Good day, ladies and gentlemen, and welcome to the First Quarter 2018 Hyatt Hotels Corporation Earnings Conference Call. My name is Denise, and I'll be your operator today. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session. As a reminder, this conference call is being recorded for replay purposes. I would now like to turn the conference over to your host for today, Brad O'Bryan, Treasurer and Senior Vice President, Investor Relations and Corporate Finance. Please proceed. [0CPPRG-E Brad O'Bryan]: Thank you, Denise. Good morning, everyone, and thank you for joining us for Hyatt's first quarter 2018 earnings conference call. I'm here in Chicago with Mark Hoplamazian, Hyatt's President and Chief Executive Officer; and Pat Grismer, Hyatt's Chief Financial Officer. Mark will begin our call today with highlights of our first quarter operating results and an update on our growth strategy. Mark will then turn the call over to Pat, who'll provide more detail on our financial results for the quarter as well as an update on our full-year outlook. We will then take your questions. As a reminder, all references to RevPAR results included in our discussion today are calculated on a comparable and constant dollar basis. Before we get started, I would like to 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 late yesterday, along with the comments on this call, are made only as of today, May 3, 2018, 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 financial reporting section of our Investor Relations link and in last night's earnings release. An archive of this call will be available on our website for 90 days per the information included in last night's release. With that, I'll turn the call over to Mark.

Thank you, Brad. Good morning and welcome to Hyatt's first quarter 2018 earnings call. I'm happy to report that we started off the year with very strong first quarter results across our global business. We reported adjusted EBITDA of $202 million for the quarter. Adjusting for the year-over-year impact of transactions, the timing of the Easter holiday and the net impact of termination settlement amounts received in both periods, adjusted EBITDA would have increased approximately 8% on a constant-currency basis. These strong results were fueled by continued growth in management and franchise fees across all regions. Turning to RevPAR results, system-wide RevPAR increased 4.3%, led by solid increases in occupancy and an average daily rate, excluding the timing of the Easter holiday system-wide RevPAR would have increased a very healthy 4.6%. More than half of our hotels globally increased RevPAR index as measured by Smith Travel Research for what is now 13 quarters in a row of increasing market share. During the first quarter, we achieved net rooms growth of 7.2% on a year-over-year basis, marking 12 consecutive quarters of year-over-year net rooms growth in excess of 6%. Even with our rapid rate of hotel openings, we continue to grow our pipeline of signed deals closing Q1 with a development pipeline of 73,000 rooms, an increase of over 10% compared to the same time last year. Our pipeline represents nearly 40% growth of our existing rooms base. Before moving on, I'd also like to highlight an important disposition in the first quarter. As previously disclosed, we completed a very significant transaction with Host Hotels & Resorts, in which we sold Andaz Maui at Wailea, Grand Hyatt San Francisco, and Hyatt Regency Coconut Point for an aggregate sales price of $1 billion. As we've indicated previously the Maui and San Francisco…

Thank you, Mark, and good morning, everyone. I will begin by providing more detail on our first quarter results and will then share an update on our expectations for the full year. Late yesterday, we reported first quarter net income attributable to Hyatt of $411 million and earnings per share of $3.40 on a diluted basis. Adjusted EBITDA for the quarter was $202 million with system-wide RevPAR growth of 4.3%. The timing of the Easter holiday adversely impacted our system-wide RevPAR growth by approximately 30 basis points. Additionally, the impact of transactions over the past 12 months resulted in a net decrease in adjusted EBITDA of approximately $34 million compared to 2017. Excluding these items along with a $5 million positive net effect from termination settlements received in both periods, our adjusted EBITDA grew approximately 8% on a constant-currency basis. These results exceeded our expectations by a meaningful amount with much of the strength for the quarter materializing in the month of March, where we enjoyed strong performance at our resorts and stronger-than-expected group business resulting from in the year, for the year bookings. I would also note that the implementation of the new revenue recognition standard resulted in a $12 million reduction in adjusted EBITDA for the quarter versus what would have been recorded under prior accounting principles. On a restated basis, previously-reported first quarter 2017 adjusted EBITDA was reduced by $10 million due to the adoption of this standard. Before moving on to discuss segment results, I want to point out that with the implementation of the new revenue recognition standard, we've made two modifications to our definition of adjusted EBITDA this quarter. First, we've excluded amortization of management and franchise agreement assets, which constitute payments to customers, including what's more commonly known as key money. This was…

Your first question comes from Stephen Grambling with Goldman Sachs. Your line is open. Stephen Grambling - Goldman Sachs & Co. LLC: Hey, good morning. Thanks for taking the questions. I guess at your Analyst Day over a year ago, you provided a value for your total owned portfolio, the owned real estate. As you look at the prices you received for the assets sold to-date and what you're thinking about selling, how would that compare to the value embedded provided at the Analyst Day and how does that shape your views on potentially increasing asset sales in the future?

