Q1 2025 InterContinental Hotels Group PLC Earnings Call
Yes.
[music].
Yeah.
Speaker Change: Hello, everyone and welcome to the I hate to use first quarter trading update call. My name is and I'll be your coordinator today. If you would like to ask a question. Please press star followed by one on your telephone keypad. If you change your mind these prestige.
Stuart: I will now hand over to Stuart's point toward the introduction.
Stuart: Many thanks and good morning, everyone for me and welcome to IHG Hotel and results conference call covering the 2025 first quarter trading update as cheerful senior Vice President and head of Investor Relations at IHG.
Speaker Change: Joined this morning by our Chief Executive Officer, and Mike will cover our Chief Financial Officer, just to remind listeners on the call that in discussions today. The company may make may make certain forward looking statements as defined under U S. Law. Please do refer to this morning's announcement and the company's SEC filings for factors that could lead.
Speaker Change: Actual results to differ materially from those expressed in or implied by any such forward looking statements, whether as analysts or institutional investors, who are listening via our website may I remind you that in order to ask questions you will need to dial in using the details on page three of this morning's rns release released together with the usual supplementary data.
Speaker Change: For the first quarter it can be downloaded from the results and presentation section under the investors tab on IHG plc Dot com.
Speaker Change: Ali.
Ali: Thank you Stuart and good morning to everyone.
Ali: Like to start today by thanking our teams for what has been a very busy and productive start to the year across our business and another period that has really demonstrated the attractiveness and strength of our globally diverse footprint.
Ali: Spike heightened macro volatility.
Ali: Revpar continued to grow and on a global basis was up three 3%.
Ali: This was driven by ADR, which was up two 2% and occupancy which was up 0.6 percentage points.
Ali: The growth was across all three drivers of stay occasions rooms revenue on a comparable hotel basis for leisure stays was up 2% globally.
Business was up 3% and groups was strongest up 5%.
Ali: In terms of system growth.
Ali: Opened 14600 rooms across 86 hotels in the quarter.
Ali: More than double the same period last year.
Ali: And with increases delivered in each region.
Ali: <unk> produced seven 1% gross growth year on year, and four 3% net growth or.
Ali: 5%, excluding the decision removal.
Ali: It is worth reminding that we typically experienced seasonality in our system growth with relatively fewer openings in more approvals in the first quarter of each calendar years.
Ali: Year to date net system growth was therefore flat. The same result, as this time last year, but it was actually growth of 0.7% when excluding the Venetian removal.
Ali: We expect that growth to ramp up through the rest of 2025 as is typical with our phasing.
Ali: Turning to signings, we added nearly 26000 rooms into our pipeline in the quarter or over 20000, when you exclude the Aruba acquisition.
Ali: This level of signings was also well ahead of last year and led to a closing pipeline of 334000 rooms, which is 9% more than a year ago and 3% more than the start of this year.
Ali: Around 40% of organic signings were quicker to market conversions, reflecting the breadth and attractiveness of our brand and the benefits to owners of joining isg's powerful enterprise.
Ali: To provide a few highlights for you.
Ali: Garner, which we only launched around 18 months ago has already reached 35 hotels open and a further 91 in the pipeline.
Ali: Combined.
Ali: Cash wise.
Ali: There were also 10 openings across both code, but yet in the quarter as well as another 18 signings for these two brands.
Ali: These were part of our strong performance in conversions, which also saw more than 30 other conversion signings across the rest of our brands.
Ali: Once again, there was a strong development performance across our six luxury and lifestyle brands with nearly 30 openings and signings combined.
Ali: The Intercontinental brand was seven of these.
Ali: But in Indianapolis U S and in Monterrey, Mexico, and the client signings right Nashville, two more in greater China, and the two in EMEA, where in Cambodia and India.
Ali: This was another great quarter performance close truly iconic global brand as we continue to penetrate established and new growth markets.
Ali: On the part of growth markets, Saudi Arabia, five openings and signings for the total quarter, India had six in Japan had some great progress in each of these target markets.
Ali: And then when I look at our powerhouse brands in Essentials that were 24 openings for express a 30 signings. This world leading brand has and a state alone over 3200 hotels in the pipeline to add over 600 more.
Ali: Holiday Inn itself has over 1500 open and pipeline hotels with another 11 openings in 'twenty two signings achieved in the quarter.
Ali: The final point I'd make on development as a reminder of our completion of the acquisition of the Ruby brand in the quarter, which added 30 hotels to our pipeline.
Ali: We're very excited about the potential of the screening them urban lifestyle brand and we've actually achieved two more signings just since the acquisition.
Ali: Okay.
Ali: The year has gotten off to a strong start for development activity as well as delivering a strong trading performance.
Ali: Even in a more volatile environment.
Ali: With that let me now hand over to Michael who will provide more color by region and it will also detailed for you that though we are at an early stage. We are on track to meet current full year consensus profit expectations.
Michael: Thanks Ali.
Michael: Starting with the Americas, where Revpar was up three 5%, which was also the growth rate for the U S occupancy in the region was up seven percentage points and pricing remained robust with great growing by two 4%.
Michael: In terms of demand types groups was strongest with comparable rooms revenue year on year by 6%.
Michael: Leisure revenue was also by 2% in business revenue was up by 4%.
Michael: As with the global performance there was growth in all three stay occasions.
Michael: In Q1 of this year there was the benefit to <unk> from the timing of Easter pulling forward some business travel endless reversed in April.
Michael: This is the opposite of the timing impacts last year, when we take the last eight weeks and the aggregate Revpar has been broadly flat.
Michael: We've also noted in today's statement.
Michael: That's the latest position on the books revenue or comparable hotels across the balance of Q2 I E for May and June is also broadly flat.
Michael: Our confidence remains for growth beyond Q2, particularly with economic uncertainty subsides and when the industry fundamental tailwind prevail and we already see on the books revenue ahead of last year for July and August.
Michael: Going back to our performance for the fourth quarter compared to the U S. Industry. We are very satisfied when we look at it on a weighted chain scales basis taken together.
Michael: This industry outperformance combined with growth across all demand. The main drivers underlies our continued confidence of isg's delivery in the region.
Michael: In terms of system size in the Americas, We opened just over 4000 rooms in Q1, a 30% increase on a same period last year, albeit as we've noted Q1 is a seasonally small quarter for openings. This included 12 hotels across the holiday Inn brand family.
Michael: And then we're also 12 more signed in the quarter in total we signed 4500 rooms across the Americas broadly in line with the first quarter of 2020 for.
Michael: Further signings for Gardner to the brand to almost 60 open and pipeline hotels in the region.
Michael: Moving on now to our Europe, Middle East Asia and Africa.
Michael: <unk> had another strong quarter with Revpar up 5%.
Michael: As with the Americas. This too was driven by both pricing and demand with rate up 4% with occupancy up <unk> six percentage points.
Michael: Looking at Revpar performance across this diverse region. The U K was broadly flat with Continental Europe.
Michael: Which was up five 6% the middle East up six 2%.
Michael: In East Asia, and Pacific was up six 8%.
Michael: Further benefit to the batter inbound leisure travel from greater China.
Michael: This helps even stronger revpar performance within that sub region, such as 11% in Thailand, and 12% in Japan.
Michael: Over 6000 rooms were opened in the quarter almost six full award in the same quarter a year earlier.
Michael: Within the 30 hotels opened there was 13 that were part of last April's no wound hospitality agreement. Another notable opening.
Michael: Boko zero exit our Science Park.
Brian: First Brian.
