I'm gonna start the clock here. Oh. See if I. Yes. I think we're just gonna jump right in. Our next presenter is from Hyatt, where he leads a global hospitality company consisting of over 1,200 hotels? 1,280 at last count. 1,280 last count, 300,000 rooms, I'm rounding. Initially. 75-ish countries. Now the leader in luxury lifestyle space. You have a number of acquisitions that helped get you there. The company is on the path to moving asset light by shedding owned real estate and continuing to grow its brands. Recently at your Investor Day, you outlined $750 million of free cash flow. I think that last time I checked, your market cap was about $11.5 billion. That's a healthy free cash flow yield, still growing rapidly, with over 80% asset light earnings by 2025. We're excited to discuss more about this asset-light transformation with Mark Hoplamazian, President and CEO of Hyatt. Thank you, Mark. Thank you. Thanks for having me. Looking back, you spent some time on this at the Analyst Day with the earnings calls as well, you have Miraval, Two Roads, SLH, Dreams, Mr & Mrs Smith. A lot of these acquisitions and partnerships have all been skewed towards leisure versus business. Talk to us about the impetus for this effective acquisition strategy and where we go from here. Sure. First of all, good morning. Thanks to you all for joining. You know, the impetus for the Miraval acquisition was really based in wellbeing, but it was also based in who the customer base was. The customer base is actually one of the key factors that we take into explicit account when we're looking at acquisitions. Our belief was that we were already well positioned for higher-end travelers, and we wanted to deepen our knowledge base of that category of travelers, but also broaden the category of high-end travelers that we were serving. When we bought Miraval, it was very much a wellbeing-focused cohort, but from a demographic perspective, actually even higher than Hyatt's core demographic. When Two Roads came along, we actually had a similar ADR level in that portfolio and similar demographics from a household income perspective, but younger. They tended to be younger cohort than our core business. The same as you look into the subsequent acquisitions of Apple Leisure Group, most recently Dream Hotels, and just closed on Mr & Mrs Smith, they all have broadened significantly our customer base in the high-end travel space. World of Hyatt has grown by almost 3 x over the last 5 years, actually, more than that. It's grown by 260%, but started at 10 million, we're now at 37 million, 36, 37, 38, somewhere in that range. There's a reason for it, and that is because we have extended the number of leisure opportunities for our core guests. We have not abandoned business. I mean, group still represents a significant portion, something like 30% of our total rooms revenue. We are not in any way stepping back from business travel. We are, however, leaning heavily into lifestyle and into leisure, which really helps to create a network of effect for all World of Hyatt members. as we look forward, and think about the company at 75% asset-light earnings, how have your strategic priorities then evolved, and how does the macro factor into where you actually focus? Well, you know, the fact is that leisure, everyone knows this, leisure led us out of COVID. Yep. You know, if you go back to the great financial recession, you go back to the Russian debt crisis, you go back to the First Gulf War, now I'm going way back in history, or even 9/11, leisure always led the industry out of these downturns. It was always the thing that came back first. I think luxury leisure, in particular, is resilient because you've got higher demographic. When you look at the data, there was a recent AlphaWise survey that you published that goes to household incomes of above $100,000, expecting to spend 10% more on summer travel this year than last year. The incidence of travel or the expectation to travel amongst that same group is at an all-time high, in the next six months. This is, you know, within the foreseeable future, within the booking window. This is a clear signal, and by the way, all the other lower demographic levels or household income levels are showing declines in those categories. Yeah. Thank you for publishing. I'm quoting you, so you're familiar with it. It really is, I think, the story of what we've always believed, which is we have a very resilient customer base. As we look forward in time, we intend to continue to maintain some balance. We're not gonna solely focus on leisure going forward, but there are probably going to be more opportunities for us to continue to grow, especially in all-inclusive, luxury all-inclusive, where we are the world leader in it. We have more luxury hotels and resort destinations than any other company in the industry right now. I believe that critical mass and the significant increase in our loyalty base will lead us to unique opportunities. ... When you say unique opportunities, does that mean it's all organic, or are we talking inorganic? One of the key areas of, I think, pushback and concern we hear candidly from investors is $750 million of free cash flow sounds great. Where is it going? Yeah. Look, I think it's really important to just look back before we look forward. During this last five-year period, we sold $3.8 billion net, $4.2 gross, $3.8 net, because we bought some hotels along the way. We spent roughly $3.6 billion in acquisitions. And the multiple differential there was 16 x on the sales and 8x net, on a run