The paragraph is an introduction to the Hilton Fourth Quarter 2024 Earnings Conference Call. The operator, Betsy, begins the call by explaining the process for asking questions. Jill Chapman, the Senior VP, Head of Development, Operations, and Investor Relations, welcomes participants and highlights that the call will include forward-looking statements. Kevin Jacobs, the CFO, adds a disclaimer about the potential variations between actual and projected results and provides information about non-GAAP financial measures. Chris Nassetta, the CEO, begins his remarks, noting that Hilton had a successful year with record unit growth and significant milestones.

Hilton Worldwide Holdings Inc. experienced significant growth and success, opening more rooms than ever before and welcoming over 224 million guests in the year. The company's RevPAR increased by 2.7% for the full year, with an 11% rise in adjusted EBITDA to over $3.4 billion, illustrating strong performance in their fee-based model. Free cash flow allowed for a $3 billion return to shareholders. Quarterly results showed a 3.5% year-over-year RevPAR increase, driven by strong leisure and business transient sectors, with leisure occupancy surpassing pre-pandemic levels. Business transient and group RevPAR also saw positive growth, especially within large corporations, tech, and banking sectors. Hilton anticipates 2% to 3% system-wide top-line growth in 2025.

The paragraph outlines the company's growth expectations and recent achievements. It predicts steady growth in the Americas, slower growth in EMEA, and growth in Asia Pacific due to improvements in China. Positive RevPAR growth is expected, led by the strong performance of group segments, while modest growth is anticipated in leisure transient due to consumer spending levels. Business transient is expected to recover with demand from large and small businesses. The company opened 171 hotels in the fourth quarter and introduced new brands in various countries, expanding globally. The full year saw a record addition of 973 hotels, marking the largest room increase in the company's history, with conversions driving a significant portion of growth. Luxury lifestyle hotels comprised about half of the new openings, enhancing the company's global portfolio.

The paragraph highlights significant growth in the luxury and lifestyle hotel pipeline, which has nearly doubled the existing supply, with system-wide growth of 8% year over year, totaling approximately 500,000 rooms by year-end. It notes record signings and openings, including several key international properties such as the Waldorf Astoria Bahrain and the first Motto in China. Construction remains robust, with nearly a quarter-million rooms under development. The company expects net unit growth of 6% to 7% by 2025, focusing on geographic and chain scale diversity. New developments include the upcoming LiveSmart Studios and Spark's international expansion, facilitated by a strategic agreement to accelerate growth in India. Additionally, there is momentum in the luxury segment, highlighted by the iconic Waldorf Astoria in New York.

The paragraph highlights the hotel's expansion and innovation efforts, including renovations and upcoming openings of Waldorf Astoria properties in various global locations and a new Signia hotel in Jordan. It emphasizes new wellness initiatives, such as partnerships with Peloton and Calm, to enhance guest experiences. The company's continued recognition for its workplace culture and brand excellence is noted, with Hampton achieving the top spot in its category for the sixteenth year. The paragraph concludes by celebrating record growth and the ongoing value provided to stakeholders across its network of brands.

The company is optimistic about its performance in 2025 and beyond, driven by strong momentum, a robust pipeline, and a resilient fee-based business model. For the recent quarter, system-wide RevPAR increased by 3.5% on a comparable and currency-neutral basis, with adjusted EBITDA reaching $858 million, a 7% increase year over year. The outperformance was attributed to better-than-expected RevPAR growth, and management franchise fees grew by 5% despite FX challenges. The U.S. saw a 2.9% increase in RevPAR, propelled by strong leisure demand and improvements in business travel. The Americas outside the U.S. had an 8.1% increase due to greater air capacity and leisure trends. Europe experienced a 6.2% rise, while the Middle East and Africa saw an 8.4% boost from key events. The Asia Pacific region had a 1.7% increase. Overall, the company anticipates varied RevPAR growth across regions in 2025.

