Hyatt Hotels Corporation (H) Q3 2013 Earnings Report, Transcript and Summary

Good day, ladies and gentlemen, and welcome to the Third Quarter 2013 Hyatt Hotels Corporation Earnings Conference Call. My name is Glen, and I'll be your operator for today. [Operator Instructions] As a reminder, this conference is being recorded for replay purposes. I would now like to turn the conference over to your host for today, Mr. Atish Shah, Senior Vice President of Investor Relations. Please proceed.

Thank you, Glen. Good day, everyone, and thank you for joining us for Hyatt's Third Quarter 2013 Earnings Call. We want to thank everyone in the community for joining us this morning. Here with me in Chicago is Mark Hoplamazian, Hyatt's President and Chief Executive Officer; and Gebhard Rainer, Hyatt's Chief Financial Officer. Mark is going to start by making some brief remarks, and then we're going to read and respond to questions emailed to us this morning. Finally, we will take live Q&A towards the end of the call. Let me remind everyone that certain statements made on this call are not historical facts and are considered forward-looking statements. These statements are subject to numerous risks and uncertainties as described in our Annual Report on Form 10-K and other SEC filings, which could cause our actual results to differ materially from those expressed in or implied by our comments. Forward-looking statements in the earnings release that we issued this morning, along with the comments on this call, are made only as of today, October 30, 2013, and we undertake no obligation to publicly update any of these forward-looking statements as actual events unfold. You can find the reconciliation of non-GAAP financial measures referred to in our remarks on our website at hyatt.com under the Press Release section of our Investor Relations link and in this morning's earnings release. An archive of this call will be available on our website for 90 days and a telephone replay of this call will be available for 1 week per the information included in this morning's release. Before we get started, I wanted to point out that our release this morning contains a new schedule at the very end. This schedule provides a list of transactions impacting the year-over-year comparison of owned and leased adjusted EBITDA, excluding joint ventures, and we will be providing the schedule on a going-forward basis. Also, I'd like to let you know that we will be having an investor meeting in the first quarter of next year. We are planning on holding the meeting on Friday, March 14 in New York City. We'll be sending out a Save the Date with more information next week. And with that, I'll turn it over to Mark to get started.

Thanks, Atish. Good morning, and welcome to our third quarter 2013 earnings call. We've made a lot of progress on a number of fronts in the third quarter, and I'd like to discuss those first, and then turn to talking about our results. One of our key strategies is to expand our presence in new markets or in markets in which we're underpenetrated -- underrepresented. We've made a lot of progress on the strategy since our IPO 4 years ago. We've opened hotels in over 60 new markets since then. This year, the pace of activity has accelerated. We're on track to open over 45 hotels in 2013, representing almost 10% growth in our system size. This is a record level of openings for us, and reflects the great work of our development and operations teams around world. The strength of our brands and the investment of significant levels of capital from us and many third-party owners is reflected in this. We continue to grow our executed contract base for new hotels, which increased in the quarter and now stands at a record 215 hotels or 50,000 rooms. I'd like to talk about 2 recent openings, in particular, hotels in which we've invested significant capital. First, we opened the Andaz Maui at Wailea in September. This is the first Andaz resort in our system, and it's opened to rave reviews. It's a one of a kind property located in Wailea, which is a master-planned resort area along the islands south shore and it's the first new resort on Maui in well over a decade. As you may recall, this resort was developed by joint venture between Hyatt, Starwood Capital and a local partner. We own, at this time, approximately 2/3 of the venture. The resort includes 297 guest rooms, including…

Thanks, Mark. That concludes our prepared remarks. For the start of our question-and-answer session, we'll answer questions that were submitted this morning and that haven't been already answered or covered in Mark's remarks.

The first question has to do with our overall results. The question is, "Where did the quarter come in relative to your internal expectations? Where did you outperform. And in particular, you stated incentive management fees were below the company's expectations? Perhaps, you could discuss those."