Brian: Net zero carbon hotel.
Brian: 12900 rooms, where site into the pipeline in the quarter, which included 5700 visits from the acquisition of the Luby's brand.
Brian: Of those 30, Ruby hotels 20 are open and will start to be added in the IHG system from the second quarter, while Ted or in the pipeline at the time of the acquisition.
Brian: A further two have already inside Copenhagen and Berlin.
Brian: Within other silence there were three more gardeners, including a flagship for the brand in Edinburgh a market.
Brian: And since the quarter end, we've also launched the brand in India.
Brian: With the first two signings in that country Q.
Brian: Q1 was also another strong development period in Saudi Arabia, with four signings, a reagent vignette boto and holiday Inn.
Brian: Finally, moving on to greater China, where Revpar was down three 5%, which was similar to the previous quarter and an improvement on the 2024 overall revpar performance from here. There is an easing in the strong comparator comparative from the prior research it return.
Brian: Covid travel demand travel.
Brian: Travel has been occurring in the same volumes as the prior year, which is reflected in the occupancy holding up the rate is down year on year.
Brian: This included further input impact so the increased outbound leisure travel leading to tier two to four cities being down five 7%, whereas the tier one cities will close to that.
Brian: Record breaking momentum in development activity has continued 4400 rooms or opened in the quarter more than double the previous year with the milestone of 800 hotels.
Brian: At <unk>, there were 8500 rooms side for the quarter also well ahead of last year.
Brian: <unk> three <unk> suites, and the pipeline since launching the brand a few months ago eight signings across luxury and lifestyle brands and of course Express holiday Inn and Crowne Plaza. All powered ahead with 28 sightings between those three brands.
Brian: As we've noted in this morning's announcement, we remain encouraged of further improvement to come and if the continued attractiveness of the long term drivers for the region.
Brian: Our fueling development activity.
Brian: Last week, the investors relations issued our eighth episode of IHG checks all along.
Brian: And this was featured a greater China, CEO, Daniel outlet and Chief Development Officer for the region.
Brian: Talking more about the huge strengths and further opportunities for ISG in greater China.
Brian: Now to update you on the share buyback. We are currently 36% of the way through the $900 million program announced in February to date. This has reduced our share count this year by a further one 9%.
Brian: And conclude with some comments on consensus as we've said in the statement whilst we are in the early stage in the financial year. We are on track to meet our current full year profit expectations. We publish details of consensus on our web site based on the visible outlet data service. This.
Brian: Currently six consensus for operating profit for our reportable segments as $1.251 billion, whilst revpar expectations may well come down a little from the current consensus of two 3% growth for the year, we remain comfortable with the process.
Brian: The consensus.
Brian: One thing to remind is that in 2025, we have the step up in ancillary fee streams. As previously described the incremental profits on both the sales and from the New U S. Co brand credit card agreements should add around 130 basis points to our fee margin expansion.
Brian: And then on top of that there would be further margin progress from the positive operating leverage leverage given we expect fee revenues to be growing in excess of where we are controlling overheads growth.
Brian: The profits profit consensus implies growth of 11% on 2020, Four's results and adjusted earnings per share compared to consensus which is 490 <unk> and.
Speaker Change: Implies growth of 15%. This would result in another year of ISG delivering on our growth outlook with that I'll hand back to <unk> for closing comments. Thank.
Michael: Thank you Michael.
Michael: We included in today's statement a short section of additional comments regarding current trading conditions, Michael has covered that.
Michael: Though early in an early stage.
Michael: We are on track to meet full year consensus.
Michael: As we see it are on the books revenue for comparable hotels are still ahead of Q2.
Michael: Michael.
Michael: It is looking broadly flat for Americas, whereas the EMEA region is still showing stronger levels of growth and improvements are expected in greater China as comparative start to ease now that we're beyond the first quarter of the year.
Michael: We are very clear that the attractive long term structural growth drivers for both demand and supply.
Michael: Unaltered and we also set up reminders.
Michael: She has many points of continued strength.
Michael: So in summary, we had a strong start to 2025, both in our trading performance and development activity. Despite increased volatility and we remain confident for more progress ahead.
Michael: And with that I'll now pass it back to the operator to open up the call for your questions.
Michael: Thank you very much.
Michael: If you would like to ask a question. Please press star followed by one on your telephone keypad now. Please ensure your devices and you take out today and if you change your mind on your question has or get the operator, we can now open the call up to questions. Please.
Michael: I called that.
Michael: Thank you very much.
Michael: If you would like to ask a question. Please press star followed by one.
Michael: One on your telephone keypad now please ensure your devices and <unk> and if you change your mind on your question has already been answered. Please press star two.
Jamie <unk>: Our first question comes from Jamie <unk> with Morgan Stanley.
Michael: Are you there.
Michael: Sure.
Speaker Change: Coal is still alive, but we can't hear the operator.
Michael: Hello.
Kevin everyone hear me now.
Michael: Alright can drive almost all of them.
Michael: Hey.
Michael: Thank you very much if you would like to ask a question. Please press star followed by one on your telephone keypad now Cleveland.
Michael: Please ensure your devices and you could look to be.
Michael: And if you change your mind on your question has already been answered. Please press star followed by Keith Please.
Michael: Ensure that your.
Michael: Phone is.
Michael: <unk>.
Jamie Rollo: Our first question comes from Jamie Rollo with Morgan Stanley Jamie. Your line is now open. Please go ahead.
Jamie Rollo: Thanks, Good morning, everyone.
Jamie Rollo: Hey.
Jamie Rollo: Yes, Jeremy talked about.
Jamie Rollo: Yes.
Jamie Rollo: Great.
Jamie Rollo: Three questions. Please first.
Jamie Rollo: Thanks for the commentary on the U S outlook could you please give us a little bit more flavor, maybe on government spending.
Jamie Rollo: Also international visitors what are you seeing in those two buckets and then also what sort of exposure today's too.
Jamie Rollo: In the U S.
Secondly, very strong openings in Q1.
Jamie Rollo: Particularly in EMEA is there any sort of phasing in there.
Speaker Change: Nearly half the new rooms were in the Bryan bucket.
It doesn't appear to be Nathan So what is what is behind that and how are you feeling about full year consensus.
Speaker Change: And it's sort of a high 3% sure for that group.
Speaker Change: And then finally, you've not mentioned currency is quite a big depreciation in the dollar.
Speaker Change: On your report, helping against the sensitivities, but it looks like it was poor.
Speaker Change: Something like a 5% profits based marking to market weakness for the rest of the year is that why you're happy with consensus EBIT. Despite.
Speaker Change: Talking down the restaurant numbers. Thank you.
Speaker Change: Okay. Thank.
Speaker Change: Thank you Jamie.
Speaker Change: I'll take a U S government international.
Speaker Change: EMEA openings.
Speaker Change: Net.
Speaker Change: Net system size growth projections.
Speaker Change: And we.
Speaker Change: Maybe for Michael talk about foreign exchange.
Speaker Change: Okay. So look in the U S.
Speaker Change: Total government, including state federal local as you understand as you know in the U S. There are many many layers of government is less than 5% of our revenues.
Speaker Change: And federal was three 5% or less.
Speaker Change: So.
Speaker Change: Yes that along with everybody in any business in the U S.
Speaker Change: A decline federal beginning maybe in March and probably continuing into April as government.
Speaker Change: Cut spending and cut cost and travel.
Speaker Change: It's a small part of our business now Interestingly state was up state travel state government travel was up.
Speaker Change: So it is a small part of our business.
