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Speaker 1: All right, let's talk a little C suite conversation here.

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Speaker 1: We can do that with the hotel business. Mark Hopplomasian

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Speaker 1: joins us. He's a president and chief executive officer of

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Speaker 1: Hyatt Hotels, joining us via zoom. Hey, Mark, thanks so

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Speaker 1: much for joining us here. I'm looking at your stock here,

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Speaker 1: fifty two week high. For those that don't know, H

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Speaker 1: is a symbol. It's cool to get that one of

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Speaker 1: those single letter symbols there. That's always pretty cool for

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Speaker 1: us Wall Street folks. I've got a market cap at

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Speaker 1: fifteen point seven billion, stocks up about three tens a

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Speaker 1: one percent.

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Speaker 2: Today.

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Speaker 1: Mark talked to us about your recent earnings and kind

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Speaker 1: of what was a messaging you needed to get across

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Speaker 1: to your shareholders.

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Speaker 3: First of all, it's great to be back with you all,

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Speaker 3: and thanks for having me. I think that the clear

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Speaker 3: message was really centered around the fact that the transformation

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Speaker 3: of the company to asset lighter platform has now shown

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Speaker 3: up in the numbers in a very material way. We

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Speaker 3: had the highest pre cash flow in the company's history.

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Speaker 3: We also had the mix of our asset light earnings

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Speaker 3: to our total earnings went up to seventy six percent

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Speaker 3: five years ago.

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Speaker 4: That was in the in the mid forties.

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Speaker 1: Hey market, So did describe for us what what your

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Speaker 1: asset light strategy is. Is that relying more on franchise ease.

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Speaker 3: Yeah, so it's not really I wouldn't call it an

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Speaker 3: asset light strategy. We'd call it an asset light program.

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Speaker 3: Where we were selling down, we had we had two

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Speaker 3: major drivers of our of our of our earnings. One

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Speaker 3: was from real estate that we owned hotels, and the

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Speaker 3: other one was from management franchising hotels across the world.

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Speaker 3: We're primarily a management business, not a franchise business, but

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Speaker 3: that those are the two businesses. So as we sell

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Speaker 3: down real estate, we uh the proportion that's coming from

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Speaker 3: real estate sourced earnings has been dropping. We've concurrently reinvested

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Speaker 3: in buying new platforms and new brands over the last

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Speaker 3: five years, and that has driven up our management en

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Speaker 3: franchising fees at the same time, so the mix is

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Speaker 3: shifted to much more in the management and franchise feed

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Speaker 3: driven business, which is very low capital intensivity and high

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Speaker 3: margin and high free cash flows conversion.

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Speaker 4: So that was probably the key message.

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Speaker 3: The other thing that we did is we simplified our

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Speaker 3: financial presentation because we have a business that's a subscription

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Speaker 3: model membership business called Unlimited Ucation Club, and we sold

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Speaker 3: the majority interest in that business to a third party

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Speaker 3: which helped us simplify how we report our earnings and

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Speaker 3: that was very well received by investors.

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Speaker 2: So, Mark, that's you and the C suite managing all

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Speaker 2: of that. What about the demand side of the business.

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Speaker 2: What kind of pricing power do you have per room?

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Speaker 2: And what's the demand situation, like actually demand.

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Speaker 4: So we think about three different demand drivers.

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Speaker 3: One is leasure, which has been the leader of the

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Speaker 3: recovery through post COVID period. We think about group business,

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Speaker 3: which is big meat and conventions and things like that,

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Speaker 3: and we also have business travel individual business travel. All

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Speaker 3: three are showing signs of great momentum and positive outlooks.

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Speaker 3: So starting with leisure, in the first quarter of this year,

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Speaker 3: our pace meeting, our bookings are up eleven percent for

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Speaker 3: our all inclusive resorts in the Pervian and.

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Speaker 4: Also up for our resorts in the Americas.

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Speaker 3: But leisure travel has been really really solid in China.

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Speaker 3: We had a record year for Lunar New Year, the

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Speaker 3: spending amongst Chinese, both inside of China and other destinations

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Speaker 3: in Asia was at them all time high, So that's

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Speaker 3: leisure in group our pace into this year, that is

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Speaker 3: forward bookings are up eight percent and so we're looking

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Speaker 3: at another solid year of growth of growth in media

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Speaker 3: and I think corporations are increasingly resolved to make sure

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Speaker 3: that they prioritize those meetings.

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Speaker 4: And then on business transient the US is lagging, but the.

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Speaker 3: Overall business transient category demand around the world is about

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Speaker 3: seven percent of the low where it was pre pandemic, so

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Speaker 3: we're getting closer and closer to.

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Speaker 4: Being a parody. Europe is fully recovered, and then some

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Speaker 4: China is fully recovered, and then some the United States

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Speaker 4: is still lagging.

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Speaker 3: So and we're seeing signs of positive signs of business

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Speaker 3: transient travel increasing. So I would say across all three

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Speaker 3: major categories, we're seeing positive trends into twenty.

