Good morning, and welcome to Hilton Worldwide Holdings First Quarter 2014 Earnings Conference Call. [Operator Instructions] I will now turn the call over to Mr. Christian Charnaux, Vice President of Investor Relations. You may begin, Mr. Charnaux.

Thank you, Sharon. Welcome to the Hilton Worldwide first quarter 2014 earnings call. Before we begin, we'd like remind you that our discussion 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. The factors that could cause actual results to differ are discussed in our SEC filings. You can find a reconciliation of the non-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 our first quarter results and will describe the current operating environment, as well as the outlook for the remainder of 2014. Kevin Jacobs, our Executive Vice President and Chief Financial Officer, will then provide greater detail on our results and outlook. Following their remarks, we will be available to respond to your questions. With that, I am pleased to turn the call over to Chris.

Thanks, Christian, and good morning, everyone. And thanks for joining us today. Disciplined execution are the core strategies that we discussed on our last call and a clear focus on delivering long-term value for shareholders has resulted in another great quarter for the company. Strong top line revenue growth, flow-through and timeshare performance led to results that significantly exceeded our expectation. And as a result, we've raised our RevPAR, EPS and adjusted EBITDA guidance for the year. Clearly, we continue to feel really good about the fundamentals of the business and our outlook for the remainder of the year. I'll spend a few minutes talking about that in just a bit. First, let's talk more specifically about the first quarter results. Our system-wide comp RevPAR growth for the quarter was 6.6% on a currency neutral basis, driven by a 3.6% increase in average rate and a 1.9 percentage point increase in occupancy. In the quarter, we saw strong growth in both the group and transient segments. In fact, for the first time in many quarters, system-wide group revenue growth in Q1 outpaced transient revenue growth. Consistent with our view that we're at the midpoint of the cycle, group business continues to build with system-wide group revenue growth in the quarter of 7.4% year-over-year. We're also starting to see meaningful increases in group ancillary spend, especially food and beverage. Banqueting revenue was up over 12% in our U.S. owned and managed hotels. And in our Big 8 hotels, group F&B spend per occupied room was up nearly 30% in the quarter and 13% in our U.S.-owned and managed hotels. This helped drive an overall increase in food and beverage revenue of almost 10% over the same time period in our U.S. owned and managed hotels. Transient revenue growth remained strong as…

Thanks, Chris, and good morning, everyone. As Chris mentioned, we are very pleased with our results for the first quarter, which exceeded our expectations. For the first quarter of 2014, diluted earnings per share, adjusted for special items, totaled $0.13, ahead of our guidance of $0.08 to $0.10. Special items that have been adjusted in our first quarter results are related to share-based compensation expenses in connection with our IPO last December. Total management and franchise fees were $331 million in the first quarter, an increase of 17% over the first quarter of 2013, driven by top line growth, new units and non-comp base fees. Franchise fees, in particular, exceeded our expectations, largely due to strong performance among our focused-service hotels in the United States. As new units enter the system and existing contracts roll over to our published franchise rates, our system-wide effective franchise rate continues to increase, now at 4.6% for the quarter. In our ownership segment, adjusted EBITDA for the first quarter of 2014 of $179 million was 13% higher year-over-year, adjusted for a onetime gain on a lease we were bought out of in the first quarter of last year and a non-comp increase in affiliate fees. This performance was driven by segment adjusted EBITDA margin growth of 172 basis points adjusted on the same basis, as well as comparable year-over-year RevPAR growth of 5.1%. Our timeshare segment first quarter EBITDA -- adjusted EBITDA, excuse me, of $85 million was 44% better than the prior year, driven by transient rental, lower corporate support costs, favorable timing from the recognition of revenue and favorable adjustments in expected sale prices. Although a portion of this performance benefited from favorable timing, the segment results this quarter speak to the underlying strength of our timeshare business. Corporate expense and other…

[Operator Instructions] Your first question comes from Harry Curtis from Nomura.

Those are really strong results for the first of the year. And I'm wondering, Chris, you talked about them continuing into the second half. What kind of data do you have that might give you confidence that the strength actually should last further into 2015?