Speaker Change: Been impacted in Q1, and we anticipate that that federal government in fact, probably continue but as you saw we were able to perform quite well despite that impact our outlook is steady.
Speaker Change: Including continued assumption of that impact for federal government.
Speaker Change: I would also add on federal government is that it's pretty low rated business.
Speaker Change: And your high rated business so.
Speaker Change: The impact is mitigated by the fact that is not high rate.
Speaker Change: On international.
Speaker Change: International for US is 5% in the U S. All international from any destination.
Speaker Change: Canada, Mexico is one 5%.
So starting in March and April we saw some diminution of <unk>.
Speaker Change: Inbound from Meg from Canada.
Speaker Change: We've probably picked some of that up but Mexico within Canada itself in Europe, but there was the menu issue from Canada to U S and that's not new news from antibody. However.
Speaker Change: Total international inbound into the U S was.
Speaker Change: Was positive for every month.
Speaker Change: On the quarter.
Speaker Change: And.
Speaker Change: As Michael said on the books for the for Q2 globally is still positive so.
Speaker Change: Yes.
Speaker Change: Some of that international travel goes somewhere else, we're well positioned to capture it.
Speaker Change: I believe.
Speaker Change: We feel good about our net system size progress for the year consensus is at $4 three <unk>.
Speaker Change: Excluding the Venetian which we signaled.
Speaker Change: Well early last year.
Speaker Change: Unprofitable property for us.
Speaker Change: <unk>.
Speaker Change: So we feel good about the corporate that I think we made actually good progress because if you look at historically.
Speaker Change: Our year to date net system sized progress in the first quarter was.
Speaker Change: Almost flat last year with zero years before was.
Speaker Change: Pretty close to zero this year when you exclude the Venetian it's zero 0.7 with double the openings that we had in the previous year.
Speaker Change: Some of that 500 rooms.
Speaker Change: Came from November.
Speaker Change: But we just had strong openings across the board it was 30% higher in the U S and the Americas. It was double in China with no particular property transaction in the Middle East. We did open a couple of large properties, but we're optimistic about good growth.
Speaker Change: Signings and openings in the middle East for the rest of the year. So.
Speaker Change: Im not saying we are in a double every quarter for the rest of the year, but im feeling very good about consensus.
Speaker Change: Okay.
Speaker Change: I'll I'll take the currency one now if you don't mind.
Speaker Change: If you look at the currency profit expectations and us being comfortable with the currency profit expectations that does not include any benefit from currency impact in fact, I think at the full year announcement, we said that roughly we expected about a $12 million negative impact on currency as.
Speaker Change: We said at the end of Q1 that was roughly an 8 million dollar that had reduced to an $8 billion.
Speaker Change: Impact now it.
Speaker Change: It can't move throughout the year as we all know the dollar has.
Speaker Change: Weakened a bit.
Speaker Change: Some currencies, but remember, we're a very broad and large.
Speaker Change: Largely distributed company. So there will be some currencies, where it hasnt done that and so if you think about our house it looks at the average of last year and then compares today's results against that average of last year. So as we sit right now theres no currency.
Speaker Change: Positive impact expected in that in our full year confidence in hitting consensus.
Speaker Change: Jeremy I think you've got a specific question about.
Speaker Change: The line in the EMEA system size.
Speaker Change: Just to clarify on that given the high proportion of conversion openings will occur.
Speaker Change: If we have a hotel joining off system, but before it's fully transferred over to one of our brands if it didnt all system counts on on our platform. Then it gets included into the Alba and then what you end up seeing that comes through in the column of internal rebranding youll see movements either between brands or out of all of that into one of those Brian.
Speaker Change: But when it's officially late with one of our brands.
Speaker Change: <unk>.
Speaker Change: Great. That's all very clear thank you very much.
Speaker Change: Thank you very much. Our next question comes from Richard <unk> with Bernstein. Richard Your line is now open. Please go ahead.
Speaker Change: Thanks, taking my questions three if I may I guess Hilton one of your peers sort of set out the framework for <unk> guidance was use of things would be flat for the rest of this year in China back to flat just wanted to.
Speaker Change: Clarify that roughly your assumptions on what you expect to get to the consensus number and if we did end up having a recession, there's not anything unique refreshment agile cost base, how much could you offset so to preserve profitability.
Speaker Change: Second question Holiday Inn Express at three 2% Revpar growth in the Americas Hudson did.
Speaker Change: 7% I appreciate just in the U S.
Speaker Change: By far the widest gap between we've seen between those two brands. So I just anything you could call out as to why holiday and express who sort of bleeding is paid in industrial it will get there.
Speaker Change: And then thirdly, we have had a few questions from investors on the defending Americas drove an investment act that would impose sort of.
Speaker Change: <unk>, 5% tax rises.
Speaker Change: Foreign companies operating in the U S.
Speaker Change: Digital service taxes, which was the UK desktop.
Speaker Change: Is this anything you've you've looked at do you expect you would come under the remit of basin.
Speaker Change: Towards that long if any questions should you list in the U S. Instead of the U K.
Richard: Richard Thank you.
Speaker Change: I'll take.
Speaker Change: I'll take a stab on all three of them and then Michael.
Speaker Change: We'll give you the detail on packs and our perspective I'll talk a little bit about our engagement with a U S government in general.
So.
Speaker Change: I'm not going to comment on hilton's guidance or or directions I'm sure people. There you can get all the information you want on that I will tell you. The way. We're looking at is the way Michael described it in his remarks and FCA is what as we look into Q2, where <unk>.
Speaker Change: <unk> by the fact, what we have on the books is positive globally.
Speaker Change: And it's flat in Q2 and combined in the U S.
Speaker Change: Americas, but.
Speaker Change: Pick up Windows is short and.
Speaker Change: 50% of our bookings come in the last seven days and theirs.
Speaker Change: There is room in time for that to improve or change.
Speaker Change: And recent trends have been has been encouraging in that direction and as we look past mainly when we look into the summer July August.
Speaker Change: On the books is positive globally and positive in the Americas.
Speaker Change: We're seeing ourselves through.
Speaker Change: And our steady constructive way.
Speaker Change: And I think you can.
Speaker Change: When you talk about China, you're asking about China.
Speaker Change: What we said last year consistently is we think China's bottoming out and I think the results affirm that our Revpar in Q1 was roughly similar to our Revpar in Q4 better than the Revpar in Q1 of the year before and and the demand is good like what I'm pleased about in China is <unk>.
Speaker Change: Occupancy was slightly positive.
Speaker Change: The rate was impacted down but the big part of that was very strong outbound to Asia Pacific We were double digit up at most Asia Pacific countries like Vietnam, Japan.
Speaker Change: South Korea.
Speaker Change: Even Thailand again, so people traveling out of China, the higher end traveler, mostly left China, and so that took some rate off.
Speaker Change: But demand was good in the near the latest results. We got for the May holiday their labor day holiday basically was record travel over 6% increase in travel from last year over 8% increase in travel spending. So look we know theres a lot of bearish narrative around China and I'm sure that's affecting a lot of industries.
Speaker Change: Things are steady ingots been China, so could we be flattish in Revpar. This year. There I think we're in the game for that as the comps get better and going into Q2, three and four were at work, we're not going to be very very precise at this point that I said last year, we could be flat I think it can be flat again moving to.
Speaker Change: The last part of the thing I'll say about China is.
Speaker Change: But a lot of people that have belief there with our openings as being double our strong signings in Q1, I think we're headed towards a record another record year of signings and openings in China. So there's confidence locally with investors in our brands and in the hospitality market.
