Q1 2025 Hyatt Hotels Corp Earnings Call
Speaker Change: Good morning and welcome to the Hyatt First Quarter 2025 earnings conference call.
Speaker Change: All lines have been placed on mute to prevent any background noise. After the speakers remarks, we will have a question and answer session. To ask a question at that time, please press star followed by the number one on your telephone keypad. As a reminder, this conference call is being recorded.
Speaker Change: I would now like to turn the call over to Adam Rohman, Senior Vice President of Investor Relations and Global FPNA. Thank you, please go ahead.
Adam Rohman: Thank you and welcome to Hyatt's first quarter, 2025 Arning's conference call. Joining me on today's call are Mark Hoplamazian, Hyatt's President and Chief Executive Officer, and Joan Bottarini, Hyatt's Chief Financial Officer.
Speaker Change: Before we start the call, I would like to remind everyone that our comments today will include forward-looking statements under federal securities laws.
Adam Rohman: These statements are subject to numerous risks and uncertainties, as described in our annual report on Form 10K, quarterly reports on Form 10Q and other SEC filings.
Adam Rohman: These risks could cause our actual results to be materially different from those expressed in or implied by our comments.
Adam Rohman: Ford-looking statements in the earnings release that we issue today, along with the comments on this call, are made only as of today and will not be updated as actual events unfold. In addition, you can find a reconciliation of non-GAAP financial measures referred to in today's remarks under the financial section of our investor relations website and in this morning's earnings release.
Adam Rohman: An archive of this call will be available on our website for 90 days.
Adam Rohman: Additionally, we posted an investor presentation containing supplemental information on our investor relations website this morning.
Adam Rohman: Please note that unless otherwise stated, references to occupancy, average daily rate, and rev-par reflect comparable system-wide hotels on a constant currency basis.
Adam Rohman: Percentage changes disclosed during the call or on a year-over-year basis unless otherwise noted. With that I'll now turn the call over to Mark.
Mark Hoplamazian: Thank you Adam, good morning everyone and thank you for joining us today.
Mark Hoplamazian: I'm very proud of our many accomplishments in the first quarter, including Strong Reff Par and Adjusted EBITDA growth, the introduction of the Hyatt Select brand.
Mark Hoplamazian: and being selected to the 100 best companies to work for annual list of US companies, according to Fortune and Great Places to Work, for the 12th consecutive year.
Mark Hoplamazian: While we began to experience greater macro uncertainty during the first quarter, we delivered great results because of our durable asset-like business model and height's culture of care.
Mark Hoplamazian: Before I comment on our results, I'd like to provide a brief update on the Playa transaction.
Mark Hoplamazian: On April 28th, we extended the tender offer period until May 23rd, 2025, at which time we will evaluate if all closing conditions are met.
Mark Hoplamazian: We continue to advance discussions for the sale of Playa's real estate and expect to be in a position to enter into an agreement to sell the real estate in the near future.
Mark Hoplamazian: We will continue to provide updates on all aspects of the Apply Transaction as we have additional
Mark Hoplamazian: We're also making progress to sell several of our own properties, including one that is under a signed PSA, two that are under a letter of intent, and three hotels in a formal marketing process.
Mark Hoplamazian: We remain under contract for the sales of Hyatt Grant Central New York and Anda's London Liverpool Street But do not expect either of those transactions to close this year
Mark Hoplamazian: We will continue to share additional updates at these transactions progress and consistent with past statements expect that we will continue to reduce our ownership of Hotels.
Mark Hoplamazian: Strange Growth, we were very busy on the development front and ended the quarter with a pipeline of approximately 138,000 rooms, a 7% increase over last year.
Mark Hoplamazian: New signings replaced the rooms that opened during the quarter, and development interest in our brands remains very strong.
Mark Hoplamazian: We signed several exciting projects during the quarter, including the Park Hyatt Taramina in Italy, the Grand Hyatt Chuala Kills in India, and a Hyatt Central in downtown Cincinnati to name a few.
Mark Hoplamazian: We are encouraged by the continued deal flow that we expect will translate to greater signings and expansion of our pipeline
Mark Hoplamazian: We achieve net rooms growth of 10.5% during the quarter. We welcome the Venetian Resort Las Vegas in January and we are thrilled for our World of Hyatt members and group customers to experience these hotels on the Las Vegas Strip.
Mark Hoplamazian: Other notable full service openings during the quarter included Andaz Doha and High Regency Bankhawk Airport.
Mark Hoplamazian: In February , we opened the first Hyatt Studios Hotel in Mobile, Alabama.
Mark Hoplamazian: Hyatt Studios' Mobile Tillman's Corner is off to an impressive start, including strong bookings through high-direct channels and great feedback from guests and developers.
Mark Hoplamazian: We are excited about the future growth by studios and the momentum we are building to expand our brand presence in the upper mid-scale segment in the United States.
Mark Hoplamazian: We expect to further accelerate our upper midscale segment growth in the United States with the introduction of our newest brand, Hyatt Select, an upper midscale transient conversion brand which we announced earlier this year
Mark Hoplamazian: The brand expands Hyatt's offerings to travelers seeking shorter stays in secondary and tertiary markets.
Mark Hoplamazian: The high select brand is flexible for both new builds and conversions designed to deliver attractive returns for owners.
Mark Hoplamazian: and offers an opportunity for us to expand our owner network.
Mark Hoplamazian: As you will recall during our 2023 investor day, we discussed the opportunity to grow our domestic brand footprint, especially in suburban, interstate, and small metro markets, and we believe Hyatt select, along with Hyatt studios, are the perfect brands for growth in these markets.
