Q2 2025 Hyatt Hotels Corp Earnings Call
Good morning and welcome to the Hyatt second quarter 2025 earnings conference call all lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press the star key followed by the number 1 on your telephone keypad. If you would like to withdraw your question, press star 1 again,
as a reminder, this conference call is being recorded.
I would now like to turn the call over to Adam Roman senior, vice president of investor relations and Global fpna. Thank you, please. Go ahead.
Thank you and welcome to Hyatts second quarter 2025 earnings conference call.
Joining me on today's call or Mark Hazen Heights president and chief executive officer and Joan berini Heights Chief Financial Officer.
Before we start, I would like to remind everyone that our comments today will include forward-looking statements under Federal Securities laws. These statements are subject to numerous risks and uncertainties as described in our annual report on form. 10K quarterly reports on form 10 q and other FCC filings.
These risks could cause our actual results to be materially different from those expressed in or implied by our comments.
Before looking statements in the earnings release that we issued today, along with the common s on this. Call are made only as of today, it will not be updated as actual events unfold. In addition, you can find a Reconciliation of non-gaap financial measures referred to. In today's remarks, under the financials section of our investor relations website and in this morning's earnings release
An archive of this call will be available on our website for 90 days.
Additionally, we posted an investor presentation containing supplemental information on our investor relations website this morning.
Please note that unless otherwise stated references to occupancy, average, daily rate and ref par reflect comparable systemwide hotels on a constant currency basis.
Unless otherwise noted with that, I will now turn the call over to mark.
Thanks Adam.
Good morning, everyone. And thank you for joining us today.
I would like to start our call by saying how proud I am of our team's accomplishments over the last quarter. I'm thrilled that we closed on the acquisition of FIA Hotels and Resorts and entered into an agreement to sell the entire Playa real estate portfolio.
I would like to extend a warm. Welcome to the Playa colleagues who joined the highest family. We are very excited for what lies ahead and the expertise they bring to Hyatt.
Our operating results. This quarter are a testament to the power of our brand focused strategy, the strength of our Network and the dedication of high colleagues across the globe.
For the 12th consecutive year high was nominated to Fortune's 100. Best companies to work for underscoring how we've been able to maintain our culture of care. Even as we have significantly grown and transformed our business.
I want to thank all of the high colleagues across the globe for their Continued Care for our guests.
Customers and each other.
Before I cover results, I'd like to provide an update on our transactions activity, starting with the acquisition of Pia hotels and resorts which was completed on June 17th.
This transaction included the acquisition of 15 all-inclusive resorts, including 8 existing Hyatt franchise resorts under our Hyatt Ziva and Hyatt Zilara brands.
On June 30th. We announced that we entered into an agreement with Tortuga resorts to sell the entirety of the real estate acquired as part of apply a transaction.
for 2 billion dollars with the ability to receive an additional 143 million if certain conditions are met,
We are pleased to be entering into this agreement with an ownership group that has deep knowledge and experience in the luxury all-inclusive space.
Concurrent with the sale which we believe could close by the middle of the fourth quarter. We will enter into 50-year management agreements for 13 of the 15 resorts.
In 2026. We expect to earn an additional.
60 to 65 million of management. Fees, net of franchise fees that we previously would have earned from PA.
We also expect to generate earnings through our distribution platform.
Stabilization in 2027, we expect the implied multiple on the net purchase price for the asset light business, to be 8 and a half times to 9 and a half times.
A very strong outcome consistent with our stabilized valuations on asset light Acquisitions since 2017.
We are extremely pleased with the terms of the transaction and the speed at which we were able to execute.
We expect the transaction to be, accretive to shareholders in the First full year.
This transaction, demonstrates our commitment to our asset light business model, while continuing to strengthen our brand portfolio and leadership in the luxury all-inclusive segment.
We also continue to make progress to sell several of our own hotel properties.
3 hotels that were under a formal marketing process. Last quarter are now subject to an exclusivity agreement.
And we expect to sign a letter of intent soon.
We also have 1 property that is under assigned, PSA and 2 that are under a letter of intent.
We remain under contract for the sales of Hyatt Grand Central, New York and anda's London, Liverpool Street, but we do not expect either of those transactions to close this year.
we will share additional updates as these transactions progress and we continue to expect our asset late earnings mix to exceed 90% by 2027
Now turning to operating results this morning, we reported systemwide revpar growth of 1.6% for the quarter or 2.2% when adjusting for the shift of Easter. From the first quarter in 2024 to the second quarter in 2025.
ref bar growth was strongest among our luxury Brands as high-end consumers, continue to prioritize travel
Leisure transient revar was up 2.6% to last year, reflecting the shift of Easter and increased approximately 6% for our luxury brands.
all-inclusive, net package, rev power, increased 6% compared to the second quarter of 2024, in the Americas highlighting, the continued strength of luxury, all-inclusive travel
Business, transient revpar was flat in the quarter with the United States declining by 1.5% driven by select service hotels.
Was up in the low. Single digits. For our full service us hotels as well as hotels in Europe and Asia Pacific, excluding greater China.
Group revpar in the quarter was up 3% to last year and increased 1.1% when accounting for the timing of Easter.
Group pace for full service managed properties in the United States is approximately flat compared to 2024 for the last half of the year.
The third quarter, which is lapping 6% year-over-year growth in 2024.
Has a challenging year-over-year. Calendar comparison due to special events like the Democratic National Convention in Chicago and the timing of Russia Shana which falls in September of this year compared to October of last year.