Speaker Change:
Moving to your question about.
Speaker Change: Our U S Revpar holiday and express other brands again won't.
Speaker Change: I won't comment on how other brands performed we obviously like you compare ourselves to others, but won't comment on it and I'll tell you that yes, I'm very pleased with how our teams performed at FERC globally with a three 3% revpar than in the Americas and in the U S. A three five despite some uncertainty and volatility.
Speaker Change: We saw positive revpar across every brand.
Speaker Change: In the Americas, and EMEA of course, not in China as things level off there, but in both regions. We saw positive revpar in every brand.
Speaker Change: Well Colin Express.
Speaker Change: It's just a powerhouse.
Speaker Change: 3200 hotels open another 600 under development.
Speaker Change: I think it's just an all team effort.
Speaker Change:
Speaker Change: Spread across many aspects of our enterprise.
Speaker Change: <unk> rewards now delivering 60% globally, but over 70% in the U S and that is a ramp up of 10 points in the last five years. So I think thats, helping us deliver for owners of our guest our new revenue management system that we deployed last year.
Speaker Change: In over 4000 hotels now almost all in the Americas and the U S. Our new AI driven.
Speaker Change: <unk> learning best in the industry.
Speaker Change: Revenue management system that we know delivering outperformance of our hotels are powerful cut through marketing continues we have the best in class I think reservation system.
Speaker Change: And so I think it's not just one thing Richard it's a combination of factors that are starting to come together and that's just the beginning we are moving ahead with our new property management system our new.
Speaker Change: CRM system. So theres more ahead for our brands in the U S. On.
Speaker Change: Tax I'll, just give you sort of on.
Speaker Change: A broad perspective that we engage very closely with the U S government, but the UK government personally myself Michael himself.
Speaker Change: Advocating for things that are in.
Speaker Change: In the interest of our industry and of our company.
Speaker Change: We are encouraged by the news today that actually leak yesterday with U S and U K.
Speaker Change: Are nearing an agreement on a trade deal or an agreement on a framework for a trade deal, but the news flows incrementally positive there.
Speaker Change: <unk>.
We hope that within that outcome there'll be a constructive resolution of any tax uncertainties and disputes but of course, we'll have to see what comes out but where we're engaged in the process to advocate for our business I'd also I'll just say, it's really early in the process.
Speaker Change: <unk>.
Speaker Change: It seems like the conversations have been very constructive.
Speaker Change: I think the to be honest I feel like we were really early on this our tax teams and government affairs teams were really quite aware of what was happening and what's allowed us to raise this and get this.
Speaker Change: Up to the appropriate people in both governments and so we've been working very diligently entirely on that aboard as we've been engaged in that and to making sure we're getting to the right.
Speaker Change: Right, so <unk> and <unk>.
Speaker Change: And I think look it's early days, but it seems like there's a lot of positive momentum in the right way to make sure. This isn't doesn't become an issue in the future I mean look as you can see in the current sort of.
Speaker Change: Negotiations a lot gets put on the table.
Speaker Change: And then where things eventually settle in and states can be very different than what's on the table and so I think we just have to be patient, but we're heavily engaged as Michael said.
Speaker Change: <unk> met with the with.
Speaker Change: With U S government with the chairman of the house ways and means committee that is working on the tax bill in the U S. We've met with the leaders here in the U K and I think we're making some constructive progress.
Speaker Change: Thanks very much.
Speaker Change: Our next question comes from Jaina Mistry with Jefferies. Your line is now open. Please go ahead.
Jaina Mistry: Hi, Thank you for taking my questions.
Speaker Change: Next question is are you seeing any changes to the deferred.
Jaina Mistry: <unk> environment.
Speaker Change: In the U S.
Speaker Change: And then my second.
Speaker Change: My question is.
Speaker Change: Thank you good question.
If there was a downturn D C scape.
Speaker Change: Further cost savings and cost efficiencies within the business.
Jamie: Hey, Jamie.
Jamie: Pardon me.
Speaker Change: My address your questions and Michael will support as always.
Speaker Change: But we're very close to our.
Speaker Change: Hotel investors or owners.
Speaker Change: Our partners in this business not just in the U S, but around the world I mean, I'd probably spend nearly half my time engaged in activities with them are beating but im personally and so does our entire leadership teams, who have a pretty good pulse and especially in the U S where I spend a fair amount of time.
Speaker Change: On the one hand.
Speaker Change: Yes, theres been quite a bit of turbulence in the news flow beginning in March and into early April. Although we are seeing that improving since then I'd say that the news flow more recently has been more constructive they've gone from.
Speaker Change: More trade tensions to more trade negotiations right.
Speaker Change: We have gone from policy that wasn't clear just a little more clarity on policy financial markets reacted strongly negative way have mostly stabilized and back to the U S. We covered most if not all of the drop.
Speaker Change: For the quarter the dollar stabilized because interest rates have stabilized. So I mean, clearly there's still some uncertainty out there, but we're moving to more clarity into more certainty and to a little less turbulence, which is encouraging and just like we are owners watch all this in and.
Speaker Change: There are an optimistic group buy by DNA, they always want to build and develop.
Speaker Change: If not we wouldn't have had the signings and openings that we did in this quarter that we did last year and actually if you exclude the <unk> acquisition from our.
Speaker Change: From a pipeline, 60% of our signings were newbuild, which take a little more encouraged than a conversion and yet our owners are signing up to it. So on the one hand, I think that remain optimistic there obviously watching what's happening.
Speaker Change: We haven't seen we haven't detected.
Speaker Change: <unk>.
Speaker Change: A palpable visible behavior change, but certainly everybody is watching to see the direction and I would say that if the direction that we've seen in the last two to three weeks continues.
Speaker Change: Which is the more resolution more constructive more negotiation more clarity less volatility than than I think their mood will continue to move in that direction, but so far they've they voted with their pocket book and signed up for our hotels and opened hotels that they signed up to open.
Speaker Change: I think from a cost growth.
Speaker Change: <unk> and what we would potentially do in the recessionary scenarios.
Speaker Change: ISG has demonstrated over the years, we have the ability to what's most recently in total.
Speaker Change: During that time period, you've seen us flex our cost base in fact, we were modeling cash positive.
Speaker Change: During that period.
Speaker Change: Even in more recent times, even if you just looked at last year, we grew.
Speaker Change: Fee revenue by 6% last year and with overhead costs only growing at 1% and we constantly look at our costs.
Speaker Change: And work diligently to make sure we're growing revenues faster than we're growing our cost as you heard in my statement today about the opportunity to continue to grow margin based on operating leverage and cost discipline. So we will continue to do that and look at that and obviously our biggest risk as a company is not <unk>.
Speaker Change: <unk> the growth in the future and we want to make sure that we're balancing we're really going after grabbing that growth, but as we need to we will obviously manage those costs, but we take a very disciplined approach every single day, we look at ways to increase our efficiencies and effectiveness.
Speaker Change: And building those into our day to day operations I mean, Jane if you go back to 2019 and compare.
Speaker Change: Our fee margin today were up 700 points. So yes, we went into the pandemic in 2020, we.
Speaker Change: We have merged very strongly but we emerged a stronger more profitable more efficient business. So we've maintained a lot of those gains whilst we're growing the business. So we don't feel at this time there is anything in particular, we need to do other than to maintain a strong discipline that we brought that allowed us to have.
Speaker Change: Solid growth last year, but good cost containment and that's the approach we've taken going into this year that allows us to stay disciplined but also capture the upside.