Sure. As I said, we're really quite pleased with the progress in the quarter and RevPAR progression was quite strong, really, across most of our markets. the -- by way of a reminder, this -- the portfolio comparison was a $10 million adjustment for the quarter, which is obviously quite material. So our overall earnings growth for the company was significant when taking that into account. I would say in terms of positives, of course RevPAR progression was strong, transient remained strong and signs of some recovery on the group side were sustained. The Americas performance and our owned and leased portfolio were positives in the quarter and SG&A is being well managed. In terms of areas below our expectations: The preopening impact of the Andaz Wailea was much higher than we expected, due to the delay in the opening. Secondly, the incentive management fee realization for the French hotels was lower than our expectation. And third, we are working through margin pressure from -- mostly from items below the GOP line, some benefit costs were higher above the GOP line, but a lot of the impact related to rent expense and property taxes. So I would say, those are the areas that were either ahead of or below our internal expectations.

Okay. The next question was a little bit more specific in nature. "Could you provide us some general guidance for equity earnings in unconsolidated ventures, as the big swings in the number make it tough to model?"

Yes. Of course, it is hard to model this. And there is some parts that due to -- and related to our distributions from joint ventures, which don't necessarily coincide with when we recognize JV EBITDA. We've had an $8 million gain in special items in connection with the sale of Residences Maui that Mark referred to in the prepared remarks. We've also recognized an $8 million distribution receipt from joint ventures. So please remember, this segment will continue to be lumpy as we go forward.

The next question relates to renovation activity. "To what extent renovations will impact us going forward, what cities, markets renovations year-over-year?"

This is really in relation to our renovations in Asia Pacific, mainly the Grand Hyatt Hong Kong, where the large impact is coming from, where we'll see impact to some degree going forward, and to our 4 French hotels that Mark mentioned, which we currently are negotiating a relation schedule for. There would be an impact on performance from those hotels as well.

Great, thank you. We had some questions on some U.S. market-specific trends by segment and market. We categorize them together, a few questions. The first one being, "Atlanta is a major market for your owned hotels. Earlier, you cautioned on Atlanta performance, but we did not see weakness in the Smith Travel reported group data. How did that market shake out in the quarter? And how do forward bookings look?"

Sure. So Atlanta, we had cautioned about a challenging prospective results in Atlanta. We really looked at this over the course of the coming year, and we continue to believe that 2014 will probably be a challenged -- that the market will be challenged in the coming year, probably due to the calendar. It's also true that we had a very strong quarter this quarter in Atlanta, very good realized business. So there will be quarter-to-quarter variations. But overall, I would say, we remain of the view that Atlanta will probably have some tough sledding through the coming year. In the quarter, we had some other markets that were particularly strong like Hawaii, Dallas and San Francisco. So those are particular areas of strength that we saw in the quarter.

The next question pertains to the government shutdown. "How has it impacted fourth quarter results thus far?"

We don't see a major impact from the government shutdown in the fourth quarter. It's in the low single-digit million dollars revenue area, but really no major impact as far as we can tell right now. But just for clarification, to segregate the government sequester, as we have mentioned in previous calls, continues to have an impact on government business and government groups, although this is a smaller portion of our business.

The next question was on activity with regard to group business. "Could you update us on group for 2014, specifically what percentage is on the books versus where you would expect it to be at this time?"

Yes. Group base is up in the low single digits overall. And we feel a lot better about group than 3 months ago in the previous quarter. Approximately 60% is on the books for 2014. Total production was very solid overall, as well as production in the quarter for the quarter that we have seen.

Moving ahead, we had some questions on performance around the world. Question is, "What are you seeing in China and India? And provide to us your outlook for China? Do you see trends picking up?"