Pace for the fourth quarter is up approximately 3% and we should see easier comparisons due to the timing of Russia Shana as well as lapping last year's elections in the United States.
As we look further out Pace in 2026 is up in the high single digits and we are seeing positive momentum in bookings, for 2026 and Beyond.
Although booking Trends in the second quarter were softer compared to the first quarter, we're seeing an uptick in future, bookings.
For both Leisure and business, transient travel.
Our group and corporate customers have shared that travel continues to be a priority.
Especially for customer-facing meetings and we expect us revpar growth to improve after Labor Day.
We continue to see exceptional engagement from our world of higher loyalty members a key driver in differentiator of our commercial performance.
Since 2017, through the end of 2024.
We have grown loyalty membership by approximately 27% per year.
Significantly outpacing the growth of our largest competitors.
we ended the second quarter of 2025 with over 58 million members an increase of 21% compared to the second quarter of 2024
And spend on our co-brand credit card continues to be strong.
This sustained growth, underscores, both the benefits of our loyalty program to Ai and travelers and the desirability of our Network.
As we expand our brand footprint and new and established markets, we are delivering more opportunities for our members to engage with Hyatt.
The world of Hyatt program remains a powerful growth engine deepening, guest relationships, reducing customer acquisition costs and reinforcing. Our value proposition to owners and Developers
Trying to grow, we achieved net rooms growth of 11.8%.
during the quarter, including approximately 2,600 rooms that join the hide system as part of the Playa acquisition,
the additional rooms from Playa, add approximately 70 basis points to our full year 2025 Outlook, which we have raised to 6.7 to 7.7% inclusive of the player rooms
During the second quarter, we delivered net rooms growth, excluding Acquisitions of 6.5% and had several notable openings, reflecting the strength of Our Brands, across key segments and geographies.
In Europe, we expanded our Resort offerings with the opening of resorts on Greece's G and coasts. And in Bulgaria,
we also added to our Essentials portfolio. Opening new your your Cove hotels in China and new select service properties in Canada.
We continue to be very busy on the development front and end of the quarter with a pipeline of approximately 140,000 rooms and 8% increase over last year.
Signings increased by over 30%, compared to the second quarter of 2024.
And included several exciting projects such as 2. Zoe Resorts 10 euro hotels and greater China and 2 Grand Hyatt hotels in India. Thailand a few
We are encouraged by the level of development interests in Our Brands which we expect to translate to Greater expansion of our pipeline, especially within our Essentials brand portfolio.
And continued organic growth over time.
We expect to accelerate the growth of our Essentials portfolio.
With the introduction of our newest brand, unscripted by Hyatt.
This brand fills a key white space in Hyatt's portfolio. Allowing us to grow in more markets and at an accelerated pace.
The brand is designed to unlock growth, through conversion, friendly opportunities, and this approach gives owners.
A flexible path to benefit from our global distribution and the world of high loyalty program.
The recent brand editions in our Essentials portfolio, tight, select and height Studios.
As we look to the future, we remain confident in our strategy and our ability to deliver value across economic Cycles.
We believe our brand, LED, and agile approach enable us to respond to shifting market dynamics on a real-time basis.
While continuing to care for our stakeholders and create meaningful differentiation and a competitive landscape.
We built a high-end portfolio of Brands through deliberate and disciplined expansion in the luxury lifestyle and all-inclusive spaces.
Our luxury chain scale rooms. Mix has increased by 1,000 basis points since 2017. While our largest competitors have seen their luxury mix Stay flat or decline,
Our growth has been intentional.
We have cultivated deep commercial and operational expertise while attracting and growing a high-end customer base.
Is yielded meaningful differentiation for Hyatt with more than 70% of our portfolio in the luxury and upper-upscale chain scales?
A position that we believe is difficult to replicate and provides a competitive advantage.
This sets us apart from our peers and positions, Hyatt among the most recognized and respected names in global hospitality.
This strategy is attracted a valuable customer base with greater disposable income.
Who seek out quality experiences, engage deeply With Our Brands and demonstrates strong loyalty.
The strength of that engagement is reflected through the compounding growth in our world of higher programs, increased co-brand credit card spend and high fees per room.
Having built this Foundation.
And transformed to an asset light business model. We are now at an inflection point.
Poised to scale with efficiency and speed.
As we further expand into the upscale and upper midscale, segments, Brands like height select height Studios and unscripted by Hyatt will allow us to grow with intention in markets where we have significant white space.
In the us alone, we are absent from more than 50% of Str tracks.
And in tracks where we have a presence, our hotel account is approximately 20%, the size.
The largest competitor.
This white space gives us robust growth opportunities, allowing us to provide existing members with more ways to stay with us, while introducing new guests to higher.
I'm incredibly excited about Heights future. We have an unmatched Global portfolio of Premium luxury lifestyle and Resort brands that has driven significant, loyalty membership,
our significant whites space for growth is expected to increase our fee based earnings
Further improving our Capital efficient asset like model.
We believe We Are positioned to generate durable growing free cash flow and deliver significant shareholder value.
I would like to close by again, expressing my gratitude to all high colleagues who live our purpose every day by caring. For each of our stakeholders, especially through changing market dynamics, Joan will not provide more details on our operating results. Joan over to you.
Thanks Mark and good morning everyone.
RevPAR growth in the second quarter increased 1.6% compared to last year, in line with our expectations shared during our first quarter earnings call.
