Q2 2024 Hilton Worldwide Holdings Inc Earnings Call

Jill Chapman: and the recently filed Form 10-K. In addition, we will refer to certain non-GAAP financial measures on this call. You can find reconciliations of non-GAAP to GAAP financial measures discussed in today's call, in our earnings press release, and on our website at ir.hilton.com. This morning, Chris Nassetta, our President and Chief Executive Officer, will provide an overview of the current operating environment and the company's outlook. Kevin Jacobs, our Chief Financial Officer and President, Global Development, will then review our second quarter results and discuss our expectations for the year. Following their remarks, we'll be happy to take your questions. With that, I'm pleased to turn the call over to Chris.

In addition, we will refer to certain non-GAAP financial measures on this call you can find reconciliations of non-GAAP to GAAP financial measures discussed in today's call in our earnings press release and on our website at IR Dot Hilton Dot com.

Speaker Change: This morning person to setup, our president and Chief Executive Officer will provide an overview of the current operating environment and the company's outlook, Kevin Jacobs, Our Chief Financial Officer, and President Global Development will then review our second quarter results and discuss our expectations for the year. Following their remarks, we'll be happy to take your questions.

With that I am pleased to turn the call over to Chris.

Christopher Nassetta: Thank you, Jill. Good morning, everyone, and thanks for joining us today. We are pleased to report strong second-quarter results with red part growth driving adjusted EBITDA and adjusted EPS above the high end of our guidance. We continue to execute on our successful development strategy, and in July, our system surpassed 8,000 hotels globally. Our newly acquired brands and recent strategic partnerships will help us build even more loyalty with guests, further enhancing our network effect and increasing our industry-leading rep part premium. Coupled with our asset-light, fee-based business model, we are well-positioned to continue producing significant free cash flow and driving meaningful shareholder returns.

Chris: Thank you Jill good morning, everyone and thanks for joining US today, we're pleased to report strong second quarter results with Revpar growth driving adjusted EBITDA and adjusted EPS above the high end of our guidance. We continued to execute on our successful development strategy in July.

Chris: Our systems surpassed 8000 hotels globally, our newly acquired brands in recent strategic partnerships will help us build even more loyalty with guests further enhancing our network effects and increasing our industry, leading revpar premiums coupled with our asset light fee based business model we are.

Christopher Nassetta: In the quarter, system-wide REPR increased 3.5% year-over-year above the midpoint of guidance due to robust group performance, continued recovery in business transients, and easier holiday comparison. Transient REBPAR grew 2% year-over-year, with increases in both business and leisure demand. REBPAR across large corporates rose 5% in the quarter, driven by strong trends across most industries, including a notable recovery in technology.

Christopher Nassetta: Leisure transient REVPAR continued to exceed prior peaks, supported by solid summer travel demand, particularly in international markets. Group REVPAR rose more than 10% year-over-year, led by strong demand for corporate and social meetings and events, and booking windows continued to lengthen. For the full year, group position is up 10% over last year, with position expected to be up mid-teens over the next several years. We expect full-year system-wide REBPAR to increase 2 to 3 percent, driven by positive growth across all major segments and regions. We tempered the high end of our expectations versus prior guidance due to softer trends in certain international markets and normalizing leisure growth more broadly.

Christopher Nassetta: With continued strength in the group and steady recovery in business transient, we expect higher-end chain scales to continue to outperform. Turning to development, in the quarter, we opened 165 hotels, totaling more than 22,000 rooms, and achieved net unit growth of 6.2%. We marked several milestones in the quarter, including the opening of our 6,000th hotel in North America, and we surpassed 75,000 Home 2 Suites rooms globally. We also opened seven new resort properties in Europe, including the debut of Curio in Croatia and DoubleTree in Malta.

Christopher Nassetta: We welcome Graduate Hotels and Nomad into our family of brands during the quarter, providing further opportunities to deliver exceptional guest experiences and accelerate our expansion in the fast-growing lifestyle segment. Demand for lifestyle products continues to increase as guests seek unique experiences and sought-after destinations around the world.

Christopher Nassetta: In the last year, we have expanded our lifestyle offerings by more than 30 percent, fueled largely by growth in Curio, Tapestry, and the recent acquisition of Graduate. With roughly 400 lifestyle properties today and hundreds more in the pipeline, we are well positioned for substantial growth over the next several years. Conversions accounted for roughly half of openings in the quarter, driven by the addition of Graduate and the continued strength of Doubletree and Spark.

Christopher Nassetta: In the quarter, Spark opened 27 hotels, more than doubling its existing supply. The brand also celebrated its debut in Europe with the opening of Spark by Hilton London Romford, just nine months after the first property opened in the U.S. The opening marks the start of an exciting journey for Spark to redefine the premium economy segment in Europe, with further launches of the brand across continental Europe expected in the coming months.

Christopher Nassetta: In the quarter, we signed 63,000 rooms, increasing our pipeline to approximately 508,000 rooms, which is up 8% from last quarter and 15% year-over-year, with notable strength across the EMEA and APAC regions. In particular, Hilton Garden Inn continued to gain tremendous traction, with year-to-date signings up nearly 90% across 20 different countries. Overall, conversions accounted for over half of the signings in the quarter, driven by additions from our acquisitions and partnerships. Excluding acquisitions and partnerships, conversions accounted for 25% of signings in the quarter, largely driven by continued momentum with Curio, Tapestry, and DoubleTree. System-wide construction starts in the quarter were up 160% versus last year and up 37% excluding acquisitions and partnerships.

Christopher Nassetta: With meaningful growth across both the U.S. and international markets, we remain on track to exceed prior peak levels of starts by year-end. Additionally, approximately half of our pipeline is under construction, and we continue to have more rooms under construction than any other hotel company, accounting for more than 20% of the industry share and nearly four times our existing share of supply. We've seen tremendous interest from owners through our exclusive agreement with small luxury hotels around the world, with the pace of initial property signups far exceeding our expectations.

Christopher Nassetta: Under our strategic partnership, we added nearly 300 boutique luxury properties to our system in July, with an additional 100 properties expected to join later this year. Adding these unique properties to our network is highly complementary to our existing luxury portfolio and significantly increases our luxury offerings for guests around the world without any capital commitment. During the quarter, the first AutoCamp properties were added to our platforms. Each AutoCamp location provides a unique opportunity for guests to immerse themselves in nature without sacrificing the comforts of high-end accommodation.

Christopher Nassetta: These exclusive agreements with SLH and AutoCamp provide Honors members with new and exciting ways to earn and redeem points while broadening and enhancing our network effect. As a result of our strong pipeline, recent tuck-in acquisitions, and strategic partnerships, we now expect net unit growth of 7 to 7.5% for the full year. We are also proud to continue to be recognized for our industry-leading brands and culture. Brand Finance recently ranked Hilton as the most valuable hotel brand for the ninth consecutive year, claiming nine of the top 50 hotel brand spots.

Christopher Nassetta: Additionally, Hilton was recently named the top workplace in the U.S. for millennials by Great Place to Work and Fortune for the seventh consecutive year. Since 2016, we've received over 540 recognitions as a Great Place to Work across more than 60 countries, and we remain the number one Great Place to Work in the world and the United States. We're very happy with our second quarter results, development milestones, and brand and commercial enhancements, which we think demonstrate the continued strength of our business model. Now, I'm going to turn the call over to Kevin for a few more details on the results in the quarter and our expectations for the year.

Chris: And for the seventh consecutive year since 2016, we've received over 540 recognitions as a great place to work across more than 60 countries and we remain the number one great place to work in the world in the United States, We're very happy with our second quarter results development milestones and bring in the commercial end.

Chris: <unk>, which we think demonstrate the continued strength of our business model now I'm going to turn the call over to Kevin for a few more details on the results in the quarter and our expectations for the year.

Kevin Jacobs: Thanks Chris, and good morning everyone. During the quarter, system-wide REF PAR grew 3.5% versus the prior year on a comparable and currency-neutral basis. Growth was largely driven by strong international performance and continued recovery in groups. Our performance was driven by better-than-expected fee growth, largely due to better-than-expected U.S. REVPAR performance and some timing items. Management and franchise fees grew 10% year-over-

Kevin: Thanks, Chris and good morning, everyone. During the quarter system wide Revpar grew three 5% versus the prior year on a comparable and currency neutral basis growth was largely driven by strong international performance and continued recovery in group.

Kevin: Adjusted EBITDA was $917 million in the second quarter up 13% year over year and exceeding the high end of our guidance range output.

Kevin: Outperformance was driven by better than expected fee growth largely due to better than expected U S. Revpar performance and some timing items management and franchise fees grew 10% year over year.

Kevin Jacobs: For the quarter, diluted earnings per share adjusted for special items was $1.91. Turning to our regional performance, second quarter comparable U.S. RASPAR was up 3%, driven by strong group performance, particularly in urban markets. In the Americas outside the U.S., second-quarter REF bar increased 7% year-over-year, driven by strong results in leisure markets. In Europe, Revpart grew 7% year-over-year with solid performance across all segments and continued strength from international inbound travel. In the Middle East and Africa region, RevPAR increased 11% year-over-year, with growth in both rate and occupancy led by strong group and leisure performance.

Kevin: For the quarter diluted earnings per share adjusted for special items was $1 91.

Kevin: Turning to our regional performance second quarter comparable U S. Revpar was up 3% driven by strong group performance, particularly in urban markets in the Americas outside the U S second quarter, Revpar increased 7% year over year, driven by strong results in leisure markets in.

