Hyatt Hotels Corporation (H) Q1 2014 Earnings Report, Transcript and Summary

Good day, ladies and gentlemen, and welcome to the First Quarter 2014 Hyatt Corporation -- Hotel -- Hyatt Hotel Corporation Earnings Conference Call. My name is Tahisha, and I will 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.

Thanks very much, Tahisha. Good morning, everyone, and thank you for joining us for Hyatt's First Quarter 2014 Earnings Call. 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 the call by making some brief remarks, and then we will read and respond to questions emailed to us this morning. Finally, we will take live Q&A towards the end of this 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 on 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 to date, along with the comments on this call, are made only as of today, April 30, 2014, and we undertake no obligation to publicly update any of these forward-looking statements as actual events unfold. You can find a 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. And with that, I'll turn it over to Mark to get started

Thanks, Atish. Good morning, everyone, and welcome to our first quarter 2014 earnings call. I'd like to talk about the results we reported this morning and provide an update on some recently completed and announced transactions and then conclude with some thoughts on our outlook. First, to our operating results. We reported a strong first quarter as we saw broad strength in our business around the world and strong results from recent acquisitions and investments. Adjusted EBITDA increased over 30% overall. The 4 main drivers of the increase were, first, strong topline performance in the U.S. with full-service hotel RevPAR up over 8%. Second, 150 basis points increase in comparable owned and leased margins in the Americas as a result of both strong room results and a solid quarter for our food and beverage business. Third, positive results from recently completed transactions, including our acquisition of the Hyatt Regency Orlando and Grand Hyatt San Antonio and our investment in Playa Resorts. Fourth, management and franchise fee growth of approximately 14%. Our fee growth is attributed to system-wide RevPAR growth of 7.7%, as well as fees coming from new and ramping hotels, which we've added to our system over the last couple of years. Overall, our results reflected both transient and group performance that were strong and are reflective of the shift in timing of Easter this year versus last year. On the Group side, revenues increased over 9% at U.S. managed full-service hotels. Markets such as San Francisco, Orlando and Chicago showed strong group results and more than offset relatively softer results in Washington, D.C. Group occupancy levels and higher spending by in-house groups helped our food and beverage business, and specifically, banquet revenue per group room was up in the mid-single-digit percentage range during the quarter. We experienced strong group production in the quarter for all future periods, and our total group production increased 11% in the quarter. This represents the fourth quarter of solid year-over-year increases, specifically in the second quarter of 2013, production increased in the mid-single-digit percentage range and in the third and fourth quarters of 2013, production increased in the high-single digit percentage range. So year-over-year increases in our group production have been healthy and are headed in the right direction. Group revenue booked in the quarter for the year increased over 13%, translating it into improved pace for this year. And our group pace for 2015 has increased about 200 basis points over the last quarter from about 5% to about 7%. On the transient side, results were strong, with rate growth up about 6%. We're seeing both group and transient strength from sectors such as technology, pharmaceuticals, manufacturing and insurance. Overall, our strong topline results put us in a position to realize strong owned and leased margin growth in the U.S. I'd like to now discuss recently completed and announced transactions. Let me start with an update on transactions we completed towards the end of last year. Our fourth quarter 2013 acquisition of Hyatt Regency Orlando is proving to be a terrific addition to our system. The hotel is on track to earn $55 million of EBITDA this year. The positive year-over-year impact of this acquisition will be lower in the second and third quarters, given that the total generates about 1/3 of its earnings in the first quarter of the year due to seasonality. As to the Grand Hyatt San Antonio, by way of reminder over the course of 2013, we owned 30% of the equity of the hotel and recognized 30% of the adjusted EBITDA of the hotel in our joint venture earnings. We acquired our partners' 70% equity interest at the end of last December. We expect this property to earn in the range of $25 million of EBITDA this year and about 1/3 of this was booked in the first quarter. The hotel's doing well and we're happy to own this asset. Our investment in Playa Resorts is off to a good start as well. The 2 resorts that we converted to our newly launched Hyatt Ziva and Hyatt Zilara brands are doing well and we're excited about the additional resorts that are expected to come in to our system after renovations are completed. Now onto some recently completed transactions. During the quarter, we completed the sale of a portfolio of 10 hotels for about $313 million. We continue to manage each of these hotels. We purchased the majority of these hotels in 2011. So we were able to buy these hotels, rebrand them, improve operations, sell the hotels at attractive returns and maintain our presence going forward under long term agreements for each of these hotels. Earlier this month, a joint venture in which we hold a 50% stake sold the recently constructed Hyatt Place Austin