As Mark mentioned and similar to the trends seen in the first quarter.
Highest den chain scales outperformed, with our luxury brands up over 5% in the second quarter.
In the United States revpar was flat to last year, driven by the lower chain scales and the shift of Easter from the first quarter last year to the second quarter this year.
The luxury chain scale performed. Well, up over 4% in the quarter from strength in group business, upper upscale hotels, were negatively impacted by the timing of Easter, which led to lower group contribution in the quarter, while upscale hotels were 1% below last year due to softer business. Transient demand.
Revpar outside of the United States performed. Well, and we saw continued strength in Europe and asia-pacific. Excluding greater China.
International inbound. Travel continues to be an important driver of results for these regions.
Greater China, grew rev par for the second consecutive quarter to the increases in Leisure transient revpar.
Pace is up almost 5% in the Americas for the third quarter. And we're excited about the sustained demand for luxury all-inclusive, travel for the remainder of the year.
We reported gross fees in the quarter of 301 million up 9.5%. Our strong fee, growth was driven by International revpar, performance, new hotel, openings and growth in non-rev par fees.
The second quarter demonstrates, our ability to generate sustained fee growth in a lower rev, par growth in environment, highlighting the strengths of our premium Brands and industry-leading net rooms growth.
Owned and leased segment adjusted. Evida increased by 1% when adjusted for the net impact of asset sales and the Playa hotel acquisition.
Distribution segment, adjusted IBA with flat to last year as higher pricing, effective cost management. And favorable foreign currency exchange offset, lower booking volumes in the 4-star and Below segments served by ALG vacations
In total adjusted, EBA was $303 million in the second quarter, an increase of approximately 9% after adjusting for assets sold in 2024.
In the quarter, we recognized approximately 14 million of adjusted ibaa related to the Playa acquisition for our period of ownership. In the second quarter,
During the quarter, we financed the Playa acquisition through a combination of cash on hand and drawing on the term loan we entered into early in the second quarter.
Upon close of the real estate sale of the Playa assets. We'll use the net proceeds to repay the term loan as per, the terms of the agreement.
As of June 30th 2025, we had total liquidity of approximately 2.4 billion dollars including approximately 1.5 billion dollars in capacity on our revolving credit facility and approximately 900 million dollars of cash cash, cash equivalents and short-term Investments.
In the second quarter, we paid a quarterly dividend of 15 cents per share and have approximately 822 million remaining. Under our share repurchase authorization
We remain committed to our investment grade profile. And our balance sheet is strong
Before I cover our full year outlook for 2025, I'd like to note that we have provided additional schedules within the earnings release, and the investor deck, which include our expectations for Playa in the third, and fourth quarter of this year.
And these schedules and for Simplicity apply as results, post-acquisition are included for the entirety of the balance of the year with the assumption that the plier real estate sale. Transaction does not close before the end of the year,
However, based on current expectations, we anticipate the plier real estate sale. Transaction could close by the middle of the fourth quarter of this year, pending antitrust approval in Mexico. I'd like to note that approximately 60% of fourth quarter adjusted EPA de for Paws. Real estate is forecasted to be earned in December.
I'll Now cover our full year outlook for 2025, which
does not include the impact of the player acquisition or planned. Real estate transactions.
Full details of our Outlook. Can be found on page 3 of our earnings release.
We continue to monitor the dynamic macroeconomic environment, and as the second quarter progressed, consumer confidence improved. However, lower chain scales underperformed, particularly our full-service chain scales, especially in the U.S.
We expect lower chain scales in the US to underperform luxury and international markets in the third quarter, which is in line with the expectations that we share during our first quarter call.
Our full year 2025 RevPAR range of 1% to 3% implies RevPAR growth for the balance of the year of between flat to up to 3%.
And we expect the third quarter to be towards the lower end of our balance of the Year range.
The fourth quarter at or above the high end of our balance of the Year range.
For the United States, we expect rough par for the balance of the year to be around flat compared to last year.
We expect third quarter, rev car growth to be flat to down slightly
and we expect to return to positive, rough Park growth in the fourth quarter, led by group and business transient, as we lap the presidential elections last year.
For greater China, visibility remains limited.
We Believe rev Park could be up in the low, single digits for the balance of the year.
we anticipate our properties in asia-pacific excluding greater China, will have the strongest growth in revpar of any geographic regions as the
Continue to benefit from significant International inbound travel.
In Europe, we expect revpar growth to be flat for the balance of year with revpar growth Contracting in the third quarter, as we lap difficult comparisons including the Olympics and Paris Last Summer.
We expect rev Park growth to be positive in the fourth quarter.
We are maintaining our net rooms growth outlook range of 6% to 7%, which does not include rooms added from the Playa acquisition.
Growth fees are expected to be in the range of 1.195 to 1.215 billion dollars. A 10% increase at the midpoint of our range compared to last year.
Adjusted ibida is expected to be in the range of 1.085 to 1.13 billion dollars. A 9% increase at the midpoint of our range compared to last year, when adjusting for the impact of asset sales.
As a reminder, owned assets sold in 2024 accounted for $80 million worth of the owned and lease segment adjusted EBITDA last year.
Our full year adjusted IBA Outlook implies balance of your growth of 6% at the midpoint of our range.
We expect most of our year-over-year growth of adjusted ibaa. Excluding the impact of asset sales for the balance of the year to occur in the fourth quarter as we lap easier comparisons, especially in the US, which has a more favorable calendar as well as higher. 1-time GNA costs last year that will not repeat this year.