Kevin Jacobs: In the Asia-Pacific region, second quarter REVPAR was up 1% year-over-year. REVPAR in APAC-X China increased 11%, led by continued strength in Japan and Korea. Chinese REVPAR declined 5% in the quarter, with difficult year-over-year domestic travel comparisons and limited international inbound travel negatively affecting results, which weighed on RevPAR results for the region but accounts for less than 3% of overall.

Kevin Jacobs: Turning to development, we ended the quarter with approximately 508,000 rooms in our pipeline, up 15% year-over-year, with approximately 60% of those rooms located outside the U.S. and nearly half of them under construction. For the full year, we expect net unit growth of 7% to 7.5%. Moving to guidance.

Kevin Jacobs: For the third quarter, we expect system-wide refrigerated park growth of 2% to 3% year-over-year. Additionally, we expect adjusted EBITDA of between $875 million and $890 million. And diluted EPS adjusted for special items to be between $1.80 and $1.85. For full year 2024, we expect REVPAR growth of 2-3%. We forecast adjusted EBITDA of between $3.375 billion and $3.405 billion. We are bringing down the high end of our guidance to reflect slightly lower FPAR growth expectations and FX movement. We forecast diluted EPS adjusted for special items of between $6.93 and $7.03. Please note that our guidance ranges do not incorporate further share repurposing.

Kevin Jacobs: Moving on to capital return, we paid a cash dividend of $0.15 per share during the second quarter for a total of $37 million. Our board also authorized a quarterly dividend of $0.15 per share in the third quarter. Year-to-date, we have returned nearly $1.8 billion to shareholders in the form of buybacks and dividends, and for the full year, we expect to return approximately $3 billion.

Operator: Further details on our second quarter results can be found in the earnings release we issued earlier this morning. This completes our prepared remarks. We would now like to open the line for any questions you may have. We would like to speak with as many of you as possible, so we ask that you limit yourself to one question. Chad, can we have our first question? Thank you.

Operator: Thank you. We will now begin our question and answer session. To ask a question, you may press star then 1 on your telephone keypad. If you're using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been answered and you'd like to withdraw your question, please press star then 2. And the first question will be from Joe Greff with J.P. Morgan. Please go ahead.

Joseph Greff: Good morning, guys. Thanks for taking my question. I was hoping you'd give us a little bit more detail, obviously, on the NetRooms growth side of things. Chris and Kevin, clearly going from 7 to 7.5% is obviously a very good thing. Can you talk about what's added versus a quarter ago, with particular attention to SLS and some of the newly acquired brands, as well as, you know, maybe what's different on a sort of organic same-brand basis versus a quarter ago?

Kevin Jacobs: Yeah, I'd be happy to. I think the way to think about it is that what's being added, essentially, is graduate. I mean, if you look at our prior guidance, we had incorporated a guesstimate of what we would do for SLH. We are doing better than that, and so I think, in the end, that's probably going to be about a point and a half of NUG. Graduation, which we said would be separate and apart, is about a half a point, and so I think if you sort of unwind all that and compare it again.

Kevin Jacobs: Prior guidance, the organic growth is slightly less, but this has 100% to do with some things that are just moving from the first quarter into the first quarter of next year. But as I said in my comments in terms of feeling good about what's going on the development side, I mean, for the full year, we're going to hit, you know, historically high levels in signings. We're going to hit historically high levels on starts, and that is both of those excluding any sort of partnerships or acquisitions.

Kevin Jacobs: And obviously, that's then translating into very good results. We feel very good about the momentum going into next year. Most everybody was at our investor day in the spring where we articulated, you know, the sort of algorithmic story of 6 to 7% organically. And we feel very, very good about being able to deliver on that. Obviously, this year is going to be, you know, above the higher end of that because of some inorganic things.

Kevin Jacobs: But if we fast forward to next year, our expectation certainly is organically that we will be solidly in that range just given the signings, the starts, and looking at how that's going to play out in the next couple of years.

Carlo Santarelli: And our next question will be from Carlo Santarelli from Deutsche Bank. Please go ahead.

Christopher Nassetta: Hey Chris, I think you addressed most of what I was going to ask, but at the end of your remarks there, you did talk about organic growth and the outline you laid out at Analyst Day. When you think about contract acquisition spend over the next several years and acknowledge that 6% net unit growth range, should we be thinking something similar to what you've been spending in terms of contract acquisition spend this year to date, last, etc. ?

Christopher Nassetta: Yes, well, last year was elevated because of a few very specific deals, which we've noted over the last couple of calls. This year will moderate and be lower than last year, and I think on a go-forward basis, I'd look at the next few years as sort of being comparable to where we'll end up this year. We're not really seeing any material difference, notwithstanding a lot of noise in the market. I think in the quarter last year, Kevin helped me. Our key money percentage of deals in the second quarter was like 7 or 8 percent.

Kevin: This year will moderate.

Speaker Change: And be lower than last year, and I think on a go forward basis I look at the next few years as sort of being comparable comparable to where it will end up this year, we're not really seeing any material difference notwithstanding a lot of noise in the market.

Speaker Change: I think in the quarter, Kevin help me or key money percentage of deals in the second quarter was like seven or 8% overall key money is still less than 10%, So 90 plus percent.

Christopher Nassetta: Overall, key money is still less than 10 percent, so 90-plus percent, fully free of any form of incentive, and we haven't really seen those stats really move around a whole lot. Again, we had an elevated year or two coming out of COVID because we got some really cool opportunities on some very big, super high-end luxury and resort convention type assets, and we took advantage of that, but we're getting back to more normalized levels, which again will be lower than last year and this year, and I think we'll continue at that kind of level over the next two or three years.

Speaker Change: Fully.

Kevin: Free of any form of incentive and we havent really seen those stats really move around a whole lot again, we had an elevated year or two coming out of Covid, because we got some really cool opportunities on some very big.

Kevin: Super High end luxury and.

Kevin: Resort Convention type assets, and we took advantage of that but.

Kevin: We're getting back to more normalized levels, which again will be lower than last year. This year and I think we'll continue at that kind of level over the next two or three years.

Christopher Nassetta: Great, thanks. And then you mentioned group pace plus 10 for this year and the outlook for the next few years, which you mentioned with mid-teens. In terms of 25, 26, what kind of percentage of your group's expected group room nights is on the books at present for 25? I don't have the exact number in my head, but I would guess at this point, it's probably 40 to 50 percent. And for 26, it's probably a quarter, something like that.

Speaker Change: Great. Thanks, and then you mentioned group pace plus.

Speaker Change: Plus 10 for this year and the outlook for the next few years, you mentioned mid teens.

In terms of 'twenty five 'twenty six what kind of percentage of your group as group expected group room nights on the books for.

Speaker Change: <unk>.

Speaker Change: In my head, but I would guess at this point for 25, it's probably 40% to 50%.

Speaker Change: For 2006, its probably a quarter something like that by the end of the year.

Christopher Nassetta: By the end of the year, you know, we'll probably be for 25, and we'll probably cross over at 60 to 70 percent. Those would be sort of the typical numbers. And the group is sort of getting back to, you know, pre-COVID typical levels. Like even if you look in the second quarter at group mix, it was pretty much at where we were pre-COVID. I mean, of the overall mix in Q2, it was 20 percent, which is exactly what it was pre-COVID. So it's sort of, you know, group; it's taken a while because of the long lead nature of it and planning and all that goes into it, particularly with the larger groups and the city-wide.

Speaker Change: It will be for 'twenty, five, we'll probably crossover at $60 to 70% those would be sort of the typical number than group is sort of getting back to pre COVID-19 typical levels like even if you look in the second quarter group mix it was pretty much at.

Speaker Change: Where we were pre Covid I mean of overall mix in Q2, it was 20% which is exactly what it was.

Speaker Change: Pre COVID-19, so it's sort of group, it's taken a while because of the long lead nature of it and planning and all that goes into it particularly with the larger groups in the city wides, but that.

Shaun Kelley: But that's, you know, that's sort of now hitting on all cylinders and normalizing. So, yeah, I would think it would be in those percentages. So I think it's a, you know, a very good indicator. We sit around this table, you know, with all of our senior team, including the head of sales and his team, and they feel very good. They're not, you know, they're not, there's no sense of, you know, sort of slowing down demand and pricing.

Speaker Change: That's sort of now hitting on all cylinders and normalizing. So yeah I would think it would be in those and those percentages. So I think it's a.

Speaker Change: A very good indicator, we sit around this very table.

Speaker Change: With all of our.

Speaker Change: Senior team, including head of sales and and his team in.

They feel very good they're not they're not there's no sense of sort of slowing on demand and pricing.

Shaun Kelley: And, you know, group demand, pricing, and overall attitude in that segment remains quite good, quite strong. And, as I mentioned in the comments, the booking window is extending. I mean, our overall booking window extended in the quarter and is at this point pretty much back to normal. The booking window obviously got super short during COVID, but it's pretty much now back to normalized levels, extended in the second quarter and pretty much got us back to pre-COVID levels, and the group booking window continues to extend just because people have to go further out; there's just not enough space available for them. Perfect. Thank you very much.

Speaker Change:

Speaker Change: Group demand pricing and overall attitude and that segment has remained quite quite good quite strong.

Speaker Change: And as I mentioned in the comments the booking window has is extending I mean, our overall booking window extended in the quarter and is at this point pretty much. The booking window is back to you know obviously got Super short during COVID-19, but it's pretty much now back to normalized.