Mark Hoplamazian: There's strong interest in the Height Select brand from owners who are looking for conversion opportunities.
Mark Hoplamazian: and Access to Hyatt's powerful commercial platform, especially in markets where Hyatt has significant white space for growth.
Mark Hoplamazian: We are very excited about the potential of this brand and the opportunity to provide more options for our members and guests in new markets.
Mark Hoplamazian: Now turning to operating results, this morning we reported system-wide rev-part growth of 5.7% for the quarter which was positively impacted by the shift of Easter from the first quarter in 2024 to the second quarter in 2025.
Mark Hoplamazian: Retpart Growth was strongest among our luxury brands, in line with the trends that we've seen over the last two years, as high end consumers continued to prioritize travel.
Mark Hoplamazian: Richard Transient Reffar was flat to last year, reflecting the shift of Easter, and increased approximately 4% across our luxury brands.
Mark Hoplamazian: We also saw solid results across our all-inclusive resorts in the Americas as net package Reff par was up over 4% compared to the first quarter of 2024.
Mark Hoplamazian: Business Transient Reff Part Group, 12% in the quarter, driven by our large corporate customers and Group Reff Part increased 9% in the quarter, as the timing of Easter positively impacted both customer segments.
Mark Hoplamazian: Our strong grant portfolio and growth into new markets and customer segments is clearly resonating with guests, driving success of our award-winning world of high-ed loyalty program.
Mark Hoplamazian: We added over 2 million members during the first quarter, ending the quarter with approximately 56 million members. A 22% increase over the past year.
Mark Hoplamazian: Lowell T. Roombite Penetration Group 170 basis points compared to last year as our members realize the benefits of our program deepening their engagement with Hyatt and contribute to greater direct bookings.
Mark Hoplamazian: We also continue to see strong Cobra and credit card spend which increased significantly compared to last year.
Mark Hoplamazian: As we look forward, we are seeing mixed indicators as it relates to future booking activity. Based on what is currently on the books and recent booking trends, we expect Breffhard growth in our international markets to outperform the United States.
Mark Hoplamazian: We're also seeing positive bookings for our all-inclusive portfolio where paces of approximately 7% in the second quarter for the Americans.
Mark Hoplamazian: In the United States group pace, for full service, managed properties is up approximately 3% compared to 2024 for the last three quarters of the year.
Mark Hoplamazian: We expect groups to positively contribute to rev-part growth in the U.S. for the remainder of the year, but we do anticipate growth in the second quarter to be softer due to the timing of Easter.
Mark Hoplamazian: As we look further out, Group Production for 2026 and beyond increased by double digits in the quarter, driven by corporate bookings and pace in 2026 is up over 10%.
Mark Hoplamazian: We are seeing software booking trends for near-term leisure and business transient bookings in the United States, which have been down in the high single digits versus last year over the last few weeks.
with the greatest impact in our upscale brands.
Mark Hoplamazian: Our larger corporate customers are still on the road traveling for business. And while transient remains short-term, we believe that if visibility to macroeconomic policy improves, bookings could accelerate from what we have seen over the past few weeks.
Mark Hoplamazian: These trends informed our decision to adjust our full year outlook, which Joan will review in a few minutes, but before I turn the call over to Joan, I want to highlight the benefits of our asset-like business model in the face of macroeconomic uncertainty.
Mark Hoplamazian: Through our acid light transformation, we have grown our room base significantly and now have over 80% of acid light earnings compared to approximately 40% at the time of our IPO in 2009.
Mark Hoplamazian: During the 2008 financial crisis, a 1% drop in Reff par led to a nearly 2.5% drop in of justice that he had done due to our higher mix of owned and least earnings.
Mark Hoplamazian: Today, as we benefit from a greater asset like earnings mix, we anticipate a 1% change in ref part, will be to an approximate 1.4% change in the just city bit dot, using the midpoint of
Mark Hoplamazian: which could be referenced on page 14 of our Supplemental Investor Deck.
Mark Hoplamazian: The sensitivity illustrates the positive benefits of our asset light model which is more durable and predictable through economic cycles.
Mark Hoplamazian: We have consistently invested in growth as a key part of our capital allocation strategy, which has enabled us to realize the benefits of scale.
Mark Hoplamazian: We believe our broader distribution across luxury, lifestyle, all-inclusive and more recently upper mid-scale segments positions us to meet our guests and customers in more places and engage them more frequently.
Mark Hoplamazian: As a result, our expanded reach and growing membership base have contributed to a pipeline that is now five times larger than it was in 2008
Mark Hoplamazian: Fuelling the potential for continued fee growth well into the future [inaudible]
Mark Hoplamazian: We sharpened our customer focus, reinforced our financial foundation, and significantly enhanced our organizational agility, enabling us to respond more swiftly and effectively as market dynamics evolve.
Mark Hoplamazian: Our teams closest to the customer are making more data informed decisions, leveraging new tools that deliver tailored insights, resulting in quick, high-quality decision-making.
Mark Hoplamazian: We continue delivering exceptional value to all stakeholders regardless of the macroeconomic backdrop.
Mark Hoplamazian: I'd like to close by expressing my gratitude to all hired colleagues who live our purpose every day by caring for each of our stakeholders, especially in uncertain times.
Mark Hoplamazian: Joan will now provide more details on our operating results. Joan, over to you.
Joan Bottarini: Thanks, Mark, and good morning everyone. As we shared during our last earnings call, we expected first quarter rev Pargros to exceed the high end of our full-year range, and we were pleased with our exceptionally strong 5.7% rev Pargros.