Speaker Change: Thank you very much. Our next question comes from Alex <unk> with Redburn Atlantic Alex. Your line is now open. Please go ahead.
Alex: Thank you very much for taking the question just one on the on the full year guide if it's possible.
Speaker Change: <unk> results do you kind of Signposted EBIT 1.25 to 1.3, so if we kind of think of the midpoint of guidance come down, let's say 25 million and then the FX is about 12, which I think I think I understood. Your answer earlier to be that it was going to be a tough headwind now you're assuming.
Alex: No benefit but based on their findings.
Alex: And I think again at the full year result, we've signed posted revpar growth to be kind of two to four which was.
Alex: So said like blackout periods of two to four and now <unk>. So is that sensitivity about right I would've thought that defensive dividend would be slightly less than that as you said, it's about $11 7 million historically, but it feels like why you're.
So, suggesting EBIT today versus where it was the depth of the folio is slightly more reductions than what you're suggesting on revpar to be just I'm sure I've got something wrong in my assumptions and if you could just kind of help me walk through that that'd be great. Thank you.
Alex: Okay, let.
Alex: Let me, let me start and then we can because theres a few things I just wanted to clear up there I think on the first one on FX, what we said at the full year results in August we expected the $12 million headwind as we sit today at the end of Q1 that was an $8 million headwind and that we said what I was saying is that within the $12 51.
Alex: There is no positive expectation.
Alex: FX there in fact, it would take into account the 8 million headwind that we have as we said at the end of the first quarter.
Alex: From a guide perspective at the.
Alex: Full year results.
Alex: We don't guide, but you may remember consensus was around the $12 50, Mark at the time, we had a few markers that were in the $12 70 range and.
Alex: And we said that was a good range for where we thought it could be and as we sit today.
Alex: Consensus is sitting at $12 51, we still feel comfortable with that I think the way when you look at that I think and as we think about it I think at the time right.
Alex: Right now consensus Revpar sits at about two 3%.
Alex: I think <unk> got some high markets and there will likely come down and that's why we feel like.
Alex: Since the Revpar may come down a little bit, but we feel like because of the great cost control that we have and the benefit from the ancillary fees that we see coming in there is no reason to fort consensus to go down further from where it sits today and so that's kind of how we would we would think about now when you look at sensitivities.
Alex: One point of Revpar and you can see this on our website is roughly $11 5 million.
Alex: Franchise and managed fees. So you can see that in sensitivity and so youre not really seeing.
Alex: A big drop there.
Alex: And as we talked about with Revpar.
Coming down just a little bit.
Alex: Hopefully that helps and answers. Your question there was a lot of lot in your question, so hopefully that answers it.
Alex: That's really helpful. And then just as a follow up it's kind of been interesting going through the reporting season for all of the pads and looking at that.
Alex: <unk> and <unk>.
Alex: Expectation not clearly the big dynamics and kind of when people reported if you go back to Wyndham when I started the call by 300 basis points that guide.
Alex: And then you got to marry our guesses on Revpar, and then from Marriott and they kind of cut by 50 basis points. So I guess my question to you would be do.
Alex: Do you think that is really the question of the passage of time. The last couple of weeks, a thousand little bit backed up or what a lot of.
Alex: The hotels have pointed to is that safety Marriott is that.
Alex: High end demand has held up better than low end demand.
Alex: If you're a high end hotels, they are trading hasn't been it hasn't been as well as much in the last few weeks and that we are not cutting as much but if we look back to 2009 low end hotels outperformed so it doesn't seem quite logical to expect high end hotels.
Alex: <unk> outperformed persistently through if we did want to be a bit more cautious on the macro. So if you could just kind of talk through baidu expectations, but how it happened over the last couple of weeks it might have affect that guidance and then your views on how you would expect high end versus low end hotels to trade and maybe a more cautious macro environment. Thank you so much.
Alex: <unk> Valley.
Alex: The hard thing is.
Alex: While it would be easier and nicer to consider all hotel companies to be homogeneous and therefore have a similar reaction to events.
Alex: Actually not the case, yes, we're all in the same sector, but the business is can be very different the distribution the location.
Alex: The geographic.
Alex: Waiting that changed scale waiting really makes a big difference and then just your systems had you operate.
Alex: How you drive performance makes a big difference and so over probably a very long period of time, some similar companies will perform within a similar range.
But over.
Alex: Multiple quarters that can vary.
Alex: For structural reasons that doesn't make one business better worse than others, we think we're a great business, but.
Alex: Wont comment on the others and how that guided our guidance I'm, just saying that we follow all of this data that you follow in great detail.
Alex: But we also recognize that there are structural differences between our businesses. We've designed our business model that we believe is powerful by geographic distribution by chain scale distribution by segmentation and put behind that enterprise that allows us to perform steadily throughout cycles throughout our regions throughout ball.
Alex: <unk> ability and always make higher hydro would go forward I am certain that we will again.
Alex: I don't think what we're saying today is different from what somebody said last week, if somebody said two weeks ago.
Speaker Change: Is it comes down to the passage of time, I mean, you'd have to ask them I don't know, but for us it's not really the passage of time as much as this is how our business has been performing this is hao.
Speaker Change: It's indicating its performance will be.
Speaker Change: And a lot of a lot of our performance. This year really comes down to structural factors that we've put in place over a long time adult necessarily very with a week or two.
Speaker Change: It rarely influx that much that quickly.
Speaker Change: We are confident in <unk> and <unk>.
Speaker Change: EBIT outlook for the year is as Michael said, we're confident system size outlook for the year recognize theres been some turbulence and volatility we think we're moving into a period of a better clarity on I can't guarantee you that I mean things.
Speaker Change: Things can change quickly, but but that's kind of been the direction and if those and if those conditions persist.
We're cautiously optimistic for the rest of the year.
Speaker Change: And could you just expand on the high end versus low end and how you'd expect them.
Speaker Change: Uh huh.
Speaker Change: I don't think we tried to we tried to sort of stereotype, how a segment will perform.
Speaker Change: Yes, I know historically, there's been this stereotype that the Midscale segment will always outperform in a downturn.
Speaker Change: At the same time, what's happened over the last 20 years is the upper classes become larger and more upper has become richer and.
Speaker Change: And healthier living longer traveling longer and that there is a segment. There is a population that is just unaffected by downturn that continues to travel.
Speaker Change: We saw our luxury segment performed very well in Q1, and we saw our luxury segment, where open performed very well during the pandemic. Our problem was that a lot of themselves can be opened but where they were open they were jammed and so if you could get there.
Speaker Change: Think that.
Speaker Change: What has been.
Speaker Change: Common received wisdom 10, 15, 20 years ago, probably does change with time and we believe that the upper the upper luxury segment is pretty resilient due to the insensitivities or lack of sensitivity of people to that wealth bracket and that the our midscale segment is resilient because of <unk>.
Speaker Change: Central travel we saw during the pandemic Holly Express did not go down below 50% occupancy when theoretically people weren't allowed to leave their homes and our extended stay brands that go below 60% because there is a level of travel it's essential so each segment can do well for different reasons that theyre not affected the same way.
Speaker Change: As people.
Speaker Change: Trying to try to stereotype of years ago.
Speaker Change: That's really helpful. That's mentioned thank you.
Leo Carrington: Our next question comes from Leo Carrington with Citi. Your line is now open. Please go ahead.
Leo Carrington: Thank you morning could I ask three questions. Please.
Leo Carrington: Firstly on the <unk>.
Considering.
Leo Carrington: The new credit card agreement.