Thank you, Stephen. This is Mark. I would say that the values that we realized were consistent with or better than the values that we had embedded in our estimates at that time. The actual – our perspective on the value of our owned real estate hasn't really changed and shifted very much. We know what we have in and we understand that both the quality of the assets themselves, but also the markets in which those assets are located in the performance profile and all of that was known at the time that we established our sell-down target of $1.5 billion over the next three years. So, it doesn't materially change our perspective on what our execution plans are. Stephen Grambling - Goldman Sachs & Co. LLC: And then, turning to the underlying fundamentals, I mean, clearly seeing some strength across a number of categories, looks like pricing growth contribution has been pretty consistent with what you've seen so far. Is that something that could accelerate as the year progresses? And how do you think about flow-through, particularly on the owned side, if that does accelerate? Thanks.

Well, maybe I'll just take a moment to reflect on what transpired over the quarter and what we think it means, both on the group and transient side. And then, I'll let Pat address the margin story, because it's not just about pricing and flow-through. So, I'll let Pat describe that. We had a very strong quarter, I mean, yes, our gross revenues – group revenues and group room nights were down, but we're obviously dealing with the timing of Easter. As I look at the quarter, there are really three things that stand out on the group side to me. One is short-term demand, the strength of short-term demand. The second is the strength of corporate. And the third is incentive business. On the short-term demand front, we had a very positive progression in both in the quarter for the quarter, and in the quarter – in the year for the year bookings. And this is the second quarter in a row that we've experienced a positive progression in both of those dimensions. You have to go back to the end of 2015, the third and fourth quarter of 2015, to find two quarters in a row in which we saw strength in short-term bookings, so that's encouraging. The other thing that I would say about the profile of the business in the quarter on the group side is that virtually all of the negative variance that we saw year-over-year was driven by associations. Corporate actually held up very, very well. It was down modestly both in terms of demand, that is room nights, and in rate, but not materially in either case. And this is a period, again, during which we had the Easter shift. And remember, we're also lapping the inauguration last year. So, when I combine…

Thank you, Mark. Certainly on the margin front, we're very pleased with the results that we've seen and the momentum that continues to build across our entire portfolio. And I would attribute it to not only very strong focus from our operations teams, but a consistent application of best practices to drive improved profitability. That includes a very disciplined asset management team responsible for working with our owned and leased hotels operators to optimize results, as well as our network of managed hotels around the world. There's a very strong process around identifying opportunities whether on the top line through enhanced revenue management or upsell techniques, as well as the middle of the P&L, where best practices encompass efficiencies and housekeeping and front desk labor, food and beverage, food cost management and efforts that we're taking even to manage laundry costs. So, I'm very pleased with the process that we have in place, the management focus. And I remain bullish in terms of our ability to realize continued strong flow-through on the revenue gains that we expect will sustain. Stephen Grambling - Goldman Sachs & Co. LLC: That's all super helpful. I'll jump back in the queue. Thanks so much.

Your next question comes from Smedes Rose with Citi. Your line is open.

Hi, thank you. Mark, in your opening remarks you talked about potentially being a net buyer in 2019 and a net seller in 2018. And I guess I just sort of have just a general strategy question. When you guys got a little more aggressive on moving towards more "asset-light and concurrent return of capital." Shares have been – have reacted well to that. And I'm just wondering why wouldn't you intend to go down that road more so rather than moving back into being a net buyer of properties? And why is that better than paying key money essentially to get management contracts?

Thanks for that Smedes. I guess let me clarify, because I think it's really important that this is clear. When we – when I mentioned that we might end up being a net seller this year as we were last year and that that might imply that we are net buyer next year. That was all and that was strictly and all within the context of asset recycling that is not a commentary about our desire or plan to expand our real estate portfolio. In fact, I just want to make a very explicit statement that we do not plan to do that. That is not what how we are managing our capital deployment. So our commitment that we made, specific commitment was to sell down $1.5 billion of real estate over the next three years, that commitment was last – the fourth quarter of last year. And we elected to do that and we size that in a way that gave us confidence that it was a material reduction in our overall real estate base and that it was something that we could execute with confidence over that period of time. And we know our real estate portfolio well and we know what the demand looks like for the – for – in the various markets although, that shifts and changes over time. So we're paying attention to it. We did not plan to abandon the idea of recycling assets. So we do plan to sell existing assets and utilize proceeds to buy other assets. Those acquisitions historically have allowed us to expand in some key markets and to acquire some really important hotels over time. So it was a key part of our activity base in terms of growth, not just growth in room count, but really strategic properties and by segment, so really important group properties, really important resort properties and some of those have actually already been recycled out of the portfolio. So we very – we absolutely expect to continue that activity but that is not and – I want to be really clear about this. That does not mean that we have any intention of expanding the real estate portfolio because we don't.