Yes. Great question. And I think I said a couple times, we remain very optimistic because I think we do, and I do, and that is really based on, I mean, look at the overall business and the biggest segments, transient strength that we saw in the first quarter, that we continue to see in the second quarter. And based on everything we see, sort of going on economically in our biggest markets, we think will continue and that's matched with significant upticks and what -- in the group's phases. I mentioned in my prepared comments, for the first quarter in a long time, we saw system-wide group revenues growing faster than transient. Not that transient was bad. Transient were quite good. It's just group is picking up steam, which gives us confidence. If you look at our big hotels in the second half of the year, they're up nearly 20% in terms of position on the group side so it gives us a great deal of confidence. Along with the fact that we are starting to see, in part because of where we are in the cycle, in part because of some real hard work that our sales force is doing, we're starting to see the benefits of the ancillary spend focus and increases there. So it feels like the business is really hitting on all cylinders and sort of playing out the way we had thought it would. And we great about what's going to play out the rest of the year. Obviously, we hope we will and think we will continue to outperform.

Okay, and then -- that's great. And the second question is on the call, you mentioned you've got 2 new brands coming. Can you talk about what segment of the market they'll address and do you need much CapEx to launch the brands?

Yes. On the first -- let me be clear, because I know a lot people asked that question. We do not think we need any real care [ph] . We don't intend to build in any of our new brands, any of this, on our balance sheet. We have a terrific group of owners, 10,000 owner relationships around the world, that are dying to do more with us because I think they believe in the strength of our brands and the market share of our brands and we're driving great profitability for them. And so in the 2 brands that I will briefly describe that we're working, we do not intend to do any of the building on our -- on our balance sheet and we do think we will be able to grow these at a very nice clip. The 2 brands are -- first, the one that will probably come first, I'd describe as a brand that will be a 4-plus-star brand that will aggregate iconic urban and resort hotels that don't really fit in the box of the specified standards of any of our other brands. What we find is increasingly, some of our existing customers, as well as other customers that we want to attain, are interested in those types of locations and staying in these kind of unique iconic hotels, and we think we can better serve our customers by offering that type of product. It often offers us a great way to serve them better, but also grow the company at a faster pace because not only will it not require CapEx, but it is very conversion-friendly as a brand. The second brand, which we've talked a lot about, is Lifestyle. And we -- I think, by the way, the first brand is probably…

Your next question comes from Carlo Santarelli from Deutsche Bank.

I have 2 questions. First, I just wanted to touch on some of the New York impact that you guys are seeing, clearly not manifesting in the numbers here. But have the market-wide New York results given you guys any pause with respect to your guidance, as you look towards the back half of this year?

No. I mean, New York -- New York was impacted in the first quarter, and pretty soft, I'd say. It's really impacted by 3 things. One that a lot of people have talked about is supply. New York does have more supply than, frankly, any of the other major markets. But that was compounded, and I think what was more impactful was the year-over-year impact on the Superstorm Sandy business and then weather, of course, we're at the northeast corridor, but New York was particularly hard hit. So we think New York was softer we think in the first quarter than it will be for the remainder of the year. But it will probably, as a result of some of the supply issues, be a little bit softer overall than some of the other markets that are growing faster in the U.S. Long term, we think New York is going to be fantastic as it always is. The demand levels are growing and we think, over time, very easily absorb this new supply. And to get to the specific answer, we do not -- it doesn't -- I mean, we have factored that into all of our thinking in terms of our guidance. And we do not see a meaningful risk related to New York and the guidance we're giving you.

And then just one follow-up. If you, obviously, look at where you guided 1Q and what you ultimately delivered in the 1Q, and I know some of which was trucked up to timing and some corporate expense. But when you think about the back half of the year and the raise of overall guidance, it looks as though there could be a bit of conservatism in there. Is there anything that I could potentially be missing?

No, I think you got it right. We essentially flow through the beat for the first quarter in the increase in our guidance. We were -- we beat the midpoint by about $53 million. We increased guidance, the midpoint, by $40 million. Plus or minus $13 million of that was sort of timing within the year. So we flow through the full amount of the beat that wasn't timing, which we feel comfortable with. And that implies, as you've suggested, that we maintain the rest of the year. We feel comfortable that frankly, there probably is a bit of conservatism built into that. We would certainly hope we would do better.

