Good morning, and welcome to the Hilton Worldwide Holdings' Fourth Quarter and Full Year 2015 Earnings Conference Call. Please note that today's conference call is being recorded. I will now turn the call over to Mr. Christian Charnaux, Vice President of Investor Relations. Sir, you may begin.

Thank you, Denise. Welcome to the Hilton Worldwide fourth quarter and full year 2015 earnings call. Before we begin, we would like to remind you that our discussions this morning will include forward-looking statements. Actual results could differ materially from those indicated in the forward-looking statements and forward-looking statements made today are effective only as of today. We undertake no obligation to publicly update or revise these statements. For a discussion of some of the factors that could cause actual results to differ, please see the Risk Factors section of our recently filed Form 10-K. In addition, we will refer to certain non-GAAP financial measures on this call. You can find reconciliations of non-GAAP to GAAP financial measures discussed in today's call in our earnings press release and on our website at www.hiltonworldwide.com. This morning, Chris Nassetta, our President and Chief Executive Officer, will provide an overview of the current operating environment and the company's outlook. Kevin Jacobs, our Executive Vice President and Chief Financial Officer, will then review our fourth quarter and full year results and provide greater details on our expectations for the year ahead. Following their remarks, we will be available to respond to your questions. With that, I'm pleased to turn the call over to Chris.

Thanks, Christian. Good morning, everyone, and thanks for joining us today. We're happy to kick off what should be an exciting year for Hilton Worldwide with our tremendous development momentum, new distribution initiatives supported by our largest marketing campaign ever as well as the planned spins of our real estate and timeshare businesses announced this morning. We think we're well positioned to drive value for guests, hotel owners, and shareholders alike. While we're confident in our ability to deliver industry-leading value over the long-term, we do realize that shorter-term macro concerns are weighing on sentiment. Despite increased uncertainty, we remained optimistic that 2016 fundamentals will continue to support top line growth. As we noted on our last earnings call, corporate transient demand began weakening in October and those trends continued throughout the quarter and into this year. Corporate transient performance in the U.S. did diverge in the quarter with oil and gas markets seeing declines, while non-oil and gas markets continued to be up in the mid-single-digits. Going forward, we expect corporate transient volume to remain highly correlated with the GDP and non-residential fixed investment, both forecast to grow this year modestly lower than last. Furthermore, corporate negotiated rates as well as group position are both up in the mid-single-digits this year, providing a good setup for continued growth. When coupled with supply growth that continues to run well below long-term averages, we believe, we are poised for solid RevPAR growth in 2016. As a result, we expect system-wide full year 2016 comp RevPAR growth between 3% to 5% with rate expected to account for 90% of that growth. This same-store growth coupled with accelerating net unit growth should drive high-single-digit adjusted EBITDA growth in 2016. Fueled by the strength of our 12 clearly-defined market-leading brands, we opened approximately 50,000…

Thanks, Chris, and good morning, everyone. Our results for the year were quite strong with system-wide comparable RevPAR growing 5.4% on a currency neutral basis. Rate gains accounted for two-thirds of full year RevPAR growth. Adjusted EBITDA exceeded the high-end of our guidance at $2.879 billion, a year-over-year increase of 13% with margins increasing 290 basis points. Turning to our fourth quarter results, overall performance came in largely as expected, although, lower growth in corporate transient demand, particularly in focused service hotels, drove modestly lower than anticipated top line growth. System-wide comparable RevPAR grew 3.7% on a currency neutral basis. We saw a particular weakness in oil and gas markets, which we estimate adversely impacted system-wide RevPAR growth by 50 basis points in the quarter. Solid results in leisure helped quarterly performance as RevPAR increased more than 5%, driven by both occupancy and rate gains. Strong growth in BAR and leisure group business, where revenue was up 7% and 6%, respectively, in our Americas full service portfolio also boosted results. In spite of lower top line growth, adjusted EBITDA in the quarter increased to $745 million, exceeding the high-end of our guidance range. The beat was primarily driven by better than expected corporate and other segment results, franchise sales, and some one-time items. For the quarter, system-wide adjusted EBITDA margins increased to solid 230 basis points versus the prior period to 41.4%. Diluted earnings per share adjusted for special items increased 29% in the quarter to $0.22 at the midpoint of our guidance range with an incremental $0.02 of negative headwind from FX. Now turning to our segments. Management and franchise fees totaled $428 million in the quarter, representing a 12% year-over-year increase, which meaningfully exceeded our guidance range. This strong performance was driven by better than expected franchise sales…

Thank you, sir. We will now begin the question-and-answer session. And your first question will be Harry Curtis of Nomura. Please go ahead.

Good morning, everybody.

Good morning, Harry.

First, I just wanted to compliment you on receiving your PLR, I'm not sure investors really appreciate how tough it was to get it.

Thank you.