Speaker Change: This level of extended in the second quarter and pretty much got us back to pre COVID-19 levels in the group.

Speaker Change: Window continues to extend just because people have to go further out theres, just not enough space available for their for their needs.

Speaker Change: Perfect. Thank you very much.

Christopher Nassetta: And the next question is from Shaun Kelley with Bank of America Merrill Lynch. Please go ahead.

Speaker Change: And the next question is from Shaun Kelley with Bank of America Merrill Lynch. Please go ahead.

Christopher Nassetta: Hi, good morning, everyone. Thanks for taking my question. Good morning, Chris. Good morning, Chris.

Shaun Kelley: Hey, good morning, everyone. Thanks for taking my question.

Shaun Kelley: Good morning, Chris So wanted to maybe just go high level and get a few your views on that.

Christopher Nassetta: So I wanted to maybe just go high level and get a few of your views on the kind of latest on the consumer and just maybe the broader macro. Obviously, there are a lot of cross currents out there. I think what we continue to see repeatedly is some softness and leisure at the margin in the U.S., you know, contrasting that with the fairly solid corporate environment. But behaviorally, what caught your eye, you know, just operationally through the quarter as we got into maybe the summer travel season? What do you think is changing at the margin? Thanks. Yeah, that's a great question.

Shaun Kelley: The kind of latest on the consumer and just maybe the broader macro obviously a lot of cross currents out there.

Greg: I think what we continue to see you repeatedly is some softness in leisure at the margin in the U S contrasting that with fairly solid corporate environment, but behaviorally what caught your eye just operationally through the quarter as we got into maybe the summer travel season, and what do you think is changing at the margin. Thanks, Greg.

Christopher Nassetta: Yeah, a great question, and obviously, we spent a lot of time talking to people and looking at a lot of data in our business. Let me do it maybe through the lens of walking around the world a little bit to, you know, talk about what's going on. So, starting with Asia, you know, maybe I'll finish at home, start with Asia-Pacific. Asia-Pacific, as you heard in Kevin's commentary, is sort of a tale of two cities, China and then APEC X China. So, in China, I think Kevin covered it nicely.

Speaker Change: Great question, and obviously, we've spent a lot of time.

Speaker Change: Talking to people and looking at a lot of data in our business. Let me do it maybe through the lens of walking around the world a little bit.

Speaker Change: Talk about what's going on so.

Christopher Nassetta: In China, there is actually, you know, a very significant amount of travel going on. We do expect to end the year sort of down, probably circa 5 percent, but what's going on in China is obviously they have, you know, economic issues, so their economy is slow, but really the travel business is still quite robust, but what's happening is they've opened up a lot of corridors for inter-Asia travel that is visa-free, and Chinese travelers love to travel, and they're going, getting out of China, and they're going around, and there's just not enough inbound travel yet into China.

Speaker Change: Starting with that maybe I'll finish at home start with Asia Pacific Asia Pacific as you heard in Kevin's commentary is sort of a tale of two cities, China, and then APAC ex China. So in China, I think Kevin covered it.

Kevin: Nicely in China, there is actually a very significant amount of travel going on we do expect to end the year sort of down probably circa 5%.

Speaker Change: But what's what's going on in China is obviously they have.

Speaker Change: Economic issues. So their economy has slowed but really the travel business is still quite robust, but what's happening is they.

Speaker Change: They've opened up a lot of core doors for inter Asia travel that is visa free in Chinese travelers love to travel and Theyre going getting out of China, and they're going around and there's just not enough inbound travel yet into China. There's just not enough flights from Europe, and the U S and other parts of the world to compensate for that and that's going to take time I mean.

Christopher Nassetta: There are not enough flights from Europe and the U.S. and other parts of the world to compensate for that, and that's going to take time. I mean, I was there during the quarter at a U.S.-China travel summit that the State Department sponsored with their equivalent, and we were talking about, you know, how we're going to get, you know, stimulate more travel, more flights, and by the way, the flights have tripled or quadrupled, you know, even since then.

Speaker Change: It was there.

Speaker Change: During the quarter U S. China travel summit that the state Department.

Speaker Change: <unk> with their equivalent and we were talking about how we're going to get.

Speaker Change: Stimulate more travel more flights and by the way the flights of trip tripled or quadrupled evens.

Speaker Change: Even since then so I mean, there is progress, but it's still going to take some time, so I think.

Christopher Nassetta: So, I mean, there is progress, but it's still going to take some time. So, I think China is a complex story, but that's what's going on. You know, travel in aggregate, similar to where it was, sort of not better or worse, but more people leaving, not enough coming in. I suspect over the next year or two, we will get to a different place.

Speaker Change: China is a complex story, but that's what's going on track.

Speaker Change: Travel in aggregate similar to where it was sort of not better or worse, but more people, leaving not enough coming in I suspect over the next year or two.

Speaker Change: We will get to a different place hopefully the economy starts to pick up but you'll have a lot more inbound travel the rest of Asia Pacific.

Christopher Nassetta: Hopefully, their economy starts to pick up, but you'll have a lot more inbound travel. The rest of Asia Pacific is quite strong, you know, particularly led by Korea and Japan, and we haven't seen any real signs of weakening in those markets, and I should say India, for that matter. No real signs of weakening.

Speaker Change: Quite strong, particularly led by Korea and Japan.

Speaker Change: Japan, and we haven't seen any real signs of weakening in those markets and I should say, India for that matter no real signs.

Christopher Nassetta: And those are the real APAC ex-China markets that are driving performance. And then coming to EMEA, again, you know, sort of a bit of a tale for cities. The Middle East remains quite strong pretty much across the board. Europe, I would say, is still very, very strong in an absolute sense, but a touch weaker than what we had seen a quarter ago, led by what you're talking about, you know, implied in your question, which is some of the leisure business.

Speaker Change: Of weakening and those are the real APAC.

Speaker Change: APAC ex China markets that are driving performance and then coming to <unk>.

Speaker Change: EMEA.

Speaker Change: Again sort of a bit of a tale of two cities the middle East remains quite strong pretty much across the board Europe.

Speaker Change: I would say is still very very strong in an absolute sense, but a touch weaker than what we had seen a quarter ago led by what you are talking implied in your question, which is some of the leisure business again youre still at the high end of our <unk>.

Christopher Nassetta: Again, you're still at the high end of high single-digit sort of year over year growth. So it's not like it's a bad story. It's just a little, it's come off just a little bit.

Speaker Change: High single digit sort of year over year growth. So it's not like it's a it's not a bad story, it's just a little its come off.

Christopher Nassetta: And then coming, you know, coming, you know, I can keep lots of other places in the world, but these are the big markets. Coming home to the U.S. is exactly what's implied, in sort of what you would guess from what I've already said. If you break apart the segments, the group is still raging, you know; business transient is still grinding up, not at a rapid pace, but still grinding up. Both of those segments maintain great pricing power.

Speaker Change: A little bit and then coming coming I can keep lots of other places of the world. But these are the big markets coming home to the U S is exactly what's implied and sort of what you would guess from what I've already said if.

Speaker Change: If you break apart the segments.

Speaker Change: The group is still raging business transient.

Speaker Change: Grinding up not at a rapid pace, but still grinding up both of those segments, maintaining great pricing power.

Christopher Nassetta: And then leisure transient, you know, has been normalizing, you know, because we're just getting back to a more normal life. And it was at very elevated levels, you know, particularly on weekends, but broadly. And so we continue to see sort of normalization there. And the consumer, if you break it apart, you know, and sort of segments in the lower sort of half of consumers, maybe even the lower three quarters. I mean, the data's all out there; they had bank accounts and checking accounts full of money coming out of COVID.

Speaker Change: And then leisure transient has been normalizing because we're just getting back to a more normal life and it was at very elevated levels, particularly.

Speaker Change: Particularly on weekends, but broadly and so we continue to see sort of a normalization there and the consumer if you break it apart.

Speaker Change: Sort of segments in the lower half of consumers, maybe even the lower three quarters. I mean, you can read the data is all out there.

Christopher Nassetta: They've spent all that money. They're now borrowing more. And so they have less available, less disposable income, and capacity to do anything, including travel. You go up to the upper echelons, and people still have pretty fat bank accounts and checking accounts and wherewithal. And so the impact of that is some continued normalization on the Leisure Transient. And the reason I use normalization is not to be cute.

Speaker Change: They have bank accounts.

Speaker Change: Checking accounts for the money.

Speaker Change: Coming out of Covid, they've spent all that money. They are now borrowing more and so they have less available less disposable income and capacity to do anything including travel you go up to the upper echelons and people still have pretty fat banking accounts and checking accounts and wherewithal and so.

Speaker Change: What the impact of that as you know some.

Speaker Change: Continued normalization on leisure transient and the reason I use normalization does not to be cute I mean for the full year.

Speaker Change: If you look at it we think we will globally see growth in all segments I said that quickly in my prepared comments it will be very very low in leisure transient.

Christopher Nassetta: I mean, for the full year, if you look at it, we think we will globally see growth in all segments. I said that quickly in my prepared comments. It'll be very, very low in Leisure Transient but positive, a little bit higher in Business Transient, and then very, very strong for the reasons I've described in meetings and events. So it is not, at least in our world and what we have seen year to date and what we expect for the rest of the year, it's not cratering in any way. It's just soft, but it's definitely softening for the reasons I described.

Speaker Change: But positive a little bit higher on business transient and then.

Speaker Change: Very very strong for the reasons I've described on.

Speaker Change: On meetings and events. So it is it is not.

