidence in, in providing our outlook. But if you ask my overlay on my judgment, I would say the marketplace feels the same.

Speaker Change: Relative to upscale or upper upscale.

Speaker Change: Thank you very much.

Speaker Change: Our next question comes from Dan Pulitzer from Wells Fargo. Please go ahead. Your line is open.

Dan Pulitzer: Hey, good morning, everyone and thanks for taking my question.

Mark S. Hoplamazian: And I think we will likely see the same, at least for the first half of the year. And we do have a number of things that we are working on that could actually pan out into incremental room growth. So I guess what I would say it's a matter of confidence interval rather than belief in, sorry, confidence interval in invisibility, as opposed to a change in our fundamental belief about what our run rate, and growth rate will be going forward.

Dan Pulitzer: I wanted to touch on the asset sales a little bit.

Dan Pulitzer: On the slide that you need to get done should we expect further seller financing and maybe could you talk about the puts and takes the interest rate environment as it relates to that.

Dan Pulitzer: Sure.

Speaker Change: First of all we are.

Speaker Change: I just wanted to briefly state that we have a very long experience in providing seller financing.

Speaker Change: <unk> back in my tenure to 2008, when we provided senior financing for the recapitalization and sale of the Hyatt Regency, Waikiki, which turned out to be a fantastic outcome, because we save that property as part of our chain, but also secured a very long term management agreement.

Mark S. Hoplamazian: And this is at a time when our new starts remain much lower than they were prior to the time that, well, pre-pandemic, I guess, and prior to the time that interest rates increased. You're seeing, I think, very limited... upper upscale and luxury starts or construction underway. You're also seeing more limited construction starts in upscale and upper mid-scale. The one caveat to that, and the one counterbalance to that, is that the CMBS market is alive and well. Availability is high, but spreads are narrow.

Speaker Change: Got repaid in full Mike I went to sleep every night, knowing that I would be thrilled not just okay with but thrilled to own the property at the loan to value at which we had made that loan and Thats really the way we think about seller financing we are structuring our lunar any seller financings that we.

Mark S. Hoplamazian: And so we're seeing CMBS deals get done, both large single asset deals but also portfolios. So that's really one thing that's sort of bridging us to a point where the banks actually start to get back involved. The only place that we see banks actively involved right now has to do with relatively smaller deals or Hyatt Studios developments. Those developers are leaning on community and local bank and sometimes small regional bank relationships in order to get deals financed. So we think that access to capital, that form of access to capital, and the quality of our developers for Hyatt Studios will allow us to see more and more Hyatt Studios starts relative to upscale or upper upscale. Thank you very much. Our next question comes from Dan Pulitzer from Wells Fargo. Please go ahead; your line is open. Hey, good morning, everyone.

Speaker Change: Done to be at a loan to value level that we are 100%.

Speaker Change: Third to own the whole property and we'd be happy to do so if it ever came to that.

And with respect to the environment, There's no question that <unk>.

Speaker Change: Capital availability is an issue.

Speaker Change: And so we have obviously in this case and we will likely find ourselves in a situation in which we are providing additional seller financing as we move through this year. What is also true is if you go back and study deals.

Speaker Change: They are not that many deals and asset single asset transactions that have occurred in truly distressed environments, but those that were able to get done or at a time when capital availability was low not necessarily distressed operating wise, but maybe in the capital markets. They are all proven to be fantastic investments, we have some personal experience.

Speaker Change: With us at Hyatt, but also if you look across.

Speaker Change: The industry those those deals tend to have great results.

Dan Pulitzer: Thanks for taking my question. I wanted to touch on asset sales a little bit. You know, on the five that you need to get done, should we expect further seller financing? And maybe you could talk about the puts and takes, the interest rate environment as it relates to that? Sure. First of all, I just want to briefly state that we have a very long experience in providing seller financing. It dates back to my tenure in 2008 when we provided senior financing for the recapitalization and sale of the High Regency Waikiki, which turned out to be a fantastic outcome because we saved that property as part of our chain and also secured a very long-term management agreement and got repaid in full. I went to sleep every night knowing that I would be thrilled, not just okay with, but thrilled to own the property at the loan-to-value at which we had made that loan.

Speaker Change: And yes interest rates are cyclical.

Speaker Change: Of course, we can't we can't tell what the interest rate cuts will yield in terms of we are in the cycle, we happen to be but we.

Speaker Change: We do expect refinancings to be very attractive well before maturity dates for the kinds of financings that we're providing so we don't expect to have this capital out for very long.