Just kind of a two-part, one question, if I can get away with that. First of all, you've been contemplating the spin for a while and I'm curious if there are – if the spin allows the separate companies to undertake growth strategies that they've not done before that would add value. And then turning to Blackstone, there are some concerns that they would have to take their ownership stake down to accomplish the spin. Can you give us some insight into whether or not that has to happen?

Yeah, happy to, on both fronts. As Kevin said, we're going to provide a heck of a lot more detail when we file our Form 10s to give everybody a really good sense about these companies. But I'm happy to give some directional sort of guidance on that. I'd say, the way to look at all three of these companies is – and the reason for – in part, for the separation of these companies, is to, of course, have dedicated management teams and allow for dedicated investor bases. It's, obviously, to create capital markets and cost of capital efficiencies. We're doing this to create tax efficiencies. And, last but not least, we're doing it to be able to activate all three businesses fully. When we think about activating it, to your specific question, I think that means both organic and inorganic growth. And so, I think the way to look at each of these businesses is that they are going to be setup to be the leaders in each of their segments and to be able to do everything that they need to do to be successful and grow long-term value. If that includes inorganic opportunities, then they certainly will have the capability to pursue those. On the BX question, that I know has come up a lot of times, we do – BX does not need to sell down in order for us to complete the transactions in the timeframes that we've talked about.

And the follow-up question would be, there has been some discussion about tax efficiency. Would that be impacted at all by them not selling down?

No.

Okay. Very good. Thanks very much.

Our next question will come from Felicia Hendrix of Barclays. Please go ahead.

Hi, we get one question, right?

Well, Harry, I guess padded his a little bit (22:33).

(22:33) So I don't know where we're going with this.

All bets are off.

Let's start with one.

Look, I know you guys can't talk a lot about the transaction. I'm going to ask one. Just, could you just help us think about the capital structure? Would you expect to refinance the debt that's associated with owned real estate and are there any mandatory payments that are going to have to be made because of the transaction?

Here's the way I think about it on the capital structure. Again, we're going to give you great amount of detail when we file our Form-10. There are no material financings required to get all of this done as I think we've talked about on prior calls. When we went public – just prior to going public, when we put the debt in place and we had the real estate related debt or the CMBS debt, we set it up to be portable. So it is portable and we can move the debt over. We may, opportunistically, enter those markets because we can improve the situation and have an even stronger balance sheet, but we don't need to do it. So I think the way to think about it is, we may if the markets are attractive during the timeframe between now and when we execute on the spins, we may in fact enter those markets. But there's no major financings required in order to get it done.

And, no mandatory payments.

And, no mandatory payments.

And, no mandatory payments, excuse me. Yes.

And, do these planned spins off impact your ability to begin share repurchases this year?

Not in a material way. I'd say giving you a little bit of color on that, in order to get the transactions done, we will, by definition, have one-time costs. There will be friction that we've talked about on a number of occasions on prior calls in terms of operating three companies instead of one. The net effect of those things is a small amount of incremental leverage if you just do the math. We maintain our desire to want to be in low-grade investment grade, and ultimately within the OpCo business. And, that is, we've said sort of low- to mid-3s, I think really in the lower-3s. The effect of having a small amount of incremental debt means that it takes a little bit longer to get there. But, let me – we had been talking sort of mid-year-ish, I think, directionally. I think it means that we'll be in the second half of the year. But, we still have every expectation that we will begin – even with the spins, we will be able to begin a buyback program at some point later in this year. Obviously, we have a lot of moving parts at the moment. When you're taking a 100-year-old – nearly 100-year-old company and breaking it into three pieces, there is all sorts of things structurally that are going on. So, we want to get a little bit further down the line. But, it would be our intention and I think our credit even with a very small amount of incremental leverage associated with doing the spins. Our credit will be where we would want it to be in the second half of this year.

So, it sounds like both no financial gating factors, but also no regulatory gating factors.

That is correct.

Okay, great. Thank you.

The next question will come from Joe Greff of JPMorgan. Please go ahead.

Good morning, everybody.

Good morning, Joe.

Chris, have you determined who's going to be running the REIT, who's going to be running the OpCo and presumably the timeshare guys will be running the timeshare business?

Yeah. That's a really good question. And the answer is, you're pretty much directionally right. We have – at HGV, we have an amazing leader in Mark Wang, who will become the CEO of that business. That business is reasonably self-contained. Mark has been running it. He's a 30-year veteran of the business, in my opinion, strong opinion, the best guy in that business and I think has been and will continue to be a great leader of that business. On the real estate REIT side, we are considering various options at various levels that involve both internal and external candidates. And, hopefully, somewhere around the time of the filings or just thereafter, we'll be able to give you a little bit more clarity. Let me be clear, our objective is really simple, we want the best in all three businesses, we want to have the best management teams in the business, and we want each of these businesses to be the clear leaders in their business. And so, that will be sort of the philosophy as we build our teams.

Great. And the REIT that will have the roughly 35,000 rooms, how much of EBITDA is associated with those 35,000 rooms?