Speaker Change: At least in our world and what we have seen year to date and what we expect for the rest of the year, it's not cratering in any way, it's just soft.

Speaker Change: But definitely softening for the reasons I described.

Speaker Change: Thank you so much.

Stephen Grambling: Thank you so much. And the next question will be from Stephen Grambling from Morgan Stanley. Please go ahead.

Speaker Change: And the next question will be from Stephen Grambling from Morgan Stanley. Please go ahead.

Kevin Jacobs: Hi, thanks. We'd love to hear some of the incremental detail on effectively the nine...

Stephen Grambling: Alright, Thanks, we'd love to hear incremental detail on effectively the non revpar related.

Speaker Change: Both within the management and franchise fees as well as the <unk>.

Stephen Grambling: Other revenue line as we just think about how the outlook has changed and any puts and takes to think about not only this year, but maybe longer term.

Kevin Jacobs: Yeah, sure, Steve. And I think, look, obviously, the non-RefPAR-driven fees outperformed. We still had very strong core fee growth in the quarter, you know, based on our algorithm, but non-RefPAR-driven fees outperformed in the first half of the year. Some of that is a little bit of timing as it relates to the trajectory of the quarters of this year. But I'd say longer term, all of those parts of the business, right, we've talked about license fees, we've talked about other income, we've talked about ancillary lines of business, our investor day, all of those parts of the business should continue to grow at algorithm or above over time.

Speaker Change: Yeah, sure, Steve and I think look obviously those the non res par driven fees outperformed we still had very strong core fee growth in the quarter based on our based on our algorithm, but non revpar driven fees outperformed in the first half of the year. Some of that is a little bit of timing as it relates to the over the trajectory of the quarters of this.

Stephen Grambling: Year.

Stephen Grambling: And but I would say longer term all of those parts of the business right. We've talked about license fees. We've talked about other income we've talked about ancillary lines of business, our investor day, all of those parts of the business should continue to grow at algorithm or above over time, so you're seeing a little bit of timing issues. This year, but then over time it should be additive to the algorithm overall.

Kevin Jacobs: So you're seeing a little bit of timing issues this year, but then over time, it should be additive to the algorithm overall. And just to clarify, are the timing issues just related to, you know, deals that were struck, partnerships that were struck, or just lapping over changes in terms? Not on partnerships or deals, just a little bit of comparability year over year and just a little bit of strength in the early part of the year in some of those areas. Got it, thank you. And there's a handful, I should say a handful of one-time items in there, but nothing related to the Parker.

David Katz: Thank you. And the next question will be from David Katz with Jefferies. Please go ahead.

Speaker Change: And just to clarify are the.

Speaker Change: Timing issues just related to <unk>.

Speaker Change: Deals that were strong partnerships that were struck or just lapping over changes in terms.

Speaker Change: Not not on partnerships or deals just a little a little bit of comparability year over year in just a little bit of strength in the early part of the year and some of those parts of the business.

Speaker Change: Got it thank you.

Hans: Hans I should say a handful of one time items in there, but not nothing related to the to the partnerships.

Speaker Change: Thank you and the next question will be from David Katz with Jefferies. Please go ahead.

David Katz: Hi, good morning, everyone. Thanks for taking my question. And it's perfectly suited because I wanted to follow on to the prior one, which is related to non-REV PAR fees.

David Katz: Hi, Good morning, everyone. Thanks for taking my question and it's perfectly.

David Katz: Should it because I wanted to follow on to the prior one.

David Katz: Which is related to non revpar fees can you talk a bit about your ability to affect or influence that growth meaning.

Christopher Nassetta: Can you talk a bit about your ability to affect or influence that growth, meaning, you know, is there just more resources toward identifying and executing on those opportunities? Or, you know, is the world just evolving in a way that's sort of driving that growth on your behalf? You know, which benefits from your scale?

Speaker Change: Is there just more resource toward identifying and executing on those opportunities.

Speaker Change: Or is the world just evolving in a way that's sort of driving that growth on your behalf.

David Katz: Which benefits from your scale, Yeah I mean.

Christopher Nassetta: Yeah, I mean, being born and raised a control freak, nothing, I don't view anything as outside of some ability to have influence, other than maybe the super broad macro, which we'll, I'm sure, talk more about at some point. So there are, David, a bunch of different things we can do. I'm not going to get into granular detail, but, I mean, you can see it in some of the actions that we publicly talk about, like with our Amex co-brand cards and, you know, the things that we're doing there to sort of reintroduce cards and change the benefits.

David Katz: Being born and raised a control freak nothing I don't view anything is outside of some ability to have influenced other than maybe the super broad macro which will I'm sure talked more about at some point.

David Katz: So there are David a bunch of different things, we can do I'm not going to get into.

Speaker Change: Granular detail, but I mean, you can see it in some of the actions that we publicly talk about like with our Amex co brand cards and the things that we're doing there to sort of reintroduce cards changed the benefits and so I think I think the way you should look at it is as Kevin described we are in.

Christopher Nassetta: And so I think the way you should look at it is, as Kevin described, we're in a constant state of dialogue with all of our third-party partners on how to maximize these cards. We have a very serious seat at the table, you know; we have lots of contractual rights built into our relationship, but we also, in the bulk of, and particularly in our largest one with American Express, have a long-standing and very close partnership.

Speaker Change: Constant state of dialogue with all of our third party partners on how to maximize these cards, we have a very serious seat at the table. Yeah. We have we have lots of sort of contractual rights.

Speaker Change: Built into our relationship, but we also and.

Speaker Change: And the bulk of them in particularly in our largest one with American express have a long standing and very close partnership.

Christopher Nassetta: It's always in both of our interests to make sure these things are performing. And so we both have dedicated teams in our companies, in the case of Amex, you know, we and they, but in our other partnerships that we have as well, and we have people literally working every day to figure out what we could do to modify the offer to customers to ultimately get them more to sign up, in the case of CoBrand, and to enhance their desire to spend. We're in constant dialogue with Hilton Grand Vacations. If you think about it, AMX and HGV are probably the two biggest players in the value proposition there.

Speaker Change: Always in both of our interests to be making sure. These things are performing and so we both have dedicated teams in our companies in the case of Amex.

Speaker Change: But in our other partnerships that we have as well and.

Speaker Change: And we have people literally grinding everyday to figure out to figure out what.

Speaker Change: Sorry to figure out what the what we could do to modify the offered to customers to ultimately get them more to sign up in the case of co brand.

Speaker Change: And to enhance their their desire to spend.

Speaker Change: We're in constant dialogue with Hilton Grand Vacations, do you think about at Amex and H D. V are probably the two biggest about the.

Speaker Change: The value proposition there.

Christopher Nassetta: So, as you can see, in a very material way, we were deeply involved in, you know, the blue, green, and diamond acquisitions. Those, you know, those were things that we worked on very closely with them to, you know, ultimately drive a much better outcome by effectively creating new brands within that space. So, I could go on and on. The short answer is we don't leave anything to chance. I mean, we're all over this stuff. We have rights, and we have great partnerships, and we are very aligned, always trying to figure out how to modify programs and adjust the offers to customers to drive better outcomes.

Speaker Change: You can see.

Speaker Change: In a very material way, we were deeply involved in the blue Green and diamond acquisitions those.

Speaker Change: Those were things that we worked on very closely with them.

Speaker Change: To ultimately drive a much better outcome by effectively creating new brands within that space. So I could go on and on the short answer is we don't leave anything for chance I mean, we're we're all over this stuff we have rights and we have great partnerships.

Speaker Change: And we are very aligned always trying to figure out how to modify programs and adjust the offers to customers to drive better outcomes.

David Katz: Super helpful. Lots more on this. Thanks very much.

Speaker Change: Super helpful lots more on this thank you very much.

Robin Farley: Thank you. And the next question is from Robin Farley with UBS. Please go ahead.

Speaker Change: Thank you and the next question is from Robin Farley with UBS. Please go ahead.

Christopher Nassetta: Great, thanks. Just circling back to the unit growth guide for next year, you have something like 30% more rooms under construction than you did in 2019, if my math is right. So you don't really necessarily need an acceleration in conversions, but some others are talking about that. I wonder if you could just sort of characterize what you think is going on in the conversion environment in terms of, you know, are there things that would drive that to accelerate in 2025? Well, I mean, yeah, I mean, I agree.

Robin Farley: Great. Thanks, just circling back to the go.

Robin Farley: Go ahead for for next year.

Robin Farley: You have a I think it's something like 30% more rooms under construction than you did in 2019, if my math is right. So.

Speaker Change: Really necessarily need an acceleration in conversions.

Speaker Change: Some others are talking about that I wonder if you could just sort of characterize what do you think is going on in.

Speaker Change: And the conversion environment in terms of are there things that would drive that to accelerate in 2025.

Christopher Nassetta: That's why I feel good about being in the six to seven percent range. I mean, effectively, if you take out all the partnerships and everything, it is, by being solidly in that range, it is accelerating. So it is organically reflective of the strength.

Speaker Change: Well for you.

Speaker Change: Typically yes, I mean I agree we that's why I feel good about being in the 6% to 7% range I mean, effectively if you take out all of the partnerships and everything it is by being solidly in that range. It is accelerating so it is organically reflective of the strength conversions, we do think our.

Christopher Nassetta: Conversions, you know, we do think they are accelerating. I mean, for the full year, we're gonna have conversions over 50%, but again, that's in part driven by partnerships, you know, acquisition, and partnership. If you strip all of that stuff out, conversions are going to go from like 30% to just under 40%. So we are having great success with conversions.