rate basis currently on the acquisition. We created 8 turns of value in that $3.6 billion trade. Probably wider on a free cash flow multiple basis. Much wider on a free cash flow multiple basis because free cash flow has escalated significantly due to two reasons. One, we sold assets, and therefore, our CapEx has gone from a run rate of $300 million five years ago to $200 million now, to $100 million within a couple of years. That's a significant change. Secondly, 100% of all the acquisitions we've made are asset light, and they all have very high conversion of earnings to cash flow. We've reported record cash flow, free cash flow this past year, $473 million, but that's growing significantly to the $750 million that you referenced. During the same period of time, though, we returned $2 billion worth of capital to shareholders. If I go back all the way to 2013, when we effectuated our very first share repurchase till today, we have used capital to do deals and to return capital to shareholders completely and totally consistently year after year, after year, after year. Yes, our priority is to find great opportunities. I hope that you would agree that you want us to continue to sell assets at 16x and buy new things, asset-light platforms at 8x. If you don't, please come and explain that to me afterwards. Higher. Higher. Sell at 18x. Okay. I assume that that would be desirable from a shareholder value creation perspective. Yes, we're going to continue to do deals that we think have that potential, but we're 100% committed to returning capital to shareholders consistently. The only two years... Did we return anything in 2021? I don't think so. 2020 and 2021, we may have made the first quarter dividend payment in 2020, so a tiny bit there. 2020 and 2021, we shut down for obvious reasons. I mean, we were constrained with respect to our debt covenants and so forth, but that's it. That's the only time since 2013 that I can think of, that we haven't returned capital to shareholders. We prioritize that. We are affirmatively dedicated to doing both things because we can. We will have increasing levels of free cash flow. We have a very strong balance sheet, and we have borrowing capacity. I'm not at all worried about maintaining both of those activities. As we look forward and think about the pipeline. Let me- Oh, go ahead. Add one more thing. Excuse me. If we don't find, appropriate deals to do, we will continue to return more and more capital to shareholders, because that's what we will do with the capital. We're not gonna sit on it for the sake of it. As a follow-up, when you sell real estate, do you think about those that capital return different than you would if it was just cash from the operations? No. Money, money's fungible. I mean, the fact that it came in so close, that is, we sold $3.8, and we bought $3.6, that's coincidental. Right. From our perspective, cash is fungible. Got it. Yeah. Maybe turning to the pipeline, I think you have a record level at 40% of rooms currently in the pipeline, and yet I think you're still saying you see white space. What, what geographies are you looking to expand in? Where do you think you're underrepresented? Yes, record pipeline, 40% of the pipeline's under construction. There's a lot of debate about how growth is going to be realized in a situation, in an environment in which regional banks have pulled back and new construction is dropping. We have a lot of hotels under construction, so we feel really good about the baseline looking forward. The white space that we are now entering for the first time ever as a company, is the upper-midscale space. Our extended stay brand that we just launched, called Hyatt Studios, is gonna serve markets which have very little or no Hyatt hotel presence. We did a lot of work on this, and we looked at all of the markets in which we currently have a hotel in the United States, and on average, where we have a market in which we have a hotel presence, we have 4 hotels in that market. On average, our primary competitors, one of whom just left the room, has 14 per market. We are not stepping on ourselves. We're not planning a new flag right next to another flag. We don't have owner issues that are gonna face us. The vast majority of the deals that we've already teed up through letters of intent, letters of interest, and now converting to signed contracts, we, the reason it was letters of interest and not signed contracts to begin with is because it took us a while to get the FDDs filed. All of the launch markets have zero Hyatt representation in them. The network effect that we will create by serving brand-new markets with no Hyatt properties in those markets and nothing to compete with is gonna be significant. We did a lot of work with Hyatt member research to find that over 60% of our members, when they don't stay with us, are not staying with us because there's no Hyatt property in the market that they're staying in, or they are trading down a price point, not 5 price points, not 3 price points, but 1, the upper-midscale. That's really what we learned, and we feel like this is gonna really create a significant network effect benefit, especially in our system. In terms of other white space, you know, we do have the most enabled and most robust management platform for luxury all-inclusive resorts in the world. Yes, it's the largest, but it's also a vertically integrated model with a vacation platform, with a membership club, and with our management resources. We, I think, have a clear advantage when it comes to organic growth in the luxury