We will give you that in our Form 10. I know you're going to get tired of hearing me say that. But we'll give all of that disclosure when we file.

Great. Thanks, guys. I appreciate it.

Okay.

The next question will come from Carlo Santarelli of Deutsche Bank. Please go ahead.

Hey, everyone. Good morning.

Hey, Carlo.

If I may, I'd like to ask a little bit about the management franchise guidance for 2016. You guys are, obviously, guiding your fees 7% to 9%, RevPAR growth 3% to 5%, with unit growth kind of in the 6.5%, 7.5% range, is the entire delta there just primarily FX or other – some other things that maybe we should be aware of?

There is a – Carlo, it's Kevin – there is a little bit of FX, but then also if you look at 2015 we had a couple of, I wouldn't even refer to them as one-time, I'd refer to them as more timing items that caused 2015 to come in a lot higher than we thought at 15% in that segment. So we're lapping those comps a little bit. So that's all it is.

Okay. So more of a smoothing over the two year then?

Correct.

Okay. And then if I could just follow up a little bit on what you guys are seeing, specifically, in the leisure segment with respect to more kind of current environment pricing ability and the ability to drive rate, would you guys be able to provide some color on that?

Yeah, I mean, I think the way to think of that business as you're seeing pockets – there are areas that have been a little bit weaker and that's really been IBT, individual business traveler segment has been weak for the reasons that we articulated in the prepared comments and that I know everybody has been talking about. BAR has been quite strong. So that would be sort of the negotiated corporate business. BAR, best available rate, which is the non-negotiated, has actually continued to be quite strong. Leisure up in the low- to mid-single-digits. Leisure has been up in sort of the mid-single-digit. So maintaining strength. And group has been reasonably strong. And as we mentioned briefly in the prepared comments, the group pace has been good at the end of last year and into the beginning of this year and the group position for the year is up in the mid-single digits. So all feeling pretty good. What sort of weighing – I think what's weighing on the IBT business is a bunch of different factors, I think largely it's a little bit – it's, obviously, a bit of a slowdown in the broader economy, but it has a lot to do if you really delve into the numbers with the energy markets, which are not just Houston and Dallas and the Southwest. And those markets, you've seen a clear – as I described in my comments, a clear bifurcation where those markets are down. If you look at IBT or business broadly, transient business everywhere else, it's still up. But when you put it all together, which is the economy, what you're seeing is sort of lower-single-digit growth in IBT still positive, so not to be a Pollyanna, but still positive. And then, you're weighting up overall performance, because of group, BAR, and leisure.

Great. That's helpful. Thank you very much.

Our next question will come from Shaun Kelley of Bank of America Merrill Lynch. Please go ahead.

Great. Good morning and thank you guys. So, Chris, you probably know the REIT business as well as just about everyone out there as well. And I just wanted to get your thoughts on the, kind of, general view on kind of capital market receptivity to a new, let's call it, largely full service REIT and how you think this is going to fit into the broader landscape of the lodging REIT community?

Yeah, I mean, that's really I should ask you guys that I do have some vague memories of the REIT world from my prior life, but I've tried to expunge all of those, just kidding of course, no. You guys could judge that better than I could. I think what we're doing is really I think setting up a company that's – that has terrific assets. We've been very thoughtful including when we did the Waldorf sale and took $2 billion and did a 1031 into a bunch of assets, and thinking – forward thinking about how do we build a portfolio that is in the best strongest markets with the best growth profile with really high-quality assets that – where we've spent money and maintained the assets, and that are associated with brands that are the market-leading brands. So when I think about it, our objective is to put this company out there to be a market-leading company both in terms of the assets that it has and the strategy that it has that I think ultimately is to not only drive same-store growth at the high-end of the market, but to be sort of in a fulsome way the best REIT in the business. From my experience being running a REIT really well involves three basic things. It involves managing a balance sheet, it involves being really good at asset management, and it involves being a great capital allocator. And great capital allocator means knowing when to buy, knowing when to sell, there's times to do both of those things, there's times not to be doing those things. What we're trying to do is both build a portfolio out of the blocks that has great diversification, brand representation, market representation, and growth profile, and a management team that is the best of the best at understanding those three components of the business, so that we both drive same-store growth rates. But we also, through capital allocation at the right times in the right ways, can create a significant amount of value. So that's the objective. I think, as a result of that, I would hope that ultimately the markets will decide that there will be a great level of receptivity to a company that will be a very large cap, ultimately, as a result, liquid stock that is going to go out in the market and be really intelligent sort of focusing on those three pillars of what it takes to be successful from my experience in that world.

Thank you. Thank you for that. And just as a quick follow-up, but we've got a couple of questions from investors about how to think about incremental SG&A at the two businesses. So I don't know if you could give us a little bit of color or thoughts about how we might think about that?