In the third quarter, we expect weaker demand among lower chain scales impacting, select service revpar in the United States as well as earnings in the distribution segment.
As a reminder, our owned Park Hyatt properties in Paris and Chicago benefited from the Olympics and Democratic National Convention respectively in 2024.
adjusted free cash flow is expected to be in the range of 450 to 500 million, which excludes 117 million dollars of deferred cash taxes paid in 2025 related to asset sales that took place in 2024
we are reinstating our full year outlook for Capital returns to shareholders and expect to return approximately dollars in 2025, inclusive of share repurchases and dividends
Our Capital allocation priorities remain unchanged. We are committed to our investment grade profile. Identifying opportunities to invest in growth that creates shareholder value and returning excess cash to shareholders in the form of dividends and share repurchases.
In closing, we are proud of our second quarter results and the strong execution Around The Plea acquisition that will deliver asset light earnings at a very attractive multiple. Once the sale of the real estate is completed later this year.
We believe our commercial and growth strategy, the quality of our brand portfolio and operational agility position as well to navigate this Dynamic environment and we remain committed to delivering against our long-term financial and strategic objectives.
This concludes our prepared remarks and we're now happy to answer your questions.
Thank you. We will now begin the question-and-answer session. If you have dialed in and would like to ask a question, please press *1 on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press *1 again.
We'll take our first question from Connor, Cunningham at Milius research.
Hi everyone. Thank you and uh been very busy over the past couple of months. Um so I again appreciate the detail in the slide deck too on just the the outcomes for for the low and high end as well. So thank you there. Um just on the on the Improvement that you expect through the remainder of the year. I'm just trying to to understand it a little bit better. It seems like you expect some some weakness in the third quarter. Is that mostly isolated to to July and then things get better. I'm just it just there's a lot of comp headwinds and whatnot. It seems like the biggest swing factor is on the BT side so just any thoughts on the moving Parts. As we move throughout the year, what gives you confidence that things get better uh towards the end? Thank you.
Sure Connor. I'll just um summarize some of what I said in my prepared remarks, as we look at the second half of the year and uh, relative to the IBA guidance that we provided for the full year. The second half would
A, uh, would reflect a 6% growth in ibitta for the second half. And I mentioned that, we expect, uh, the majority of that to be earned in the fourth quarter. Because as you said in the third quarter, as you mentioned, there are some, uh, in particular tougher comps, uh, several 1-time events, including the Olympics, and, um, the Democratic National Convention. Um, those 1-time events, um, will as they were realized in the second, excuse me, the third quarter of last year. Um, that that is 1 of the headwinds that we will have in the third quarter. We also have, uh, slower group Pace, uh, growth in the third quarter that we're seeing right now. So, um, it is slightly negative, as, um, Mark mentioned earlier. Our group pace is flat for the remainder of the year and so the third quarter is negative as of right now and then there's, uh, some slower pickup in our lower chain scales and that
That impacts our upscale business in the US as well as our distribution business. So that is sort of the, the headwinds in the third quarter, just to give a little bit more color. And then on the fourth quarter pickup, um, yes, there are easier comps because of 1 time events in the fourth quarter, uh, including some of the holiday shifts and um, and the presidential election in November. So um, easier comps there in the fourth quarter, we're seeing some better pickup on the
Teesside, uh, that we expect to realize post Labor Day into the fourth quarter. That's still a shorter term business, but as we talked to our top corporate customers, uh, they are confident in, uh, getting back on the road post Labor Day. So, that is what we're hearing and what we're seeing, uh, in the numbers. Um, recently the group Pace numbers, I mentioned that while we're flat for the full for the entirety of the second half of the year, the fourth quarter is positive. So uh that gives us confidence, obviously we have you know, more visibility to group pace. So that's um that's a positive in the fourth quarter. So there's quite a few uh reasons for the um, difference in the growth rates that we expect in the third quarter and the fourth quarter. And we feel really good about our expectations based on, um, what we're the bookings that we're seeing. And um,
Those estimates that we provided for the remainder of the year, I would just add that. If you, if you pick your head up from this year, into next year, the group pays into next year is extremely strong.
Um, with a lot of it represented by rate increases. So um,
While I think Joan explained the profile of the remainder of the year. Um, with great detail, I think the maybe the more important um message is that we see a, an improving picture heading into 2026. In addition to all the things that John just mentioned.
Yeah, the accelerate but maybe I can ask another 1 just on the co-branded credit card negotiations. I I I mean I'm just trying to understand a little bit more better on the on the timeline and what you guys are trying to accomplish from an outsider's perspective. You've obviously have a ton of growth and luxury, your loyalty members are up over 400%, it just seems like you're in a pretty good negotiating position. So just any level If You Can level set us there, that would be great. Thank you.
Connor, we will update.
We have something to update as we've mentioned, we um do feel good about um what we'll be able to accomplish but um we'll provide a more specific on our expected economics as soon as we're able to do that. And I I would I would expect, you know, maybe we'll be in a position later this year, early next year,
Okay, I had to try. Thank you.
We'll move next to Stephen Grambling at Morgan Stanley.
Hi, thanks. Um,
Done a lot with getting the, the pee real estate sale done here, or on the, on the path to, to being completed by the end of the year. But as we think about other Hotel dispositions, maybe remind us of where you stand. And how you think about Capital allocation, from any proceeds that that could come out from that.