Great. So on the China front, we had some variability across China. Southern China was actually quite strong, but North and Eastern China were challenged. That had to do with some -- the economic activity in the country, but is also the continuing effects of what we've historically referred to as the austerity program in China. But increasingly, our view is that the -- that, that state of austerity is likely the new normal for our -- for the foreseeable future. So as we head into 2014, I would say that we believe that, that level of activity that was negatively impacted by some of the government initiatives will likely remain in place. And secondly, with respect to specific markets, there are -- there will be variability quarter-over-quarter, due to new openings and absorption. In -- at any given point in time, there will -- individual markets will experience absorption of new supply. But over time, we still feel confident that overall economic growth -- underlying economic growth will absolutely adjust and -- adjust demand over time, and that the hotels that we are signing up and opening will be successful. With respect to India, the market is quite disrupted. We actually took our board to India for our third quarter board meeting and spent a week meeting with owners and with others in the travel industry. And I think the -- there's an election coming up this coming year. I think there will continue to be some disruptions. But the overall economic picture remains challenged. The rupee has been under a lot of pressure. That actually was a bit of a benefit over the last quarter because more Indians stayed in India for their holidays instead of leaving India with a weaker currency. So our -- the market conditions currently are under pressure. We did have a strong quarter in Goa. But overall, I would say, they are under pressure still, but seemed to be starting to stabilize relative to year-over-year comparisons to what were weak quarters a year ago.

Great. Thank you. The next 2 questions relates to share repurchase activity and cash position. The first question is, "Share repurchases were significantly lighter sequentially. Some comments as to really what's happening as to cadence on share repurchase."

So a couple of things. First of all, we repurchased about $780 million, a little over that, in stock since we have been public. More than $250 million of that was this year. There will certainly be fluctuations quarter-to-quarter, but recognize that we invested more than $1 billion since the beginning of the third quarter in new investments. And so both for capital planning purposes and otherwise, we -- that was some of why the share repurchase activity in the quarter was somewhat lighter. In terms of cash position, we ended the quarter with about $800 million, a little over $800 million of cash. That excluded over $430 million of restricted cash. This is cash restricted by virtue of the fact that we're doing 10/31 exchanges on the sale of a number of hotels that we sold over the course of the year, and that's why it's restricted for the most part. There are some other small amounts that are also restricted. And so that -- and since the end of the quarter, we purchased the Peabody Hotel for $717 million and we also received the redemption of our preferred stock position in the Hyatt Regency New Orleans, which was just under $90 million.

And the final question here is, "Would management consider additional debt to fund future investments or share repurchases?"

We have -- we think of our liquidity and our asset base holistically. So our liquidity sources are cash on our balance sheet, operating cash flow and sale proceeds from selling assets. So historically, we've funded our share repurchases out of cash available, and that's our expectation going forward as well.

The next few questions relate to a transaction activity, both in the quarter and prospectively. First question being, "How should we think about the EBITDA impact of sold hotels? Can you talk to us about how much owned EBITDA was sold and, perhaps, what the fourth quarter impact was. Trailing data or expectations would be helpful."

So we sold 6 full service hotels this year for $433 million. This is an approximately 15x blended trailing EBITDA. Given the timing of the transactions disclosed, our overall transaction activity should be close to neutral in the fourth quarter with the exception of the Hyatt Regency Orlando, which is expected to add about approximately $10 million to EBITDA. And of course, any other transactions that might take place as we go forward.

Second question is regarding unconsolidated joint venture EBITDA. "Is the decrease that you experienced going to be recurring in the next several quarters? And can you give us some outlook for unconsolidated joint venture EBITDA?"

A couple of factors in there. One, the Seattle joint venture lapped with last year. Waikiki, as mentioned by Mark, was a drag and will continue to be a drag for the next few quarters, as we see at the moment. Andaz Wailea was a drag in the fourth quarter, always a drag in the fourth quarter, as we see it right now. But Playa will potentially have a positive impact as we go forward. So if you take those factors into account, that's the way we look at joint venture EBITDA.

Next question will be, "Following a quarter with significant transaction activity, has your thinking evolved at all around the need and/or desire to add an additional brand to the portfolio?"

Well, I guess, we had significant transaction activity. By way of reminder, the areas that we focus on for capital application were 4 areas: One being resorts; one being gateway cities; another being select-service hotels, in particular urban locations; and finally, convention group hotels. We've made tremendous progress, obviously, on the group side, having applied significant capital to both New Orleans and now Orlando. So I think we've really moved our strategic mandate forward significantly there. With respect to how we think about other activities and whether we would add a brand or not, as we said before, we would be open to that, but it would -- really need to -- we would need to be convinced that it would enhance our existing portfolio and otherwise provide a significant network effect or benefit to the overall company. So while we remain open to it, it would have to fit those criteria. I would also add that we're introducing 2 new brands in the all-inclusive areas, Ziva and Zilara. And we will have hotels opened and operating under those 2 brands by the end of the year.