I know you're – I said you're going to be tired of hear me say this. We'll give you a lot of color on that when we do our filings. I mean you can triangulate off of things that are out there. I mean, I think, in a very high level, I'd say the timeshare business is other than sort of public company related costs relatively self-contained already, real estate business not as much. So you can look at what others are spending out there and you can scale it. This is going to be the second – probably the – clearly, the second largest. I mean you can do some basic math and not to be evasive. We're still refining those numbers and, at the time, we do the filing, we'll obviously give you some more clarity. But I think you can do a pretty good job directionally by looking at what exists in the marketplace.

Thank you very much.

Yeah. Thanks, Shaun.

The next question will come from Steven Kent of Goldman Sachs. Please go ahead.

Hi. Two questions. It goes a little bit to what Shaun was saying. You provide intersegment adjustments to get to your adjusted EBITDA by segment. So timeshare fee $45 million, owned fee of about $130 million that are added to managed and franchised EBITDA. Are these the intersegment fees that the independent companies would ultimately pay to each other, or would there be a step-up? And then, to truly talk about an operating issue, which is Tru, is there any fear that Tru would start to compete with demand for Hampton Inn, especially from developers. How are those two brands differentiated?

On the first – thanks, Steve – on the first one, that's – you're right to sort of – I know you guys are trying to model and trying to figure it out, and we're really not trying, even though it seems like we are, to be evasive. But, we will provide that kind of detail when we file the Form 10s. I think the way to think about, here's how I'd think about the fees and those two give you some directional guidance. On the timeshare side, there is sort of a market that is formed for essentially a master license arrangement between a brand and timeshare company. So, I think you should think a little bit that we have something in place to probably directionally consistent with the market, and we're going to follow the market. On the real estate REIT side, similar sort of approach which is obviously, we're going to have very long-tenure agreements. These are really important assets to the operating company, because these are bellwether assets. In terms of economic terms, I think these will be a market-based kind of economics. Some – whether there will be adjustments or not, we'll clarify. But, I think the way to think about is long-tenure but economics that are market-based. On Tru, the answer is no. I mean there is always a little bit of sort of cannibalization that goes on around the edges with all the brands. But, I'll tell you the biggest – the most positive reception that we've had on Tru has been from our Hampton owners. In fact, what we did is go out first really to our existing owners, we have not – with 163 deals that we've done, it's 100% existing owners, we have not opened it up to outsiders yet, and the very large majority of those people are Hampton owners. They love it, because they realize that it's a different product, different price point. So, frankly, most of the 163 deals that we have done are from Hampton owners that are – have been part of our process and are very, very supportive of it. So, I think this is intended to be something different. As I say – I can't say there's never overlap in any of these price points and brands, of course there is on occasion around the edges. But, you're talking about a 25% lower price point, different cost to build, really a different sort of product approach. So, we think this thing is going to do incredibly well, and that it's going to allow Hampton to continue to be incredibly successful at the same time.

Okay. Thank you.

Thanks, Steve.

The next question will come from David Loeb of Baird. Please go ahead.

I promise to only ask one, and not ask one about whether you're going to take more than one.

Thanks, David.

I want to ask actually – I want to ask about the cancellation fee trial. What did you learn and how will the results impact your revenue management strategies?

We learned a lot in that. And, we did it – let me – we did it in a really blunt force way intentionally to sort of see what customers' reactions were. And, I think what we learned is customers hated it, okay? But, not – that's not really surprising, we knew they would. And, but we did get some nuanced intel out of the experience. I think going from where we are, which is an industry that not just us but all players in the industry, are willing to tie up inventory essentially for a large part of the customer base at no cost, which sounds illogical, and is illogical, and going from there to what we were testing in one step, I think is very hard just because of consumers have been trained for so long around the model the way it exists. I think what it tells you, though, and what we've learned is that there are some serious – there is some real opportunities to change the way we go to market in overall pricing. So it's, as opposed to the test that was quite blunt force intentionally, so we could learn, I think what you will see us do and we're in the process of doing the work and doing other tests right now, is the different ways of pricing our products both for different customers, short, long lead, more and less flexibility. To some extent, not unlike what the airlines and other industries have done. So I think of this as what we want to do is make sure that on behalf of ourselves and our owners that, we're not tying up inventory unnecessarily without customers having to take any risk or have any cost, but we have to migrate a behavior from where it is to where we want it to be. And I think there's some really intelligent things that I think you'll see us start to do later this year to start to move customers down that journey of recognizing, yeah, if you want total flexibility, there is a price for that. And if you want a better price then you're going to have less flexibility. And there's a lots of ways we can sort of create boundaries around our pricing structures to be able to accomplish that and I think get to the same place with a little bit less of a brute force approach.

So, Chris, just to follow up on that, there is I think valid concern that in any pockets of weakness or in any broad-based weakness, the repricing engines are going to lead to a lot of cancel and rebook behavior. How will you battle that? Are the initiatives you're talking about enough to really (41:09)?