Downtown. We had invested approximately $7 million of equity into the venture, 2 years ago. Upon the sale of the hotel, we received approximately $25 million for our interest. The pricing reflects the excellent profile of this project, including the performance of our Hyatt Place brand with a very successful ramp-up, a great location in a key market, and great execution with a great partner, White Lodging, with whom we enjoy a strong and expanding relationship. The Hyatt Place Austin will remain a part of our portfolio over the long term under our franchise agreement. This transaction is another example of how we can grow our presence and generate strong returns on our investments at the same time. And it continues a trend as we were able to achieve similar results recycling our preferred equity investment in the Hyatt Regency New Orleans, our senior debt investment in the Hyatt Regency Waikiki and our joint venture investments in 2 hotels in Seattle, which we monetized over a year ago. In all of these cases, we grew or maintain our presence and earned strong returns in the process. Lastly, I want to remind everyone of one pending transaction. We recently agreed to purchase the Hyatt Regency Grand Cypress in Orlando, Florida for $190 million. We expected to close on the purchase in the second quarter. The acquisition has been planned for quite some time. As a reminder, this hotel is currently consolidated as an owned and leased hotel, pursuant to our capital lease. There will be no change to our reported adjusted EBITDA as a result of the acquisition. From a balance sheet perspective, we will pay $190 million in cash and reduced debt on our balance sheet by $190 million. Our 2014 interest expense estimate reflects this purchase. Our owned basis in the hotel is under $300,000 per key, inclusive of the renovation capital we invested over the last few years. We believe this to be an attractive price and well below replacement costs. We're excited to own this hotel and now have the flexibility to recycle this hotel at the appropriate time. As to other activity, recall that we are currently marketing for sale 9 full-service hotels in North America. We will provide updates, if and when we sell any of these hotels. We also remain active in looking at new opportunities. The overall level of deal activity and capital availability for deals in our industry remain high. Finally, I'd like to remind you that we continue to be active in returning capital to shareholders. We've repurchased over $85 million of Class A shares since the beginning of the year at a weighted average price of about $52 per share. We have ample liquidity and our balance sheet continues to be strong, as we maintain flexibility to execute on opportunities that will help us achieve our goal to be the most preferred brand. Now with respect to what we're seeing in the markets. We're confident in the business trends we see in the U.S. As I mentioned earlier, our group pace for the remainder of 2014 and into 2015 is healthy. Occupancy rates are at record levels and we continue to see strong average rate growth. In addition, our food and beverage business continues to improve. And finally, supply growth continues to be quite modest in most major markets in the U.S. Outside the U.S., we expect continued positive demand growth, although this will vary by region. For example, most regions within China appear to be stabilizing relative to a volatile 2013 and we realized solid overall RevPAR growth in China in the first quarter. Our presence in many markets continues to grow as new hotels come on line. So we're benefiting from both revenue increases at existing hotels, augmented by our expanded presence. For example, across the world, we own -- opened 8 hotels in the first quarter, of which 7 were in new markets for us. As we look to the short term, I'd like to remind everyone that our second quarter comparisons will be tougher due to the timing of Easter relative to last year. In addition, as a reminder, there will be some quarterly variability in incentive fees as a result of seasonality and our contract structure related to our management of 4 hotels in France. These hotels came into our system during the second quarter of 2013. As a result, our incentive fee growth in the second quarter of 2013 was strong. During the first quarter of 2014, earnings from those hotels were below the performance guarantee threshold by approximately $15 million. As expected, we recorded this performance guarantee expense as other losses on our income statement. In the seasonally stronger second quarter, we expect to earn in excess of the threshold. Those our earnings will be recognized as income in the Other Income line on our income statement. Guarantee payments from prior quarters within the calendar year need to be fully offset before incentive fees are recognized. As such, we do not expect to earn incentive fees in the second quarter as we did last year. Again, as a reminder, we expect to earn annual base management fees of approximately $7 million from these 4 hotels. So to summarize, our performance in the quarter was strong and benefited from our differentiated business model. We saw strength from our multiple earnings tools including our strong position with meeting planners and groups, our committed excellence and innovation in food and beverage, as well as ongoing disciplined hotel management that drives margins at our owned hotels. We're well-positioned to benefit from robust business travel trends around the world, increased presence as we open new hotels, our continued successful asset recycling strategy and brands that are punching above their weight. Our long-term goal remains clear: to drive preference for our brands among our colleagues, our guests and our owners to realize superior shareholder value. And with that, I'll turn it back to Atish for some Q&A.