Your next question comes from Robin Farley from UBS.

So first is a follow-up on your comment about the second brand that you may launch this summer, is that more of kind of a subtitle where you're just kind of putting hotels that are not currently in your system in there, rather than actually any sort of rebranding of those hotels or managing those hotels?

No, it is -- it is -- let's not say there -- that there may be opportunities to rebrand parts of our portfolio, but I think that is -- that would be very modest. Both the brands are focused on new units that are not in the system. So again, there may be very small amounts of things that can move around over time. But the deals that we are working on, and we are working on a meaningful number of deals in both new brands, are new units outside of our system. Some newbuilds, particularly with Lifestyle, but a significant number of conversions.

And then for my second question just looking at the guidance raise, how EBITDA's raised more than the RevPAR's raised and fee growth is unchanged, but EBITDA up. Is that -- what's been primarily the driver there? Is it some kind of owned property margins, or what should we think as the biggest trends?

Yes, it's a little bit of flow-through. Basically, margin's better all around, a little bit of revenue, a little bit of margin, little bit of time share.

Right. And some in fees, Robin, obviously the fee...

There are some in fees...

The 10% to 12% is a wide range in fees, right? So we feel better about fees, but not quite better enough just yet to raise it to 11% to 13%.

Your next question comes from Steven Kent from Goldman Sachs.

A couple of questions. First, on timeshare, the sales were up 13%, very strong in the first quarter. Can you just give us a sense for how much of those are coming from your asset-light strategy, and how much more growth opportunities do you have there? And then the G&A costs even after adjusting for onetime benefits, they were lower than we were forecasting. And I think you've done a very good job on there. Can you just give us a sense for where that goes over the next couple of years? Does it -- does G&A flatten out? Or does it have to grow as you increase some of these brands, the number of brands?

Sure. On the first, I think it's simple. In the first quarter, we were a little less than 60% of our sales were in the asset-light. If you look at all of 2013, I think we're around 50%. So it ticked up in the first quarter. It will bounce around a little bit depending on what inventory's getting sold when. But if you just look at the trajectory, 80% of the existing inventory, which is roughly 5 years of inventory that we have is capital-light. So over time, that number should be growing. Naturally, as a result of most of our inventory -- the majority of our inventory being capital-light inventory. On the G&A side, thank you for your comment. Yes, we -- we're actually quite proud of the fact that we're very efficient in the G&A side of things. I think part of what even netting out for the comp stuff that you're seeing is there are some timing things going on in the first quarter that allowed it to be even better than what you might have been forecasting. Some of those things, obviously as the year plays out, will reverse themselves and occur in different quarters. Having said that, we, as I said, are very proud of the fact that we are very focused, very lean and mean in terms of our cost structure. We are not going to lose our cost discipline. As Kevin described, we said we'd have a 3% to 5% increase in G&A and other year-over-year. That's incorporating public company costs. Our objective would be to be in that same sort of range. Next year, they're even including the incremental step up in public company costs. So we do have, as you know being public, requires certain cost structures in the accounting and the legal and tax as well as having public company compensation, which in our case is flowing through and impacting is being taken out of our EBITDA. So when you factor for those things, we will have some increases, but we believe are very modest increases.

Your next question comes from Bill Crow from Raymond James. William A. Crow - Raymond James & Associates, Inc., Research Division: It really was a good quarter, so it might be a little bit nitpicking here. But as I look at owned hotel RevPAR growth of 5.7% and I look at owned hotel revenue growth of 3%-ish. You got some FX drag, and from what we gather, maybe the joint venture hotels delivered very good results, which did not flow through to revenue in that line item. But my question is what, do the Big 8 hotels do in the quarter? You mentioned the food and beverage and outside-the-room spend. But what was the RevPAR growth of the Big 8?

Big 8 RevPAR growth was 5.1%, I think, and revenue growth was, I think, a little bit better than that. William A. Crow - Raymond James & Associates, Inc., Research Division: Is 5.1%, are you surprised at all with that, given the shift in the holidays and the way the group is ramping up...