I think so. Yeah, I think so. You'll have to see and we'll have to see as we roll them out. But I think so, that with, I think a lot of people in the industry including us sort of changing our cancel policies to thwart some of the robo techno approaches to cancel and rebook that are going on. We've changed our policies. It used to be same day for everybody in the industry, now it's 24-hour. There are things that we can do and sort of extending that timeframe in addition to creating different types of pricing structures for more or less flexibility and I think the combination of those two things, David, if we're smart should accomplish the objective.

Great. Thank you.

Our next question will come from Thomas Allen of Morgan Stanley. Please go ahead.

Hey, good morning.

Good morning.

Hey, how are you? One of your peers last week said that their RevPAR in January was up, I believe, a touch over 3% and they expected February to be slightly better than that. Can you give us any similar color? Thank you.

Yeah. Similar, I mean we gave you our guidance of 2% to 4% for the quarter. January was basically 3%, very high 2%s, 3%. February, similar – similar, and we're hoping – January and February have seen transient trends in the mid-2%s. We do hope and are expecting March to have a bit of an uptick in the transient trends. So that's how we get to the 2% to 4%. But if you look at January and February, we're sort of running plus or minus 3%.

Helpful. Thanks. And then just in terms of 2016 U.S. RevPAR trend, you have a pretty diversified chain scale mix. How are you thinking about each chain scale? I mean, last year, you saw the inflection where the lower tier chain scales start to outperform the higher tier, but it sounded like in your prepared remarks there was some weakness in the fourth quarter and (43:22)?

Yeah. And I've been saying this I think for about a year or more – and we started to see it last year. I don't think you're going to see a huge divergence by the way, I mean this is one of things, when RevPAR starts growing at a little bit lower level, things do converge, the spreads converge on one another. But I do think you'll see higher end outperforming lower end a bit. And the reason, I'm sure, is obvious to you guys, that really the group side, right, because the higher – lower end doesn't have much group business, which, given group position, is stronger, lower end is much more transient in orientation. So, I would expect and I would say is natural at this point in the cycle from my experience in prior cycles that you'll see upscale and above upper upscale really and above outperform everything below, just for the group factor if nothing else.

Great. Thanks.

Our next question will come from Bill Crow of Raymond James. Please go ahead.

Good morning, guys.

Morning.

Chris, just a housekeeping question to start with. The timing of the filing of the Form 10?

Q2, where a lot of work going into it. We've done a ton of work. I'd hate to give an exact date, I mean we're – sometime in the second quarter, hopefully in the earlier part of the quarter than the later, but we'll see. It's a lot of moving parts coming together.

Okay. And then a two-parter, and I'll be done here, on capital. I think there is a perception among the REIT investors in particularly that maybe you're, I think, you called them bellwether assets, need a lot of CapEx. So could you comment on that? And then, as we've heard from other companies, there's certainly some challenges in the financing environment out there. Have you thought about whether you're going to increase your investment in unit growth through either increased key money, mezz loans, anything like that? That's it for me.

Okay. Yeah. I'm happy to cover both and Kevin may want to jump in, if I miss something. On the CapEx, on the big super tankers or broadly in the owned estate, we've invested a lot of money. And I think since 2007 and 2008, $2 billion into those assets. We've I think done a very good job of doing the core things. There was a lot of deferred maintenance in some of those assets just in terms of room renovations, basic meeting space, some of the public spaces. And we've done a ton of that work. So I would say, my view is from a – sort of what I think the market worries about at least what I hear and I think implied your question is, as there are a bunch of huge deferred maintenance; no, there is not. We've spent, I mean on average, probably 8% of revenues or more, 8% to 10% of revenues on those assets. Having said that, I do think there is lots of opportunities because we have been very focused on being capital-light. And so, as it relates to opportunities to invest in larger ROI or doing incremental investing that could drive returns, I mean not deferred maintenance but incremental to deferred maintenance that would drive even higher returns. Being perfectly honest, we have shied away from that, because even though that's a big part of the company, as a combined company that's just not – we're focused on the capital-light side of the business, we think investors want us focused on that. So we have not been deploying as much capital as we could have. So I do think there's plenty of upside opportunity for a separate company that is going to be in the capital intensive business, by its very…

Thanks, Chris.

The next question will come from Smedes Rose of Citi. Please go ahead.

Hi, thank you. I wanted to ask you a question just a little bit on your guidance. You note that cash available for debt reduction and capital return at $800 million to $1 billion for the year. And I was just wondering, is there anything going on there maybe with cash taxes or some – or working capital, I just – it just seemed at least relative to our numbers like a little bit lighter than what we were looking for? And I was curious if you could add a little color around that.

Yeah. Sure, Smedes, it's Kevin. I think not fully knowing what you're looking for and certainly Christian and Jill can take you through the modeling what you're doing. But I would say, relative to last year, we did $1.1 billion. And I think that you got to remember, we had a couple of capital transactions last year including one very large asset that we sold, that we used the entirety of those proceeds to pay down debt. So, if you look at it on a run rate basis, this year's free cash flow guidance range is higher than last year's. And that's how we think about.

