The paragraph introduces the Hilton's Third Quarter 2023 Earnings Conference Call and reminds listeners that the discussion will include forward-looking statements. It also mentions the non-GAAP financial measures that will be discussed and provides information on where to find reconciliations. The President and CEO, Chris Nassetta, will give an overview of the current operating environment and the company's outlook, followed by the CFO and President, Kevin Jacobs, who will review the third quarter results and expectations for the year. The call will end with a Q&A session. Nassetta also expresses condolences for those affected by events in the Middle East.

The company's top priority is the safety and security of its team members and guests, as well as supporting relief efforts for the humanitarian crisis in the region. They have reported strong results for the quarter, with system-wide RevPAR, adjusted EBITDA, and adjusted EPS all above expectations. The strength of their brands, commercial engines, and business model continue to drive performance and generate cash flow. They have returned over $1.9 billion to shareholders and plan to return $2.4 billion to $2.6 billion for the full year. System-wide RevPAR increased by 6.8% year-over-year, with strong international performance and recovery in business and group segments. Compared to 2019, system-wide RevPAR grew by 11.4% in the quarter, driven by both rate and occupancy. Leisure RevPAR saw the highest growth, followed by business transient RevPAR. Adjusting for holiday and calendar shifts, mid-week RevPAR saw a significant increase compared to the second quarter.

The hotel industry saw a strong third quarter with RevPAR exceeding 2019 levels for the first time since the pandemic. Group bookings for future periods have also increased significantly. The company's pipeline for development is at its highest in history, with a record number of rooms signed and under construction. The US in particular has seen a strong quarter for construction starts. The company opened 107 new hotels in the quarter, showing a 22% increase year-over-year.

Hilton achieved several milestones in the quarter, including the opening of their 700th hotel in the Asia-Pacific region and celebrating their 60th anniversary in Japan. They also opened their 300th lifestyle hotel and launched new brands such as Tempo, Canopy, Curio, Tapestry, and Motto. Their newest brand, Spark, has already opened its second hotel and has more than 400 deals in negotiation. Project H3 also continues to see high demand, with 350 deals in negotiation and the first property breaking ground today. The fourth quarter has seen positive momentum with notable openings, such as the Hilton Cancun and Mar Caribe all-inclusive resort.

The company is announcing a 1,000-room conversion property in the Northeast, with conversions expected to account for 30% of full year openings. Net unit growth of 5% is expected for the year, with a potential increase to 5.5% to 6% next year and a return to prior growth rates. Fee contribution is expected to be above RevPAR and net unit growth. The pipeline is balanced and diversified, with a focus on both full service and focused service hotels. Hilton Honors membership grew 19% year-over-year and accounted for 64% of occupancy. The company is committed to meeting the evolving preferences of guests and will launch Hilton for Business in the near future.

The company is implementing a multifaceted program that includes a new booking website, targeted benefits for SMEs, expanded event booking capabilities, and a focus on sustainability. They have been recognized for their culture and have reported strong results for the quarter. The company is optimistic about future opportunities due to strong demand and a record pipeline. System-wide RevPAR grew 6.8% and adjusted EBITDA was $834 million, exceeding expectations.

The company's outperformance in the third quarter was driven by strong fee growth, with management and franchise fees increasing by 12%. US RevPAR grew by 3%, led by recovery in business and group travel, while international regions also saw strong growth. The company expects continued improvement in the fourth quarter and has provided guidance for RevPAR growth and adjusted EBITDA. For the full year 2023, the company expects RevPAR growth to be between 12% and 12.5%.

The company forecasts strong financial performance for the upcoming quarter and expects to return a significant amount of money to shareholders. They also raised their net unit growth outlook for 2024, citing positive trends in signings and starts. The CEO, Chris Nassetta, is confident in this decision and believes it will lead to improved results.

Chris Nassetta, CEO of a hotel chain, reports that their activity levels in the US have been strong despite the tough construction and financing environment. They have had great success in signings and starts, and are on track to have a record year with a double-digit percentage increase in signings. They also have a high level of conversions, which they expect to continue, including the addition of a new brand. Nassetta explains that their confidence comes from a detailed model and conservative assumptions, and they expect to achieve a range of 5.5 to 6 for the year.

Chris, the speaker, is discussing the company's plan for accelerating net rooms growth. He believes that the plan is based on underlying momentum and production. The company has been asked about when they will reach their goal of six to seven rooms, and Chris believes it is possible next year with a few things going their way. They are currently focused on achieving 5.5 to 6 rooms by October 2023 and will continue to refine their plan. They feel confident about their plan and believe there is more upside potential than downside risk. The speaker also mentions that the US market is showing positive signs for growth and capacity additions are expected to be constrained. The next question asks about the typical timeline for hotels in the pipeline, and the speaker does not provide a specific answer.

Chris Nassetta, CEO of a hotel company, is discussing the growth of their rooms for the upcoming year. He explains that the time it takes for a new hotel to go from the pipeline to actually opening varies depending on the region, with limited service hotels taking a couple of years and full service hotels taking three to four years. However, due to COVID and supply chain issues, this timeline has been extended. Nassetta also mentions that 30% of their upcoming hotels are conversions, which have a shorter gestation period. Overall, he estimates that the time in the pipeline is about the same as before COVID, but with an increase in conversions.