Sure, Stephen. Thanks for the question. Um,
On further dispositions and that will um, certainly allow us to have more flexibility with respect to uh return of capital to shareholders. And we expect that picture. That is the return of capital to shareholders to continue to improve as every quarter that goes by, we become increasingly um fee based in our earnings mix and the conversion to free cash flow um is going up and it's also true that we have a fortress balance sheet as it is, uh, posts that pay down of the debt that we took on for the play acquisition. So I think that's what you can expect to see over the next, um, 18 months.
And and 1 very quick. Follow up. You, you talked about the improving free cash flow conversion. Uh, maybe I missed this in your opening remarks, but how is the, uh, big beautiful Bill potentially going to impact your your cash taxes. And how you think about cash conversion over the next couple of years?
We'll have some impact. We have the benefit of like everybody else does of accelerated depreciation. Um, and that while the form of the capital that we're spending is much less about, uh,
Bricks and mortar and, uh, investments in hotels and more about technology, um, that those are all, uh, qualified for accelerate the depreciation as well. So, I think we will, uh, realize some benefits with respect to our cash taxes. Um, as a result of that beyond that, I'm not sure that um, there's much to to talk about
No. Just to reinforce the fact that free cash flow as we sell real estate, um, continue to sell real estate and get to our 90% expectation for, uh, asset light earnings. Yeah, that will have, um, greater and greater levels of freedom,
Over time.
Great thanks. I'll jump back in the queue.
Thanks, Stephen.
We'll move to our next question. From Sean Kelly at Bank of America.
Hey, good morning everyone. Thank you for taking my questions. Um, you know, marker, Jones May, maybe 1 place to start, would be just kind of. Can you help us with the building blocks for, you know, any next year overall? I, I think I think for the most part the investment Community gets them but there is a lot moving around. So if we think about kind of part 1 being the clean Playa fees, once the real estate is divested, part 2 being the credit card deal. Part 3 being some amount of, you know, organic, net unit growth and then part 4 being. Um, you know, trying to think about owned and leased, uh, you know, pieces that are kind of net or maybe we need to annualize. Can you just help with some parameters around? You know, sort of each of those.
Areas to each of those areas just as people are starting to kind of look out a little further and want to want to clean, look at what higher really high, it really can do on the earnings power side. Uh, next year, that'd be great.
We'll split this up, John. You can take the first 2 and uh, I'll jump in after that. Okay, uh, Sean, I I, I'll take the first 2. Um, so Mark had had mentioned, uh, the expectations that um, actually we we published when we announced the deal, the the fee acquisition deal, that ultimately the the the contracts that were entering into the 50-year contracts um with the tortuga, uh buyer, uh reflects about 60 to 65 million of fees, uh, an incremental basis,
So when you look at that, at a, at a full year basis, um, what we were, what we were realizing pre-acquisition was about 15 to 20 million dollars of franchise fees. So that is the increment for 2026 uh relative to Playa.
And um and and with respect to that's on the fees side and which with respect to the credit card, I'll just reiterate what I just responded to which is that we will provide you uh insight into economics as soon as we're able to do that. As soon as um we have a deal to share so later when we provide guidance for 2026 more officially um we'll be sure to give you some insight into that.
and then on the other 2 points, um, first, um
The.
Uh asset sale impacts. Um we've laid out on page 15 of the investor information deck that was uh released this morning the quarter by quarter adjustments for 2024 and we will continue to report these adjustments out on a quarterly basis to facilitate everyone's ability to understand what the impact is on the year-over-year basis. I think the um,
Pace and a continuing positive outlook for leisure travel. Um, especially in the luxury Leisure segment. Um, I know that overall Leisure numbers, um, have been weaker but, um, that's primarily driven if not entirely driven or maybe more than 100% driven by lower chain scales. So that's not where we live, um, and if you include Europe and in the Outlook with respect to Leisure, um, it's actually even better. So we were us Resorts uh were up mid mid single digits year to date. Um, if you include and and all inclusive resorts in the Americas, were up almost 7 if you include Europe. It's up 8.
So, that's, that's year to date. But the Outlook is continues to be very strong patient, to the remainder of the year for, uh, our HIC height inclusive collection hotels is strong as, uh, is the pace outlook for the Pia hotels that we now own. So, uh, I think the, the most important thing in terms of the, the um, the Outlook at heading into 2026 relates to uh, those Dynamics where we've got big chunks of our business that um all have positive signs.
Um, and I, I don't remember what your fourth.
Oh NRG of course, how could I forget? Um,
We are on Pace uh, this year to um, a a great outcome in my opinion. I with the 70 basis points that we added to the Outlook is, um, has to do with the p transaction. Um, but our, our feeling and our sentiment, especially given the increased signings Pace in the second quarter. Um, and some of the Dynamics that we're seeing in uh, some of the traction that we are starting to see really grab hold in, the upper mids scale for us. Um, and our focus on that area is um, in, in my opinion, going to continue to be the, the Tailwind. Um, and so I think we'll have wind in our sails with respect to energy heading into the next year and the year after that. And, um, I'm I'm increasingly confident that we'll be able to maintain those levels of growth as we look forward. Yeah. And I would just add, uh, for your modeling purposes. Sean,
Um, the confidence that Mark just described about the business and our growth, this all leads to our confidence in the fiago helping holding up. So, um, I think that helps with respect to, um, what you're looking for from modeling into next year. Yep.