Okay. And then you had mentioned in the quarter that your franchise fees or management fees were a little bit higher due to some franchising relicensing, I think. I was just wondering if you could isolate that piece in the fourth quarter.

No, I mean, it's just a – I mean, there are a couple of larger deals that happened in the fourth quarter and then it was just kind of volume, right. I mean, we're at – we're a pretty active part of the market for that sort of thing. So, we had good volume and we think we'll still have good volume this year; it's just some of the timing got pushed it into the fourth quarter versus the first quarter.

Okay. Thank you.

Our next question will come from Wes Golladay or RBC Capital Markets. Please go ahead.

Good morning, everyone.

Good morning.

Hey. When we look at Stop Clicking Around, I guess is that more U.S. focused marketing campaign? And what's the difference in rooms booked directly in the U.S. versus international?

That is a global campaign in fact, at least in my history and I think probably in the history of company since just before I got here we put the company back together. And this is the first time we've done a global campaign that is activated in all forms of media, it's activated with all of our team members around the world every hotel. There's not a hotel that you'll go in, in our system, in the world where you won't see Stop Clicking Around. There's not a team member that doesn't know about it. So, it is an all hands on deck Hilton Worldwide effort and will continue to be so. The ultimate objective is, as I stated, it's really – it's about having direct relationships with our customers why do we want that because we want them to have a – we want them to get the best value that they can get, get the best experience, and we obviously want to lower our distribution costs for both ourselves and our owners. We're a couple weeks into it. So it's – maybe we can give you some stats next quarter, it's early days, but so far off the charts, meaning, we've had the highest levels of HHonors enrollments in our history and we've had some pretty high enrollment periods. We were up 50% in enrollments last year, but we're setting new records. We've had the highest level of web activity that we've ever had on our websites, more downloads on our app than we've ever had, and historically high revenues coming booked through the app. So, it's working. I think people are getting the idea that the best value and the best experience is going to come through being an HHonors member and booking through our channels. So big and global and this will be a drumbeat you're going to continue to see. Obviously, a big burst at the beginning, but you're going to continue to see a drumbeat for a very long period of time.

Okay. Thank you. I look forward to the updates.

Our next question will come from Vince Ciepiel of Cleveland Research. Please go ahead.

Thanks. Most of mine have been answered, but just a quick one. I wanted to take a step back, and think about the fee business on a standalone basis. I know you have a relatively higher exposure to franchise fees versus some of your peers. So how should we think about kind of longer term fee growth trajectory of your fee business? And then also maybe the durability of your fee stream in various market conditions?

Again, I hate to retreat to, we'll give you more later but – we'll give you more later. No, we are going to, when we file our Form 10s, give individual analysis and strategic thinking about each of the businesses, and break it apart in a granular way, so that you can understand that. I think a couple of things that we've talked about, and so you'll get a lot of information. I think the way to think about our fee business is, it's got tremendous growth potential both same-store and obviously new unit growth, and new unit growth is easy. We're leading in organic new unit growth, and my job – our job is to continue to do that, and we expect that we will. So that's going to add to the profile of the growth. In terms of the existing fee base, I think it's in a really good place in terms of having tremendous upside potential at a much lower beta. And I say that because a large part of it, I think it's something like 70% of the existing fee business which you can see without further disclosure, is in the franchise space, which means we have tremendous growth potential in that, but it's a lower volatility fee stream. We also have opportunities to continue to move those fees up. We have – our sort of market level of fees on average is about 5.5 and growing on average and we are now only at 4.7. So, we have opportunities to continue to move those fees up on our management business. We do have incentive management fees and lots of upside potential there. We've been growing those obviously in the 15% to 20%, before FX and increasing. The way to think about our incentive management fees is, it's very different than some of our competitors, because, number one, it's a lesser part, so lower volatility, it's 10% of our overall fee base growing at a nice rate, and 80% of it is in the international arena and the very large bulk of those deals do not stand behind owner priorities which is quite different than I think some of our competitors, particularly in an environment where things might slowdown and you have cliffs that you go over where you go under an owner's priority and fees go from something to nothing. We don't really have that, almost all of our deals that we participate first dollar of profitability and there is no cliff. So I think, it's actually – again, we'll give more detail, I know I just threw out a bunch of stats and we'll be happy to work with folks at the appropriate time that model it. But I think the way to think about it is, between the structure of what we have same store, new unit growth, tremendous growth potential but a lower beta business at the same time than some of our competitors.

Great. Thanks. And then finally just, could you comment on the quarterly cadence of what you're seeing in your group bookings?

Yeah. I think – for the full year, I think, first quarter is strong, second quarter less so. I think it's first and third quarter strongest is my recollection, second quarter a little less, and fourth quarter is always – fourth quarter is a smaller quarter for the group side.