No, we expected pretty -- I mean in fact, that outperformed what our expectation was. And the Big 8, because it's just 8 hotels. It ends up being largely a function of sort of when the groups are cycling through year-over-year and the comps of when we have big groups in the year before. So that was actually better than our expectations. The Big 8 are performing really well. They're going to have a great year. As I said, the Big 8, the group position for the second half of the year is up almost 20 -- it's 19-and-change, almost 20% up. So the second half of the year is going to be, from a RevPAR growth point of view, much stronger for the Big 8 than the first half of the year. Second quarter would be better but the second half, much, much better. And again that's just the function of individual hotels and the group business they had last year and groups they have on the books this year.

And Bill, I think for the overall segment, it was 5.1% for the quarter. So the difference between the RevPAR and the revenue wasn't as extreme. And as you said, there were some FX in there and some non-comp stuff, particularly outside the U.S. William A. Crow - Raymond James & Associates, Inc., Research Division: Right. The 5.1% was post-FX, I think, right? But -- yes.

Yes. William A. Crow - Raymond James & Associates, Inc., Research Division: And I think you nailed it. The follow-up question was do you have any commentary, Chris, on the group trends as we look into '15? I know it's early, but I'd love to get whatever color you might have on that.

Yes, it's early, but the site lines we have feel pretty good. I mean the second half of the year is very good momentum, and I think very indicative of what's going on if I talk to our guys, which I do all the time. On the sales side, they feel very good about the momentum that's building in terms of pace and position into next year, and frankly, into '16. So I think good things are on the way.

Your next question comes from Felicia Hendrix from Barclays.

Chris, on the timeshare side of your business, I'm just wondering if you think the market is valuing your timeshare business appropriately? I mean, Marriott has obviously spun off. And now we have the Hyatt announcement this week. Just wondering, would you be consider -- would you consider spinning off the units and perhaps get some more value?

You'd have to tell me or investors would have to tell me how they're valuing it. I don't -- I don't know the answer in terms of whether it's individually, people are valuing us very weak. We are very committed to the business. Marriott spun theirs, as you point out. Hyatt sold theirs this week. We really like the timeshare business for, I think, some really obvious reasons. Number one, it is a great business. It's our -- the customers in our timeshare business are our most loyal customers. In the hotel side of our business, the day after they buy a timeshare unit, they spend 40% more with us in the hotel business. We like taking the ability to take care of those customers that have become so loyal. We have a very focused strategy, as you know, which has driven great results even through the downturn in terms of growing revenue, growing margin, growing EBITDA. And on top of all of that, as we talked about answering Steve's question, we've been converting the model to be much like the hotel model, where now 80% of our inventory is for third parties, where the returns in the business are going up astronomically, as we depend not on our own balance sheet but on others' balance sheets. So the combination of these customers being so valuable, very good margins, very good growth and not demanding the kind of capital that it has with other companies or what we had been using historically, we are committed to the business. We think it's a great business. And ultimately, we think, as we continue to tell the story and we transform the business to being more and more capital-light, we certainly believe it -- and are hopeful and believe that the markets will reflect it in our value.

Very helpful. And just for my follow-up regarding asset monetization. You talked about the retail build-out at the Hilton in New York. Just wondering if you have thoughts in terms of partnering on that project, or if there will be any partners? And then any thoughts you might have or updates on plans for the Waldorf?

Yes. On the New York Hilton, it's a pretty straightforward project. So we certainly will be working with others as it relates to how we end up merchandising it and how we end up finding the right tenants to maximize the opportunity. But in terms of actually doing the construction and the like, it's pretty straightforward. And we think I mean, that our team can do it working in conjunction with some consultants. So we do not intend to have a partner with that. On the Waldorf, obviously, a great deal of interest in it. We understand why. And trust me, we spend a significant amount of time focused on the Waldorf, as I mentioned on the last call. We are deep into the weeds in figuring out the best way to maximize the value of the Waldorf. We think there is a huge amount of value there that is untapped. We are way down the path in figuring that out and figuring out the way to execute against it. We are not yet in a position -- and I'm not being coy, just being honest. We're not in a position to really articulate what that is because we're that's just not far enough down that path. I said on the last call, we -- it would be our objective to be able to lay that out in a great amount of detail by the end of the year, and I think we're on good path to be able to do that.

Your next question comes from Shaun Kelley from Bank of America.