The paragraph discusses the performance and future outlook of a hospitality company's business in the Asia-Pacific region and globally. RevPAR in the APAC region, excluding China, saw an 8.8% increase due to strong leisure demand, while China's RevPAR declined by 4%. Despite this, there was improved performance towards the year's end due to fiscal stimulus and increased demand during Golden Week. The company predicts low to mid-single-digit RevPAR growth in Asia Pacific for 2025. Development efforts resulted in a 7.3% increase in net units and an 8% year-over-year rise in pipeline rooms, with significant growth outside the U.S. For the first quarter, the company anticipates RevPAR growth of 2.5% to 3.5%, with adjusted EBITDA between $770 and $790 million. Full-year 2025 projections include RevPAR growth of 2% to 3% and adjusted EBITDA between $3.7 and $3.74 billion. Capital returns in 2024 included $3 billion to shareholders, and a similar amount is expected in 2025.

The paragraph is from a conference call following an earnings release, where Chris Nassetta is responding to a question from Shaun Kelley of Bank of America regarding the impact of a recent U.S. election cycle on business sentiment. Nassetta shares that his current outlook is more confident compared to the previous quarter due to reduced uncertainty following the election. He notes that his opinions are based on conversations with hotel and business leaders, and that general macroeconomic views are informing this improved sentiment.

The paragraph discusses the uncertainty leading up to an election, which impacted consumer and business behavior due to regulatory and policy concerns. Following the election's decisive outcome, there is a prevailing belief among industry leaders that economic growth prospects have improved in the short to intermediate term. Despite ongoing noise from political dynamics, there is optimism about an economic uptick, partly due to the resolution of election-related uncertainties.

The paragraph discusses the current business environment, noting that there is a lighter regulatory climate across various industries and uncertainty about tax policy changes, which are expected to take time and debate before resolution. Despite the noise and initial uncertainties, the business community remains optimistic that any changes will benefit economic growth. The speaker expresses cautious optimism about the U.S. economy, suggesting it will have positive effects globally. There is a recognition of the uncertainty, which is why businesses are careful not to make overly ambitious predictions at this stage. Shaun Kelley and Stephen Grambling are contributors to this discussion.

In the paragraph, Chris Nassetta discusses the sentiment at the ALICE industry conference regarding merger and acquisition (M&A) activity versus new development within the hotel industry. He notes that while there is optimism around M&A due to increased capital availability and the expectation of interest rates decreasing in the future, there is skepticism around new development projects. This skepticism is attributed to the increased costs of building that arose during and after COVID-19, creating friction in pursuing new developments. Despite this, Hilton remains positive about its development pipeline.

The paragraph discusses the challenging conditions for new construction due to rising interest rates and reduced capital availability but notes a growing optimism about economic prospects. It suggests that improving economic performance, stabilization of building and labor costs, and potential decreases in interest rates over the next 12 to 24 months could positively impact the construction industry. The paragraph also highlights the significant role of shelter costs in inflation calculations, suggesting potential inflation reduction as these costs stabilize. Additionally, it notes the administration's focus on reducing energy costs and hints at gradually increasing capital availability, though not abundantly, contributing to a cautiously optimistic outlook.

The paragraph discusses a cautious optimism within the financial sector due to a potential easing of regulatory pressures and stable economic growth, which could result in increased capital availability. This is expected as lending institutions may take on higher risks to improve yields, prompting more construction and development activities. Despite challenges, the speaker senses a positive shift, primarily because their brands perform well, making them more financeable and attracting a significant share of available capital and conversion opportunities. As a result, a substantial portion of conversion opportunities has been integrated into their system over the past year.

In the paragraph, Chris Nassetta discusses the company's unit growth through conversions, stating that in 2024, conversions accounted for about 45% of growth when including acquisitions and partnerships, or about a third when these are excluded. He expects growth in 2025 to be about a third as well, indicating a return to more typical levels of growth compared to the higher rate experienced in the previous year. Carlo Santarelli then inquires about the company's guidance, noting that first-quarter RevPAR guidance is slightly better than full-year expectations, suggesting a challenging comparison.