Thank you, Mark. Okay, let's start our Q&A session with questions that were submitted to us this morning. We had about a dozen questions that came in and we've organized them by category. The first set of questions pertains to first quarter reported results and some -- getting into some specifics on group and other parts of the business. So the first question is, are you able to quantify the Easter shift to either RevPAR EBITDA and would it also be possible to isolate the positive impact from that Easter shift?

So our full-service managed hotels in the U.S. benefited by approximately 250 basis points in relation to Easter. That would be an impact of approximately $3 million to $5 million on EBITDA.

Okay. Great. Second question for the owned select-service hotels. Were there any markets that were particularly weak, which cause the underperformance relative to your owned full-service hotels?

The majority of the under performance in the select service portfolio came from a number of renovations that we had in the first quarter. There was a little bit of a weather impact in the East and Northeast, but we have remind that we have a larger concentration of owned select-service hotels in East and Northeast.

Okay. Great. The third question pertains to group business. What markets experienced the most strength in group business and how much of your increase in group business is due to lesser or no renovation disruptions at several of your large domestic hotels?

As Mark mentioned in the prepared remarks, San Francisco, Orlando, San Antonio and Chicago were strong for us. D.C. continues to be relatively weak. The group's strength was driven in part by the Easter shift but we had a very strong production. Our renovations had a minimal impact, it was really not much impact at all.

Okay. Great. And the last question on this category of first quarter results was pertains to foreign exchange. Why was there so much foreign exchange impact on the America's full-service hotels?

This is in relation to the Canadian dollars, the Mexican peso and really all the South American currencies who appreciated versus the dollar and had an impact on our portfolio.

Okay. Great. Next category was asset recycling. First question is do you have any expectations to begin marketing additional hotels besides the 9 previously announced, to take advantage of strong buyer interest?

I -- consistent with what we've been doing, we have been and will remain opportunistic about how to stage and select assets that we may be interested in selling. Even as we are looking at opportunities on the buy side. So really, we'll continue to be opportunistic and we have nothing else listed at this point other than the ones that the 9 hotels that we've previously referenced. And consistent with the past practice, we'll also announce sales when they're closed but -- and so we don't have a further update at this time other than just to reiterate what I said earlier, which is -- it's a vibrant market at this point.

Great. The next category was our investment at Playa Resorts. The question is how much EBITDA, if any, did Playa contribute in the quarter? Can you give us an update on future plans for Playa, including whether an IPO is likely?

Okay. By way of reminder, we said that the range on EBITDA is $13 million to $15 million for 2014, about 1/3 of that was generated in the first quarter. We mentioned that we're very pleased with the performance of those hotels that have been converted so far. We have an additional 2 hotels towards the end of the year that will be rebranded/converted once renovation is completed. This is the early stage of our investment in Playa, and questions with regards to IPO or any other questions on Playa as a company specifically are best left for Playa management to answer.

Great. We had one question on the 4 hotels in France, can you update us on the base and incentive fee structure? Have you made any progress on restructuring the agreement in order to smooth quarterly incentive management fees?

So currently, the contract structure and the accounting have not changed but we are continuing to talk and we're concerning the work on hopefully, coming to conclusion on some changing that will help us smoothen out the volatility. So for now, volatility will continue as Mark mentioned in the prepared remarks as well.

Okay. Great. We had a couple of questions on share repurchase activity, return of capital. First question is share repurchases appear to be picking up. Did you buyback Class A or Class B shares? Can you give us a breakdown of the number of shares currently outstanding in each class and how much stock is left that you can realistically buy and still have decent float in your opinion?

I guess, first of all, all of the shares that we've repurchased this year have been Class A shares, so just to be clear about that. We'll be filing our 10-Q shortly and it will reflect Class A shares of 42.4 million and Class B shares of 112.5 million. And I will just note that we bought back nearly $900 million of stocks since 2011. And our float has changed very modestly. It went from about $43.9 million Class A shares at the end of 2009, to 42.4 million as of April -- end of April here in 2014. So I would say that we're mindful about the float and potential impact, but we've -- meanwhile, we've been able to execute on our repurchases without having a significant negative impact on it. And secondly, we've seen institutions with large positions to be able to trade our stock over time. So nonetheless, we remain mindful of it and we'll continue to do so.