Okay. I appreciate that color. I wanted just ask you too, you noted that you're about 10% of your rooms exposure, I think it's in China. And just wondering and you may have said that, I'm sorry if I missed it, but where do you see that going over the next couple of years given the current, what's in your pipeline now?

Right, so the pipeline there is quite robust. We expect to double our total room base there over the next four years and that does translate into a doubling of our fee base coming out of that region as well. And I would say, given all of the initiatives that we have underway and the new leadership team that is being built there right now under Stephen Ho's leadership, we expect to actually have an opportunity to accelerate that growth over this period of time. The strategic development arrangement that we just entered into with Minyoun Group is – our expectation is that we will sign additional hotels under that development agreement that is not included in our current pipeline and our target with them is 50 Hyatt Place and Hyatt House hotels over the next five years. But, even apart from that, given our performance, the reputation of the brand and the excellence that we've had and reputationally in food and beverage, we continue to see great demand for our core brands. So, we expect to continue to expand the pipeline over time.

All right. Thanks. Thanks a lot.

Your next question comes from Shaun Kelley with Bank of America Merrill Lynch. Your line is open.

Hi, guys. This is (43:00) on for Shaun. Thanks for taking my question. Mark, as you think about growing your select service presence globally as you mentioned in your prepared remarks, I know you considered M&A in your use of capital, looking back at your LodgeWorks acquisition in 2011, where you reflagged their brands and ultimately sold the underlying properties, is that type of the strategy a good framework for your current thinking, should you ultimately choose to go down the M&A route. And if it is, do you think you have the flexibility now to go into deals with a partner and potentially streamline the process? Thanks.

Thanks for that Shaun (43:31). The answer is yes to both of those questions. We do see that that might be a productive avenue and yes we would be not just open to but interested in working with a partner. The one thing I would say is that our mandate that has been clearly articulated. But let me say it again is that we do not intend to expand our real estate portfolio. So, if we were to find an opportunity, an M&A opportunity that included assets, included hotels, we would execute that if and only if we had a plan to be able to exit the real estate side of the equation. It may not be immediate, but we'd have to have a high degree of confidence that we could sell the real estate portion and therefore not end up with an extended or expanded real estate portfolio over any material amount of time. So, I guess what I would say to you is, yes we're open to it, because as you probably know many brand opportunities around the world come with real estate. They are built on the back of real estate investments. And so oftentimes in order to achieve an acquisition of a brand or a platform, you have to acquire real estate with it. But our commitment would be to sell down the real estate as quickly as we could.

Great. Thanks very much for the question.

Sure.

Your next question comes from Patrick Scholes with SunTrust. Your line is open.

Good morning and thank you. First question for you on the good margin performance in light of your 1.6% RevPAR, we typically think, rule of thumb, you got to do 2.5% RevPAR to breakeven on the margins. You know is it fair to think the rest of the year that – so your breakeven might be closer to say 1% or was there perhaps something an anomaly maybe in total RevPAR or food and beverage in 1Q that made it not quite reflective of the rest of the year?

Yeah. Patrick, this is Pat. You're right. We had a wonderful margin performance in Q1 contributing not only to improved margins for our comparable owned and leased hotels, but also contributing significantly to our growth in incentive fees. And as I mentioned before, we have a very good process and discipline amongst our operations teams to drive improved productivity without impairing the customer experience. We have nice momentum there and the work is not done, it's hard to say exactly how that will flow through balance of year in relation to any particular quarter's RevPAR growth. But what we do know is that the work is not done. We have nice momentum and we're really pleased with the results. And as I said earlier, I remain bullish on our ability to achieve strong flow through on revenue gains.

Okay. Keep it up. Good luck. Thank you.

Thank you.

Your next question comes from Michael Bellisario with Baird. Your line is open. Michael J. Bellisario - Robert W. Baird & Co., Inc.: Good morning, everyone.

Good morning. Michael J. Bellisario - Robert W. Baird & Co., Inc.: Just wanted to circle back to your capital recycling comments, it's kind of a two part question here. One, are you more confident that you'll sell more hotels this year? And the second part is are you also not seeing reinvestment opportunities into new adjacent spaces or other brands as well not just on the asset acquisition side?