Joan Bottarini: As Mark mentioned, business transient and group travel meaningfully contributed to Rev Park Rose and the highest end chain scales outperformed, with our luxury brand categories up over 8% leading to over 2 percentage points of Rev Park Index gains.
in the United States.
Rev Par increased 5.4%
Joan Bottarini: The shift of Easter and the presidential inauguration in Washington, DC positively impacted growth by approximately 150 basis points and group and business transient segments each delivered double-digit growth in the quarter . .
Joan Bottarini: Respar in the Americas, excluding the United States, increased 2.3 percent, and net package rep power for all inclusive properties in the Americas, increased 4.1 percent.
Joan Bottarini: In Greater China, Rev. Par was flat to last year as we lapsed the strongest quarter of growth in 2024, but we increased our market share by approximately 1%. International inbound travel from the broader Asia-Pacific region increased 14% compared to last year.
Joan Bottarini: Asia Pacific, excluding greater China, had another great quarter, with Rezpar up 11.2%. Rezpar in Japan, India, Australia, and South Korea were up a combined 14%.
Joan Bottarini: International Inbound continues to be an important driver of results in the region.
Joan Bottarini: Repar and Europe grew by 8.5% compared to the same period last year, Elisir Travel in the region grew by 8% from growth in both rate and demand.
Joan Bottarini: We reported gross fees in the quarter of $307 million, up 16.9% Our record level of fees was driven by strong ref-part performance, new hotel openings, and gross and non-ref-part fees.
Joan Bottarini: London Lee's Segment Adjusted EBITDA, increased by 18% when adjusted for the INED impact of asset sales.
Joan Bottarini: Distribution Segment Adjusted EBITDA, improved by 9.6% when excluding the impact of the UBC transaction. Performance in the quarter was driven by higher pricing, effective cost management and favorable effects.
Joan Bottarini: In total, Adjusted Yvada was $273 million in the first quarter, an increase of approximately 24% after adjusting for assets sold in 2024.
Joan Bottarini: In the first quarter, we repurchased approximately $149 million of class A common stock and had approximately $822 million remaining under our share repurchase authorization.
Joan Bottarini: to be drawn from the new term loan to finance the apply acquisition.
Joan Bottarini: We remain committed to our investment grade profile, and as we've previously disclosed, we plan to use proceeds from the asset sales to pay down this incremental debt.
Joan Bottarini: As of March 31, 2025, our balance sheet remains strong with total liquidity of approximately $3.3 billion including approximately $1.5 billion in capacity on our revolving credit facility and approximately $1.8 billion of cash and cash equivalence and short-term investments.
Joan Bottarini: Again, $1 billion of our cash on hand is expected to fund a portion of the ply acquisition.
Joan Bottarini: On that cover are full year outlook for 2025, with the full details to be found on page 3 of our earnings release.
Joan Bottarini: As a reminder, our outlook does not include acquisition or disposition activity beyond what we have completed as of today.
Mark Hoplamazian: We continue to monitor the dynamic macroeconomic environment and while we had a very strong first quarter, the trends that Mark mentioned have led us to adjust our
Mark Hoplamazian: We have seen signs of slowing customer booking behavior, particularly in short-term leisure and business transient demand.
Mark Hoplamazian: At this time, we anticipate Rev. Pargros to moderate in the balance of the year. Our full year 2025 Rev. Par range of 1% to 3% implies Rev. Pargros for the balance of the year, up between flat to up 2%.
Mark Hoplamazian: For the United States, after a strong first quarter with Rev. up over 5% to last year, we expect Rev. up for the balance of the year to be around flat compared to last year.
Mark Hoplamazian: The greater China, visibility remains limited, but as we lap easier comparisons to last year, we believe Rev Park could be flat to slightly up for the balance of the year.
Mark Hoplamazian: We anticipate our properties in Asia-Pacific, excluding greater China, will have the strongest growth and red part of any geographic region as they continue to benefit from significant international inbound travel.
Mark Hoplamazian: We are maintaining our net room's gross outlook range of 6% to 7% driven by organic growth.
Mark Hoplamazian: Gross fees are expected to be in the range of 1.185 to 1.215 billion dollars, a 9% increase at the midpoint of our range compared to last year.
Mark Hoplamazian: Adjusted EBITDA is expected to be in the range of 1.08 to 1.135 billion dollars, a 9% increase at the midpoint of our range compared to last year when adjusting for the impact of asset sales.
Mark Hoplamazian: As a reminder, owned assets sold in 2024 accounted for $80 million worth of owned and leased segment adjusted EBITDA last year.
Mark Hoplamazian: Adjusted free cash flow is expected to be in the range of $450 to $500 million, which excludes $117 million of deferred cash taxes.
Mark Hoplamazian: expected to be paid in 2025, related to asset sales that took place in 2024, as well as approximately forty-three million dollars of cost related to the planned acquisition of fly-up.
Mark Hoplamazian: Identifying opportunities to invest in growth that create value for our shareholders . . . .
Mark Hoplamazian: Paying a quarterly dividend and returning excess cash in the form of shared purchases.
Mark Hoplamazian: We expect to return additional capital to shareholders in 2025 beyond quarterly dividends and our year-to-date share of purchases.
In closing, we're proud of our first quarter results.
Mark Hoplamazian: which highlights the strength of our asset-life business model. We believe our commercial and growth strategy, the quality of our brand portfolio, and operational agility position us well to navigate this dynamic environment, and we remain committed to delivering against our long-term financial and strategic objectives.