And I think it.

Speaker Change: Just provides.

Speaker Change: The right kind of bridge if you will.

Speaker Change: The other thing is it's a small portion of the capital stack, we're not advancing.

Speaker Change: 60% purchase price or anything like that they tend to be a small proportion.

Speaker Change: To be in the teens or 20% of the total purchase price.

Speaker Change: Got it thanks.

Just for my follow up.

Speaker Change: I want to make sure I'm kind of understanding the UBC pieces.

Speaker Change: Clear right, so youre going to $60 million in fees that you've talked about getting for 2024 that will come in the form of EBITDA.

Mark S. Hoplamazian: And that's really the way we think about seller financing. We are structuring any seller financing that we do to be at a loan-to-value level where we are 100% prepared to own the whole property and would be happy to do so if it ever came to that. And with respect to the environment, there's no question that capital availability is an issue. And so we have, obviously, in this case, and we will likely find ourselves in a situation in which we are providing additional seller financing as we move through this year. What is also true is if you go back and study deals, there are not that many deals in single-asset transactions that have occurred in truly distressed environments, but those that were able to get done were at a time when capital availability was low, not necessarily distressed operating-wise, but maybe in the capital markets.

Speaker Change: That would be a fee stream right and that it's basically just the 160 <unk> more or less of deferrals that you had in 2023 are coming out we're not going to see those does that does that kind of the easiest way to think about it Dan I would.

Dan Pulitzer: My prepared remarks, I referenced a table and a schedule in our earnings release its a 'twenty two it's super helpful to referenced that schedule as a baseline for 2023, because what we've done there is we have illustrated the.

Dan Pulitzer: Transaction, both UBC and Aruba and then also this re class that we undertook for Mr and Mrs. Smith, So that baseline there that is reported in our earnings release. This morning, as a great reference to understand the line items that are impacted by those three things.

Mark S. Hoplamazian: They've all proven to be fantastic investments. We have some personal experience with this at Hyatt, but also, if you look across the industry, those deals tend to have great results. Yes, interest rates are cyclical.

Dan Pulitzer: Okay.

Speaker Change: Got it thanks, so much.

Welcome.

Speaker Change: Our next.

Comes from Patrick Scholes from tourist Securities. Please go ahead. Your line is open.

Patrick Scholes: Hi, good morning.

Patrick Scholes: Good morning.

Mark S. Hoplamazian: Of course, we can't tell what the interest rate cuts will yield in terms of where in the cycle we happen to be, but we do expect refinancing to be very attractive well before maturity dates for the kinds of financings that we're providing. So we don't expect to have this capital out for very long, and I think it just provides the right kind of bridge, if you will. The other thing is that it's a small portion of the capital stack. We're not advancing, you know, 60% of the purchase price or anything like that. They tend to be a small proportion, maybe in the teens, 20% of the total purchase price.

Patrick Scholes: Mark This is Joe regarding the Aruba sale is that 2023, EBITDA sort of a fair comparison to think about what.

Patrick Scholes: Multiple would be was there any.

Joseph Greff: Anything unusual in that and then any large requirements for capex.

Joseph Greff: On that property also.

Joseph Greff: Help us to think about.

Joseph Greff: Sort of what the all in multiple on that sale.

Speaker Change: Yeah. So first thing I'm going to do is do as Jon just did which is refer you to a 22 and in that schedule. There are extensive footnotes from which you will be able to pretty clearly see what the property level earnings were in 2023, because we have created a pro forma illustrative.

Dan Pulitzer: All right, thanks. And just for my follow-up, I want to make sure I'm kind of understanding the UBC pieces. The 60 million in fees that you talked about getting for 2024, that will come in the form of EBITDA, and that would be a fee stream, right? And then it's basically just the 160, more or less, of deferrals that you had in 2023 are coming out. We're not going to see those.

Speaker Change: Pro forma for.

Speaker Change: Isn't that schedule.

Speaker Change: Yes. It is the property to sold at a multiple significantly below where we had been selling properties. There are two key factors. The first is to lease holds not a freehold.

Joan Bottarini: Is that kind of the easiest way to think about it? Dan, in my prepared remarks, I referenced a table and a schedule in our earnings release. It's A22. It's super helpful to reference that schedule as a baseline for 2023, because what we've done there is illustrated the transaction between UBC and Aruba, and then also this reclass that we undertook for Mr. and Mrs. Smith. So that baseline there that is reported in our earnings release this morning is a great reference to understand the line items that are impacted by those three things. Guys, thanks so much.