Great. Thanks.

Yes.

The next question will come from Robin Farley of UBS. Please go ahead.

Great. Thanks. I wanted to ask – I know that a lot of the detail is going to be in the filling. But when you look at properties that are going into the REIT versus those that aren't, I guess we had thought about maybe 80% of your owned and leased being – 80% of that being owned, but you're only putting in 70 properties of the 124 properties that are wholly owned and leased. Can you maybe sort of just give us some philosophy behind what's not going to go into – go in the REIT? And then....

Yeah. Yeah.

...also – go ahead.

No, that's a great question. And yes, I can give you some philosophical view and then we'll provide the granular detail. I think what we've tried to do, as I said, is set up every one of these companies for a success. So, what we've thought about is there are both structural issues, of course, with what goes where, but we've tried to set up the REIT in a way that will be appealing to the REIT investor base, which means that it is – wants to be largely U.S. domestic assets, which thankfully we have a lot of those. There is – there will be a small complement of international assets where it makes sense. But it will be a very small minority of the overall company. Where we've left assets in or going to leave assets in OpCo has to do with some international where having long-term control of those assets makes sense for OpCo because it's how it will control its tenure. And then leases, particularly the international leases, are largely if not entirely left in OpCo because that is, number one, doesn't really work or fit within a REIT; and number two, it is the means by which we control our tenure, given the structure of how those were set up in the international estate and we want to be able to control our tenure. So that's philosophically how we did it, set each company up for success, make it very attractive to REIT investors and allow OpCo to continue to control its destiny on certain assets, particularly leased assets that are controlled under those structures for the long term.

Yeah. And, Robin, I'd just add that, in terms of economics, this is factual that we've talked about before about the existing company is. Our top 10 assets are 50% of the EBITDA of the segment. Our top 20 assets are two-thirds of the EBITDA of the segment. So, no commentary on what's going to be in or out, but I think you can get a sense for the economics versus the asset split from those stats.

That's great. That's very helpful. Thanks. And if I could ask part two of my one question, as everyone is.

Sure.

Chris, you commented on the three things that are most important when running a REIT and one of them you talked about was the timing of whether – knowing whether it's time to buy or sell assets. So I guess I'd love to hear your view on whether you think right now it's time to buy or sell?

I actually would say right now is the time to probably do nothing, not to be trite about it. I think right now is the time – I do not think, with the uncertainty in the world, that it's a great time to go out and buy. I also don't think it's a particularly great time to sell, because the markets have really – capital markets for those kinds of transactions, debt markets, have slowed down. So there are times in the REIT world where the best thing to do is really hunker down and really drive the value of what you have. And if you're going to buy anything, I'd be buy what you know best, buy your own shares in an environment where they're significantly undervalued. I think now is one of those times.

Okay, great. That's very helpful. Thank you.

The next question will come from Rich Hightower of Evercore ISI. Please go ahead.

Hey, good morning, everyone. Just one question here. I want to hit on one of Chris' earlier comments in the prepared remarks about organic growth opportunities in the real estate portfolio and I think you answered part of the question in the CapEx discussion in terms of potentially pursuing ROI projects that haven't been done to-date. But also were there previously internal resource allocation questions or things like revenue management or group production that might be improved upon when the real estate portfolio is spun out separately?

I don't think specifically, but I would say this, we've certainly had, I think, a very full asset management approach to these assets and I think our operators have worked well with our asset managers to drive good results. I think reality is, if being – I told you my three pillars, asset management, managing the balance sheet, and capital allocation, have we dedicated as a big operating company where the thrust of our growth has really been in the management franchise segment, have we allocated capital or G&A, if you will, to having a super robust asset management team with every resource available? The truth of the matter is, no. That's not to say we, I think, have been irresponsible in any way, we haven't. We have allocated capital the way we thought we would get the greatest return. So said another way, I think there are opportunities as this company becomes independent and builds an even fuller asset management capability to drive better results. And we will be very pleased to be working with them as a partner, a long term partner to do that.

All right. Thanks, Chris. That's all from me.

Our next question will come from David Katz of Telsey Group. Please go ahead.

Hi, good morning, all.

Good morning.

I wanted to just ask about specifically the timeshare business, because you mentioned that as a free standing business, it can grow in a more natural way, and we've certainly observed what's happened when a competitor of yours spun-off theirs , and we've seen other entities start to grow? And I wonder how you think about that timeshare business as a competitive landscape? Is there a point at which those entities can compete with each other? And since the one question rule seems to have fallen by the wayside, I wanted to ask about the shared economy, and it's become an increasingly focused upon issue within branded hotel environments and how you envision something like that fitting into your business today and then in the three parts, all using the same brand, and I'm referring to the sort of Airbnb type model? Thank you.