Yeah. So let me just make a couple of comments on the marketplace overall. First of all, I think as we have bid in the market we've – my expression historically has been we're always in the market on the buy-side and the sell side because it is the best way to stay current and be able to be responsive. And yes, we see demand for some of our assets. So, I guess what I would say is, we are actively engaged and we don't have anything to report or comment on at this time. But it is an environment in which we could see additional disposition opportunities arise. On the acquisition side, I would say it's been a period of more modest opportunity on the individual hotel front. And when I say individual hotel front, I mean individual hotels that we could rebrand. Obviously, that's the only thing that we could do or we would be interested in doing. Having said that, we are actively looking at a number of opportunities. None of them are advanced to a point where I could say that I believe they've moved into the likely category, but we're definitely actively looking at a few high-quality opportunities. And we're actively looking at some M&A opportunities. And, again, it's really too early to say. But overall, I would say that, as I've talked to brokers and looked at the marketplace and been actively engaged in looking, it's been – it's a relatively, I guess, more modest period in terms of availability of assets that we could buy. Michael J. Bellisario - Robert W. Baird & Co., Inc.: And just to clarify, when you said M&A, that's referring to assets or that's also brands and the adjacent spaces you'd look at, too?

Yeah. So the M&A that I'm referring to right now is primarily focused on hotel brands. Michael J. Bellisario - Robert W. Baird & Co., Inc.: Got it. That's helpful. Thank you for that.

Okay.

Your next question comes from Thomas Allen with Morgan Stanley. Your line is open. Thomas G. Allen - Morgan Stanley & Co. LLC: Hey. So, congrats on the strong unit growth and the acceleration there. Could we just dive in a little bit more on it? I noticed that in the quarter, if we look sequentially, it looked like managed and franchised unit growth actually expanded more than franchised growth and franchised growth has been stronger historically. So is that a change in trend or is that just – you touched on conversions so maybe that's it, just any more color would be helpful. Thank you.

I'll take an initial shot at this and Pat can add color. But as I look at the profile of our pipeline evolution and openings, we had expected that 2018 might be off of our prior trend line with respect to our total net rooms growth during the period. And that had more to do with just timing and sequencing of the opening of hotels, especially the select service properties. So, if you're seeing anything that doesn't look like a smooth curve, it might be related to the same dynamics that we reported on last quarter. I would say that the demand that we have seen, good activity in both management and franchise opportunities, it does not reflect a change or a shift in our philosophy or our strategy, that is to say we're pursuing both. And increasingly, we're pursuing both globally. Historically, if you looked at our franchising activities, it was really concentrated in the United States. But over the past several quarters, we've seen more opportunities arise in Europe, in South America, where we're about to open two magnificent Hyatt Centric properties in Lima and in Santiago with a group. These are franchised opportunities. And there are others that we are in contact with at this point for further growth there. And also in China, it's our first foray into franchising in China with Minyoun. So, I would say our commitment and our philosophy with respect to growth, that is both managed growth and franchised growth, remains that we are trying to identify great partners and great opportunities and grow that way. So really no shift and no significant inflection point, I think the demand that we've seen over the course of this year has led us to increase our guidance. And part of that has to do with the fact that we've had some conversion opportunities already present themselves, but also additional conversion opportunities on which we're working, which have not been signed yet, so they are not technically in our pipeline, but they do factor into how we think about net rooms growth and our pipeline growth over the course of the year.

And to add to what Mark has said, definitely no change in development strategy, but certainly as we think about the composition of our pipeline today and how that is going to evolve going forward, that pipeline will be more heavily weighted toward select service, more heavily weighted to international and more heavily weighted to franchised. Thomas G. Allen - Morgan Stanley & Co. LLC: Helpful. Thank you. And then, are you prepared to say how quarter to-date or April RevPAR has been going?

No. I don't think we'll make any commentary about that at this point, but like I said, I think if you look back the two quarter run that I described earlier with respect to group activity was really encouraging to us. So, but we're not going to really make any commentary with respect to the current quarter.

The only thing I would say is that we do expect, I think as you would expect, that the Easter timing headwind that impacted Q1 becomes a tailwind in Q2. Thomas G. Allen - Morgan Stanley & Co. LLC: Perfect. I thought it was worth a shot. Thank you.

Your next question comes from Carlo Santarelli with Deutsche bank. Your line is open.