And the second question is on this topic of share repurchase. Does the Board have plans to re-up the repurchase authorization and how does the Board evaluate the trade off between share repurchases and additional acquisitions?

Consistent with what we said at our investor meeting in March, we really look at our capital base as available to continue to drive shareholder value. That includes investing to grow our business but also includes the return of capital to shareholders. So it is not an either or sort of decision. We have been and we've continued to do both. That is invest in our business and return capital to shareholders, and we talked also at the investor meeting about how we think about using our existing asset base as capital -- as a capital base in the context of our asset recycling strategy. So I would say that, that really has defined and will continue to define how we approach this. With respect to the repurchase authorization, it's something that's reviewed as an ongoing regular matter by the Board, and I think in normal course, the Board will continue to address authorization levels.

All right. Next question had to do with fees. Remind us of which hotels converted from managed to franchised and how that should impact results going forward?

So we have had about half of the hotels that we sold converted from managed to franchised. And if you look at the consolidated level, of the 14% increase in fees that we show, about 1 to 2 points of that increase is due to the conversion from owned to third-party, from owned to managed.

Okay. With a question that came in on the Park Hyatt New York that's under development. The question is would you update us on the Park Hyatt New York and what do you expect the EBITDA impact will be in 2014 and '15?

We expect to open the hotel in the third quarter, very excited about doing that. And by way of reminder, we are going to be purchasing a 2/3 interest in this hotel upon completion. So roughly, $250 million commitment by Hyatt. We have been looking into financing for that acquisition, for that project with our partner, and right now, our best guess is that we'll end up financing something in the range of 50% of the purchase price. That is with debt. And with respect to EBITDA impact, I would say, it will be de minimis in 2014.

Which gateway markets would you like more exposure to?

Well, we've talked about this on prior calls and in the context of our investor meeting, but I would say, first of all, it's brand dependent. So we've been actually very deliberate about looking at opportunities in some particular markets by brand. Overall, I would say, the key -- globally, the key markets that we continues to remain focused on are London and Miami, San Francisco, Hong Kong, Los Angeles, and then with respect to select service, properties, our focus remains on urban development and with respect to resorts, as we described last year in the context of the Playa investment that we made and the introduction of our new brands, really have been focused on Mexico and the Caribbean in North America. And then if you look at Asian opportunities, we've got projects underway and recent openings in Thailand and China.

Okay. Great. We had a couple of questions that came in related to the investor meeting that we held in March. The first question is with 14% CAGR EBITDA outlook outlined for 2014 to '16, does the 30% EBITDA growth in the first quarter imply that the remainder of the year will be in the high-single digits?

So, I guess, maybe I'll take a step back and just remind everyone that when we provided the illustration in the course of the investor meeting, it really was to illustrate the earnings potential of the company, not to try to reduce this to quarterly estimates for EBITDA growth. So I will -- I'll just refer back to how we presented it and actually how it was understood, based on a number of notes that were written following the meeting. So I would say, that we think about the earnings progression and the momentum that we've gotten in our business and the number of things that are working well for us and continue to do so as all positive signs and leave us in an optimistic outlook. But trying to reduce that to an individual quarter or set of quarters is not really practicable. And secondly, I would say that the other thing will change over time, obviously, is the portfolio where we remain active in buying and selling hotels and we will continue to do that. So depending on what it is that ends up either being sold or acquired, that will obviously an impact on our actual results in any given period.

Okay. Great. And the last question that came in, again, related to the March investor meeting was during the March investor meeting, you presented a slide that highlighted an illustrative $7.5 billion of asset value for your company's owned hotel properties. Can you confirm whether that amount includes the leased and/or joint venture properties? This question -- so the answer to this question is that yes the information was on Slide - page 88 and it does not include joint ventures or leased hotels. We excluded those by design because obviously, you would value those quite differently. And those numbers relate to our year end owned hotel count, which is about 25,000 rooms. As we mentioned, we sold some hotels during the quarter, so current count is slightly lower than that, closer to 23,000 rooms. So that wraps up all the questions that were submitted in advance. We can move to the queue now to take your live questions. Tahisha, if we could have our first question please.

[Operator Instructions] And your first question will come from the line of Joseph Greff. Joseph Greff - JP Morgan Chase & Co, Research Division: When we look at your first quarter results, but for that to us was the flow through that the margin improvement on the owned and leased side of things. When you look forward, do you see that broad trend's sustainable?