Leo Carrington: Why hasn't the slowdown in Europe.
Leo Carrington: And the Revpar in your expectations since last year changed the potential fee income for <unk>.
Leo Carrington: <unk> thousand 95, I'm thinking actually both.
Leo Carrington: Credit card agreement and the <unk> sales.
And secondly.
Leo Carrington: I think it's interesting that between your Krishna Ruby and merits, calling Cincinnati the oven by Cry Holy Cow.
Leo Carrington: Concepts.
Leo Carrington: It seems very popular and a very valuable is that space elsewhere in Europe.
Leo Carrington: In your portfolio and your annual annual creative brands for another similar setup, perhaps pitched at the different price points. Thank you.
Leo Carrington: Okay.
Leo Carrington: I'll try to take both.
Leo Carrington: Michael Please jump in.
Leo Carrington: As you see.
Leo Carrington: On the ancillary.
Leo Carrington: So look we're pleased with the.
Leo Carrington: With our performance year to date on points and credit card.
Leo Carrington: We think the outlook is steady as robust.
Leo Carrington: And things change of course anything can change, but based on what we see today, we're confident in meeting the expectations that we set out last year for doubling in.
Leo Carrington: In 25, what our credit card.
Leo Carrington: P&L revenue would be from 'twenty, three and for the additional $25 million and point sales.
Leo Carrington: We look to be quite on track for that so I just think it's.
Leo Carrington: Travel has has continued and as long as people are traveling they're engaging more with our brands and engaging more with ISG and feeling a level of affinity and therefore.
Leo Carrington: They want to they want to.
Leo Carrington: Participate in our credit card and earn more appointed and I mean keep in mind that we're just really re launching our partnership with chase and with Mastercard.
Leo Carrington: And that's giving us a boost because we're moving to a whole new level of marketing engagement of promotion of our cards and.
Leo Carrington: And they're doing very well and the feedback we're getting from our credit card partners is that they are very pleased with the performance that we're seeing we're very pleased with performance we're seeing.
Leo Carrington: So for now the trajectory is good.
Leo Carrington: Pleased with it I think also.
Leo Carrington: There may be a misconception that the credit card component to this type of Revpar is not the way. We're compensated on that is tied to really a usage of the credit card acquisitions on the credit card in that credit cards is performing very very well and in fact, we've heard from our partners. They are very impressed with what our relaunch has done it.
Leo Carrington: And what we've offered so there's multiple components to that and it's not just.
Leo Carrington: Hotel spends in which we earn.
Leo Carrington: Earn profit from that so I think just to be clear on that and then on the point of sale is actually performing extremely well and in line or ahead of expectations as guests look for maybe different ways to purchase their rooms.
Speaker Change: On your question about Ruby and could there be other similar.
Brands in our portfolio look we're very pleased with Ruby just since the acquisition.
Speaker Change: Interest from <unk>.
Speaker Change: From owners from customers has been very very pleasing.
Speaker Change: I'm confident the brand will be a great success in our portfolio not just in Europe, but globally.
Speaker Change: Hmm.
Speaker Change: I won't predict whether there's room for something similar there, but we really like the lifestyle space, we've been leaders in lifestyle.
Speaker Change: I joined the company in 2015, which was right when we're acquiring kimpton.
Speaker Change: And that's really brokers into lifestyle, and then growing indigo and adding <unk> and yet and purchasing six senses in region and now Ruby I think we we've been early.
Speaker Change: Pioneers and differentiate ourselves in lifestyle luxury lifestyle and so this is more accessible.
Speaker Change: Luxury they call it sort of.
Speaker Change: No.
Speaker Change: <unk>.
Speaker Change: The urban premium urban micro accessible a sense of luxury and accessible price here in London, you got three hotels that are just amazing that do very well.
Speaker Change: We think theres room for <unk> to grow a lot in that there is something that is.
Speaker Change: Similar but not the same.
Speaker Change: Always looking.
Speaker Change: Thank you Ali Thanks, Michael.
Speaker Change: Sure.
Our next question comes from Sterling.
Speaker Change: <unk> with J P. Morgan Stanley. Your line is now open. Please go ahead.
Speaker Change: Good morning, and ask two questions. Please the first one just to come back on the quarters ahead.
Speaker Change: Mr. King you you seem to be still ready to be opportunistic in the Americas in Q3 onwards. After a slightly softer period from say March to me. My question is what are the key elements driving your country to answer given the limited visibility and the second one is on the UK market.
Speaker Change: You mentioned broadly flat for filing U K annuities and could you just provide some color on what we see there in terms of demand trends potential consumer weakness.
Speaker Change: You're just seeing a continuation of the trend we saw last year. Thank you.
Speaker Change: Ill talk about Americas.
Michael: Michael and pick up the U K market.
Michael: Okay in the Americas.
Michael: Very good first quarter, we've talked about that we're pleased.
Michael: So we know that our brands are our commercial systems, our enterprise performs.
Michael: There was the Easter effect.
Michael: That washes out between March and April to flat, which is similar to last year actually.
Michael: Our on the books is also roughly flat.
Michael: But.
Michael: With.
Michael: Maybe seven weeks ago, a seven to eight weeks ago in the quarter.
Michael: Keep in mind that 50% of our bookings come in the last seven days, so theres a lot of room.
Michael: The environment.
Michael: It remains constructive for more pickup to come.
Michael: But we're not saying any more today and then as we look to.
Michael: July and August.
Our on the books business is positive so.
Michael: We're getting our confidence not from a mood, but from the data.
Michael: And where better data driven at ISG and we focus just on the figures exactly what they say in right now.
Michael: We recognize there has been some sentiment impact from the volatility and turbulence in March and April as I said earlier, we believe.
Michael: The news flow is more constructive today things are a bit better the data still don't show.
Michael: The economic data still don't show a downturn in the U S. You have the jobs report for February and for March were pretty strong better than expectations.
Michael: Unemployment is still pretty low.
Michael: Yes, the GDP report for March was down but that really all came to.
Michael: Forwarding and Frontloading.
Michael: Ports ahead of potential tariffs, while consumer spending was up in private investment was up.
Michael: And so with hiring still strong consumer spending is still good.
Michael: Investments still good maybe the data will reflect something different at some point and so far it hasnt and combined with what we see in while limited, but actual visibility going forward still to the positive. If you look into the summer flat for the rest of the quarter that gives us the perspective that we have today.
Michael: Cautiously optimistic for the rest of the year and confident in in <unk>.
Michael: Consensus EBIT.
Yes, we look at the U K the U K was broadly flat, but London within that was a small negative but I think outside of London. We were we were slightly positive. So in London, If you looked in London.
Michael: <unk> was down.
Michael: Low single digits year over year, and that was really driven by the number of events that were in London in the first quarter relative to last year and I would just say, we haven't really acquired broad portfolio across all kinds of chain scale.
Michael: <unk> within the U K and so we saw some really strong performance, but I think London is really the reason we were dropped down in the U K, a little bit and that's mainly driven from events that were held last year versus the script, but just to put in perspective, while you know.
Speaker Change: Youre being in London, it's a great place.
Speaker Change: The UK totaled 5% of our rooms globally. So it's unlikely anything happening in the U K is as a big swinger to our to our results in either direction.
Speaker Change: Okay.
Speaker Change: Okay. Thank you.
Speaker Change: Our next question comes from Garik <unk> with UBS Gareth Your line is now open. Please go ahead.
Garik: Thank you morning, three as well firstly just on tariffs.
Speaker Change: The cost of Bo do you seeing any pressure I mean any spoke about.