all-inclusive space, and we will also have an underwriting advantage to the extent that there are any portfolio deals that we find with an opportunity to bring on a number of properties at one time. I think we have many different levers that we can pull. Asia is roaring back in terms of operating results. Southeast Asia is really got great momentum now, and China, even with a 60% reduction in inbound travel into China, is tracking above 2019 levels because of the significant pent-up demand and the travel within China. I think across the board, our growth markets, not to mention the Middle East, where we're spending a lot of time focused on that, feel really good to me, and the secular growth looking forward, is pretty robust. I want to follow up on some of your comments about upper mid-scale. We can also broaden this out, but, I was just in Asia visiting with some of your team. Yeah. Noah put together a great group, and one of the things that struck me there was a lot of the developers seem to come to you. Mm-hmm. It'd be great to just hear how developers may be similar or different in the mid-scale segment versus what your core is, and maybe help frame for the audience, why is it that they're coming to you, which seems to be very different in a lot of ways, versus folks who are kind of trend, going after everything within the space? Yeah. Are you talking about Asia in particular? No, we can say that this is just broadly. Okay. Start with maybe mid-scale. Okay. Why, you know, who is that developer? Right. Are they coming to you? Yeah. You can zoom out and say, generically, why are developers coming to Hyatt? Great. On the mid-scale front, in the U.S., Hyatt Studios was designed by developers, we actually created a unusual effort, I guess. We organized a unusual process. It was a very agile process, we did a lot of testing and learning and rapid reiteration of what we were designing. There was, almost, we had, I think, one Hyatt colleague sitting around the table during the entire design process from December of last year through April. The person who led it loved it so much, he joined the company, Dan Hansen, who many of you know from Summit Hotel Properties. He was really a member of the Hyatt family at birth. He just got separated for a while. He's a great guy and cultural perfect fit. The rest of the people were developers. Mm-hmm. We pulled them in, and they co-authored this, and there's a lot of sense of ownership when you're designing something that needs to work for someone, and they're at the table helping to design the thing that you're doing, the putting together, it creates a lot of commitment, which is why we had letters of interest for over 100 hotels at the inception, which is significant. The second reason is what I said earlier, which is they look at us as having a brand halo. If you look at our ADR as a system, we're higher than everybody else, all the other major public companies, I mean. They're looking at Hyatt, with Hyatt prominently in the name, Hyatt Studios, and thinking: Wait a second, this is destined to actually penetrate these markets very well and price realize very well. I think they're absolutely right. They're coming towards us for those reasons. They don't want to be running into the other 14 hotels from the other competitors in the same market. In Asia, the upper mid-scale market, in which we actually participate through a partnership with Home Inns, the brand is called UrCove by Hyatt, is developed completely differently than any other hotels that we currently develop in China, because they're almost all adaptive reuse. They're commercial buildings or residential buildings that get converted into hotels under leases. It's not a market we plan. First of all, we're not LLC in many markets, period. Certainly not in China, it's a very different marketplace, allows us to grow very quickly. That brand is doing extremely well and is actually fulfilling the same purpose for which we launched Hyatt Studios, which is bringing in people earlier in their travel pattern and bringing them into the Hyatt world. All of the people who are now booking and staying at UrCove by Hyatt are becoming members of World of Hyatt. That's actually worked out very well. I think in China, in particular, we were very early in our representation of iconic hotels. The Grand Hyatt Shanghai really put the Grand Hyatt brand in every developer's mind when it opened. It was the most stunning piece of architecture in the middle of what became now a whole city unto itself in Pudong. Every developer that came to Shanghai would go see this hotel. It's got an atrium that stretches from the 53rd floor to the 89th floor, and it's internal to the building. When you walk in and you look up, it's like something you've never seen before in a skyscraper, and it captured everyone's attention, everyone wanted to build a Grand Hyatt. We've maintained a halo in relation to food and beverage as well, that's been a big attraction. Those are the kind of dynamics that are how we compete and why we have people coming towards us. Is it, given food and beverage is such an important part of the business, not only in Asia, but I think if you just think about group, how does that, how do you leverage that when you're going into more of a select service type of business model, where maybe food is not as important? Actually, it's interesting you ask it that way, because, when we were sitting around, designing Hyatt Studios, I said, "You know, the fact is that..." I'll speak very candidly about this, you know, the breakfast