Speaker Change: I mean, you know for the full year.

Speaker Change: We're gonna have conversions over 50%, but again, that's in part driven by.

Speaker Change: Partnerships, you know acquisition and partnership if you strip all of that stuff out.

Speaker Change: Conversions are going to go from like 30% to just under 40%. So we are having great success and conversions. We believe strongly that has everything to do with the strength of our brands and the strength of our commercial engines driving better outcomes for our owners and so we are getting a hugely disproportionate.

Robin Farley: We believe strongly that this has everything to do with the strength of our brands and the strength of our commercial engines driving better outcomes for our owners, and so we are getting a hugely disproportionate share of conversions, and if we do our job, which we intend to do, I think that will continue. So the sixth, you know, being solidly in six to seven next year, is reflective of the benefit of the acceleration we're seeing and signing starts conversions, all of that baked in.

Speaker Change: <unk> share of conversions and if we do our job, which we intend to do we think that will continue so.

Speaker Change: The six being solidly in 6% to seven next year is reflective of the benefit of.

Speaker Change: The acceleration, we're seeing in signings starts conversions all of that baked in it's obviously a little bit early.

Robin Farley: It's obviously a little bit early, you know, in that it's August to give a number, you know, to give a tighter range, but as we get closer to it, we will, but we feel very comfortable being solidly in Thanks. That's very helpful.

Speaker Change: And that it's.

Speaker Change: August to give the number you know to give a tighter range, but as we get closer to it we will but we feel very comfortable being solidly in that range.

Speaker Change: Okay. Great. Thanks, that's very helpful. And then if I could just one clarification.

Kevin Jacobs: And then, if I could, just one clarification, Kevin's comments on kind of the timing of fee growth and that the first half outperformed and the idea that it will, over time, it will, you know, that sort of algorithm is the same. Just, does that mean, like, sort of for the full year, the algorithm will be the same, or was that more that, like... I'm just thinking about if the second half would be slightly below the algorithm, but the full year still comes in in line, or with the comment that the idea that the full year... Yeah, if you look at our guidance, that is what is implied.

Speaker Change: Kevin's comments on kind of the timing of gross.

Speaker Change: Growth in the first half outperformed and the idea that it will over time it will.

Speaker Change: Sort of algorithm is the same just does that mean like sort of for the full year. The algorithm will be the same or was that more of it.

Speaker Change: I'm just thinking about it in second half.

Speaker Change: Would be slightly below algorithm with the full year still comes in in line or was the comment that yes, yes.

Kevin Jacobs: I mean, the first part of the year, in terms of, I don't know what metric you're looking at, but if you just look at EBITDA growth, it will be higher in the first half of the year because of some of the stuff that Kevin was talking about in terms of timing. As a result, it will be lower, but for the full year, it will be in the ranges we talked about, which when I round it off, is sort of like EBITDA growth of 10%.

Speaker Change: If you look at our guidance.

Speaker Change: That is what is implied I mean, we the first part of the year in terms of I don't know what metric you're looking at that but if you just look at EBIT growth.

Speaker Change: It will be higher in the first half of the year because of some of the stuff that Kevin was talking about on timing.

Speaker Change: As a result will be lower but for the full year it'll be in the range as we talked about which when I rounded as sort of like EBITDA growth of 10% I mean, I think you know.

Kevin Jacobs: I mean, I think, and I'm patting us on the back, but I guess that's my job. I mean, when I think about what's going on in the world and our ability to do that, I think it's striking. The reality is, as much as I said I'm a control freak and I wish we could control everything, we don't control the macro. You know that better than we do, and the macro environment is weakening a touch.

Speaker Change: Pat us on the back, but and I guess, that's my job I mean, when I think about.

Speaker Change: What's going on in the world and our ability to do that I think it's striking the reality is as much as I said I'm a control freak and I wish we could control everything we don't control. The macro you know that better than we do in the macro environment is weakening a touch okay. That's just what's going on not dramatically so but it tweaking it touch thus why we brought.

Kevin Jacobs: Okay, that's just what's going on, not dramatically so, but it's weakening a touch. That's why we brought the top end of our REBPAR guidance down and shaved a little bit of the top end of our EBITDA guidance. Frankly, a lot of that shave had to do with FX changes.

Speaker Change: At the top end of our of our Revpar guidance down in the top.

Speaker Change: I haven't shaved a little bit of the top end.

Speaker Change: Our EBITDA guidance frankly, a lot of that shave had to do with FX changes honestly, if you take out FX it didn't really move a whole lot.

Christopher Nassetta: Honestly, if you take out FX, it didn't really move a whole lot from an EBITDA point of view, but even in the face of all that, at the same time that REBPAR, the midpoint of REBPAR is coming down, unit growth is going up, and the result is pretty much the same, which is, if you think about back to investor day, we said we were going to deliver plus or minus 10% E We're going to do it, even in an environment that I would argue, from a macro point of view, is not super strong and is softening a touch because of the success that we're having in executing what I think is a very thoughtful plan and strategy on the development side. We are still getting to circa 10% EBIT growth in that environment.

Speaker Change: From an EBITDA point of view, but even in the face of all that at the same time that revpar. The mid point of Revpar is coming down.

Speaker Change: The mid point of you.

Speaker Change: Unit growth is going up and the result is pretty much the same which is if you think about back to Investor day, We said, we're going to deliver plus or minus 10% EBIT growth on average we're going to do it even in an environment that I would argue from a macro point of view is not super strong and maybe you know and and softening it.

Speaker Change: It's because of the success that we're having and executing what I think is a very thoughtful plan and strategy on the development side, we are still getting to circa 10% EBIT growth in that environment and I think.

Christopher Nassetta: I think that is a demonstration both of the resilience of the core business and the model, and this is PADDUS on the back, and I'm patting Kevin on the back as he runs development, the success that we're having with what is a really good development strategy being super well-established. Great. Perfect. Thank you.

Speaker Change: You know that that is a demonstration both the resilience of the business the core business and the model and this is the Pat us on the back and then Pat and Kevin on the back as he runs development the.

Speaker Change: The success that we're having.

Kevin: What is a really good development strategy being super well executed.

Speaker Change: Great perfect. Thank you.

Smedes Rose: And the next question is from Smedes Rose with Citi. Please go ahead.

Speaker Change: And the next question is from Smedes Rose with Citi. Please go ahead.

Kevin Jacobs: Hi, thanks. Just to follow up on the growth outlook a little bit, just looking at sort of the implied REVPAR ranges, it's kind of one and a change to three and a change through the back half of the year. I mean, is the higher end just a reflection of maybe what happens with US economic growth? Or is there something else in particular that you think could drive you towards the higher end of that implied outlook? Yeah, I mean, it implies two to three.

Smedes Rose: Hi, Thanks.

Smedes Rose: Just a follow up on the growth outlook, a little bit just looking at sort of the implied revpar range is it kind of one and change to Korean change through the back half of the year.

Speaker Change: It's a higher and that's a reflection of maybe what happens with the U S economic growth or is there something else in particular that you think could drive you towards the higher end of that implied outlook.

Kevin Jacobs: Yeah, I mean it applies two to three for really both quarters, Smedes. I think if you think about it, if you look at what's going on so far in the third quarter, it has been a touch softer.

Speaker Change: I mean, it implies two to three for really for both quarters Smedes I think if you think about it if you look at what's going on so far in the third quarter. It has been a touch softer.

Kevin Jacobs: And as we get into the fourth quarter, the expectation would be that as the bigger business travel months of October and the first part of November kick in, particularly in the U.S., there would be a little bit of strengthening in Red Park growth, also supported by, I should mention, our group position. So if you think about that, and then if you think about the mix of the business, we still are largely 70% plus or minus of our revenue comes from the United States.

Speaker Change: And as we get into the fourth quarter, the expectation would be as the bigger business travel months of October and the first part of November kick in particularly in the U S that there would be a little bit of strengthening in revpar growth.

Speaker Change: As supported by also by I should mentioned by our group position. So if you think about that and then if you think about the mix of the business. We still are largely 70% plus or minus of our revenue comes from the United States and so what happens in the U S will be a driver, but supported by our group position supported by strength in the bigger group hotels in the urban markets we think.

Kevin Jacobs: And so what happens in the US will be a driver. But supported by our group's position, supported by strength in the bigger group hotels in the urban markets and what we think will be stronger business travel in the early part of the fourth quarter, that's kind of what's playing out over the balance.

Speaker Change: And what we think will be stronger business travel in the early part of the fourth quarter, that's kind of what's playing out over the balance of the year.

Speaker Change: Thank you appreciate it.

Brandt Montour: And the next question is from Brandt Montour with Barclays. Please go ahead.

Brandt <unk>: And the next question is from Brandt <unk> with Barclays. Please go ahead.

Christopher Nassetta: Good morning, everybody. Thanks for taking my question. Good morning. So, good morning.

Brandt: Good morning, everybody. Thanks for taking my question good morning.

Christopher Nassetta: So, Chris and Kevin, implied in the fact that EBITDA, you know, the guidance for the full year didn't really come down, but you did cut REVPAR. We're left to assume that there were some, you know, incremental fees potentially from that extra NUG from SLH. Correct me if I'm wrong there, but the follow-on question is, if you could just remind us the economics of the SLH hotels and what you're implying by sort of, you know, accruing fees from them as we go through the rest of the year.

Brandt: Good morning, Chris and Kevin So implied in the fact that EBITDA.