In the paragraph, Carlo Santarelli inquires about certain one-time factors that affected the first quarter's adjusted EBITDA growth, which appears lower at four to five percent compared to the annual growth estimate of about eight and a half percent. Kevin Jacobs acknowledges these factors, noting that they deal with a tough comparison due to one-off items and foreign exchange impacts, yet insists that underlying growth aligns with expectations when adjusted. Lizzie Dove then asks about defying cost pressures in the industry, particularly regarding insurance and wages, during a conference last week. Kevin Jacobs responds that their cost structure remains disciplined, with general and administrative costs for the year projected to be slightly lower than in 2019, even after accounting for six years of cost inflation.

The paragraph discusses the challenges and strategies related to cost pressures and operational efficiencies in the hospitality industry. It highlights the focus on helping owners improve their bottom lines through efficiencies in areas like wages, benefits, and insurance. Additionally, Kevin Jacobs addresses a question from David Katz, noting that there's significant progress in the luxury segment, particularly through a partnership with SLH, which required no capital contribution from the operator. Capital contributions in the luxury space vary globally, with higher contributions typically seen in the Western world.

The paragraph discusses the competitive landscape in the luxury and mid-market sectors, highlighting that there are more competitors in luxury, which affects supply and demand dynamics. Despite high competition, the company provides key money in only about ten percent of its deals. The company is confident in its track record compared to competitors. It notes some project delays into 2025 are reflected in their guidance, which aligns with previous predictions. Their guidance for this year includes all capital expenditures, and there's mention of positive Q4 results and improved RevPAR guidance for 2025.

The paragraph discusses a discrepancy in the projected EBITDA growth rate for 2025, which appears lower than the midpoint of RevPAR plus unit growth. Kevin Jacobs explains that when adjusted for one-time items and foreign exchange (FX) impacts, growth would actually align better with earlier guidance, which was exceeded in Q4. For 2024, the midpoint of guidance suggests an 8.5% growth, slightly below the algorithm's 9% due to similar adjustments. Chris Nassetta adds that despite FX influences, the EBITDA projections for 2025 remain higher than previous estimates, aligning with expectations laid out at the investor day.

The paragraph features a discussion between Robin Farley and Kevin Jacobs about the company's financial performance and guidance. Despite foreign exchange (FX) impacts, the company's bottom line EBITDA has exceeded expectations due to strict discipline in managing both top-line revenue and cost structures. Jacobs notes that the EBITDA margins have improved significantly since 2019. He also mentions that some one-time items were weighted across specific quarters, but assures that these will eventually even out throughout the year. Brandt Montour from Barclays inquires about discrepancies between the EPS guidance and the Investor Day algorithm, noting that stock buybacks are not included in the full-year guide. However, he observes that the EBITDA guidance aligns with expectations.

The paragraph features a discussion among Kevin Jacobs, Chris Nassetta, Brandt Montour, and Smedes Rose, focusing on financial performance, specifically EPS (earnings per share) and RevPAR (revenue per available room). Kevin Jacobs explains that while buybacks are a significant driver, the company's recent $2 billion financing for a share buyback program has led to higher borrowing rates, which impacts EPS. Despite this, adjusted EPS growth would be in the mid-teens. Chris Nassetta notes that leveraging won't impact long-term performance once stabilized. Smedes Rose asks about the U.S. market expectations for different hotel segments (luxury versus select service), to which Kevin Jacobs responds that performance comparisons are based on year-over-year metrics.

In the paragraph, Chris Nassetta addresses concerns about the impact of tariffs, particularly those from China, on franchisees, developers, and builders. He notes that while tariffs fluctuate, there hasn't been any significant impact reported so far. He suggests that tariffs are part of ongoing trade negotiations, which may ultimately lead to deals that don't involve major tariffs. Despite the uncertainties surrounding tariffs and supply chain issues, Nassetta remains optimistic about the opportunities and maintains a steady approach.