Thanks, I know that was a long 1. Just a clarification, Joan, and I will, uh, I won't go any deeper, but just, uh, for the incremental fees from Playa in terms of the numbers that you gave, I think that, uh, you had originally laid out, 55 to 60 million, just to be clear. That's the incremental fees in addition. You keep the fees that you already had, right? So so, um, but that'll be the, the incremental bump for 26, over 2025.
Yeah, the incremental it that number is the increment. First of all, it was 60 to 65 bees Topline fees. That's net of the franchise fees that we would have received from Playa right? Which is why I provided those because when you actually look at the second half of this year, when you consolidate Playa, you're going to see a, um, which is which is you'll see that on page, 3 of the earnings release? Yeah. That, um, on a Consolidated basis for the second half of the year, we don't earn any fees because we own the real estate. We own the real estate. Yeah. So that is why I provided the 15 to 20, which was the pre-acquisition fees franchise fees that we collected from Playa the 50 to 55 that you're referencing. Sean. That was an IBA number that we provided. Yeah, so yeah, just to be clear the 60 to 65 is the gross fees that number is net of 17 million that we would have otherwise received and the 50 to 55 is the ebit dog that's implied from those from the 60.
65 of fees.
Is that clear? And that the it's good.
It's clear. Thank, thank you so much. I know it's a lot.
Yep.
We'll move next to Michael Bellisario at Beard.
Thanks, good morning.
Thanks, thanks Michael. Um, with respect to standard. Uh, we are live, uh, across the portfolio. There may be 1 hotel in the, in their portfolio. That is not live on World of height yet, I'm not sure. Um,
The manner, I think, was the last hotel to convert or to, to be brought live. So, I, as I sit here, I just don't remember, but it's a single Hotel. Um, the early results are quite remarkable. Um, you know, Omar Lonnie, who runs our lifestyle team ran, uh, development, and, and was a key leader for w when w hotels were launched when he worked at Starwood. And, um, so he understands exactly how a um,
Premier world class sort of loyalty program with the right customer base can actually interface with a lifestyle group where you don't end up with sort of cognitive dissonance when you walk walk into our hotels. Um, and so it there's a, there's a, um, there's a profile of customer that is going to be attracted to standard, but the early results, um, are really better than we expected in terms of of, uh, contribution. The standard hotels are performing. Extremely well, that strength is maintained through our acquisition of the company. So everything that we are looking at is displacement of more expensive channels. So the owners of those hotels will benefit
A lot from World of high, uh, members now staying in their hotels and we expect that to grow further over time. So we will buttress and and strengthen the overall earnings profile for those hotels. Um, and reduce distribution costs all at the same time, so we we're really, very favorable about that on that as to the corporate, uh, integration work, that'll, uh, continue to, uh, to unfold during the remainder of the year. Uh, I'm our and his team have, um, done a complete inventory of all of our lifestyle hotels and also identified a lot of Runway,
So they're they're they're sort of tag teaming their time through getting the integration work done and uh, and growing, uh, all of our Brands. And we've already seen some really significant um, activity in in our lifestyle Brands, including branded resi, um, which has been super encouraging, uh, with respect to buy, uh, likewise that's, uh, that, that that is fully managed out of the JV that we have a 50% interest in, um, and that integration work. Uh, continues. Um, I think we did FasTrak, um, world of Hyatt. Uh,
Um, integration into those hotels. I don't uh, know whether that's taken hold, uh, quite yet. If it has, it's been only, uh, literally in the last few days. So we have yet to uh, really see significant impact uh, with respect to our customer base into those hotels. Having said that the business is performing quite well. Um, at least as well as our as our underwriting and proforma uh expectations. Um, and the third 1, the third area that you asked about was
Or is it just by Prince band standard?
Uh, well, the third is just just on the, the Pia hotels that you're going to convert just oh, yeah, sorry, thank you. Yes, there is disruption, uh, with respect to the rebranding, um, all of that will the we will be fully ramped by by the end of the year. Um, so that is, um, that's underway and and, uh, we are turning on the channels that we have, uh, unique, uh, capabilities and including ALG vacations. Um, and so, yes, uh, there is disruption there, anytime you change brand groups, you're going to end up with disruption. But uh, we'll all of that will be fully behind us, uh, come January of 26.
Thank you.
Thanks.
We'll move next to Smith's Rose at City.
Hi, thank you. Um, I did have 1 more question around, um, your uh, supplier acquisition, um, I think is part of that you kept a hundred million dollar, preferred interest, um, in the in the assets and just going forward. Um, I assume that the well, I don't know if you can give any kind of scope on kind of the interest you expect to receive their. And I assume that's not included in the fees that you've lined out going forward or just again just sort of thinking about building blocks for next year. Is it will that be a significant? Um,
Interest for you.
Yeah, so um, quick quick summary, um, it the returns associated with that preferred are not fees period so they don't show up in the fee line. That's not we're not conflating anything or, or recharacterizing anything, um, just to be super clear about that second. Um, the way that that piece of paper is structured, um, it will encourage the buyer to refinance and repay that, um, over time. So I'm not going to go into the specifics about uh, at what rate. The the um the paper is is is just shoot out at this point. Um, but it structurally, it has features in it that over time will uh, step up. So we expect that um a refinancing will be, will be available. Um, 1 of the reasons we were so confident about the sale of this real estate. First of all, we know the market extraordinarily, well, with the largest player.
In this asset class, as manager and secondly.