Brandt: The guidance for the full year didn't really come down, but you did cut revpar were left to assume that there was some.

Speaker Change: Incremental fees potentially from that extra nug from SLA <unk>.

Speaker Change: Correct me, if I'm wrong, there, but the follow on question is if you could just remind us the economics of the SL H hotels, and what Youre implying.

Speaker Change: Sort of.

Speaker Change: Our crew and fees from them as we go through the rest of the year.

Kevin Jacobs: Yeah, I think your implication is right. Some of it is, you know, fees are doing better in SLH. Some of its non-REBPAR fees are doing better. And the way to think about economics on SLH is that we get sort of normal fees relative to what we would get in a typical franchise arrangement, but for the fact that we get paid on the business we generate there versus 100% of revenues. Now, realize that, you know, the average rate of these hotels is probably five to seven times, six or seven times our system-wide average rate. So, in the end, we feel... Very good about the economics.

Speaker Change: I think I think your implications right. Some of it is you know fees doing better necessarily some of its non revpar fees.

Speaker Change: Doing better and the way to think about economics on SL ages, we get sort of a normal fees relative to what we would get a typical franchise arrangement, but for the fact that we get paid on the business we generate.

Speaker Change: There versus a 100% of revenues now recognize that you know the average rate of these hotels is probably five to seven times six or seven times our system wide average rate so.

Speaker Change: And then we feel very.

Speaker Change: Very good about the economics.

Brandt Montour: Okay, that's super helpful. And then the follow-on question, just a clarification on some of your comments, Kevin, on the back half of the REVPAR, I know the U.S. is the big one, but the U.S. and China may be taken separately. What are you implying for the back half of those two buckets versus the July run rate? Are you implying any re-acceleration or sort of straight line, or what's qualitatively what you guys are thinking there?

Speaker Change: Okay. That's super helpful and then.

Speaker Change: The follow on question just a clarification on some of your comments Kevin on the back half Revpar.

Speaker Change: I know U S is the big one, but the U S and China may be taken separately what are you implying for the back half on those two buckets versus the July run rate do you are you, implying any reacceleration or sort of straight lining or whats qualitatively. What you guys were thinking there.

Kevin Jacobs: Yeah, I mean, we haven't given a July run rate for us, but if you look at what's going on in the industry, it does imply an acceleration in the back half of the year relative to July, if that's your specific question.

Speaker Change: Yeah, I mean, we didn't get we haven't given a July run rate for us, but if you look at what's going on in the industry. It does imply it does imply an acceleration in the back half of the year relative to July if that's your specific question.

Christopher Nassetta: And I think that acceleration, Kevin said this, Brandt, would be fourth-quarter oriented. I think third quarter, you know, you're in a transition where leisure is softer and you don't have all the business travel and the meetings and events. So third quarter, if you look at it third versus fourth, I think third quarter will be weaker, fourth quarter a lot stronger for the reasons Kevin described.

Speaker Change: And I think that acceleration Kevin said this brand would be fourth quarter oriented I think third quarter, you will likely see you're in a transition where leisure is softer and you don't have all the business travel in the meetings and events of the third quarter. If you look at it.

Speaker Change: Third versus fourth I think third quarter will be weaker fourth quarter, a lot stronger for the reasons Kevin described one.

Christopher Nassetta: One, you know, we fully expect more normalized business transient travel, particularly as you get, you know, a week or so past Labor Day and into October, November. It will get hot, and we have a very strong group base in the fourth quarter that supports a stronger fourth quarter than the third.

Speaker Change: We.

Speaker Change: Fully expect a more normalized business transient travel, particularly as you get.

Speaker Change: A week or so past labor day and into October November it will get cooking and we have a very strong group base in the fourth quarter.

Speaker Change: Towards a stronger fourth quarter than third.

Speaker Change: Perfect. Thanks, everyone.

Patrick Scholes: And the next question is from Patrick Scholes with Truist Securities. Please go ahead.

Speaker Change: And the next question is from Patrick Scholes with Truth Securities. Please go ahead.

Patrick Scholes: Hello. Good morning, everyone.

Patrick Scholes: Hello, Good morning, everyone.

Christopher Nassetta: Okay, morning.

Patrick Scholes: Thanks, Good morning.

Patrick Scholes: Have you seen any impact on ADR growth or even customer demand from bundling the hotel rate and the resort or amenity fees into a single rate quote? Thank you.

Speaker Change: Have you seen any impact on <unk>.

Speaker Change: <unk> growth or even.

Speaker Change: Clustered customer demand.

Speaker Change: From bundling the hotel rate and.

Speaker Change: The resort or amenity fees into a single rate quote. Thank you.

Kevin Jacobs: No, not yet. I think, look, it's sort of early days on sort of those changes, but I mean, really, in the end, that's about more transparency, and we do not see any impact on ADA. We have not seen any impact, nor do we expect any from that change.

Speaker Change: No not yet I don't think look it's sort of early days on sort of those changes, but really in the end that's about more transparency and we do not have any impact.

Speaker Change: We've not seen any impact nor do we expect any from that change.

Patrick Scholes: Okay, and a follow-up question. I'm here for Kevin.

Speaker Change: Okay.

Speaker Change: A follow up question.

Speaker Change: Okay.

Speaker Change: Mike or Kevin.

Kevin Jacobs: You folks have done exceptionally well with EBITDA margin expansion, really far and away the best in my coverage universe since 2019. Any high-level thoughts about how much more room you have to go, or how we should think about potential for EBITDA margin growth over the next several years? Thank you.

Speaker Change: Folks have done exceptionally well.

Speaker Change: With EBITDA margin expansion really far and away the best in my coverage universe since 2019.

Speaker Change: Any high level thoughts.

Speaker Change: About how much more room, you have to go or how should we think about potential core EBITDA margin.

Speaker Change: Growth over the next several years. Thank you yeah I think thanks for the question Patrick We appreciate that because we think it's been a very good story, we talked about this a little bit at the Investor day, but for those those who weren't there or need. A reminder, we think there is 50 to 100 basis points a year of embedded margin growth increases in the business as we shift obviously the growth in the business is all through the <unk>.

Patrick Scholes: Yeah, I think, thanks for the question, Patrick. We appreciate that because we think it's been a very good story. We talked about this a little bit at Investor Day, but for those who weren't there or need a reminder, we think there's 50 to 100 basis points of embedded margin growth increases in the business. As we shift, obviously, the growth in the business is all through the fee segment. So those fees come in at 100% margin and improve the margins of the business.

Speaker Change: Segment, so those fees come in at 100 at 100% margin and improve the margins of the business and so that combined with really good cost control, which I think we have.

Patrick Scholes: And so that combined with really good cost control, which I think we have, you know, like Chris said earlier, I think we'll pat ourselves on the back a little bit on that. I think we're really good at being disciplined about cost control. And so what that does is, you can see our margins are 1000 basis points higher than they were pre-COVID. And we think that that will, Okay, thank you for the clarification.

Chris: Like Chris said earlier, I think well Pat ourselves on the back a little bit on that I think we're really good about being disciplined about cost control and so what that's done as you can see our margins are a 1000 basis points higher than they were pre COVID-19 and we think that that will continue to grow again there'll be different there'll be puts and takes depending on what's going on in the economy and how we do and where we are relative to our to our.

Speaker Change: Annual algorithm projections, but for the most part you should think about it as 50 to 100 basis points.

Speaker Change: Better growth and some years will be better. Some worse. This is gonna be a year that is better. So I think we will we expect to be over 100 basis points in EBIT margin growth this year.

Speaker Change: Okay.

Speaker Change: Q4.

Speaker Change: Macquarie.

Speaker Change: I'm all set.

Speaker Change: Okay.

Chad Beynon: And the next question is from Chad Beynon with Macquarie. Please go ahead.

Speaker Change: And the next question is from Chad Beynon with Macquarie. Please go ahead.

Christopher Nassetta: Morning. Thanks for taking my question. I wanted to focus on conversions, which for you guys and a lot of your peers are just becoming a bigger component of net unit growth and maybe, you know, said differently, a more predictable piece. So as you think about the net unit growth beyond 25 and 26 and some of the new brands that you've rolled out, which are helping with conversions, should this lift just in terms of the percentage of NUG and how does the cycle play into that with Thanks. Yeah, it's a really good question. I think it's a good idea...

Good morning, Thanks for taking my question wanted to focus on conversions, which for you guys and a lot of your peers are just becoming a bigger can.

Chad Beynon: Component of net unit growth and maybe said differently a more predictable piece. So as you think about the net unit growth beyond and $25 26, and some of the new brands that you've rolled out which are helping on conversions should this lift just in terms of percentage of.

Speaker Change: Nug and how does the cycle play into that with with rates coming down.

Christopher Nassetta: Yeah, it's a really good question. I think it's obviously a bit of both. I mean, we've had years in the past; this is the part of the cycle where, you know, particularly when capital gets more constrained and more expensive for new builds. And this is the part of the cycle where you typically lean into conversions because they're just easier to finance. You've got a trading hotel, you've got cash, you know, it's cash flowing.

Speaker Change: Yeah. It's a really good question I think it's obviously a bit of both I mean, we've had years in the past. This is the part of the cycle, where particularly when capital gets more constrained and more expensive for new builds and this is the part of the cycle, where you typically lead into conversions because they're just easier to finance you've got a trading hotel you've got cat, it's cash flowing we are obviously.

