00:00In your earnings release, you cite improving trends in the U.S. and moderately higher growth internationally compared with the
00:06U.S.
00:07Walk us through what you see according to geography, especially in the last two months.
00:12Sure. Scarlett, thank you for having me. It's great to be here.
00:17As we covered in our earnings call this morning, the U.S. is showing great signs of strength, had a
00:23good first quarter, but also the outlook for the year is very positive.
00:26Leisure is really leading the way, up 7%, and business travel is split between group travel, which is up 4%,
00:35and transient travel, which is individual business travelers, up 2.5%.
00:39Outside the U.S., we had a stellar first quarter in Europe because the Olympics really paid off.
00:45A lot of people came, and they spent a lot of money, and we are positioned at the premium end,
00:51so we really benefited tremendously from the Olympics.
00:54But China was also a great surprise, positive to the upside.
01:00The Lunar New Year period is up 20% year over year, which is quite stunning.
01:05And Greater China was up over 12%, and the rest of Asia Pacific, excluding Greater China, was up 11%.
01:10So we're seeing some really remarkable strength outside of the Middle East, which was down.
01:18It was down modestly because the conflict with Iran began at the very end of February, so really March was
01:24the month where we saw business fall off.
01:26It was actually holding up very nicely through February.
01:30Sorry, go ahead.
01:31No, no, I just want to jump in here because when it comes to the U.S., I'm wondering if
01:35you're at all concerned that this K-shaped economy that we have right now could perhaps reshape in that the
01:40higher income consumer could begin pulling back.
01:44We see no signs of it whatsoever.
01:46Our customer base is extremely resilient.
01:48We have the core of our customer base is a premium customer base at higher levels of household income, and
01:57they spend disproportionately on travel.
01:59And so we're seeing great strength across the board.
02:02And that's true in all of our markets, not just in the U.S.
02:05Thank you for just giving us a sense of the demand picture out there.
02:09I want to get to your operations now.
02:11You recycled your playbook from the Apple Leisure acquisition to complete your Playa Hotels acquisition.
02:16You moved very quickly to offload real estate and assets.
02:20What is next now that most of your portfolio is asset light?
02:25What's next is a continuation of what we've demonstrated over the last five years, which is really great organic growth.
02:31So we've had really superior, if not industry-leading REF PAR growth, revenue per available room growth every year for
02:40the last five years.
02:41We've led in net rooms growth.
02:42And we also have the fastest growing loyalty program.
02:44We were up another 18% to 66 million members for World of Hyatt this past quarter.
02:50So we've had tremendous momentum in our core business.
02:54And really, our outlook for the year that we shared this morning is more of the same.
03:00That is, we expect to post very strong REF PAR, great fee growth from our managed and enfranchised hotels.
03:07And with respect to owned real estate, we still own some hotels.
03:11But we will, over time, continuously sell more hotels.
03:16We're not afraid to use our balance sheet.
03:18As we demonstrated last year, we bought Playa.
03:19And then we sold $2 billion to real estate out of that platform to keep the management and franchise business.
03:26So there will be some M&A opportunities for us to act on over the next several years.
03:31But we are really focused on the premium positioning, the highly differentiated positioning that we hold in the industry, and
03:38pushing that to its maximum potential.
03:40So when it comes to that M&A opportunity, are all-inclusives an area where you'd want to build out
03:46even further through acquisitions?
03:49Yeah, the world is a very big place, and all-inclusive is a very attractive format.
03:53So we have a very significant operation in the Americas.
03:57We have a growing operation in Europe.
04:00But there are even parts of Europe that we don't cover at this point.
04:03And we have our first all-inclusive resort opening in Asia, in Thailand, later this year.
04:12So we're actually breaking into new markets that haven't really experienced our form of luxury, all-inclusive in the past.
04:21You certainly see it as an opportunity.
04:24But I wonder if this is just one of the ways, the many ways, that travel preferences have changed following
04:30the pandemic.
04:30Or is this something, you know, is this a key growth driver for you going forward?
04:36Or is it just, you know, another option for travelers?
04:39I think it's both.
04:41It's another option for travelers, and it's an attractive option because for many people, you're right.
04:45During the post-COVID recovery period, the certainty of knowing what your vacation would cost you was very attractive.
04:55And you take all of the transactional friction out of a stay because things are paid for.
05:02So you're not sitting there ordering another drink or deciding where to go for dinner based on another decision you
05:10have to make about charging something else to your room.
05:12It's all included.
05:13And I think that level of ease and confidence that that instills is really attractive to a lot of travelers.
Comments