The yield.
Uh, profile for. These assets is, is quite high and it's quite High relative to anything that you might find in the United States, for example, and I think that over time, um, people will come to understand and that the institutional Community, um, as evidenced by our sale, by the way, um, will not only understand, but take advantage of
And that is what allows you tremendous Financial flexibility. So yes. Um the buyers will earn a very attractive yield um and that's in part because that's what the market is. It is also true that the free cash flow that that results from that um gives them tremendous Financial flexibility. So they're set up for, I think a very good rate of return and we're set up for getting our Capital back.
That's right. And and 50 year management agreements for the hotels that are staying in our system.
Right. And, and before we move to the next question, um, I just wanted to clarify Adam just um, clarified a point I made earlier. And this is in reference to Shaun's question, our IBA expectations for 2026 for CLIA our 555 to 60 million, and that has not changed since what we previously published. So, um, just wanted to make sure that, that was clear. Yeah, sorry that was 5 million dollars, lower than is what I said. So that was my mess up. Sorry about that Joe. Oh no.
We haven't changed our expectations. Yeah, I just
Can I just switch over for a moment to, uh, I know how you Studio has been a big focus of kind of your roll out and and I I would assume it's an important part of your um next rooms growth expectations, um any kind of change or updates. You can provide there in terms of how that uh roll out is going
We have.
Hotels under construction. We have a lot more in the, in the funnel. Um, and so we are very focused on converting into signed contracts and then into construction. Um, but the early results in Mobile um are very very strong.
So, we feel good about that and.
I would point you to Pages 6 and 7 of the investor uh information pack that we
That we, uh, deck that rather that we published this morning, um, really what that demonstrates pretty starkly is just how big the opportunity is for us. Um, the whole, uh, the whole strategy has been based around building.
And um, cumulatively we're we're growing 20% every quarter that goes by um almost 60 million members, which is more than twice, the number of members that SPG had when Marriott purchased Starwood. Um, so we are really seeing tremendous, um, Traction in both world of Hyatt and the interest in Our Brands in these wide open markets. But I would, I would definitely take a look at Pages 6 and 7. That'll give you a very clear picture about where we stand and why we're so confident about our growth rate going forward.
Great, thank you. I appreciate it.
Go next to Ben Chiken at Meizuo.
Hey, thanks for taking my questions.
Um, you've you have 3 additional assets? You referred to in the prepared remarks. I think you said, I believe you said, 1 Hotel under 1 Hotel, signed and 2 under Loi. Um, if you dispose of more this year, uh, would that increase your shareholder return? Um, expectations. And then I don't know if you want to touch this or not, but is there any way to size that opportunity for those 3 hotels? And then 1 follow up. Thanks.
Yeah, we, well, you know, our practice is to uh, provide specifics once we, once we close transactions. So, uh, we'll wait to do that. Um, but the answer to your question is, um, first, um, you've heard us repeat. I don't know how many times uh, that we're committed to an investment grade profile. Um, we are well on our way to doing that with the pay down of the debt, once we close the play, a real estate transaction. So, um, we it will those transactions assuming that they uh, close this year, could open up additional opportunities for us. Um, and as we look into next year, uh, as I mentioned earlier, we do have an expectation that we, we will be able to lean more heavily into Cheryl to returns. Um, for all the reasons that we discussed earlier,
Got it. And then just one quick follow-up. But just what are you seeing in China, either by chain scale or customer segmentation? Any color will be helpful. Thanks.
Yeah. Uh, the word of the day in China is caution and conservatism. Um, the impact of...
The current policies that are in place.
Plus concern over the potential impact from.
Uh, continued friction over tariffs, uh, has led to, I would say a tremendous level of caution, more more significant than we experienced in the US. Um, if depending on what quarter you look at, we've seen sustained demand in business transient and then, um, more recently Leisure. But, um, in fact, what's happening is, um, that a lot of the higher-end customers in China, um, are actually spending more as they, um, as they move as they travel outside of China. But outside of China is not spending in China because, um, inbound traffic, uh, remains very low. So right now, I would say the name of the game is caution and conservatism. Um, and I think that the, there's an increasing expectation that there will be some policy shifts. Beijing is very historically, the government is very, uh, responsive and since it is,
Positive to customer sentiment. So, uh, there is a, there's a growing expectation that there will be, uh, some policy shifts and possibly some more clarity around the Tariff picture. So, um, I would say, you know, I would say that we don't have, uh, uh, we don't have, uh, a tremendous level of a crystal ball because everything is shortened up in terms of bookings. Um, but uh, we don't see
Not really any um significant holes as we look forward. A nor is there a way for us to um predict that we're going to see a massive recovery in this year. Um and by way of reminder uh total fees that we earn out of China roughly 7% of our total fee base,
We'll go next to Patrick Skulley at Truist Securities.
Hi. Um, good morning, everyone. Thank you.
Um,
Now that the plot transaction uh is closed and it seems like it is going up. Well and as intended um
Would it be completely unrealistic to think there could be a similar opportunity with, uh, the public hotel rates?
Um, which you seem to be.
to flip the real estate and then enter into uh,
Similar long-term management contracts. Uh again would that be completely out? Uh, unrealistic think that uh might be something you'd be interested in it. Thank you.
um,
Patrick, thanks. Thanks for that. Um, I'm I'm 100% sure I I can't comment on your question. I I know it's a little unless I don't know which really, really what what, what the realm of, uh, possible, uh, uh, explanations is or or responses is, um, look. Um, I can tell you that, uh, we are really focused on our organic growth and uh, also focused on, um, the things that are really in our wheelhouse. Um, so I really, I'm not sure that I, I have much to say beyond that.