Christopher Nassetta: We are obviously leaning into our lifestyle brands, which are soft brands that tend to be more driven towards conversions. Sparck is a 100% conversion brand, so we are doing things strategically to increase our share of conversions. So I think it's both. I think part of it's cyclical in nature. Like I said, you've seen times when conversions have been a bigger part of the story. This is just a part of that cycle. But some of these are like, you don't want to say permanent, but sort of semi-permanent where we're doing things strategically to focus on being able to take share, and we're doing it. I think last year for the full year, we were something like 40% of the conversion deals done in the entire U.S. We're higher than that so far this year.

Speaker Change: Leaning in to our lifestyle brands, which are soft brands tend to be more driven towards conversions spark is 100% conversion brand. So we are doing things strategically to increase our share of conversion. So I think it's both I think its part of it is cyclical in nature like I said like I said, you've seen times when conversions have been a bigger part of the story. This is a part of that.

Speaker Change: That cycle, but some of these are like.

Speaker Change: Permanent but sort of semi permanently where we're doing things strategically to focus on being able to take share and we're doing it I think I think last year for the full year, we were something like 40% of the conversion deals done in the entire U S. We're higher than that so far this year and so are.

Chad Beynon: And so the network effect we create, the red part next we drive, the fact that our brands are stronger, and the fact that we're strategically focusing on it, I think should mean that it's additive to the overall growth trajectory of the company over time rather than just being cyclical. Thank you very much. The next question is from Duane Pfennigwerth with Evercore ISI. Please go ahead. Hey, good morning. Thank you.

Speaker Change: The network effect, we create the Revpar next we drive the fact that our brands are stronger and the fact that we're strategically focusing on it I think should mean that it's additive to the overall growth trajectory of the company over time, rather than just being cyclical.

Speaker Change: Cyclicality matters as well.

Speaker Change: Thank you very much sir.

Speaker Change: Yeah.

Duane <unk>: The next question is from Duane <unk> with Evercore ISI. Please go ahead.

Duane Pfennigwerth: The next question is from Duane Pfennigwerth with Evercore ISI. Please go ahead. Hey, hey, good morning.

Duane <unk>: Hey, good morning, Thank you.

Duane <unk>: Alright, just on spark you mentioned 27 hotels any themes.

Speaker Change: In terms of the brands or types of properties that are converting from.

Speaker Change: And what the average investment by owners is and then my follow up on the 400 S. L. H generally where are they located in any more detail you can offer about the profile.

Speaker Change: All of these properties coming in as well thank you.

Kevin Jacobs: The first part I would say about Spark is everything is going the way we thought and the way it's planned. Ninety-five percent plus are from third-party brands. I'm not going to get into specifically which brands those are from, but I think people can figure that out, and it's been sort of what we've expected. The owner investment is coming in line with what we thought. There have been a little bit of increases in construction costs, as has been well documented in the industry, but they are still coming in within the ranges.

Speaker Change: Yes, so I'll take the first part I would say on spark is everything is going the way we the way we thought and the way. It's planned I mean 95 plus percent of them are from third party brands I think not going to get into specifically, which brands. Those are from but I think people can figure that out and it's been sort of what we what.

Speaker Change: We've expected.

Speaker Change: And the owner investment is coming in in line with what we with what we thought there had been a little bit of increases in construction costs has been well documented in the industry, but still coming in within the ranges and then so far early days the Revpar index for the performance of the hotels has been quite strong and again, maybe even a little bit better than what we've expected which is key.

Kevin Jacobs: And then so far, in the early days, the REVPAR index, the performance of the hotels has been quite strong and, again, maybe even a little bit better than what we've expected, which is creating momentum in that area. SLH breaks down 60 percent in EMEA, 20 percent in the Americas, and 20 percent in Asia Pacific. And I'd say that they're small hotels, by definition, small luxury hotels. I think on average they have 45 to 50 rooms, something like that.

Speaker Change: <unk> momentum in that area, and then SL H breaks down 60% in EMEA, 20% in the Americas, and 20% in Asia Pacific and I would say that there are small hotels are by definition small luxury hotels. So I think on average there are 45% to 50 run something like that.

Kevin Jacobs: As we've talked about, really unique properties in really high-rated, high-REVPAR markets. And that's all been, I think the pace of people signing up has been better than we thought, but the profile is exactly what we thought when we signed up. Thank you. Sure. And the next question is from Dan Politzer from Wells Fargo. Please go ahead. Hey, good morning, everyone, and thanks for taking my call.

Speaker Change: As we've talked about really unique properties and really high high rated high Revpar markets and Thats all been I think the pace of people signing up has been better than we thought but the profile is exactly what we thought when we went into it.

Speaker Change: Thank you.

Speaker Change: Sure.

Dan Politzer: And the next question is from Dan Politzer from Wells Fargo. Please go ahead. Hey, good morning, everyone.

And the next question is from Dan Pulitzer from Wells Fargo. Please go ahead.

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

A quick one on China I believe you said that China was 3% of overall fees.

Speaker Change: I assume that that over indexes in terms of the incentive management fees, but how should we think about that relative to that line item and maybe any any guide rail guardrails for incentive management fees and so we think about the rest of the year and as it relates to China.

Kevin Jacobs: No, I think, look, for China, it's no different than our normal fee structure. If we manage it, it's a base fee off the top and a percentage of GDP at the bottom.

Speaker Change: No I think look for FERC, China. It doesn't it's no different than our normal fee structure. If we manage its it's a base, it's basically off the top and a percentage of G. O P. At the bottom so that's not not really different than any of our other international management agreements and then Fred I know when we're growing a big franchise business now in China. So that's just straight <unk>.

Kevin Jacobs: So that's not really different from any of our other international management agreements. And then for, I know, we're growing a big franchise business now in China. So that's just straight franchise fees, right? 5%-ish franchise fees off the top. And so that's really, the fee composition in China is really in line with the broader business. And then for IMF, there are a couple of things going on with IMF. This maybe isn't exactly what you asked, but we've got a little bit of FX.

Speaker Change: Franchise fees by 5% ish franchise fees off the top and so that's really the fee composition in China is really in line with the broader business and then for and then for IMF. We think there's a couple of things going on with IMF. This maybe isn't exactly what you asked but.

Speaker Change: Got a little bit of FX, we've got a couple of contracts that converted from management to franchise sort of at the same economics are you just seeing some shifts from one IMF segment to the other if you adjust for those two factors in a couple of timing items IMF it'd be sort of low double digit growth for the year, so a little bit better than the overall business and it's I think 99 or 10% of fees.

Kevin Jacobs: We've got a couple of contracts that converted from management to franchise, sort of at the same economics. So you're just seeing some shifts from one IMF segment to the other. If you adjust for those two factors and a couple of timing items, IMF would have sort of low double-digit growth for the year, so a little bit better than the overall business. And it's, I think, 9% or 10% of fees. So really, nothing really is going on.

Speaker Change: So nothing really nothing much really going on there.

Speaker Change: Thank you helpful here.

Richard Clarke: And our next question is from Richard Clarke with Bernstein. Please go ahead.

Speaker Change: And our next question is from Richard Clarke with Bernstein. Please go ahead.

Kevin Jacobs: Hi, good morning. Thanks for taking my questions. Just looking at some of the other regions like Middle East and Africa, Asia, China, the ones that are really delivering double-digit growth at the moment, just your outlook for that for the second half. Can they keep that pace and momentum, or are we going to sort of see a convergence of global rev power around your guidance number? No, I think...

Speaker Change: Hi.

Richard Clarke: Hi, Thanks for taking my question. So just looking at some of the other regions like Middle East and Africa Asia ex China, and the ones that are really delivering the double digit rate environment. Just your outlook for that for the second half can they keep that pace and momentum of where are we going to sort of see a convergence.

Speaker Change: Alright, Glenn Revpar around your guidance number no I think we feel good about the second half in those regions that are really performing at that level.

Christopher Nassetta: No, I think we feel good about the second half in those regions that are really performing at that level. As I was trying to say when I did my little around-the-world exercise, we do, you know, think there's softening in certain segments in certain parts of the world for the reasons I described, but not enough.

Speaker Change: As I was trying to say when I did my little around the world.

Speaker Change: Exercise, we do think there's softening in certain segments and certain parts of the world for the reasons I described but not not enough we think.

Kevin Jacobs: We think APEC-X China is going to have a very good second half of the year. We think Middle East Africa will as well. And those are the two that are really, you know, at the highest levels of reperformance.

Speaker Change: Pac ex China is going to have a very good second half of the year, We think the middle East Africa will as well and those two cases and those are the two that are really at the highest levels of Revpar performance.

Kevin Jacobs: And then maybe just a clarification, maybe this is related to your previous comment, Kevin, but I noticed that I think about 1000 Waldorf Astoria rooms have left the system and about 300 Conrad, I guess that's probably Edinburgh and the New York one, but just any color around those hotels leaving the system and what it means for those brands. No, I mean, we had a couple of Waldorf's that we converted to...

Speaker Change: And then maybe just a clarification maybe this is related to your previous comment Kevin.

Speaker Change: Think about a thousand Waldorf Astoria rooms have left the system in about 300, Conrad I guess, probably Edinburgh and the New York, one, but just any color around those.

Speaker Change: Hotels, leaving the system and what it means for those brands no I mean, the walls. We had a couple of Waldorf that we converted to the actually stayed in the system and converted two different brands. These these are a couple of hotels that have been in Waldorf for a long time kind of.