Mark Hoplamazian: And this concludes our prepared remarks and we're now happy to take your questions.
Mark Hoplamazian: As a reminder to ask a question, please press star, followed by the number one on your telephone keypad. In the interest of time, we ask that you please limit yourselves to one question and rejoin the Q-footy additional questions.
Speaker Change: A first question comes from Shaun Kelley from Bank of America. Please go ahead, your line is open.
Speaker Change: Hi. Good morning, everyone. Mark or Joan, just wondering if you could give us a little update on sort of how you expect some of your line items or business units to perform in, let's call it this chopier macro environment, specifically a little color on your expectations around distribution, given I think you called out, you know, some slower bookings, and then own at least an incentive management fee that these are tough for. A lot of people to model and understand the kind of sensitivity points given [inaudible]
Speaker Change: when Revbar especially gets down to around the zero level, which I think you're implying for the balance of the year. Thanks.
Mark Hoplamazian: Thanks, Shaun. It's Mark Altstart and on sort of a macro commentary and then I think Joan can cover the specifics on the O&L and distribution of the U.S.
Mark Hoplamazian: So, generally speaking, I think it's obviously a choppy environment. Having said that, the first quarter was solid really across the board, and we are seeing
Mark Hoplamazian: Strength in the very near term, the pace as we get into the end of April into May is...
Mark Hoplamazian: Coming off a bit in terms of leisure, and that is looking forward, except for our all-inclusive
Mark Hoplamazian: which remains very solid. So our own inclusive business in terms of pace and the second quarter is up to seven.
Mark Hoplamazian: If you look at the actualized revenues in April for our all-inclusive business, it's up nine. Of course, that includes Easter effects, but 7% of that 9% growth was ADR.
Mark Hoplamazian: and Q3 pace at this point is flat. Q2 has 88% of the business book.
and Q3's got 45% of the business folks.
Mark Hoplamazian: The leisure picture is much weaker in the U.S. resorts than it is in the non-U.S. Americas.
Mark Hoplamazian: We have seen increases in Canadian travelers into Mexico and the Caribbean, but overall that segment is actually holding up very nicely on the leisure front.
Mark Hoplamazian: on Business Transient and Group, on Business Transient, first of all, very, very strong first quarter, up 12, and as we look into the current outlook,
It really is a tale of sort of three segments.
Luxury,
Mark Hoplamazian: is very strong as far into the future which is really through the end of May as we can see.
and so BT is coming off.
in Select Service overall.
Mark Hoplamazian: Our negotiated accounts are biggest accounts, I should say, are actually positive in select service, but the overall business transient cases is definitely off on the select service site. And then on group,
Mark Hoplamazian: were up for the remainder of the year just under 3 percent.
Somewhere in the two and a half to three percent range.
Mark Hoplamazian: You know, right now we don't have any reasons to believe it won't [inaudible]
Mark Hoplamazian: We'll yield a total year about four and a half to five, close to right in the middle of that actually.
Mark Hoplamazian: and I think that that's actually a very good result for the year.
Mark Hoplamazian: What's most encouraging is with about 50% of the business on the books for 2026, we're seeing an over 10% pace increase, including really healthy rate increases.
Mark Hoplamazian: It's very important to recognize that 70% of our portfolio is luxury and upper-up skill, and so...
Mark Hoplamazian: As we look at how this is unfolding, the tracking by segment and price point has actually become really important to understanding the total story.
Mark Hoplamazian: So that's kind of the macro picture at this point, I would say there are risks of course the GDP figures that just came out are not encouraging . . .
Mark Hoplamazian: Um, I don't, it doesn't necessarily feel like we're on the precipice of some massive contraction but you know I'm not an economist because if I were I'd have like five opinions about that same topic so I'll spare you my speculations [inaudible]
Joan Bottarini: But then, I think Joan can talk about the other two pieces of your question [inaudible]
Speaker Change: Shaun, I'll just comment on the own segment and distribution. So, owned is a smaller portfolio now, less than 20% of our earnings mix, and there's a bit of a higher concentration to luxury.
Speaker Change: So the performance that we're seeing in those chain scales is obviously helping the portfolio in the quarter . . .
and also because of the shift in Easter.
Speaker Change: in New York had a really great quarter and we have a couple of long totals there. As we look forward this portfolio we expect to continue to be strong. We have a concentration in the US so we're watching that closely as far as the short term pick up. [inaudible]
Speaker Change: We have a Q3, difficult comp because of the European Hotels and
Speaker Change: what we generated last year in Paris with the Olympics. But all in all on balance, the own portfolio is performing strongly and margins are up in the quarter. Up over last year, 70 basis points, which is really a result of our teams in the field and our asset management teams.
really pushing on productivity and cost that we can't control.
Speaker Change: So, and Joan, I would just add that that strength that you just described continued through April .
Speaker Change: That's right, we had actually a very good April , part of that was actually driven by New York to continuing to be strong on the business side. For distribution, we had a good quarter.
Speaker Change: in the first quarter. And it was a little bit better than expectations, actually. As our teams are, you know, being very, very disciplined about cost deficiencies.
Speaker Change: They are seeing some slowdown in booking activity at the lower chain scales, not into some of the five-star locations in Mexico and the Caribbean but in lower chain scales. So they're working hard to make sure that we're very disciplined about the cost structure and driving pricing.