Great. Thank you. We had 2 additional questions on our investment in Playa Resorts. "Regarding the investment in Playa Resorts, what type of EBITDA range are you expecting in 2014 and '15? How many Playa rooms are in the pipeline? And will these be appearing in your managed and franchised hotel room count?"

Yes. So we're really excited about our partnership with Playa. We believe it will be a great platform for future growth and a great new market for us in an area where we are underrepresented from a resort perspective. We expect, as I said, earlier, we expect to add 6 hotels from the Playa portfolio. The Playa portfolio includes 13 hotels currently, and 6 of them are expected to be under our brands. And they are included in our pipeline, which is -- and they represent a bit over 3,000 rooms in total. Once we get into the -- well, for the coming year, for 2014, we expect that we'll recognize somewhere in the range of $18 million to $20 million of EBITDA, adjusted EBITDA from JVs from our Playa investment. And as we get into the coming year and start to refine renovation plans and conversion plans for other hotels, we'll be able to develop an outlook for the subsequent year or 2, but not at this point.

Second question on Playa Resorts. "How much, if any, EBITDA did Playa contribute in the third quarter?"

So in the third quarter, we did not recognize any EBITDA contributions from Playa. There are certain transition issues that we currently address. There is an accounting lag that relates to reporting. Reporting is being fine-tuned at the moment in conjunction with Playa. And we expect to have all of that come through in the fourth quarter. Please remember as well that it is seasonal. There is a seasonality factor in there. It's seasonal business. The third quarter is typically the weakest quarter from a seasonality point of view. We will have renovations that are being scheduled for the properties, which are yet to be converted. And at this point, as Mark mentioned, we are sticking to our outlook for 2014, but we will fine-tune that picture as we go forward.

And we have one question on the Peabody acquisition, the Hyatt Regency Orlando. "Will this increase or decrease blended RevPAR and ADR going forward? By how much? And was the acquisition paid for with proceeds from the revolver or directly out of cash?"

Well, first of all, it will not impact RevPAR since it's not a comparable hotel until 2015, when we will have comparable base. We expect RevPAR to be roughly in the range of the existing Americas portfolio. So it will not have an impact in that sense. And from an acquisition perspective, we paid in cash for the acquisition. We did not use the revolver.

We had a few other questions, more specific in nature. So we'll go through those at this time. First one being the tax rate we reported in the quarter. "Why were taxes higher than they had been in past quarters?"

The taxes in the quarter were higher predominantly because U.S. earnings were larger and we had some true-ups, which typically happen around this time of the year, and it was more related to our North American business. On a full year basis, we still expect to end up in the mid-30s tax range. We have, of course, quarter-to-quarter volatility due to our mix. And in general, just as a way of background, U.S. taxes are higher than international tax.

Second question, "How does the return of your investment in Hyatt Regency New Orleans affect annualized EBITDA on a go-forward basis? What do you expect the fourth quarter 2013 impact to be?"

So we did not historically recognize any EBITDA from the Hyatt Regency New Orleans. So there will be no impact from the redemption of our preferred interest in that property. And all of the preferred return that we earned on the investment will be recognized in the fourth quarter this year, and it will all be included in other income.

That's right. That relates to the investment, the fees we do pick up.

Of course. That excludes management fees that we receive from managing the hotel.

Next question, "Did a number of -- you did a number of acquisitions this quarter as well as increase your pipeline, how much did development costs impact third quarter results?"

Well, if I understand the question, let me just disaggregate it. If the question relates to transaction expense, transaction-related expenses, the answer is that those are -- that those really don't have an impact on EBITDA. They're included in the capitalized transaction values that we previously reported. With respect to development costs, they are really included in our SG&A. So this is oversight of new developments for new hotels, the activity that we've got underway for select-service developments and the like is all included in our SG&A figures.