All right. So, David, I'll take timeshare first and then probably hand it over to Chris for sharing economies. So, I think, the way we think about it is our timeshare business has been a really strongly performing business for a long period of time, its top line revenue has more than doubled since we've been here at the company since 2007. The way it's done that is it has transformed itself to a capital-light business. We've singed up 11 fee-for-service deals, and we've significantly built our inventory such that it's been effectively growing in good times and bad, it continued to grow through the Great Recession. So we don't think any of that changes, it's going to be set-up for success. I think what Chris referenced before is it may allocate capital in a slightly different way, and I think that what that's going to enable it to do is, at times when it makes sense to maybe lean in a little bit more on capital, whether that's buying back inventory or investing in new projects, it will have the ability to that, because it's going to have a shareholder base that thinks about capital allocation slightly differently. That said, I don't think it ever goes back to the way it was, when we got here where we were spending $0.5 billion a year building timeshare towers. We permanently transformed this business under Mark's leadership and with our capital allocation efforts to where it's set up for success and I don't think it's going to – we don't expect it to perform any differently out on its own than it has been with us other than maybe a little bit...

Yeah, I would say...

...a little bit higher tolerance for capital allocation.

And as a result, David, I'd say, we think that HGV can grow its bottom line a bit faster on its own than with us. Simply because, even though, Kevin is right, we are not going back, we are going to continue to lean in to being capital light. There is some, I think relatively modest incremental capital allocation that would be made to the business that, that investor base would understand and appreciate, that will help grow the bottom line a little bit faster. And those were investments that we did not want to make. We wanted to, again, be capital light. We did not – we wanted to allocate a minimum amount of capital to that or any capital intensive business as a consequence of having those businesses tied to the management franchise business. By delinking them, I think it allows them to allocate a little bit more capital and grow a little faster. And then on Airbnb, I mean, I certainly have answered the question. Exactly – I was trying to figure out exactly the tack. We talked about this quite extensively on the last call. Can you maybe refine the question a little more on what exactly you're asking?

Yeah. What are you doing today and what are you planning to – what strategies have you added since the last time you discussed or answered the question, in terms of evaluating that as a business and whether it belongs within your branded system or not?

Yeah. I don't think we talked that. I don't really have a different view than – David, than we talked about last time. I think Airbnb's a real business, I suspect going to be around a real long time. I do think it is satisfying, I mean, it's a business that frankly has been around for thousands of years, that is becoming very, very efficient. I do think it is meeting demand that customers want. I think it's a different product that they're delivering on than what we deliver on. And in the sense that it is generally longer stay, leisure, and value oriented. That is not generally what we do. I think we have lots of products, we take a physical product and wrap it in a lot of hospitality and in a lot of service which I think is very different. So I think there is ample opportunity, as I thought on the last call, for us to coexist. I think we believe that these are different businesses. There is overlap in our customer base. We don't see any material impact from it. I think testimonial to that is that the industry is at the highest levels of rates and occupancy that we've ever seen in history. So we certainly have not been suffering. There's no sort of scientific data that would say that we're suffering. I think there's plenty of opportunity for us to coexist for them to do what they do best and for us to do what we do best.

Thanks for taking my questions.

Yeah.

The next question will come from Patrick Scholes of SunTrust. Please go ahead.

Hi. How are you? One thing I was confused about just some of the assumptions that go into your 1Q RevPAR guidance of 2% to 4%. I want to clarify something. An earlier question you answered, you had said that for January and February you were currently tracking plus 3% for RevPAR, is that correct?

Yes.

Okay. I guess my confusion or where I'm not following is, we know that March is going to be a really tough comp month, how – what do you assume to get to the high-end of your RevPAR guidance or even your midpoint here because it seems a stretch in my opinion?

Yeah. I mean, we – I don't really know quite how to answer that in a sense that we've said it's 2% to 4%, so we think we're going to be in the range of 2% to 4%. We've been running 3%, maybe a slight bit less than that. We do think transient trends are going to be a little bit stronger in March based on the booking trends that we see right now and I would say we feel good about being within that range. Exactly where we'll be, we'll obviously come back and report after the fact.

Okay. Fair enough. Thank you.

Okay.

Thank you. And with no further questions, I'd like to turn the conference back over to Chris Nassetta, President and Chief Executive Officer, for any additional or closing remarks.

Well, we've probably taken enough of your time today. So, I'll just say thank you for spending the time with us. As I started out by saying I think we're going to have an exciting year in 2016. We still feel good about where our fundamentals are. We're very excited about the momentum we have in the development side of the business that add to our growth. The spins are going to – are complicated, but I think long-term we're going to create a tremendous amount of value. We'll look forward to telling you what's going on in the operating environment when we get together next and we'll look forward to giving you lots more detail on our Form 10, which I know based on all the questions everybody is interested in getting here in the not too distant future. So again, thanks for the time today.

Ladies and gentlemen, the conference has now concluded. Thank you for attending today's presentation. You may now disconnect your lines.