Speaker Change: in those upper chain scales that they're delivering to. So that really helped results in the quarter, and we got a little boost from FX to in that segment. As we look towards the remainder of the year, again, we think we're watching the bookings closely. We do think that the 5 to 10 million upside to last year will probably be closer to around flat.
Speaker Change: which means, you know, a slight pullback in the last three quarters of the year relative to the first quarter. But nothing material. And again, the teams have some levers at their disposal as they manage through the business into the-
Speaker Change: and to the coming weeks where that's where visibility is. It's really in the next couple of weeks.
Speaker Change: Our next question comes from Michael Bellisario from Baird. Please go ahead, your line is open.
Michael Bellisario: Thanks, good morning everyone. Just want to dig in a little bit more on the booking trends. Are you seeing cancellations? Or is it all just less bookings at this point? And then a group, what markets, what customer types are you seeing the hesitancy from in that 3% pace for the remainder of the year? Where was that 90 days ago? Thanks.
Yeah, I think we're first of all, I guess, [inaudible]
Speaker Change: This is a year that so far has been dominated by corporate [inaudible] political and political and political
Speaker Change: corporate is up in all respects and especially in bookings into the future association is actually off.
Speaker Change: So we've seen really, really strong pace development from corporate. In terms of sectors
Speaker Change: The key sectors that really drive our business, both on the different transient and the group side.
Speaker Change: That is IT, Confelting and Banking and Finance on the BT side. The business transients are all up, they're all up double digits.
Speaker Change: in Q1, and so those are the key sectors that are firing at all cylinders at this point. So I would say the key differentiation that we're seeing at this moment is association pull back versus corporate re-enforged.
Yeah, you know, I would just add, oh sorry, I would just add to when we look globally
Speaker Change: Stronger, notably stronger when we look at the transient pacing both on the business transient and the leisure transient side. So, the US is a little bit slower than...
Speaker Change: In the last couple of weeks, then international, so when you look on a global basis, actually businesses is up and leisure on a global basis. It's slightly down, but that again is driven by the two different, very different dynamics we're seeing international versus U.S.
Speaker Change: Our next question comes from Ben Chaiken from Mizuhau. Please go ahead, your line is open.
Speaker Change: Hey, good morning. Thanks for taking my question. Would love to give more color on the progress around Plya. Language in the release seems to suggest a little faster timeline than was indicated the last time we spoke when I think you were referencing 2027. Not sure if that read is fair and then any color on the number of potential buyers would be great. Thanks.
Speaker Change: Acid Dispositions, and I really beyond that, it's a bit difficult to say further by virtue of some uncertainties on timing and so forth.
By way of reminder, we established the end of 27.
Speaker Change: Existing Oundassets in our portfolio. So, that was the reference to 2027. We have a very long history of establishing
Speaker Change: Goals and providing some guidance on our activities on the portfolio side.
that we...
Speaker Change: Absolutely we feel certain that we can accomplish. We have actually beaten every single goal that we've ever set in both in terms of time.
Speaker Change: in terms of dollars and in terms of valuation. So that is a, that's a track record that we are extremely proud of and intend to maintain.
Speaker Change: Hi, good morning. Thanks for taking my question. So just a question on the construction landscape. What level of cost inflation are your developers seeing? Is that having any impact on maybe your US construction and any update on the percentage of your pipeline that is under construction? That was I think 25% at the last quarter. Thank you very much.
and Mark Hoplamazian.
Thank you, Richard. A couple of things. First...
Speaker Change: I had the great pleasure to be at the grand opening of the first high studios that opened in Mobile, Alabama.
Speaker Change: And during that time, I spent all of my time talking to the other developers, the developer of that hotel and other developers that came, there are quite a few of them. Many of them were involved in the creation of the brand to begin with.
Speaker Change: And to a person, they said that they are putting contingencies in their cost estimations right now that range as high as 20%.
in terms of cost to build. However, [inaudible]
Speaker Change: The inspiring part of that conversation was that at least two different developers talked about having stood up, well in one case they themselves stood up and in the other case they have identified.
Speaker Change: Case Good Manufacturers in the United States that they are now working with on an accelerated basis to limit any impact of tariffs with respect to imported case goods.
Speaker Change: A lot of the other materials, as you can imagine, building materials don't ship well in terms of cost, given the weight. Meaning, drywall, lumber, steel, etc. And certainly, ready-mixed concrete is a hyper-local business.
Speaker Change: Those are all factored building cost factors that are not impacted by tariffs at all.
Speaker Change: So I'm actually I was really taken by the ingenuity and the creativity of the of the group that I talked to and I think we're going to see more and more about that is discovering and standing up on shore.
Speaker Change: It has to do with shipping costs and so forth. So, I'm not saying it's not going to, we're going to escape by and not have any impact from terrorists whatsoever.
Speaker Change: I am saying that necessity is the mother of invention, and our developers are really showing some great ingenuity in how they're approaching this [inaudible]
Speaker Change: and, by the way, with respect to the proportion of the...
of the pipeline that's under construction.
Speaker Change: It's actually about 30% on 25. And secondly, excuse me, second lead.
Speaker Change: The pipeline activity in the first quarter is very vibrant. We opened over 4,000 rooms.
Speaker Change: out of the pipeline in the first quarter, and we added a bit more than mad in the quarter. And I think you know this well, Richard, because you've been a student of the industry for a long time, but the first quarter is notoriously a slow quarter for signings.
Speaker Change: So we're quite happy with that and we're especially happy to see the activity that's underway in the sort of feeder system into
Speaker Change: the deals that we're currently negotiating, which we have confidence we're going to end up signing. So I would say the activity on the pipeline front feels better to me than it did a year ago. And I think our performance year today is actually quite strong. So I think we're going to end up on the pipeline front feels better to me than it did a year ago.