I guess, the first thing I would just point out is that we saw good rate growth in the quarter so that obviously has significant impact. And we've had a number of things that we've discussed in previous calls regarding in our own portfolio at least, rent expense issues that will sort of persist through the second quarter, and of course, the annual perennial benefits challenges, that is trying to manage our total benefits cost. But otherwise, I would say, we feel good about how the expense base is actually evolving, we saw good progress both in the room side and the F&B side.

Your next question will come from the line of Steven Kent.

A couple of questions. One, just on the asset recycling front. Could you just talk about both buying and selling, what that market's looking like for you? Is selling the select service hotels in the U.S. a priority, are you considering selling some of the full service hotels, given some of the prices that we've been seeing out there? And then just maybe a little bit on group strategy, how you're thinking about over the next 12 to 24 months allocating rooms of group versus transient, association versus corporate versus government, does that mix changing and as you think about that business over the next few quarters?

Great. First of all, on the buying and selling front, as we've said, we have been and will remain active on both sides of that equation. The kinds of things that we are looking for are opportunities for unbranded properties or properties that they're able to be converted into our brands and in particular markets. So as a consequence of that state, really focused on opportunities in those -- that fit those criteria and the opportunity set ebbs and flows. Overall, activity base has been high. Some of the deals that may have been late and deferred because of extensions by lenders are now increasingly coming to market, either because of owner motivations or because of lender motivations. So as a consequence of that, I would say overall volume continues to be quite healthy. So and then on the sell side, these processes can take 6 to 9 months to execute. So we've been more thoughtful and planful about what we will do and how we will do it in what sequence and that's really, so we've been in -- we got into the market with respect to the 9 properties that are now listed for sale months ago. And we continue to pursue those deals. With respect to select service, this has been a non -- we don't have any select service property listed at this point, but as an ongoing matter and for some time, what I'd said and what continues to remain true is we really view that portfolio largely as an opportunity to expand institutional ownership. We took a big step in that direction obviously, with the deal that we just closed with RLJ, a very important high quality owner of these kinds of assets. And the purpose of that is really to make sure that we've got provide our developers with increasing numbers of opportunities for them to sell their assets and recycle their own capital. And so that remains a key area of focus for us. In terms of deployment back into the select service arena, it's really almost exclusively been in urban developments and so you can see we just -- we've just referred to the sale of the Hyatt Place Austin, that's one example. But there are many others. We opened the Hyatt Place in Omaha last year, which is our own, we own that hotel. And we've got other joint ventures underway for construction of Hyatt Places and Hyatt Houses in urban locations. So that's going to remain an area of focus for us. I guess, turning to group mix, the overall, just by way of reminder, group represents mid-40 sort of 45% of our total rooms' revenue in the U.S. This past quarter, really, we were struck by how strong corporate was, so corporate really was the leader of the pack so to speak in terms of different segments within group. And that's extremely encouraging to us and that was also reflected in the total production activity for the quarter. I would say that -- and part of that also led to an expansion of the F&B and banqueting revenue per occupied group room because corporate groups are bringing more spend into their meetings. Obviously, as this continues to progress, we would expect to see more rate movement. And I would say, that we've got increasing opportunities with the network that we now have, New Orleans, Orlando, and the renovations that we've completed now in Atlanta that are being completed in San Diego, Washington, D.C. and Dallas. We've got a really superbly refreshed network of great convention hotels. So I would say, that we feel optimistic that we're going to continue to be able to lead in this area. And so that will influence how we think about pricing as we go forward. The one other thing I would say, and this is a minor point but something that we had talked about in some prior quarters, government business, which overall today, represents less than 2% of our total, was a consistent sort of drag over a number of quarters, and in the first quarter was actually up. Now, I'm not suggesting that we think that that's going to be material or a significant trend going forward, but we were interested to see that. So after a number of quarters in which we just saw continued declines in terms of room nights and so forth and pressure on rates, we saw both occupancy and group room nights and rate increased for government in the first quarter of this year. Again, it's now declined so much that it's -- it represents an even smaller proportion of the total but just a quick note because you did mention government in the course of that. So hopefully, that's helpful to you.

Your next question will come from the might of Harry Curtis.

Mark, how deep in the lodging cycle are you willing to purchase hotels and is there a point where you suspect you'll prefer to sell more than buy more hotels?