Speaker Change: And the second is that there are some local market factors that we have we and the buyer have very high visibility to that will create.

Speaker Change: A headwind with respect to earnings prospectively.

Speaker Change: That will apply a couple of years from now and that is fully accounted for in the valuation taking those factors into account, we're thrilled with the outcome of this transaction and feel like it was a very good value. The final thing I'll say.

As I made a comment.

Speaker Change: A year and a half ago that the thing that.

Dan Pulitzer: You're welcome. Our next question comes from Patrick Scholes from Truist Securities. Please go ahead, your line is open. Hi, good morning. Hey everybody, Bryan here.

Speaker Change: There's a lot of people were focusing on was the elevation of cap rates and what I explained at that time was the other thing thats coming up that people don't add to that that <unk>.

Patrick Scholes: Thanks so much for tuning in, and we will see you next week. Bye. Bye. Mark and Joan, regarding the Aruba sale, is that 2023 EBITDA, um, sort of a fair comparison to think about, you know, what the, what, uh, multiple would be, you know, was there any... You know, anything unusual in that? And then, you know, any large requirements for CapEx on that property also helped us to think about, sort of, the all-in multiple on that sale. Yeah, so the first thing I'm going to do is do what Joan just did, which is refer you to A22. And in that schedule, there are extensive footnotes from which you will be able to pretty clearly see what the property level earnings will be in 2023 because we have created a pro forma illustrative pro forma for Yes, it is the property sold at a multiple significantly below where we have been selling properties. There are two key factors. The first is that it's a leasehold, not a freehold.

Speaker Change: Sound bite is earnings so as cap rates rise in earnings rise. The total proceeds that one receives upon disposition.

Speaker Change: Stay the same or increase depending on the growth rate of earnings. So if you ask me going all the way back to 2017 or even prior to that how we have been looking at the valuation of Aruba.

Speaker Change: We've received proceeds equivalent to what we thought the asset was worth.

Speaker Change: And Thats the result of much higher earnings at a lower multiple but in terms of cash value to the company we've absolutely.

Speaker Change: <unk> achieved what we believe is a very fair value for the asset.

One other thing.

Speaker Change: <unk> disclosed to Patrick is that when we have disclosed in multiples that does not include fee based long term fee based that we retain as a result of all of these sales. So that is in addition to the asset sale itself is the retention of those contracts and in every single asset that we sold we have retained a long term.

Speaker Change: Management and franchise contract and those have significant run rate value.

Speaker Change: And then a follow up question Mark I apologize, perhaps you.

Mark S. Hoplamazian: And the second is that there are some local market factors that we and the buyer have very high visibility into that will create a headwind with respect to earnings prospectively that will apply a couple of years from now, and that is fully accounted for in the valuation. Taking those factors into account, we're thrilled with the outcome of this transaction and feel like it was very good value. The final thing I'll say is that I made a comment probably a year and a half ago that the thing that a lot of people were focusing on was the increase in cap rates. And what I explained at that time was the other thing that's going up that people don't add to that soundbite is earnings.

Speaker Change: You mentioned this in the prepared remarks.

Speaker Change: Last quarter, you gave some statistics on booking pace for.

Speaker Change: The ALG resorts.

Speaker Change: I'm wondering if you can give us some color on how booking pace looks versus <unk> and then.

Speaker Change: Any initial indications on that leisure travel for the summer. Thank you.

Speaker Change: Yeah. So.

I think we mentioned that.

Speaker Change: The pace for ALG properties in the first quarter is up 11%.

Speaker Change: And.

Speaker Change: The second quarter is is developing well.

Speaker Change: Sure.

Speaker Change: I will be reluctant to give you a number at this point, it's a little early.

Speaker Change: As the base is still building at this point, but.

Speaker Change: Definitely positive.

Speaker Change: Exactly we ended up I can't say at this point, but.

Mark S. Hoplamazian: So as cap rates rise and earnings rise, the total proceeds that one receives upon disposition stay the same or increase depending on the growth rate of earnings. So if you ask me, going all the way back to 2017, or even prior to that, how we have been looking at the valuation of Aruba, We've received proceeds equivalent to what we thought the asset was worth, and that's the result of much higher earnings at a lower multiple, but in terms of cash value to the company, we've absolutely achieved what we believe is a very fair value for the asset. One of the things we've consistently disclosed to Patrick is that when we have disclosed the multiples, it does not include the fee base, the long-term fee base that we retain as a So that, in addition to the asset sale itself, is the retention of those contracts. And in every single asset that we've sold, we have retained a long-term management or franchise contract. And those have a significant run rate value. And then there was a follow-up question. Mark, I apologize.