Next question regards -- relates to CapEx and investments in 2014. "Can you talk about this generally and provide a range as to 2014 CapEx and investment spending?"

Yes. At this point, we don't really see any unusual expenditures in maintenance CapEx for 2014. We are in the process of pulling together 2014 information. It's budget season as you know. And we expect from a new hotel development investment perspective to spend over $150 million in 2014.

Great. Well that captures the questions we've received in advance. We'd now like to take your questions. [Operator Instructions] Glen, may we please have the first question?

And your first question comes from the line of Joseph Greff with JPMorgan. Joseph Greff - JP Morgan Chase & Co, Research Division: Mark, you mentioned that you ended the quarter and entered this fourth quarter with about $430 million of restricted cash. Did you use that, apply that then to the Peabody acquisition? Is that how we think about it?

Well, we had unrestricted cash in excess of $800 million as well. Yes, so the -- Gebhard is reminding me that the restricted cash relates to some 10/31 exchange transactions that we're involved in as well as a few other things. So it was principally available cash. As I mentioned also, we received $90 million -- or just under $90 million from the redemption of our Hyatt Regency New Orleans preferred interest this past week. So that plus operating cash flow leads us in a liquidity position, which has not required us to tap our revolver for the investment. Did that answer your question, Joe? Joseph Greff - JP Morgan Chase & Co, Research Division: It does, yes. And then if I may, Atish, you led off by saying you're going to have an analyst event in March of next year. Can you talk about what your views are in terms of maybe providing targets or setting or implementing some sort of guidance, as you look towards discussing some of your initiatives at this event next year?

Yes. Joe, we're actually working through that right now. I think, Mark, if you want to add something with regard to just philosophy on guidance or approach?

Yes. No, I think what we've said and acknowledged is, first of all, we've been, I think, clearly adding to clarity and detail on our disclosures and explaining what's going on with the business, and we will continue to do that. And secondly, we've also talked about the importance of looking forward and trying to lay out how the company is expected to evolve over time, and that's exactly -- that's one of the key things that we will be talking about during the Investor Day.

Your next question comes from the line of Steven Kent with Goldman Sachs.

Could you talk a little bit -- you mentioned, Mark, in your opening comments about group business being strong even into 2015 or showing some strength. How much -- I don't think you've answered or told us how much typically would be on the book at this time. And would you still say that it's in the quarter for the quarter as a theme broadly in the group business? Or is that starting to dissipate?

Well, let me address the second question and then Gebhard will give you the answer to the first question about what's on the books and so forth. The in the quarter -- the total production in the quarter was quite strong. It was strong overall. It was also strong on an "in the quarter for the quarter" basis. So really, frankly, very encouraged across the board. In terms of the production for future years, it was stronger for 2015 and further out, and that typically relates to association business. The quarter itself in terms of realized revenue in the quarter was more driven by corporate business than association business. So quarter -- so in the quarter itself, the realized business in the quarter, stronger corporate. And with respect to future booking, I would say, more association oriented for the 2015 and beyond periods. In terms of what's on the books going into the year proportionate -- the percentage that we've got in the books, do you have that?

For 2014, it's 60%, roughly 60%. And for...

Which is sort of in line with what we would have otherwise expected at around this time.

Exactly. But we had a very nice evolution actually in the third quarter, where we've seen really positive trends in terms of our pace, not only for this year but also '14, '15 and '16.

Yes. So pace for '14 increased over the quarter of the by -- or should have been low single-digit rates in terms of positive pace for the quarter.

But I guess, what I'm asking -- Mark, I guess, what I'm asking is this -- if it's 16% now for 2014. For 2015, it must be below 10% or so that you would be talking about?

What Gebhard said was...

60%.

60%, 6-0, for 2014 ,not 16%.

And your next question comes from the line of Thomas Allen with Morgan Stanley.

In your prepared remarks, you mentioned executive fees limited margin upside for some period of time in your owned and leased business. Can you just elaborate on that a little more?