offerings for most mid-scale and upper mid-scale brands is not... I think there's a Saturday Night Live skit about the continental breakfast. Thank you. I'm not gonna go further. I think it's, you know, point's made. If it's on Saturday Night Live, you get the point. We said, "Look, we're gonna provide an artisanal muffin, fruit, and, of course, free coffee and so forth for the breakfast offering, because we don't want to pretend that we're offering something of tremendous quality in a hot breakfast form that is both unprofitable and ultimately gonna be looked at as a Saturday Night Live skit." Instead, we're focused on the market, and we will end up with the most... I think, the market with the most selection of high-end product that you can buy, and every room in Hyatt Studios will have an oven that is both convection and microwave. You end up with the ability to actually have a great experience for breakfast. Yes, it's paid for, you're not gonna end up skipping out of breakfast and going to the local McDonald's to pick up a Egg McMuffin or doing something else. You're gonna actually go downstairs, grab something, and then take it back to your room and eat while you catch up on emails or something. That was the intent. If you, if any of you have had the opportunity, and if you haven't, please take the opportunity to visit the Caption by Hyatt we have open in Memphis now. That food and beverage experience was highly curated, and it is the thing that a lot of developers are very drawn to. We just signed another deal in Australia, China, signing up more hotels in the United States. This very artisanal, kind of higher quality level of a grab-and-go, it's not Dean & DeLuca necessarily. It doesn't have that kind of selection, but it's a step above, and that's actually what we think is the best way for us to represent what's great about Hyatt in that kind of execution, that's also owner-friendly. Right. That's great. I'm gonna turn to a couple of areas of pushback we typically hear. One is just starting with the macro. Obviously, over the past two years, there's been this perpetual, it seems like, concern about a recession. What indicators are you looking for, and how do you think about the cyclicality of the business now in a run-of-the-mill recession, whatever that looks like? Yeah. First of all, let me preface what I'm about to say by saying, we have steadfastly held on to, and really focused on, investment-grade rating, because the first rule of this industry is that it's cyclical. The second rule is never, ever forget the first rule. Just the way it goes. You wanna maintain access to capital through any conditions. Now, having said that, as I sit here today, with employment numbers coming out last week, with economic growth, other than the tech sector that is in the process of contracting back to a more normalized level, I don't see much evidence of a slowdown, and I don't see much evidence of risk. What I do see is a crisis of confidence, not really a banking crisis. It's a crisis of confidence in regional and local banks. That's a major issue because those are the banks that fund construction for hotels, new construction for hotels. Money center banks are not lending to the new Hyatt Place being built down the street. It's regional and local banks. That has to work its way through. The good news is this is not 2007, 2008, 2009 redux. We don't have completely contorted and with inchoate losses on these balance sheets. It's just not what's going on. There is a crisis of confidence, though, so I'm, you know, concerned about that. With respect to the so-called recession that people are concerned about, if one comes, my view is we have some insulation because according to AlphaWise, we are well positioned for enduring that. Secondly, we've spent the last two years pulling all of the hyperreactive, adaptive, agile, nimble processes that took hold during COVID forward. We're operating the whole company in that manner today. Our view is: When people say: Well, how are you preparing for the recession? My answer is: We're building the capacity to pivot quickly, to make decisions on a distributed basis and move rapidly. That's actually the best antidote to a recession, because scenario modeling is a complete waste of time. Tell me what occasioned the recession, tell me how widespread it is, and tell me how deep it is. Then I can give you an answer to those questions. The number of it's like running a Monte Carlo simulation. You might as well just, like, throw it in the trash can. It's not very helpful. dart at the wall. Yeah. We still do get the question about certainly ALG, just the cyclicality of that business. Is that something that you can look back on and say there's any kind of framework to think about, especially maybe as we think about the distribution and destination management part of the business, which has been very strong? Mm-hmm. Yeah. That business is frankly less cyclical than the rest of the industry, primarily because things like Mexico and the Dominican Republic never shut down, not once. They never closed the border during COVID. In the prior incarnation of ALG Vacations, they did have a deposit base for travel, for future travel, that the then owners needed to address in a significant downturn. The fact is that the vast majority of those customers took future travel credits instead of asking for cash back, but enough of them asked for cash back that there was some recapitalization that went on. The company has transformed, though, so those cash return policies have been completely changed. All