Speaker Change: Im encouraged by what I'm seeing so far a couple of things that I would just provide this context. The first is there's significantly more lift into Kan coon. This year than there was last year and secondly.

Speaker Change: Airfares are down so the total package.

Speaker Change: Costs.

Speaker Change: Are maintaining.

Theres, just a relatively higher proportion of that that's going to.

Hotels than it is to airlines, let's say so.

Speaker Change: By virtue of airlines really trying to maintain market share into one of the hottest.

Speaker Change: Destinations for leisure travel and.

Speaker Change: So and by the way Theyre down from levels last year that were unusually high. They were there was a bubble I would say.

Speaker Change: One reference point that we looked up and had referenced to in the third quarter of last year was.

Speaker Change: The rates on average from Houston.

Houston to Cancun went from just under $400 to over 100 over $750.

Speaker Change: And that's now readjusted back to a more normalized level so the extra.

Mark S. Hoplamazian: Perhaps you mentioned this in the prepared remarks. Last quarter, you gave some statistics on booking pace for the ALG resorts. I'm wondering if you can give us some fresh color on how the booking pace looks for 2Q and then any initial indications on leisure travel for the summer. Thank you. Yeah, so I think we mentioned that the pace for ALG properties in the first quarter is up 11, and the second quarter is developing well. I will be reluctant to give you a number at this point.

Speaker Change: The extra lift is positive it is still true, though that we are lapping a very unusual demand period last year in the first quarter and that's why we've got this $20 million headwind that Joan referenced in ALG vacations.

Okay. Thank you.

Speaker Change: Our next question comes from Duane <unk> from Evercore ISI. Please go ahead. Your line is open.

Duane: Hey, Thanks, I could ask you more UBC accounting questions, but we'll take that offline.

Mark S. Hoplamazian: It's a little early because the base is still building at this point, but definitely positive. Where exactly we end up, I can't say at this point, but I'm encouraged by what I'm seeing so far. A couple of things that I would just provide as context.

Duane: Just on this journey to simplification.

Duane: I guess, the sale of UBC and outfits.

Duane: What are the other one to three initiatives that youre working on to further simplify your financial reporting.

Mark S. Hoplamazian: The first is that there's significantly more lift into Cancun this year than there was last year, and secondly, airfares are down. So the total package cost is maintaining, there's just a relatively higher proportion of that that's going to.., than it is to airlines, let's say. So that's by virtue of airlines really trying to maintain market share in one of the hottest destinations for leisure travel. So, and by the way, they're down from levels last year that were unusually high. They were, there was a bubble, I would say. One reference point that we looked up and had reference to in the third quarter of last year was that the rates, on average, from Houston to Cancun went from just under $400 to over $750.

Speaker Change: Sure. So Duane yes simplification is absolutely what we believe.

Speaker Change: We will be.

Speaker Change: Demonstrating here in 2024.

Speaker Change: A couple of things. So you mentioned UBC and the capture of those economics now in fees no no more disclosures around net deferrals and net finance contracts. We've also realigned our segments, which I went through in.

Speaker Change: In some detail in my prepared remarks, and there is also a more detail in our release. This morning, and importantly that realignment is really how strategically we're looking at the business. We have a much greater fee based results and that's demonstrated by our mix that.

Speaker Change: We disclosed this morning, a 76% and so now we'll have the managed and franchised business in one segment and we're also providing an outlook for our managed and franchised fee.

Mark S. Hoplamazian: And that's now readjusted back to a more normalized level, so the extra lift is positive. It is still true, though, that we are lapping a very unusual demand period last year in the first quarter. And that's why we've got this $20 million headwind that Joan referenced in ALG Vacation. Okay, thank you. Our next question comes from Dwayne Fennigworth from Evercore ISI. Please go ahead; your line is open.

Speaker Change: Our growth into 2024, so adding all of those elements up really really simplifying.

Speaker Change: The results this year and the outlook this year and then the ability to model Hyatt.

Dwayne Fennigworth: Hey, thanks. I could ask you more UVC accounting questions, but we'll take that offline. Just on this journey to simplification, which I guess the sale of UVC now fits, what are the other 1, 2, 3 initiatives that you're working on to further simplify your financial reporting? www.