The speaker discusses the current state of fee growth in the company and mentions that they will provide more information on it in the future. They also mention an algorithm that factors in same-store growth, new unit growth, and license fee increases to ultimately result in fee growth that is greater than the combination of these factors.

The company believes that their business model will continue to be successful as they add new units and increase their license fees. They expect their fees to grow at a higher rate than RevPAR and NUG. They will provide more details at their upcoming Analyst Day and believe their business model is straightforward and compelling.

The speaker touches on key money and its increase in the fourth quarter, stating that less than 10% of their deals have key money associated with them. They mention that in a more competitive environment, key money tends to be more expensive, but their overall approach to it has been consistent. The speaker also mentions an increase in overall CapEx guidance, but clarifies that it is not key money guidance. They attribute the increase to winning larger deals and one deal that carried over from the previous year. The speaker expects next year's CapEx to normalize and be in the low to mid-2s range. The next question is about NUG acceleration, and the speaker explains that there is an expectation for improvement in the landscape.

Chris Nassetta explains that the company is focused on taking advantage of opportunities in the market, which is a result of their strong performance and high market share. They expect to continue taking share and winning conversions due to their successful brands. The company is not overly reliant on any changes in the market, but believes that they will continue to see growth and success in the coming year.

The speaker believes that things are starting to turn around for the company and they may outperform expectations. They saw an inflection point in the second half of last year and are now seeing results. They have a large delivery quarter coming up and believe they are on the way back up. The speaker also clarifies that 85% of their group business is from small and medium-sized enterprises, but this is a coincidence. Group business is pacing well for next year, but the speaker does not mention the remaining 15% of larger businesses and their appetite to book for next year.

Next year, there will likely be a shift towards larger group events due to pent-up demand and the difficulty of securing space for these events. Currently, small and medium groups dominate the group business, but next year, there may be a surge in larger groups. Overall, the company is seeing strength in all types of groups.

The speaker discusses the strong demand for group hotel bookings and the lengthening of lead times due to limited supply. They also mention that despite economic uncertainty, there has been no impact on group demand. The speaker then answers a question about the fourth quarter RevPAR guidance and explains that there is some timing and currency effects, as well as a small amount for Israel. Finally, the speaker mentions that the conversion rate for next year will be around 30% and the same for 2024.

The speaker is asked about the visibility of conversions for the upcoming year, and estimates that around half of them are already on the books or in negotiations. The next question is about upcoming corporate rate negotiations for 2024, to which the speaker responds that they feel good about it and expect upper single-digit pricing. The final question asks for the speaker's thoughts on regions with the most potential for RevPAR growth in 2024, to which the speaker does not have a clear answer.

Next year, Hilton's growth is expected to be balanced between the US and Rest of World, with slightly higher growth in Rest of World. The company anticipates positive growth in all regions, with Asia-Pacific leading the pack due to strong performance in China. The company expects low to mid-single-digit global RevPAR growth, with China and APAC leading the way. However, the regions are expected to converge in terms of growth.

The speaker discusses how the world is starting to return to normal as countries reopen from COVID-19 lockdowns. They mention that China was the first to reopen and is experiencing some comparability issues in 2024. The next question is about occupancy rates and the speaker explains that they are only 200 basis points off from 2019 levels in Q3 and expect to get closer to prior levels by the end of the year. They believe that as the group base returns, occupancy rates will continue to improve and they anticipate a strong year for group bookings in 2022.

The speaker discusses the future of the company's luxury segment, stating that they expect to see a rebound in business travel next year. They also mention their focus on luxury lifestyle and plan to launch a new product in the market next year. The company's customers are satisfied with the current offerings but there is potential for growth in the luxury lifestyle segment.

The CEO of the company talks about how their loyalty program is successful and how their customers are satisfied with the current offerings. They believe that having more luxury options will have a positive impact and they are currently looking into expanding in that area. They also mention that they have loyal owners who want to build luxury hotels, but they do not have a product for them currently.

The speaker discusses the growth potential of their luxury lifestyle brand and how it will enhance their network effect. They mention their loyal Honors members and the success of their ecosystem. The speaker also mentions their plans to continue adding luxury deals and products to further improve their growth rate. A question is then asked about this topic.

The speaker discusses the current situation with Country Garden in China and their involvement in the company's pipeline. They also mention a potential $40 million key money payment for a hotel in Boston. The speaker reassures that the Country Garden venture is a separate entity and not a major component of the pipeline. They also mention the company's plans to move forward with the venture even if Country Garden does not meet certain milestones.

The speaker is satisfied with the success of their company, particularly in regards to their Home2 brand in China. They are not able to comment on specific deals, but state that the majority of their deals are profitable and only a small percentage involve key money. They are confident in their profitability and will provide further updates in the future.

Next year is expected to have a strong demand for group and business travel, leading to a positive outlook for the company. The company is confident that they have reached a turning point and are on track to achieve their growth rate goals. They have a busy end of the year ahead to prepare for next year and will reconvene with updates after the year is over. The conference has now ended.

This summary was generated with AI and may contain some inaccuracies.