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Speaker 1: Four, Mark, could you talked to us about M and

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Speaker 1: A and kind of growth via acquisition? How does that

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Speaker 1: figure into your growth plans? What are you guys messaging

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Speaker 1: to the street about your willingness to engage in EM

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Speaker 1: and A because I know you had to buy out

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Speaker 1: recently of the Apple Leisure Group. I want to see

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Speaker 1: kind of your appetite is going forward.

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Speaker 3: Yeah, So over the past five years, we've been vested

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Speaker 3: about three point eight billion dollars in acquisitions, the biggest

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Speaker 3: one being at a leisure group at two point seven billion,

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Speaker 3: and it's been tremendously beneficial to us because we've been

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Speaker 3: able to expand our customer base in the most in

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Speaker 3: the highest growth and most relevant to us categories, which

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Speaker 3: is leisure, lifestyle and luxury. And so we've really done

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Speaker 3: this in a very deliberate way to move the company

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Speaker 3: in that direction. In the fourth quarter, I think we

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Speaker 3: had fifty seven percent of our total rooms revenue around

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Speaker 3: the world was leisure focused, which is up twenty points

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Speaker 3: from the mid thirties to the mid fifties pre pandemics

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Speaker 3: on now, so that the mix in the company is

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Speaker 3: tremendously shifted, but they're also been very profitable and high

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Speaker 3: value acquisitions. The fees per room that we are earning

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Speaker 3: today are materially higher than they were five years ago

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Speaker 3: before we made these acquisitions and evolved the company. Even

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Speaker 3: as we have grown our select service breks, so we

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Speaker 3: are expanding in lower price points, but our overall feed

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Speaker 3: growth per room has been growing yeah, which is really

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Speaker 3: I think part of the equation of actually driving share

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Speaker 3: holder value on an accelerated basis in terms of out book.

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Speaker 3: I think there will be more opportunities for MNA in

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Speaker 3: the future, but probably smaller scale.

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Speaker 2: Mark Paul and I talked by the story yesterday for

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Speaker 2: the Journal reported that hotel parking fees are spiking because

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Speaker 2: of the fact that you guys that on hotels have

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Speaker 2: to pay more and rent interest rates have increased. Maybe

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Speaker 2: there's a demand issue in certain pockets. You got to

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Speaker 2: increase prices where you can talk to me about how

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Speaker 2: expensive it is to run your business, like where costs

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Speaker 2: coming down, where costs going up?

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Speaker 4: You know.

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Speaker 3: I think the primary look, first of all, let's start

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Speaker 3: with the biggest cost category, which is people, yeah, at

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Speaker 3: our hotels. And in twenty twenty one, non union markets,

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Speaker 3: which is primarily in the South, the Sun Belt, the

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Speaker 3: smile of the United States. I think our wage rates

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Speaker 3: went up by twenty percent over the course of that year,

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Speaker 3: and that started to mitigate or ameliorate in twenty twenty

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Speaker 3: two and twenty twenty three, but we experienced a massively

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Speaker 3: acute situation in terms of supply of labor that's really

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Speaker 3: that's evened out.

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Speaker 4: We were in the mid teams that in that.

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Speaker 2: Because we also talked about didn't we paul about cleaning

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Speaker 2: services like not staffing housekeeping because they just can't find

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Speaker 2: the workers. So do you feel like you're at the

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Speaker 2: right spot?

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Speaker 3: I would say that there are pockets where we still

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Speaker 3: have shortages, and I think part of that has to

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Speaker 3: do with.

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Speaker 4: The nature of the workforce at this point.

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Speaker 3: So we've got a lot of the byproduct of not

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Speaker 3: having a really advanced immigration policy in the United States

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Speaker 3: to be visa program, is that for at times, especially

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Speaker 3: over the summer, where you have peak demand, we don't

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Speaker 3: have the right type type of labor that's willing to

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Speaker 3: take those jobs and be happy to start their careers

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Speaker 3: in those jobs. So I think this they go together.

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Speaker 3: A lot of the a lot of the h TV

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Speaker 3: people that come in on an HGB visa, which is

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Speaker 3: a temporary work visa, they come and they leave. Or

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Speaker 3: the incidence of immigration that allows us to hire people

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Speaker 3: who are coming into the workforce in the United States

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Speaker 3: for the first time has been has been under some pressure.

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Speaker 3: Now Having said that, overall, our vacancy rates have gone

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Speaker 3: from mid teens to mid single digits, so down ten points,

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Speaker 3: which is extraordinary, and that's over the last eighteen months.

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Speaker 3: So we are having a better time finding labor, but

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Speaker 3: there are definitely pockets of constraints still.

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Speaker 1: Yep, hear that from a lot of folks in the

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Speaker 1: service business. Hey, Mark, thanks so much for joining us,

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Speaker 1: Mark Hopplomacion, he's a president and chief executive officer at

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Speaker 1: Hyatt Hotels, joining us from Chicago, Illinois via zoom. The

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Speaker 1: company stock H is the ticker all time high today.

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Speaker 1: So how about that they had some pretty solid numbers

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Speaker 1: recovering from the pandemic, like we see a lot of

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Speaker 1: other entertainment usure spaces.