of the risk, so to speak, when I say risk, I mean positions taken in the charter market, for aircraft, have completely changed. The company today, ALG Vacations, the travel platform, is earning. It's transformed from a low single-digit to a high-teens margin business because of very deliberate steps that they took in terms of which markets they were serving and how they use automation at a dramatically higher level today. Secondly, they de-risked the business, so the real impact of a downturn financially is not very significant. I would just reiterate what I said before, I think the durability of leisure travel into these markets, especially at the price points that we serve, and the household income levels that we serve, I think is less cyclical or less volatile than, you know, business travel into New York City, which took a massive hit and stayed, you know, disrupted for an extended period of time, or Chicago or San Francisco or the other markets that are having a slower time coming back from a business transient perspective. Makes sense. Sticking with the all-inclusive side of the business, you did a good job at the investor day of giving more color. Where are we in terms of synergies between the two businesses? This is something I think I've asked on calls in the past. Initially it seemed like from an underwriting perspective, it wasn't really a big part of it. Yes. It seems like there are opportunities that are sprouting up and certainly ways that maybe you can accelerate growth of that business. Where are we in that process? What are the big opportunities? Yeah. The way I think about synergies is, cost synergies are interesting to talk about, but, we've never underwritten a deal, none that I can think of, where the achievement of cost reduction was the vehicle to get a return. We always believed that it increasing revenues and making the platform more powerful and future growth was actually the unlock for future value. Every one of the acquisitions we made has had a pipeline, and we believed expansion capabilities well beyond what it currently had, and we had revenue opportunities. Because you can only, you can only cut costs once, but revenues, if you can continue to grow them on an accelerated basis, that's the gift that keeps on giving. I'm not saying that there won't be cost synergies, but I think that there are dramatically more revenue synergies, and they come in the area of borrowing the expertise that ALG has developed in food and beverage, special food and beverage events that they put on, and food and beverage programming that they do for groups, and bring that into what we do in resorts at Hyatt. ALG Vacations has a packaging capability that is applicable to a number of Hyatt resorts. We are now starting to elevate the application of packaging for Hyatt Resort destinations, primarily in Hawaii, which is where ALGV has significant presence. Yes, do I think that there will be, on the corporate function level, some synergies that we will realize? Absolutely, because the more that we pull together, the more leverage that we can get out of each other's organization and the more efficient we become. I just think that that's not the primary value driver. It's primarily the top line and margin realization and growth. One of the things that I've heard from some owners and certainly from some investors, is that there can be a misalignment as you move to being more asset light with the owners in terms of investing on their behalf in things like technology. I don't wanna call out any specific competitors, but there's examples of where perhaps they haven't invested in technology, and now they have to invest in a bigger way and after owners. You're more aligned, given that you're both an owner and you're the manager. Yeah in most of these instances. Where, where are the biggest opportunities to invest in technology, where perhaps that can be a differentiator versus some of the bigger peers? Yeah, I think, there are a couple of areas in particular. One, we've invested a lot in our digital capabilities and have a lot to show for it, because our digital penetration has gone up a lot over this period of time. Our own digital channels have grown at a faster pace, excuse me, than OTA and other digital internet-based distribution channels. There's been a tremendous return on that investment over time, and we continue to invest behind it, but we made significant investments over the last three years. We've also built out a really robust data and analytics and insights team, which happens to be at the right place at the right time when ChatGPT applications are now starting to reveal themselves. Hmm. We are taking this slowly, just to be clear. We're not running headfirst into using ChatGPT in every domain, but we do see significant opportunities for the application of that in many ways. Not just in search functionality, but in customer support centers, in getting our colleagues informed on a real-time basis of things that they can use in their interactions with guests and also with colleagues. I think helping to better understand what we can do for colleagues in healthcare and other support is not to be underestimated. I think there's going to be a lot of opportunities in that domain, but that will take some years to unfold. Yeah Because regulation is coming, I think. Any questions from the room? Well, we're right at time. Please join me in thanking Mark Hoplamazian from Hyatt. Next up, we're going to have InterContinental Hotels. Thank you. Appreciate it. Thank you. Thank you very much. Appreciate it.