Kevin Jacobs: No, I mean, we had a couple of Waldorf's that we converted to, that actually stayed in the system and converted to different brands. These were a couple of the hotels that had been in Waldorf for a long time, kind of going back to when Waldorf was more of a collection brand than sort of the brand it is today. And so other than the one you mentioned in New York, the Waldorf's that shifted out have stayed in the system, and they're now Curios. One's an LXR, and two of them are Curiosities.

Speaker Change: Going back to one Waldorf was more of a collection of brand and sort of the brand. It is today and so other than the one you mentioned in New York the Waldorf that shifted out have stayed in the system and they are now they are now carried at ones and Alex are in two of them are curios.

Speaker Change: That was at our urging.

Speaker Change: We're strategically trying to do with Waldorf if you think about all of them.

Kevin Jacobs: Thank you. Thank you.

Speaker Change: Existing Walters the Newbuild orders that are coming Waldorf is really hitting on all cylinders. The product is extraordinary and the new products are off the charts and so you know there you know like any brand that's been around for a while there are some that you know really don't quite fit the bill but the good news is with 24 brands you know we have a home.

Kevin Kopelman: So, I think, you know, the brand that's been around for a while is pretty well-known, and I think that's a good thing. I mean, I think it's a good thing that we're getting involved in the existing Waldorf's, the new Bill Waldorf's that are coming. Waldorf is really hitting on all cylinders. The product is extraordinary. The new products are off the charts. And so, you know, like any brand that's been around for a while, there are some that, you know, really don't quite fit the bill.

Kevin Kopelman: But the good news is, with 24 brands, you know, we have a home for, you know, not everything, but we have a home for most things. And those properties that left Waldorf are terrific properties. They just weren't, you know, sort of meeting the mark on the market.

Speaker Change: You know not for everything that we have a home for most things in those properties that that left Waldorf our terrific properties that just weren't sort of meeting the mark on Walter but they met the mark and other brands.

Kevin Jacobs: That makes sense. Thank you.

Speaker Change: Makes sense. Thank you.

Kevin Kopelman: And the next question is from Kevin Kopelman with T.D. Cowan. Please go ahead.

Speaker Change: And the next question is from Kevin Kopelman with TD Cowen. Please go ahead.

Kevin Jacobs: Thanks a lot. Just a couple of quick housekeeping. The first one is on your FX assumption. Um, is it safe to assume that that was set before the U.S. dollar kind of started weakening on Friday? And then the second one was if you could, um, could you give us pipeline approvals for the second quarter extra?

Kevin Kopelman: Thanks, a lot just a couple of quick housekeeping.

Kevin Kopelman: First one is on your FX assumption.

Is it safe to assume that that was set before the U S dollar kind of sort of weakening on Friday.

Speaker Change: And then the second one was.

Speaker Change: Could you give us pipeline approvals in the second quarter ex graduate.

Speaker Change: Yes.

Kevin Jacobs: Yeah, so the first one, the answer is no. I mean, technically, you know, our forecast was set before Friday, but I don't think Friday's move is going to have a material effect on the full year for FX. It just, it did, as we mentioned, it did get a little bit worse over the, became a little bit more of a headwind over the course of the quarter, which affected our guidance range for the full year.

Yes, so the first one the answer is no I mean technically.

Speaker Change: Our forecast was set before Friday, but I don't think the Fridays move is going to have a material effect on the full year for FX. It just it did as we mentioned it did get it it did get a little bit worse over the become a little bit more of a headwind over the course of the quarter, which affected our guidance range for the full year and then sorry, the second part of your question.

Kevin Jacobs: Oh, the second one was just, um, you had that huge number of approvals. I think some of it was maybe incorporating, um, graduate hotels, but I know the underlying was also strong. If you could just give us pipeline approvals, ex-graduate. 44, 44.

Speaker Change: And the second one was just you had that huge approvals number I think some of it was maybe incorporating.

Speaker Change: Graduate hotels, but I know underlying was also strong and if you could just give us pipeline approvals ex graduate.

Speaker Change: 44, I have that right.

Kevin Jacobs: Yeah, we gave it. We gave it. We gave it. It's in the press release. 44,000 and change.

Speaker Change: Yes.

Speaker Change: We gave them.

Speaker Change: In the press release, 4000, and change and perfect. It does incorporate both momentum and the existing brands and the new stuff.

Kevin Kopelman: And, and you're right. Oh, perfect. It does incorporate both momentum in the existing brands and the new stuff. I'd say that's pretty strong. Thank you very much.

Speaker Change #100: That's pretty strong thank you very much.

Speaker Change: Sure.

Conor Cunningham: And the next question is from Conor Cunningham with Mellius Research. Please go ahead.

Speaker Change: And the next question is from Conor Cunningham with Melius Research. Please go ahead.

Conor Cunningham: Hi everyone. Thank you.

Conor Cunningham: Hi, everyone. Thank you just on the conversations with developers I'm just curious on how that's changed over the past six months I assume that there is a lot more comparability around financing and credit availability and then another one just airbnb called out bookings hesitation on just longer term rentals.

Speaker Change #102: Guys. Your extended stay business is not exactly the same but are you seeing any hesitancy are no longer on the longer booking curve stuff in general Thank you.

Speaker Change #103: Now the second part's easy, we're not and I think I'm not going to comment on what Airbnb said and you haven't had a ton of time to study what they said, but that's a very different business the composition of their business, 90% to 95% leisure all long term stay so I'll, let them comment on that part of the business, we're not seeing any any changes in Chris even talked about booking windows normalizing and things.

Speaker Change #102: That earlier in the call so.

Speaker Change #102: Nothing nothing there and then I'm sorry, the first part was.

Kevin Jacobs: Just on the conversations with developers, I'm just curious how that's changed over the past six months. I assume that there is a lot more comfortability around financing and credibility. And then another one, just Airbnb called out booking hesitation on just longer-term rentals. I mean, I realize your extended stay business is not exactly the same, but are you seeing any hesitancy on the longer booking curve stuff in general? Thank you.

Speaker Change #102: Just on the.

Speaker Change #104: The evolution of your discussions with developers.

Conor Cunningham: Yeah. No, the second part's easy.

Speaker Change #105: Yeah, I'd say, they're largely consistent I mean developers we remain excited about the future for travel and the setup I think that overall capital is you know a little bit less expensive than it was right. It's coming off of peaks I think there's an expectation that it will come down there is there.

Speaker Change #105: Is it is a more constrained credit environment based on the lending communities views of the macro and what they're worried about what's going to happen, but there's still capital available for good projects, which is why youre seeing our construction starts go up and we're taking share in environments, where capital is more constrained. We've said we've said this a bunch of times, but rising.

Speaker Change #105: <unk> lift all boats when the tide's going out the stronger brands that are that lenders have more confidence lending to and developers have more confidence affiliating their hotels with are going to take share and that's what's happening.

Speaker Change #106: I appreciate it thank you sure.

Speaker Change #107: And ladies and gentlemen, this concludes our question and answer session I would like to turn the conference back over to Christian setup for any additional or closing remarks.

Kevin Jacobs: We're not. And I think, you know, I'm not going to comment on what Airbnb said, and we haven't had a ton of time to study what they said, but that's a very different business. The composition of their business, 90, 95% leisure, you know, all long-term stays. So I'll let them comment on that part of the business. We're not seeing any changes, and Chris even talked about booking windows normalizing and things like that earlier in the call. So nothing there. And then, sorry, what was the first part?

Conor Cunningham: Just on the evolution of your discussions with developers, I mean, it seems like they're just, yeah. Yeah, I'd say they're largely consistent.

Kevin Jacobs: Yeah, I'd say they're largely consistent. I mean developers remain excited about the future for travel and and the setup I think that overall Capital is you know a little bit less expensive than it was right coming off of peaks I think there's an expectation that it'll come down There is you know there there is it is a more constrained credit environment based on you know The lending communities views of the macro and what they're worried about is going to happen But there's still capital available for good projects Which is why you're seeing our construction cuts starts go up And we're taking share in environments where capital is more constrained We've said this we've said this a bunch of times But you know rising tides lift all boats when the tides going out you know the stronger brands that are that lenders have more confidence Lending to and developers have more confidence affiliating their hotels with are going to take share, and that's what's happening

Christian: Thank you Chad and thank you as always for spending an hour of your day with us.

Christopher Nassetta: And ladies and gentlemen, this concludes our question-and-answer session. I would like to turn the conference back over to Chris Nassetta for any additional or closing remarks.

Christopher Nassetta: Thank you, Chad, and thank you, as always, for spending an hour of your day with us. Obviously, we're super pleased with being able to deliver in the second quarter. And, you know, we feel very good about our outlook for the full year, as I described. While the macro environment is a little bit weaker, our development story is incrementally stronger, and the net result is pretty much our ability to deliver that algorithm, which we're excited about. We will look forward to catching up with you after the third quarter to give you the latest and greatest, and we hope everybody enjoys what they can of the rest of the summer. Take care, and thanks.

Christian: Obviously, we're super pleased with being able to deliver on second quarter, and we feel very good about our outlook for the full year as I described while the macro environment is a little bit weaker or.

Speaker Change #109: Our development stories incrementally stronger than the net result is pretty much our ability to deliver at algorithm.

Speaker Change #109: Which we're excited about.

Speaker Change #109: We will look forward to catching up with you.

Speaker Change #109: After the third quarter to give you the latest and greatest in OPE, everybody enjoys what you're kind of the rest of summer take care and thanks Nick.

Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Speaker Change #110: The conference has now concluded. Thank you for attending today's presentation you may now disconnect.

Speaker Change #110: [music].