Okay, thank you. Um, it was just some, uh, investor chatter there that I just wanted to uh to ask about answer the question. Um a a more standard question here, uh for Joan. Um, I didn't hear you mention about, unless I missed it, expectations on the Caribbean, uh, for the rest of the year. Um, I wonder if you could talk about that, thank you.
Yeah, we are very encouraged with what we're seeing on the booking side in the Caribbean. I mean, we have, I think Mark mentioned in his prepared remarks that our pace going into the...
Third quarter is in the 5% range and um, Supply. A portfolio is also a performing really well. I think it's uh, in that same, you know, mid single digit range. Maybe it was lower because of the, the, um, brand conversion. Yeah. The brand conversion is maybe is having a little bit of an impact but, um, very strong, um, booking. Um, so I, you know, we're very encouraged by the level of
Activity, we're seeing going into that market.
Okay, thank you.
We'll move next to Richard Clark at Bernstein.
Hi. Hi there. Thanks for taking my question. Just just some questions I guess on the last division you've not talked about which is the distribution. Um, revenues down year on year, maybe just buy an expected ease to boost and just the mechanics. You said you, you you you think you can make some more money in distribution post, the acquisition of plier. How, how does that work? Is it more volume or better returns and, and, and just to clarify, if there's any of that, in your guidance, for this year, uh, some booths to distribution from the player side,
Yeah, you heard right, Richard? That’s absolutely... there’s an opportunity to, um...
Better utilize that distribution channel from the Playa hotels. They, um, from a competitive perspective, they did not, uh.
utilize that in their revenue management distribution strategy in those hotels.
So um now the combination provides a great opportunity for us to fill in um into inventory in those properties leveraging the expertise and um
And, um, the abilities of ALG to find, um, good spacing and, um, booking windows.
to optimize for those hotels.
So that will be, that will be, uh, recognized for us into 2026. We're we're still ramping into that chain. That shift in strategy.
And so that would be included in the IBA numbers that I just reiterated from our expectations for next year for Playa.
In the 55 to 60 for 2026 would include some distribution earnings, as a result of that strategy.
And and, and the decline this year uh, year on year in the, in the quarter, despite what we might think could be an Easter boost to that business.
Yeah, I you know we had antic, we had mentioned at the first quarter earnings call that we expect to be flat. Um based on what we're seeing which is the continued momentum of lower chain scales in those markets. Um,
you know, actually realizing some
Booking. Some bookings that are a bit softer, that's going to impact distribution in in the third quarter. And we still anticipate being, you know, flat to slightly down uh maybe between 0 to 5% down in the distribution business for the full year.
And that's because of the structural lower chain scale performance. That we're
in that business.
Understood, thank you.
Sure.
We'll move next to Wayne to, Dwayne pfennigwerth at evercore, isi.
1 on sgna as you, you know, you're you're comment about, um, an inflection point kind of caught our attention is the story more about scaling, your current sgna with Topline growth or is there an efficiency opportunity and for my follow-up? Um, can you just remind us what the remaining asset sale Target is, uh, after Playa? Is there any way to think about that on an annual basis? Thanks for taking the questions.
So, Dwayne, the way I would answer your SG&A question is that when we had set forth our.
Guidance for this year, um, that guidance actually is a decline on a call it a, a year-over-year comparable basis 2024 to 2525. So, we've been very disciplined around sgna and so, the growth rate has declined on the Core Business. Um, the increase the slight increase that you see in the guidance relative year-over-year is due to is entirely due to Acquisitions. So, that's how we're managing DNA. We have a little bit of timing, you'll, you'll notice that the first half is a, is a bit, um, smaller as a proportion to the full year estimates. Um, that's just a little bit of time.
Timing cost.
I'm sorry, got it. And, and then just just on the, um, remaining asset sale Target after PA, is there any way to think about that on an annual basis? As we think kind of longer term,
No, I, you know, our practice has been to optimize, um, results that is, uh, sale results, um, and be really, um, diligent about, uh, and thoughtful about who we're selling to we've executed, uh, this way since 2017 at multiples far in excess of anything that's been attributed to our real estate portfolio. Um, we we, we had every expectation of doing that because we, we have clear Clarity around what our assets are worth. Um, so we will be disciplined in that, but we will stay, um, leaning forward into executing. So you can expect to see a steady stream of, uh, dispositions over time. But uh, I I dare not um, try to guess at what the volumes of that might look like because that's, um, beyond my pay grade.
Hey, can you just remind us? Is there a is there a total amount remaining that you're targeting?
Uh, no. We we frankly on the, on the 1 hand, I would say everything is for sale, so there's no, there's no, there are no, uh, sacred cows. On the other hand, I've said in the past and I'll just reiterate. Now, I don't think that we will ever get to zero. Um, that's a unrealistic um expectation and not evidenced anywhere in the industry.
Okay, thank you.
Thanks. I just want to say thank you to all of you for your time. Uh this morning we appreciate your interest in Hyatt and we certainly hope to see you all uh showing your lovely faces in our hotels so that we can even do better um, and Report better results next quarter. So um, enjoy the rest of your day. Thank you.
And this concludes today's conference call. Thank you for participating and have a wonderful day. You may all disconnect