Kevin, I think in one of the previous answers you gave you mentioned, you weren't yet prepared to kind of bump up the fee guidance range. But as we looked at it, 17% or so growth year-on-year on the management franchise fees is one of the various surprises to us in the quarter. So I was wondering, could you give us just like a little bit more of a sense of where you are in terms of raising the royalty rates, and how that kind of laps versus last year? Because I think that was one of the big growth drivers that we saw in this quarter.

Yes, it wasn't as much. But raising the royalty rates, we're on track. Every new deal we roll over, the new deals we rolled over in the first quarter were at a full point higher than they were before. The reason you're seeing -- the big reason you're seeing a difference between the 17% we showed in the -- we achieved in the first quarter and the full year is we had some non-comp affiliate fees that were higher in the first quarter that didn't exist, or that were lower in the first quarter of last year, and then we had some timing of some change of ownership fees that were expected in the second quarter, and the deals happened more quickly and they ended up in the first quarter. So the difference is just a little bit of non-comp fees and a little bit of timing, which gets you between -- bridges you between the 2.

Yes, but I think Kevin's right. We would hope to be at the higher end of that guidance. But that's certainly from standpoint of how we're driving the business, and what we see in the first quarter...

And how we feel about RevPAR.

And how we feel about where our RevPARs are going, we would like to be better -- at the better end of that.

Sure, that makes sense. And then I guess second question, just big picture, Chris, maybe give us your -- just your thoughts about not specific kind of value opportunities, more just broadly about asset sales and the right time in the cycle to sell. Because we do see a lot more private equity hotel activity starting to pick up, and it does seem like a number of your assets might be attractive to that type of buyer, as we move through the cycle here.

Yes, that's a really good question and a topic we address a lot, both on calls and in meetings. I think we've been pretty consistent, so we'll try and remain consistent, which is we think in terms of the assets that we own, there is tremendous potential in those assets. We are, in our view, as described by sort of being mid-cycle and what's going on in the group and the east [ph] hotels are largely driven by that. We think there's tremendous operating upside in the bulk of these assets. We also, as we, I think, proven with Hawaii, and now New York Hilton, and we talked about what's coming in the Waldorf. And there are other things that we're working on. We think there's tremendous value to enhance the property. So we're very focused on that. To the extent, when we think about whether we should be more asset-light, whether we should hold these, again, we think there's, from a growth point of view, there are a lot of reasons have these assets and benefit from the growth. I said, I think, many, many times, having said that and all those opportunities, we're not in love with having to own real estate. We're in love and committed to creating shareholder value. But we're creating shareholder value as it relates to our assets, purely the big ones that really drive the value is about sort of the after-tax benefits to all of our shareholders. When we talk about the real estate and doing individual asset sales, at least on much of the major real estate, it doesn't make as much sense as potential is looking over time at the real estate as part of more of a structured transaction or a series of structured transactions. And then, it's a little bit different equation, obviously, than what the market is and PE [ph] firm's buying. It really becomes more an equation on where our relative valuations and multiples of OpCos and PropCos. And when we look at that today, we -- and we're happy to get any feedback, anybody who wants to give it. We look at that today, we don't see a meaningful arbitrage that says that OpCo -- that incents you on behalf of the whole shareholder base to want to do something because we don't think that there's a value play. If we thought there was one when and if there is, we won't be shy about it. But the idea of doing large-scale individual asset sales -- I'm not going to say we would do none. We are always exploring and there may be, on a very limited basis, an opportunity for some of that. But any kind of large scale meant the real estate really wants to be done in efficient sort of structured content context.

Your next question comes from Joe Greff from JPMorgan. Joseph Greff - JP Morgan Chase & Co, Research Division: Most of my questions have been answered. Just your development pipeline continues to grow, nice sequential growth since you reported last in February. Are you getting more requests from developers on Capital Front Hilton to contribute to new deals? Or has it been relatively steady?

I'd say it's been relatively steady. I was, in fact, looking at the numbers a couple weeks ago with our development teams, because we were all together. We -- if you look at the deals we're doing by number that are in the pipeline, it's less than 5% of the overall deals that have any contribution from us. And when you look at it statistically, which is the best way to answer this, that has been pretty consistent over the last 3 or 4 years. So statistically, no. In terms of anecdotally when we around the table approving every deal we do, which we do, around this very table we're sitting at, no, it feels about the same. It's very rare that we are contributing. Obviously, 95-plus percent of the time, we are contributing no capital. And it feels about the same as it has.