Thank you.
Speaker Change: Our next question comes from Patrick Scholes from Tourist Securities. Please go ahead, your line is open.
Thank you. Bye.
Speaker Change: Good morning everyone. Good question for you on the client transaction. What if anything at this point would make you not go forward with this deal. Thank you.
Speaker Change: Well, we have a committed transaction and we're in the middle of a tender offer. There are conditions to that completion of that tender offer.
Speaker Change: I'm not going to enumerate all of them and this is not by any means an exhaustive list but a few really important ones [inaudible]
Speaker Change: First, getting to an 80% tendered percentage. That is the 80% of a share is tendering. Second would be clearance of all any trust.
Speaker Change: Clearances that are required. And third, we don't get to 100% in the tender, then there's a process that you go through that's prescribed that will take some number of weeks to complete.
Speaker Change: in order to acquire the remaining shares. So those are the key conditions and so I hope that helps to sort of outline what's ahead of us.
Speaker Change: How confident is this juncture do you feel about those key conditions being met or satisfied? Thank you.
Speaker Change: We're confident that we'll get through this. I think any trust predictions on any trust if you look backwards over the last.
Speaker Change: four to eight years have, this is not US by the way it's primarily Mexico that we're talking about.
Speaker Change: Yeah, but I think we will get to the tender level that we have as a minimum requirement.
Okay, understood. Thank you. Thank you
Speaker Change: Our next question comes from Chad Beynon from Macquarie, please go ahead, your line is open
Chad Baynon: Morning, thanks for taking my question. With respect to the 2025 outlook, has anything changed with the non-hotel-related fees?
Speaker Change: and with any softness that you've seen recently in the leisure traveler, does that usually correlate with kind of what you see in that line? Thank you.
Speaker Change: On the non-hotel-related fees, in the first quarter, we had a very strong result, significantly in our franchise and other fees. Some of that was boosted by the UVC transaction, which [inaudible]
Speaker Change: in last year in the middle of the quarter. So that did help us in the first quarter, but we're anticipating healthy growth in both franchise and other non-ref-par related fees for the rest of the year. And then, you know, I don't know if this is behind your question, but maybe just a little bit of color.
as we think about the other fee stream.
Speaker Change: You know, incentive management fees again, strong in the quarter across all actually dimensions of our fee growth.
Speaker Change: Flat in the quarter and we anticipated we look through the rest of the year that that could improve based on what we're seeing. In fact, April was a little bit better in China.
Speaker Change: And then, for the US, the same comment I would make is that the short-term bookings being a little bit softer, we with...
Speaker Change: What we see evolves in the environment, we could see some pickup because the bookings are short term right now.
Speaker Change: and, again, April was positive in the US. So...
Speaker Change: You know, it's a matter of watching this really closely and making sure that our teams are going to market where the demand is coming and that's what we're focused on in light of some booking activity that's a little bit softer than we would have anticipated a couple of months ago.
Speaker Change: And that should help us sustain these fee growth numbers through the rest of the year. We've got a, we've posted 17% growth in the first quarter and we anticipate the full year at the midpoint will be 9% so still strong growth through the remaining three quarters of the year.
That's great. Thank you.
Speaker Change: Our next question comes from Stephen Grambling from Morgan Stanley . Please go ahead, your line is open.
Stephen Grambling: Hi, thank you. I think last quarter we talked about this a little bit, but as we think about your co-brand credit card, is there a path to this being potentially renegotiated early as some of your peers have? And any to reason to believe that your terms would be different than some of those recent renewals? [inaudible]
Speaker Change: Stephen, we don't have an update today to share and we will absolutely provide an update when we have more information. We do believe we're going to achieve a very competitive new deal because of our brand portfolio, our distribution, the growth, the options we provide.
Speaker Change: So serving the High End Traveler helps us in this regard. And of course the performance of the World of Hyatt program is also a key contributor to why we think we'll have a successful deal when we get to be able to share the negotiation specifics with you.
Speaker Change: Craig, and then I think that you touch on this with Chad's question, but have you seen any big deviation in the spend on your existing co-brand credit card, whether it's shifting more towards goods versus...
Speaker Change: Services that may mirror some of what you're seeing on the other side from a red part standpoint.
Speaker Change: Now really strong results that we've seen personally and what we've heard from our issuers, so nothing that is concerning at all or materially different than that strong result.
Great. Thank you.
Speaker Change: Our next question comes from Wayne Pfennigwerth from Evercore ISI. Please go ahead, your line is open.
Hey, thank you. On the favourable...
Dwayne Penickworth: All-inclusive pacing. You briefly mentioned or alluded to Canadians overflying the US. I wondered if you had any stats on how the point of sale might be changing for all-inclusive, you know, is US point of sale stable? Or are you seeing other geographies meaningfully perk up?
Dwayne Penickworth: I think that the answer is yes, and in this case I think we're seeing an increase in Canadian inflow and consistency from Americans.
Dwayne Penickworth: The percentage increase from Canada was high in the first quarter in terms of actual space [inaudible]
But the U.S. is the dominant feeder market.
Dwayne Penickworth: So I would say that a lot, a big proportion of the total performance of, you know, for state business in the first quarter and the pacing is coming from the US.
Dwayne Penickworth: I would describe the move up a significant percentage increase of Canadians is a bit of a cascade out of some U.S. resorts, but...