I guess, the mandate that we really began with and continue to operate with is that we want to be active on both sides of the equation through the cycle. And the reason is because if you think about being able to, from an earnings perspective and from an asset exposure perspective, if you got both inbound and outbound at the same time or in close proximity, then you're coming closer to, relatively speaking, match funding. Your activity now, quality of what we have been buying versus the markets in which we've been selling have led to more concentration in key cities for us and, even though there's opportunity left to realize good returns in the other markets for us as a strategic manner in terms of deploying capital makes more sense for us to use it to really expand in key markets, especially gateway cities. So from a strategic perspective, that's how we've been led to invest in those cap rates and those markets tend to be lower. So I would say, that we expect to continue to be active on both sides of the equation. We think that there's plenty of time left in the cycle so we are going to remain active. We've been obviously, been active and we will -- we plan to continue to be active on both sides.

I guess, as a follow-up, do you see any value in trying to lighten up the owned portion of your EBITDA as the cycle matures?

I think, what will end up happening is we've got a significant base of executed contracts that are in managed or franchised properties that don't really have any impact, obviously, on our owned and leased segment but rather expand our managed and the franchise segment. And so as we continue to open new hotels, which we've been doing at a pretty good clip and we expect to continue to, evidenced in the first quarter, 8 hotels opened, we think that, that's going to end up continuing to expand our managed and franchise space. I think, that the mix will therefore change over time and I believe that we'll end up at different points in time, maybe having relatively higher or lower owned and leased composition, but as we continue to go down the path of fulfilling on our use of capital for elements of our strategy that is our individual brands and individual markets, we do plan to really focus on utilizing our existing investments and properties as opposed to expanding the portfolio. So we're not trying to expand the portfolio. We really want to utilize capital that's already invested. And again, whether we're a net buyer or a net seller at any given point in time, will just depend on what happened in the immediate past.

[Operator Instructions] And your next question will come from Nikhil Bhalla. Nikhil Bhalla - FBR Capital Markets & Co., Research Division: Mark, I can't recall if you actually mentioned what's your 2014 basis tracking right now versus where it was 2 months ago.

I may or may not have. Pace has increased over the last quarter, probably in the range of 100 to 200 basis points, something like that. I guess, similar to the expansion that we saw in the 2015 pace expansion, which is about 200 basis points quarter-over-quarter. Somewhere in that range. Nikhil Bhalla - FBR Capital Markets & Co., Research Division: Got it. And just digging to that a little bit deeper, what specific areas that improve a little bit, others when it comes to groups and if you can discuss maybe some drivers of that as you may surmise.

You mean industry sectors? Nikhil Bhalla - FBR Capital Markets & Co., Research Division: Yes, so like what do you see on the association front versus what do you see on the corporate front or maybe and what may be driving that?

Yes. So the association business is actually been quite steady over the course of last several quarters. The corporate business has been increasing and improving at a faster pace and within that, by far, technology has been the leader in that. So technology companies, which includes both manufacture -- hardware and software but also consultancy businesses has really been leading the way. Manufacturing actually has actually also shown some very good progress in the first quarter. And insurance and other financial services, not money's in our banks so to speak, but other types of financial services companies, especially insurance, have also been quite positive. So those are the key areas that we've seen significant activity. I'm sorry, the other one has been pharma. We've actually seen good progress there as well. I think over time, what -- it's interesting to see this new consolidation wave in the pharmaceutical business, if you think back 6 or 7 years ago, there was a flurry of activity then as well. A lot of what happened at that time was the consolidation of the primary care physicians' salesforces, which really drove significant attendance at very large launches of big products and what's happened over the last 6 years or so is the industry has really evolved and you don't have those mass primary care physician launches any longer. What you do have is more smaller focused meetings on drugs that are more targeted to different types of physicians. And more focused salesforces. So the meetings haven't stopped, they've just changed in their nature, but a lot of people talk about the evolution of the profile or group. This is 1 of the -- this is a big dynamic, actually it has changed over the last 5 or 6 years. I think, it will continue to evolve because there are still a number of new drug introductions that are coming with the proliferation of a lot of new development activity in the pharma space.

We have no more questions in the queue.

Okay. Great. Well, thank you very much, Tahisha, and I want to thank everyone for joining us today. We look forward to speaking with you soon. Thank you.

Ladies and gentlemen, that will conclude today's conference. Thank you for your participation. You may now disconnect and have a great day.