Your next question comes from Patrick Scholes from SunTrust.

My questions have been asked.

Your next question comes from Thomas Allen from Morgan Stanley.

There's a lot of concern heading into the quarter around your New York exposure. Can you just give us what your outsized geographic EBITDA exposure is by city? So like New York, Hawaii, I know you have big exposure, and a lot of people are focused on D.C. Any other markets you can call out?

Yes, I mean, I can do it in -- at a high level summary. In New York, our existing supply is about consistent with what we have across the U.S., so we're not really over-indexed. We have 10.5%, 11% of the U.S. market and we're about 10% -- 10% to 11% of New York. In terms of EBITDA, it's roughly about, with the owned assets there really driving at about 8% of EBITDA. Hawaii is almost an identical, coincidentally identical story. We are, in Hawaii, about sort of at the market for what we have across the U.S., 10% to 11% in U.S. share, 10% to 11% of the Hawaiian market. And it also is about given we have 2 large assets, about 8% of the EBITDA. Affiliate D.C., we over-indexed in terms of what our level of supply is, so we are about 15%. If you look at D.C., and I'm giving D.C. sort of everything, Maryland, Virginia and D.C., sort of the broader radius around D.C. But it only is about 2.7% plus -- less than 3% of EBITDA. And that is obviously in part driven by we don't have any major real estate. It is predominately in D.C. fee -- management franchise fee business.

That's helpful. And then just, if I heard this correctly, it sounds like you're getting, or you're expecting to get about $600 a square foot for your New York Hilton retail that you're repositioning. Are there other opportunities just on the -- is that right or no?

Yes, that's in the net, directionally.

I mean, that's a very high number. Are there other properties? Do you think you can do that high rent? Or I mean can you just talk about the retail opportunity in general?

There are -- that's pretty unique. There's probably one other that is reasonably unique in that same city that we talked about earlier, not being coy. The Waldorf, while we have retail at the Waldorf, I would say to you, clearly one of the opportunities and I don't want to go -- obviously, we're not ready to display the whole thing. But clearly, I can say one of the opportunities in the Waldorf is not only to do the retail more intelligently but more of it. If you just take a gander and walk the full city block that we own on Park Avenue, and sort of take it in and think about retail. And I think you would very quickly conclude there are big retail opportunities there. So we -- as part of the overall Waldorf plan, are very, very focused on enhancing the whole retail platform.

We will take one more question. And it is from Jeff Donnelly from Wells Fargo.

First question, actually this is for you, Kevin, I might have missed it, but what's the implicit adjusted EBITDA margin growth for full year 2014 guidance? Is it about 250 basis points for the company?

It is about -- sorry, I don't have it.

150 to 200.

150 to 200, yes, sorry.

And then, maybe, Chris, just back on timeshare. Stepping back, can you talk about what the consumer appetite is for timeshare today [ph] compared to maybe the prior peak? because some, I guess I'll call them discretionary products are just a shadow of their former selves and others have been fairly robust. I'd be interested in hearing how you think it's doing versus at prior peak level and maybe what's changed in the industry since the 2000s in terms of who's buying or where that demand is coming from?

It -- I think the story is very simple. And they may -- consumers may not want a lot of other products, but they want timeshare more than they did at the prior peak. So if you just look at our -- the best indication of that is where our sales are versus prior peak, and where it is versus our competition for that matter. But we see increasing velocity of demand in timeshare. The product really resonates with the customer. And thus, the strength of the results that you see. So it's certainly not seen any sort of waning appetite. To the contrary, increasing appetite for the product.

We have no further questions at this time. I turn the call over to the presenters.

Well, thanks, everybody. We appreciate the time today. We're obviously quite pleased with the first quarter, and as we've said many times, both focused on the rest of the year and in the coming years, as well as very optimistic about what the rest of this year and the next few years are going to be like. So we look forward to catching up with everybody after our second quarter. Thanks, and have a great weekend.

This concludes today's conference call. You may now disconnect.