Dwayne Penickworth: I found this may be most acute, actually, in a non. [inaudible]
Dwayne Penickworth: All Inclusive Resort that we have in the Bahamas, where in the first quarter they experienced very significant increase in Canadian travelers.
Dwayne Penickworth: and anecdotally, at least some of that had to do with, as you described it, a flyover.
So, I think it's, I think it's...
Absolutely a current...
A current uh...
Dwayne Penickworth: Phenomenon, but, and the US is positive, but the Canadian travelers are basically adding a boost to overall results in Q1 and in terms of the pace that we see in the next couple months.
Speaker Change: Thank you for that. And then I just wonder a big picture. I know you have a longer term goal, but how should we be thinking about dispositions this year excluding potential pliet transaction? Thanks for taking the questions.
Speaker Change: Sure. I have to say I think it's a little less predictable in terms of chiming at this point.
Speaker Change: One of the things that has been a byproduct of policy decisions.
and Paul C. Volatility.
in Fiscal Matters is...
Speaker Change: Disruption in the fixed income markets, and that's, you know, you already understand that.
Speaker Change: and that does create disruptions and I wouldn't go so far as to call it dislocation, it's just disruptions in capital formation and most importantly not necessarily capital availability but pricing and so I feel like there's some measure of
Awareness and thinking about how best to finance.
Speaker Change: Property Acquisitions at this point in time. Some of the properties that we have for sale are actually in Europe , so the capital formation there is a little more straightforward.
Speaker Change: So we absolutely have an expectation that we will close on some of the things that we enumerated earlier.
Speaker Change: But timing-wise, it's right now, as we sit here at this moment, not very predictable in terms of the actual effectuation of those.
Thank you.
Sure.
Speaker Change: Our next question comes from Smedes Rose from City. Please go ahead, your line is open.
Speaker Change: You know, you've obviously been sure a lot of cycles, you know, this pace very well, you've been very successful at it [inaudible]
Speaker Change: You mentioned sort of, you know, difficulties maybe around financing and I'm just wondering are you more inclined to offer seller financing in some circumstances? Have you gotten maybe pushback around pricing from potential buyers given increased uncertainty or are they kind of just looking through all of it? And any thoughts maybe just on [inaudible]
Speaker Change: You know, more sort of institutional interest in the all-inclusive space, which I think you talked about a little bit on the last quarter, which we haven't seen so much of in terms of real estate ownership and just sort of any thoughts there.
Speaker Change: Yeah, so first of all, thanks me to appreciate the question. The fact is that anytime you effectuate a trade, you are by definition locking in whatever is available at that moment at the pricing that's available at that moment.
and there is a...
Speaker Change: Trade-off, if like we do, believe that there's great long-term value creation, longer term, medium to long-term value creation in the asset base, and so what you don't want to do is end up getting
Basically, crystallizing
Speaker Change: A sale that is unduly, I would say maybe in some cases, if it were to be unduly influenced by the cost of debt.
Speaker Change: So, there are many ways to ameliorate that or mitigate it, and one of which is to do what you asked about, which is seller financing.
Speaker Change: So, my inclination at this point in time is to evaluate exactly how the different sources of capital, whether they be banks or non-bank lenders, are pricing risk.
Speaker Change: Seeing how we might step in on a highly asymmetric risk-reward basis.
Speaker Change: to provide either credit support or other kind of seller financing that would allow for more
Speaker Change: with great confidence that we've got great asset coverage and a very appropriate, risk-graded return.
Speaker Change: So that's how we're thinking about it and we've been applying that sort of thinking for our entire 5th year, but it becomes even more relevant in today's world. I would say that the valuation...
Speaker Change: Point goes to the quality of the assets. I think the key, from my perspective, is, and we've said this for...
Speaker Change: At least a decade now, that the quality of the portfolio that we've got matters, the resiliency of the performance of our Hotels matters.
Speaker Change: The current performance of our portfolio matters and you heard Joan talk about how well our own the least portfolio is doing.
Speaker Change: and I can tell you, you can read through my own comments about our all-inclusive segment as an indication of performance in that segment.
Speaker Change: So, really, let's not forget that valuation is and multiples actually have to be multiplied by earnings and with sustained and improving earnings over time, valuations can and should be maintained and increased.
Speaker Change: So this is all the balancing act that I've covered the whole waterfront now, but that's the way in which we are engaged in all of this, whether that's all inclusive assets that we will come into ownership of through Playa or our existing portfolio.
Okay, thank you.
Speaker Change: Our next question comes from Conor Cunningham from Melius Research. Please go ahead, your line is open.
Speaker Change: Hi, everyone. Thank you. I'm sorry to get back to sort of the short term question, but just I'm just trying to understand what's going on on business, in this transient and then leisure in general. There's obviously a lot of noise from the calendar shifts.
Speaker Change: and what not, but has demand stabilized in April ? If it exclude all the calendar stuff, is it now stable from where it was?
Speaker Change: before all the uncertainty kind of crept into the market. And just as you think about internationally, you talk about it outperforming the US, it all makes sense. But it seems like the entities are at much different spots. So if you could just talk about where you see the most upside and potential more muted outcomes, that would be helpful. Thank you.
Speaker Change: So Conor, maybe I, you touched on it and it's actually a way that we're...
Speaker Change: Sitting here as we're processing the numbers, is that April was an unusual month because of the holiday, the Easter holiday, and the holiday being later in the month too. So you have this, you sort of have the spring break that...