<unk> mentioned now the schedule a 'twenty two I think it will be super helpful to model this year and.

Speaker Change: And I'll just add on when you compare that to the mid points that we've provided in our outlook that.

Speaker Change: We are still following our growth model.

Speaker Change: For fees net rooms growth are owned performance. The only exception this year will be the vacations.

Joan Bottarini: TheBusinessProfessor.com: Sure, so Duane, yes, simplification is absolutely what we believe we will be demonstrating here in 2024. A couple of things. You mentioned UVC and the capture of those economics now in fees; no more disclosures around net deferrals and net finance contracts. We've also realigned our segments, which I went through in some detail in my prepared remarks, and there's also more detail in our release this morning. And, you know, importantly, that realignment is really how we're looking at the business. We have much greater fee-based results, and that's demonstrated by our mix that we disclosed this morning of 76%.

Speaker Change: Business.

Speaker Change: And that headwind that we described so when you when you apply the growth model to the baseline that we've provided on a 22, you'll see that we're growing core growth on our adjusted EBITDA by 11% this year.

Speaker Change: We will be as I mentioned, we will be sharing with you. This segment realignment prior to the first quarter earnings release, and we will include a few simplifications through the growth model as well as as you can now look at the different segments with a different view of clarity. So we're.

Speaker Change: We're excited for that and look forward to.

Seeing that.

Joan Bottarini: And so now we'll have the managed and franchised business in one segment, and we're also providing an outlook for our managed and franchised fee growth into 2024. So adding all of those elements together, really simplifying the results this year, and the outlook this year, and the ability to model Hyatt. We've mentioned now Schedule A22.

Speaker Change: Released when we actually had that call with all of you.

Speaker Change: Okay. Thanks, and then just for my follow up you did provide some good pipeline detail in the release can you expand.

Speaker Change: ALG, specifically eog's versus new build.

Joan Bottarini: I think it will be super helpful to model this year, and I'll just add on. When you compare that to the midpoints that we've provided in our outlook, that we are still following our growth model for fees, net room growth, and our owned performance. The only exception this year will be the vacations, business, and that headwind that we described. So when you apply the growth model to the baseline that we've provided on A22, you'll see that we're growing core growth on our adjusted EBITDA by 11% this year. We will be, as I mentioned, sharing with you this segment realignment prior to the first quarter earnings release, and we will include a few simplifications to the growth model as well, so you can now look at the different segments with a different lens of clarity. So we're excited about that and look forward to seeing that release when we actually have that call with all of you. Okay, thanks.

Speaker Change: And any comment on the typical timeframe from signing to opening.

Speaker Change: With ALG resorts versus kind of conversion.

Speaker Change: Sure.

Speaker Change: With these openings that I mentioned in the fourth quarter.

Speaker Change: The actual total net rooms growth for <unk>.

Speaker Change: <unk> is running something like in the high teens at the moment.

Speaker Change: But that does include some conversions I mentioned, the 2000 rooms into the Mexican Republic.

Speaker Change: The core.

Speaker Change: Excuse me pipeline is all newbuild.

We are working on additional deals like we experienced in the Dominican Republic.

Speaker Change: In Europe and in the Americas. So I would say we have said in the past and I would continue to maintain that I think the core growth for the LG portfolio will likely be in the 10% range.

Dwayne Fennigworth: And then just for my follow-up, you did provide some good pipeline detail in the release. Can you expand on ALG specifically, you know, ALGs versus new builds, and any comment on the typical time frame from signing to opening with ALG resorts versus a kind of conversion? Sure. We, with these openings that I mentioned in the fourth quarter, the actual total net room growth for ALG is running something like in the high teens at the moment, but that does include some conversions that I mentioned, the 2,000 rooms in the Dominican Republic, and the pipeline is all new build. We are working on additional deals like we experienced in the Dominican Republic, both in Europe and in the Americas. So I would say, as I have said in the past, and I would continue to maintain, that I think the core growth for the ALG portfolio will likely be in the 10% range, plus or minus, a small amount, but generally speaking, I think that's a fair way to think about it. And there are – it's punctuated by episodic portfolio deals and other conversions.

Speaker Change: Plus or minus.

Speaker Change: A small amount, but generally speaking I think that's it.

Speaker Change: Fair way to think about it and.

Speaker Change: There are it's punctuated by episodic.

Portfolio deals and other conversions.