The paragraph discusses the current state of economic growth, highlighting that it is better than expected despite the risks associated with tariffs and negotiations. The company has aggressively diversified its supply chains over the past five years, partly driven by the COVID-19 pandemic, to mitigate potential impacts from tariffs or supply chain disruptions in any single location. This diversification allows the company to pivot and manage risks effectively. The conversation then shifts to a question from Michael Bellisario about deletions from the pipeline, with Kevin Jacobs noting that the company typically removes a small percentage of the system annually.

The paragraph discusses a conversation about the impact of large corporations traveling more and its potential positive effects on business travel and group activities. Chris Nassetta acknowledges seeing an uptick in activity during the fourth quarter, partly due to increased certainty around tax and regulatory environments and the way holidays affected travel days. He notes that while they haven't forecasted this trend, there is a general sense of increased comfort in spending. The discussion also highlights meetings with CEOs and the head of sales to explore opportunities in corporate accounts.

The paragraph discusses trends in business and leisure travel, noting a general expectation of increased travel and higher costs. It suggests that business travel, or "business transient," is recovering and may reach or surpass pre-pandemic levels by the year's end. The writer anticipates a shift in focus toward higher-priced travel segments as demand increases. The trends, which accelerated after the election, indicate a return to normal business operations and travel behaviors.

The paragraph discusses Hilton's approach to using AI agents developed by AgenTek in the context of online travel agencies (OTAs) like Booking and TripAdvisor. Chris Nassetta emphasizes Hilton's focus on maintaining direct relationships with customers, as OTAs represent a small portion of their business. While Hilton values its partnerships with OTAs for accessing certain customers, the company prioritizes enhancing the customer experience through direct interactions throughout the entire travel journey, from dreaming about a trip to post-stay activities, while acknowledging the benefits of improved customer service via OTAs.

The paragraph features a discussion about a company's use of AI and technology to enhance customer experiences, with a focus on direct customer relationships and mass customization. Chris Nassetta emphasizes the company's commitment to directly engaging with AI technology without outsourcing these interactions to third-party AI agents. Richard Clarke seeks clarification on whether customers would need to book directly through the company rather than using external AI agents like OpenAI. Chris confirms plans to work directly with certain players but not indirectly. The conversation then shifts to Dan Politzer from Wells Fargo, who inquires about leisure occupancy trends in December, asking whether they were stronger in the U.S. or internationally, and seeking clarification on pricing trends for the first quarter.

In the discussion, Chris Nassetta highlights the impact of holidays on travel patterns, noting that the timing of holidays like Easter can significantly stimulate travel across various rate structures, particularly in the leisure segment. He mentions the positive impact of Easter on Q1 results and hints at a negative effect for Q2. Additionally, there is a brief mention of challenges like fires and storms, but these don't seem to have a significant net impact. Conor Cunningham from Nellis Research then shifts the focus to positive developments in China, asking for more details on the differences expected between the first and second halves of the year, along with development and signings in that region. Kevin Jacobs concludes by stating that the trends in China were consistent over the past year.

The paragraph discusses the performance and outlook of a company's lodging business, highlighting steady low single-digit growth and strong development activities, especially in China. Despite a general real estate slowdown, the company benefits from adaptive reuse of buildings, particularly mid-market hotels. The company sees a 10% increase in approvals and starts, and a nearly 30% rise in openings in China. Additionally, there's a notable surge in outbound travel from China, driven by visa-free zones in Asia, benefiting the company's broader Asia-Pacific (APAC) operations. Despite predictions of modest growth in China, the increased travel demand supports overall business performance in the region.

The paragraph is a conclusion to a conference call, with Chris Nassetta expressing optimism about the company's performance in 2024 and prospects for 2025. The call included a Q&A session with participants, and Nassetta appreciates the questions and engagement. The session ends with an invitation to reconnect after the first quarter of the next year, followed by the operator closing the conference.

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