Speaker Change: Existed for several weeks prior to the Easter holiday. We are looking at preliminary numbers for April and they're positive. So while we've been seeing some bookings flowing, April still has positive results and very strong
Speaker Change: continued momentum outside the U.S. in markets in Asia, outside of greater China, even though I also mentioned greater China with positive in the month.
Speaker Change: and in our own Christian business, we heard the pace numbers, we were sharing it at 7% [inaudible]
and the Americas, the all-inclusive segment.
Speaker Change: So that's where the mixed comment comes and so we're watching it closely. We will I think look at May and June as indicators of what you're suggesting with respect to a more
Speaker Change: Quote Normalize period in this uncertain environment where we can actually track what's landing because it is still a short term. I mean, the one call out that is probably, you know...
Speaker Change: A bit more of a, as we look at the chain scales because luxury has been outperforming and the upscale segments have been underperforming. They've been a bit weaker, so that's the area that
Speaker Change: You know, we'll be watching that closely in particular in May and June when we have a little bit more of a clearer calendar and a month that should be healthy from a business perspective on a normalized basis. So that'll give us, you know, next quarter's call we'll be able to give you a really good insight into those two months. May and June .
Okay, thank you.
Short.
Speaker Change: Our next question comes from Brandt Montour from Barclays. Please go ahead, your line is open.
Brant Montour: Good morning, everybody. Thanks for taking my question. I was curious if you could give us an update on the ground.
Brant Montour: signing momentum in China. And specifically, Mark, I was hoping you could kind of talk a little bit about the bigger picture question or idea that's been in the news a lot lately, lately of America Inc. And if you're seeing any sort of hesitation.
Brant Montour: from local developers in China in terms of signing on with an American brand.
Brant Montour: Thanks for that, Grant. The signing activity in China started off as we expected it would slow in the first quarter. That's not atypical.
Very strong
Brant Montour: The pipeline for those Hotels, we have more than 70 Hotels now, so all together that is going to put us close to 130 Hotels.
Brant Montour: in under that brand. So the expansion of the pipeline even as we continue to open more and more of those hotels is very encouraging. I think it's a format.
Brant Montour: who are definitely looking to stay in central locations. These are hotels that are largely developed from adaptive reuse of office buildings and residential buildings in very, very central locations, but at a lower price point.
Brant Montour: and so I would say it's been strongest among across our portfolio. I think the pipeline under construction in China is lower than the overall 30% that I cited earlier.
Brant Montour: that still has to do with projects that during the hard shutdowns of two years ago were either suspended or pushed and so we're continuing to monitor that . . .
Brant Montour: I think one thing that we have deliberately done to mitigate any concerns about the...
Brant Montour: The financial base behind the pipeline has been to work with state owned enterprises and larger state owned enterprises and we have joint ventures with two. We have actually three.
Brant Montour: Join Ventures in total, but two of them are with companies that are ultimately owned by the state.
Brant Montour: and so our progression with them in growing the portfolio has been very consistent and I think is very reliable. There have been news reports about...
Brant Montour: Chinese consumers trading away from American products that is on the consumer goods front. We don't see that saying dynamic in our business.
Thanks, Mark.
Speaker Change: Our last question today will come from Kevin Kaupelman from TV Howin. Please go ahead and join us open.
Kevin Koppelman: Thanks so much. I just had just a follow up on the Rev. Park comments [inaudible]
Kevin Koppelman: First, could you clarify the zero to two that you're thinking of for the rest of the year? Is that also a good range for how you're thinking about the second quarter?
Kevin Koppelman: and on all-inclusive, could you help us translate the pacing numbers that you gave for Hyatt Hotels and that net package rev part in Q2, you know, understanding obviously that it's all to right now. Thanks.
Kevin Koppelman: Sure, Kevin, the first question, and I'm going to ask you to repeat the second question around the second quarter. The answer is...
Kevin Koppelman: Yes, we expect around to be in that same range between 0 to 2%. I told you the numbers for April that are preliminary, so we're tracking...
Kevin Koppelman: I would say to the higher end of the range in April and that's boosted by leisure because of Easter in the month.
Kevin Koppelman: and also boosted by the international markets Asia Pacific outside of greater China and Europe in the month of April . So the answer is yes, and that's kind of a little bit of context of where we're tracking.
Quarter today. Great. And I'm not all in clu- [inaudible]
Speaker Change: Yeah, I'm not all inclusive. Just kind of the pacing, you shared the pacing data point, which looked really good. If you could just help translate that for us to how net package of part might be looking for the second quarter compared to the first. [inaudible]
Speaker Change: Yeah, you can expect, you know, a high single digit pacing number is going to be about a mid single digit.
Result on the Net Package Rev Par, similar to the first quarter.
Speaker Change: and you know that is strong and actually you know on the books is healthy because we have a little bit more visibility into that business because it takes a little bit more time as travelers make the decisions about the second quarter. So...
Speaker Change: We feel good about that result for all inclusive in Q2. Yeah, I would say we feel really good about it in Q2, because 88% of the businesses are already booked. So there's not a lot of... Thank you so much. Yeah, there's not a lot of open to buy, so to speak, or remaining.
Speaker Change: that we need to generate in order to meet those numbers.
Thank you so much.
Speaker Change: Well, thanks everybody. I appreciate all of you for taking your time this morning and we appreciate your interest in Hyatt. We look forward to welcoming you into our hotels and resorts so that you can not only experience the power of the care of the Hyatt family, but also give our red par boost, which we would greatly appreciate. Thanks, and we'll talk to you soon.
Speaker Change: This concludes today's conference call. Thank you for participating and have a wonderful day. You may all disconnect.