Yes. I mentioned that we -- one of the things that have impacted us in the quarter was increased rent and property tax expenses. Given the timing of those increases, which were in the middle of this past year, we would expect that those will continue to have a drag or create a drag for us until sometime in the second quarter of next year. So that's one element of it. There were some increased benefit costs. Benefit costs continue to increase at a rate above inflation, but it was really the timing issue that I just alluded to is really what I was referencing in terms of continued drag.

Okay. And then just on your select-service RevPAR growth decelerate this quarter, can you elaborate on what's driving that?

Our select-service performance over the last several years has been really superb. We couldn't be happier with it, and there will be variability from time to time in a given quarter. I think relative to the total segment in the U.S., we're still performing well. And I look at it more specifically across the hotels and look at the progress made in relation to market share of our hotels, and I'm very happy with the continued progress there. The one difference that you'll start to see in our select-service performance over time, over the coming years, is that we are now, really for the first time since we launched these brands 4, 5 years ago, entering into urban markets. So this year alone, we've opened hotels in Chicago, in New York City, in Austin. We are, I think, opened or about to open in Omaha. There will be other urban locations that we will open over the course of the coming year. This is a big change for us. Up until now, we've had virtually no urban representation whatsoever. These Hyatt Place property, they're all Hyatt Places that we've opened this year, have been doing really phenomenally well in these urban locations. And it's exactly what we expected, because a lot of our volume accounts or corporate customers have been looking for a lower price alternative in some of these markets as part of the Hyatt network. And so we're really excited about this. That will also start to change how I think -- we enhance how the brands perform, but have also changed the RevPAR dynamics. Because historically, our total chain-wide RevPAR for Hyatt Place, for Hyatt House have been at a level that doesn't reflect the relatively higher rates in urban markets. So I think you'll start to see a shift in terms of total RevPAR reported over time.

And your next question comes from the line of Shaun Kelley with Bank of America Merrill Lynch.

Mark, in your prepared remarks, I think at the very beginning, you mentioned that transaction activity for you guys are picking up. And obviously, you've been very busy. But overall, for the hotel sector, could you just give us your view on the transaction market, both in terms of asset disposition that you guys have been busy on, as well as possible acquisitions? Just what you're seeing from brokers, that would be helpful.

Yes. I mean, I think it's very clear that activity is up significantly. There's more capital that come into the market for hotels. And given -- even though it's been kind of all over the place and volatile, the fixed income market has really persisted at low rates. I mean, the 10-year is still -- it's in the 2.505 range, for goodness' sake. I mean, down from almost 2.90% or something like that, probably 3 or 4 months ago. So I think both debt and equity capital remains attractive, and there's real momentum in a number of markets in terms of operating performance. So there's just been a lot of activity. And there have been a lot of opportunities as well. Obviously, we've both realized a lot of proceeds from different investments and we've deployed a lot of capital. So I would say on both sides of the equation, the activity level is high and has remained high.

Great. Now are you specifically seeing any pick up as it relates to the just private equity interest in some of your assets? Just like you said, LTV is getting a little bit better and the credit markets remain favorable?

Yes. I think it's an attractive time for private equity to be buying hotel assets. I think it continues to be a good time. I think the -- for us, we, as we've discussed a number of times before especially in the select-service side, we're very focused on making sure that as we look through how we actually realize value from our owned asset base, that we are also paying attention to who the buyers are and whether they can be ongoing, persistent buyers of Hyatt-branded assets. Because one of the important things for us to do is expand institutional ownership, which we've done significantly over the last year or 2. But -- so we will continue to focus on making sure that it's -- that we're dealing with buyers, who not only can provide good value to us, but also will end up being good ongoing buyers for developers who are developing Hyatt assets. And I think that's especially true for select service assets. On the full-service side, I think there's been increased level of private equity interest. And I think as we look at our portfolio and think about acquisitions like the Hyatt Regency Orlando, we believe that those kinds of assets are attractive to big institutions as well. So I think the quality of our asset base and the performance of our brands leaves us well positioned to continue to be able to recycle assets.