Speaker Change: I Didnt expect when we bought ALG I did not expect that we would see so much conversion activity as a possibility, but we are now starting to see that for various reasons that I've covered in prior earnings calls but.

Speaker Change: We remain encouraged about that.

Speaker Change: Okay I appreciate the thoughts.

Speaker Change: Yeah.

Speaker Change: Our last question today will come from Michael Bellisario from Baird. Please go ahead. Your line is open.

Michael J. Bellisario: Thanks, Good morning, everyone.

Michael J. Bellisario: 222, more ALG questions for you.

Michael J. Bellisario: First now that you've sold the MVC is there any opportunity or thought around monetizing the vacations business and then John I know you mentioned the $20 million headwind in <unk>, but how do you see the full year or the rest of the year playing out for ALG EBITDA, especially relative to the comments last quarter that 2023 should be a good base to grow.

Mark S. Hoplamazian: I didn't expect – when we bought ALG, I did not expect that we would see so much conversion activity as a possibility, but we are now starting to see that for various reasons that I've covered in prior earnings calls, but we remain encouraged about that. Okay, appreciate the thoughts. Our last question today will come from Michael Bellisario from Baird. Please go ahead; your line is open. Thanks. Good morning, everyone. I have two more ALG questions for you.

Michael J. Bellisario: Thanks.

Sure Michael that the ALG vacations headwind in the first quarter, we had an exceptional year first quarter in 2023.

Speaker Change: And so that is it's really.

Michael J. Bellisario: First, now that you've sold UVC, is there any opportunity or thought around monetizing the vacations business? And then, Joan, I know you mentioned the $20 million headwind in 1Q, but how do you see the full year or the rest of the year playing out for ALG, especially relative to the comments last quarter that 2023 should be a good base year to grow from? Thanks.

John Bahraini: Out of the ordinary growth that we saw in the first quarter as you look across the full year, we expect that the remaining three quarters of the year will be consistent with 2023.

John Bahraini: And with respect to ALG vacations.

John Bahraini: The business has grown in strength and grown overall and its capabilities, we've invested heavily in technology.

John Bahraini: The market share it maintains is high.

Joan Bottarini: The ALG vacations headwind in the first quarter. We had an exceptional year, and the first quarter in 2023. And so that is, it's really out of the ordinary growth that we saw in the first quarter. As you look across the full year, we expect that the remaining three quarters of the year will be consistent with 2023. And with respect to ALG Vacations, the business has grown in strength and grown overall in its capabilities. We've invested heavily in technology. The market share it maintains is high, but it continues to grow. And the discovery that we are now in the midst of to unlock additional value-add opportunities for legacy-high properties is incremental value that we think we can extract from this amazing platform. So, we have no plans at this point to do anything different with ALG.

John Bahraini: Is it continues to grow.

John Bahraini: And the discovery that we are now in the midst of to unlock additional.

John Bahraini: Value add opportunities for legacy high properties as incremental value that we think we can extract from this this amazing platform. So we have no plans at this point to do anything different with the LGD.

John Bahraini: Okay.

Speaker Change: Got it thanks.

Speaker Change: One quick clarification on the John your comments about <unk> is that for the vacations business or ALG EBITDA overall.

Speaker Change: In terms of vacations business.

Speaker Change: We've given you some insight into the.

Speaker Change: The transaction change for UBC.

Speaker Change: And the model will hold true for feed.

Speaker Change: Within the guidance for fees include.

Mark S. Hoplamazian: Got it. Thanks. Just one quick clarification, Joan, your comments about 2Q to 4Q. Is that for the vacations business or ALG EBITDA overall? Thanks for the vacations business. We've given some insight into the transaction change for UVC, and the model will hold true for fees, within the guidance for fees includes the UBC and also the hotel management business.

Speaker Change: Okay.

Speaker Change: The UBC and also the all inclusive hotels.

Telecom management business. Thank.

Speaker Change: Thank you.

Speaker Change: Welcome.

Speaker Change: Yeah.

Speaker Change: This.

Speaker Change: Today's conference call. Thank you for your participation and have a wonderful day you may all disconnect.

Speaker Change: Okay.

Speaker Change: [music].

Speaker Change: Yeah.

Speaker Change: [music].

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: [music].

Joan Bottarini: Thank you. Welcome. This concludes today's conference call. Thank you for your participation and have a wonderful day. You may all disconnect.

Speaker Change: Okay.

Speaker Change: [music].

Speaker Change: Okay.