Hey, guys. Thank you. If you could, in terms of your RevPAR guidance, looks like 75 basis points obviously midpoint to midpoint was the improvement, but based on the comments earlier and assuming the midpoint of your prior guidance, you can get closer to 150 basis points of kind of RevPAR favorable revisions. How much of that revision is kind of the in the year for the year group that you spoke about earlier, the 1Q upside and the transient impact, if you could kind of compartmentalize each of those three pieces and talk about like how each maybe influenced the RevPAR boost?

Yeah, thank you, Carlo. It's really difficult to parse the increase in that fashion. Certainly everything you've mentioned has contributed to our confidence that we will deliver a better full-year result than we had originally guided. However, as I mentioned in my prepared remarks, notwithstanding our optimism, our cautious optimism, for the year, we believe that it's prudent to be conservative with our guidance, given that we have nine months to go.

Understood. And then if I could just one quick follow up. If you think about 2018 and we think about the midpoint of your 2018 EBITDA guidance, what percentage at that point in the year do you anticipate will come from management franchise fees?

It's really tough to parse it that way. The way we've thought about it is that, we had a strong Q1, we believe those results account for roughly two thirds of the increase in the full-year midpoint with the other third coming from the improved RevPAR over the balance of the year. I would say a majority of that would be through fees, but I wouldn't be any more precise than that.

That's helpful. Thank you.

Thank you.

Your next question comes from Bill Crow with Raymond James. Your line is open. Bill A. Crow - Raymond James & Associates, Inc.: Thanks. Good morning, Mark and Pat. Most of my questions have been answered, but let me touch one more time on the capital deployment. You've had 75% of your $1.5 billion three-year target, disposition environment seems really favorable right now, I'm not sure it gets much better with the interest rate environment. How tempted are you or maybe The Street is certainly looking for an increase to that $1.5 billion target, is that something you can think about?

Thanks, Bill. As I said earlier and as we said in the prior calls, I think the – and we just want to remind everyone that we set the target where it is for some specific reasons. First, it's a meaningful reduction of the real estate base. Second, it is an opportunity to free up capital for investment and other opportunities, and therefore help us accelerate growth over time in the right ways. And third is something that we have high confidence we can execute in the timeframe. So, at this point, we don't have any plans to change the target. Bill A. Crow - Raymond James & Associates, Inc.: Okay.

The other thing I would say Bill is that an important – excuse me, an important governor in our thinking is the availability of reinvestment opportunities and what we – until we have better visibility to those opportunities, I would say we would hesitate to bring forward asset dispositions that would form part of that sell-down program. Because what we don't want to do is find ourselves with a lot of cash that we can't deploy toward growth opportunities, recognizing that as to use of proceeds, we're thinking about reinvestment in the growth of the business as well as return of capital to shareholders. Bill A. Crow - Raymond James & Associates, Inc.: Okay. Thanks, Pat. Let me just ask a question about China if I could, which is, you spent a lot of time in talking about your China strategy and growth and I think the lodging companies all sold off when we started talking about trade wars and tariffs and that sort of thing. How do you assess the risks of operating in China in today's environment? Is there any sense of nationalism over there that might take Chinese residents away from U.S. based brands? I mean, just give us a little flavor for the dynamics that you're thinking about and seeing over there?

Well, thanks for that. I think the fact is that a lot of what we do in China is in segments that are not proliferated by local Chinese brands. If you go down the chain scale, you'd find a lot more competition at the mid-scale level and below that. We're with directly head-to-head with Chinese brands; that is where you'd see a lot of additional competitive companies that are Chinese domicile companies. So part of that dynamic is that we are a reputable and a good operator within the country. We've had a long history in the country, a very long history in the country and we've got a very, very strong group of partners that is developers and owners that in some cases are state-owned enterprises and/or companies that have significant investments in them from the government. So, I would say that we're well-positioned with respect to both our developer base, our reputation and our position. And as we look forward in terms of the segments that we're currently in, we believe that we have a real sweet spot in our select service portfolio, because the reputation and cache that the Hyatt brand is associated with gives us some pricing power. In hotel developments where I'm talking about ADR pricing power, the hotel developments that are at a more modest level than a lot of the luxury and full service hotels that we have built in in the past. So, I really feel like we've got a big significant opportunity there, but it's not head-to-head with a very proliferated extremely competitive mid-scale and economy segment. Bill A. Crow - Raymond James & Associates, Inc.: All right. Thank you.

Okay.

At this time, I'll turn the call over to Mr. O'Bryan. [0CPPRG-E Brad O'Bryan]: Great, thank you, Denise. And thank you to everybody for joining us today and we look forward to talking to you soon. Goodbye.