And your next question comes from the line of Smedes Rose with Evercore.

Based on your guidance around SG&A and interest expense, it looks like you are expecting a little bit of a pickup in the -- versus the run rate year-to-date into the fourth quarter. Is that related to the development costs you mentioned in SG&A? And maybe is there something going on in the interest side?

It's really predominantly timing that's involved here on a quarter-to-quarter basis. And by way of reminder, we did a realignment last year and we have some comparability factored in there as well. And hence, we see that SG&A increase.

I'm sorry, what was the last thing you said? That you had something in there? I missed what you said.

We had a realignment in the company. We went through a realignment. We changed SG&A structures and corporate structure, so...

Which reduced our run rate...

Which reduced our run rate...

Of last year.

Yes. So that gets fourth quarter specifically look different to the other quarters before when you do that comparison in 2012.

Okay. And then could you just give any commentary around corporate-negotiated rates with -- from other companies that have reported today that kind of mentioned some ranges? What sort of stage are you in on that?

It's still too early to really say. We do expect we'll see pretty solid increases, and -- but we're still too early in the process to really draw any conclusions from what we've seen so far.

And your next question comes from the line of Harry Curtis with Nomura Securities.

Just trying to get a sense of what inning you're in with respect to recycling the legacy portfolio. How many more moving pieces do you think there are?

Well, we have a great portfolio, Harry, and a lot of interest in our assets. So I guess, I would say that as long as there's interest on the buy-side and the sell-side, we will continue to look for opportunities. We've made, I think, tremendous progress across all 4 of the areas that we've been focused on, and I think we still have great opportunities to really expand our presence in some key markets in gateway cities, in particular. We've taken, I think, very affirmative and important steps forward on the resort side as well, both through Playa and also the Andaz Wailea. So I would say, we've demonstrated an ability to manage this well, both on the value realization front and the deployment front. And our strategy continues to be to engage in this to continue to help our growth in a very targeted and deliberate way.

I would add that it's not just the legacy assets, but assets that we've recently acquired as well. Once we reposition them, renovate them, re-brand them, those would be potential sale candidates as well.

And your next question comes from the line of Ian Weissman with ISI Group.

Just 2 questions. First, can you give us an update on the Park Hyatt in New York City and how that progress is coming along?

Sure. It's coming along very well. The expectation is that we will open in the second quarter of next year, and the progress on the property has been going quite smoothly, actually, subsequent to the crane replacement, which took place over the course of the summer.

So on time and on budget?

Yes. Well, certainly on budget. The structure of the deal is that we have agreed upon price that is the purchase price upon completion. So that's fixed. And the timing is delayed, as we previously reported, largely due to the construction site issues that were occasioned by the crane problems that they had that were caused by Hurricane Sandy last year.

Right. And finally, you were buying back stock last quarter at 41, stock's about 13%, 15% higher. So how should we think about buybacks going forward and source of funds?

Well, we've -- I think, as we've looked at our share repurchases over time, we are -- balance has been between using capital to help us grow. And by way of a reminder, we've invested over $1 billion this -- since the beginning of the third quarter in new investments. So there will certainly be impacts from our investment activity. But I think we will manage our stock repurchase program consistent with how we've handled it in the past, looking at a number of different factors.

So you're comfortable buying back stock at these levels?

Well, I think what we said in the past is that as we look at the position for the company and future prospects, we were comfortable. I'm not really going to go into details and make any comments about at what price levels we're a buyer or not. But I would say that we've managed the program as a tool that we have available to us and we are committed to returning capital to shareholders, but that's balanced relative to applying capital to help us grow.

And just finally, Starwood obviously put out guidance for next year, 5% to 7% range. I would just say, generally speaking, as you look across United States, is that a range that you're comfortable with across your markets?

Yes. We're not providing guidance. So I guess, that's the way I would answer the question.

At this time, I will we have no further questions. And I will now turn the call over to Mr. Atish Shah for closing remarks.

Thanks, Glen. Thank you very much for joining us this afternoon. We look forward to talking to you soon. Thank you, and goodbye.