Garik: And Ah.
Garik: More inputs coming in I guess into the U S. So how much how much of that.
Garik: I guess goods made in China actually.
Garik: And up in our hotels, and then benefits et cetera furniture.
Garik: Secondly, the financing markets or any commentary around that it seems like they are pretty open given the signings of newco.
Garik: And then lastly, just on.
Garik: Outbound international traffic.
Garik: How far into that at the moment of course surprised to see U S travel into Europe looks up such as just in general international traffic globally.
Garik: No its not anywhere near.
Garik: The majority of Yo Yo travel, but it is material, how how you're seeing the outbound international travel market.
Jared: Yep. Thank you Jared.
Garik: Let me try to cover these here.
Garik: So the first thing I'd say on tariffs is.
Garik: We just need to be a little more patient to see what the end state here is clearly there's been a lot put out there on what they could be what they might be where they might go whom they might be imposed on but then we also see significant changes to carve outs the special deals to negotiations right now.
Garik: You've got U K and U S talking about coming to an agreement EU and U S. In negotiations now China and the U S are back in discussions.
Garik: So there is a different end state than what has been put out there which is I don't know what it is.
Garik: And the impact therefore on <unk>.
Garik: Especially hotel development in the U S is undetermined.
Garik: It is uncertain I will concede that but I think to conclude what the impact is is is undetermined then to bring it to you to some quantitative perspective.
Garik: Of the cost of a hotel.
Garik: I mean, we're just.
Garik: We've got to go build the hotel everything included.
Garik: Only.
Speaker Change: Excluding land only 10% of that construction cost in the U S roughly 10%.
Speaker Change: Is sort of <unk> materials lent in this that the other OSA knee, which are sort of those those consumable items. The vast majority of it 90% is going to be construction costs break sticks roofing.
Speaker Change: Contractors labor pool.
Speaker Change: Plumbing.
Speaker Change: Excavation of concrete.
Speaker Change: And the vast majority of that is local.
Speaker Change: So to really extrapolate how much of a 10% has is either directly from China or has some China component starts to get a little complicated.
Speaker Change: But I would say that during the pandemic, what we did in our procurement practice, which has extensive support that we can bring to owners to buy everything we can passive bond can contract for them for around the globe, but the highest quality the best prices and high service and reliability, we did start.
Speaker Change: <unk>.
Speaker Change: Much of our supply chain from China to other.
Speaker Change: Our country's only to diversify not saying we won't continue to to purchase in China of course, everything that we do in China for our fast China business a lot of it comes from there, but also we're still going to continue to source from there.
Speaker Change: Specially when when this uncertainty clears up but we had already begun to diversify so I actually don't think that.
It is a material exposure per product.
Speaker Change: Especially we can substitute in some cases due to China U S. Trade tensions now if there is general inflation I think I think the bigger risk.
Speaker Change: And I don't want to lead you down some other.
Speaker Change: Worry, but I think the bigger risk isn't some particular element costing more because of its origin I think it would be more the general inflation. If there's general inflation as we had in 'twenty two 'twenty three mitigated in 24 that would probably be something to watch out more for them.
Speaker Change: What goes into that because almost everything is either locally sourced or can be substituted or from a different point of origin, but we're waiting to see I think let's just take a deep breath I think there'll be more clarity when we talk again at the end of the summer and towards the end of the year I think a lot of this will reach an end state thats clear.
Speaker Change: On the financing market.
Speaker Change: <unk>.
Speaker Change: It's just this.
Speaker Change: I would call this grind forward.
Speaker Change: It did not and I always said this is not going to be a V shape or improvement in the new construction financing market. Its just been getting gradually better <unk>.
Speaker Change: Probably.
Speaker Change: Took a pause in March.
Speaker Change: April as as you had increased market volatility.
Speaker Change: Probably ameliorating right now, but yeah, our owners are able to finance the <unk>.
Speaker Change: Quality projects assigned with ISG. It just takes a little bit longer in the body they put up a little more equity.
Speaker Change: Sure.
Speaker Change: But it's sort of grinding forward and as a general context of.
Speaker Change: Policy becomes clearer.
Speaker Change: Nope that they will continue to improve Meanwhile, where we're doing very well with conversions and our owners are able to find financing for conversions that.
Speaker Change: That continues our growth not just in the U S, but around the world.
Speaker Change: Can I ask a question on out bound international I assume you mean.
Speaker Change: From any destination to any other destination not just outbound from the U S and Europe or Europe to the U S.
Speaker Change: That's correct.
Speaker Change: Yes, no travel.
Speaker Change: I mean look I sit on the executive committee of the World travel and Tourism Council. We just had a meeting recently looked at the latest update.
Speaker Change: Yeah.
Speaker Change: It was.
Speaker Change: It was a record of international travel last year, they still expect it to be a record this year not as much growth, but still growing.
Speaker Change: And the thing to remember about ISG, though.
Speaker Change: As we intentionally designed the business model that yes is global on one hand.
Speaker Change: But it's also focused on being at the very large domestic player and very large domestic markets. So in the U S, where 95% domestic and China, where over 80% domestic and Europe were mostly domestic in EMEA.
Speaker Change: It's mostly domestic within that travel.
Speaker Change: So yes, we have some exposure of course, the international Intercontinental travel, but by strategy by design, where large domestic players and large domestic either countries or affiliated regions.
Speaker Change: However, you are correct that.
Speaker Change: Outbound from country to country, while some country pairs may have changed their travel.
Speaker Change: <unk>.
Speaker Change: Canada is one we said, yes that country bear figure is down no question, but those Canadians are going somewhere else, we're seeing them more in Mexico. We are seeing in the more in Europe, we're seeing them here in London, Interestingly, China to Asia Pacific is again up double digits from last year and inbound into Europe.
Speaker Change: From Asia is up again middle East are strong so.
Speaker Change: It is a resilient factor and we're pleased by it so I don't think that.
Speaker Change: I think our fundamental thesis jaret.
Speaker Change: But over the mid to long term the growth in GDP growth in Middle class is a structural tailwind to travel and the industry is cyclical it makes highs and lows that mix higher highs and higher lows. I think this is a time, where it has further reinforced that thesis has further reinforced.
Speaker Change: Thanks very much.
Speaker Change: Our next question comes from Jeff Our mystery with BNP Paribas to find your line is now open. Please go ahead.
And I've got two questions. Please.
Speaker Change: On forward bookings in the Americas, the flat for Q2, and then growth in July and August I'm. Just curious if there's some color you could share on price versus occupancy.
Speaker Change: And those figures.
Speaker Change: And then on industry pricing in the U S.
The industry is showing a great amount of price discipline in the last five years, a much more disciplined unexpected I guess at the time.
Speaker Change: As you alluded to early during lockdown people were physically prevented from travelling he could not just entice them with a discount and then see if it works right now if people are just uncomfortable traveling because of the noise and uncertainty someone could try a discounted and see if it works. So my question is on.
Speaker Change: Are you seeing competitors in the U S productivity use more promotions.
Speaker Change: In some of your franchisees in the U S being a bit more open.
Speaker Change: To use promotions in your managed hotels, where you have pricing silver Z are you tactically using or exploring more promotions, maybe not lowering headline prices, but allocating a bit more to discount channels it or what's been the feedback from many of those explorations. Please.
Speaker Change: Yeah. Thank you good luck.
Speaker Change: <unk>.
Speaker Change: I mean year to date last year, even the year before.
Speaker Change: Most of our growth has been driven a liver biopsy growth mostly by rate.
Speaker Change: It is generally similar on the books globally and in the Americas, So theres no no change in that which.
Speaker Change: Actually helps answer your second question, which is we're not seeing yet any price resistance.
Speaker Change: Or any and people are generally ask us if we're seeing any any downshifting.
Speaker Change: Any trading down from brands or brands, we're not seeing that.
Speaker Change: And then discernible way, we're not seeing any price resistance occupancy continues to good what's on the books is either flat or up as we said, which isn't showing a decline of resistance to travel.
Speaker Change: And look supply has been low in the U S supply has been low end and that.
Speaker Change: May not be a tailwind from unit growth, although we're getting there we're taking share and with conversions, which is another form of taking share, but it's also a tailwind. It is a tailwind for Revpar you just don't have that many options and many cities and many destinations many resorts they are under supplied today.
Speaker Change: Given the level of demand that comes.
Speaker Change: I don't think.
Speaker Change: Now, we're not seeing any behavior any promotional access of our all new promotional behavior in the industry.
Speaker Change: Yes.
Speaker Change: We're continuing steady as we were before I think that we also I mean, you mentioned it earlier some of the new systems, we bolt on using AI large language models going in data. It takes a lot of emotion out of pricing now and I think that being rolled out to our hotels in the Americas has really.
Speaker Change: It helped our performance and.
Speaker Change: I think it will continue to help owners make the right decisions on where to set rates and so I think that environment has changed significantly from where we were post the financial crisis, where historically in the industry.
Speaker Change: <unk> declined in occupancy came back and then rain came up and I think we're just in a much different situation now it doesn't mean, there couldn't be a situation where that happens, but the technology advancements, we're helping take the emotion out of those decisions for owners and helping them make the right kind of pricing decisions Panther gross pointed to him.
Speaker Change: Usually I mean.
Speaker Change: Irrational discounting gets because humans are making decisions with fear.
Speaker Change: Nice thing about machines, they don't have fear they are perfectly rational and <unk>.
Speaker Change: And it sounded humorous, but it's true the fear factor as you reach the date of arrival.
Speaker Change: This meeting is no longer being recorded drive irrational behavior, even when having some unsold inventory is actually the best decision for your long term revenue profit and price integrity, but humans.
Speaker Change: The process at the same rate of the machine does so the more we are moving to high quality AI driven machine learning driven trusted systems that our franchisees are using.
Speaker Change: The better rate integrity, and stronger performance, we're going to have for them and for us.
Speaker Change: Thanks, Dan.
Speaker Change: On the occupancy versus pricing I'm, a I'm, sorry, I'm not super clear what this means for when numbers are zero. So when number that two or 3% I take your comments to mean.
Speaker Change: One third of that is occupancy two thirds of it is pricing.
Speaker Change: On the zero flat for Q2 in the Americas on the books.
Speaker Change: Zero zero is slightly down and still up a bit in pricing.
Speaker Change: Well, we're not commenting specifically I mean as you know we don't give guidance.
Speaker Change: A deeper level of specificity that we gave him before we're only talking about the future months given the recent volatility in and wanting to give our investors a little more color and clarity on the current context.
Speaker Change: But it's broadly flat and following similar patterns for the past.
Speaker Change: Thank you.
Speaker Change: Yeah.
Speaker Change: Thank you very much.
Speaker Change: <unk>, if you would like to ask a question. Please press star followed by one on your telephone keypad now.
Speaker Change: Please ensure your devices unlimited locally and if you change your mind or your question has already been answered. Please press star two.
Andrea <unk>: Our next question comes from Andrea <unk> with Deutsche Bank. Andrea Your line is now open. Please go ahead.
Andrea <unk>: Yes. Good morning. Thank you for taking my question most of them were already answered, but just wanted to come back on the demand.
Andrea <unk>: <unk> you.
Andrea <unk>: You mentioned that <unk> was down which was not a surprise, but could you give us some more color granularity.
Andrea <unk>: Granularity about the split between corporate Malaysia bumps and.
Andrea <unk>: If you've seen anything changed recall when he can change.
Andrea <unk>: And during the past few weeks months.
Andrea <unk>: In terms of booking in the way people are booking.
Andrea <unk>: Thank you very much.
Andrea <unk>: So what we have seen.
Andrea <unk>: Is that federal Gov.
Andrea <unk>: Government travel has declined not a surprise to anybody.
Andrea <unk>: And.
Andrea <unk>: Now that federal government travel was less than three 5% of our U S business. So <unk>.
Andrea <unk>: Less than 2% of our global business.
Andrea <unk>: Decline.
Andrea <unk>: And the 10% range.
Andrea <unk>: State travel has been hired to smaller piece of the business day travel has been up.
Andrea <unk>: Even more than that on a percentage basis, but on $1.20 percent less and it's about.
Andrea <unk>: So U S business. So the net of all government travel.
Andrea <unk>: Has been down but.
Andrea <unk>: We.
We made it up in other segments.
Andrea <unk>: Group has been strong leisure has been studying business transit has been steady.
Andrea <unk>: We made it up in other segments, we expect.
Federal government to continue to be to be down for for a period of time obviously.
Andrea <unk>: But what we do is we look forward from ever just go ahead and say.
Andrea <unk>: In total.
Andrea <unk>: We're pleased that the.
Andrea <unk>: Second quarter is looking.
Andrea <unk>: Flattish, but still seven eight weeks of pickup available given the short booking window and beyond that in the summer it's positive so.
Andrea <unk>: That's the extent of the data that we're sharing today.
Andrea <unk>: Where.
Andrea <unk>: Our group on the books.
Andrea <unk>: One our group business on the books to give you one point is about seven ish percent over last year and so.
There are other segments that are helping make up for.
Andrea <unk>: When governments down and as I said earlier the government.
Andrea <unk>: Business, while used to be steady business.
Andrea <unk>: It is actually pretty low rated business. So we don't need an equal amount of leisure or business or group to make up for an amount a specific unit of a government because that's cap. It usually low rates. There is very little extra spend it's not in your luxury properties or any upgrades.
Speaker Change: Yes, the government is going through an efficiency program, but per trip I'll tell you. They were also very efficient already.
Andrea <unk>: Okay.
Speaker Change: You're talking about the groups.
Andrea <unk>: Include the my segment.
Andrea <unk>: Yes.
Andrea <unk>: It's corporate in mice.
Andrea <unk>:
Andrea <unk>: Andy anything Thats group business. So much it's probably for US. It's 50 50 between corporate group and the rest.
Andrea <unk>: Okay. Okay.
Andrea <unk>: No slowdown.
Andrea <unk>: On the buy segment.
Andrea <unk>: I, we haven't detected anything different really I mean, it's all part of group.
Andrea <unk>: And it's not a very very big segment in of itself, but.
Speaker Change: You don't hear you don't hear that from also Big Big Conference destinations like Las Vegas Orlando.
Andrea <unk>: Conferences are still very popular.
Andrea <unk>: At this point, that's our that's the data we have as of UBS.
Speaker Change: Okay. Thank you very much.
Speaker Change: Thank you very much.
Lee: <unk> no further questions. So I'll hand back over to Lee for any closing remarks.
Lee: Q2 or view on the call today.
Lee: To remind you that our second quarter update and financial results for the first half of 2025 will be announced on Thursday, the seventh of August before to speaking to you then.
Lee: Goodbye.
Lee: Thank you very much Andy and thank you Stuart and Mark Q4, being our speakers on today's call that concludes today's conference call. Thank you everyone for joining you may now disconnect your lines.
Lee: [music].