Good morning, and welcome to the Hilton's First Quarter 2023 Earnings Conference Call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Brian Kucaj, Senior Director, Investor Relations. You may begin.

Thank you, Chad. Welcome to Hilton's First Quarter 2023 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 speak only to our expectations as of today. We undertake no obligation to 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 most recently filed Form 10-K. In addition, we'll 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 ir.hilton.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 Chief Financial Officer and President, Global Development, will then review our first quarter results and discuss our expectations for the year. Following their remarks, we will be happy to take your questions. With that, I'm pleased to turn the call over to Chris.

Thanks, Brian. Good morning, everyone, and thanks for joining us today. We're pleased to report that demand for travel remains strong, maintaining the trend that we saw in the back half of last year, which led to both our top and bottom line results finishing the quarter above the high end of our guidance. As we move forward, fundamentals remain strong, and we expect secular tailwinds to continue to support growth. Despite continued macroeconomic uncertainty, we're optimistic that the power of our network effect, our industry-leading RevPAR premiums and our fee-based capital-light business model will continue to drive strong operating performance, unit growth and meaningful cash flow, enabling us to return an increasing amount of capital to shareholders. In the first quarter, system-wide RevPAR grew 30% year-over-year and 8% compared to 2019. Rate continued to drive growth, up 11% compared to 2019, and system-wide occupancy reached 68%, up from the prior quarter and just 2 points shy of peak levels. Globally, all segments outperformed expectations, and the lifting of COVID restrictions in China drove significant recovery in demand across Asia Pacific throughout the quarter. As a result, RevPAR in the month of March exceeded 2019 levels across all regions and segments for the first time since the pandemic began. Given our strong results and positive momentum, we're raising both top and bottom line guidance for the full year, which Kevin will cover in more detail in just a few minutes. Turning to the segment details. Leisure trends remained strong throughout the quarter with RevPAR surpassing 2019 by approximately 15%, ahead of prior quarter performance. Strong leisure transient demand continue to drive rates up in the mid-teens above 2019 and occupancy fully recovered back to 2019 levels, driven by the surge in travel in Asia Pacific. Business transient also continued to…

Thanks, Chris, and good morning, everyone. During the quarter, system-wide RevPAR grew 30% versus the prior year on a comparable and currency-neutral basis and increased 8% compared to 2019. Growth was driven by strong demand in APAC as well as continued strength in leisure and steady recovery in business transient and group travel. Adjusted EBITDA was $641 million in the first quarter, up 43% year-over-year and exceeding the high end of our guidance range. Outperformance was driven by better-than-expected fee growth across all regions as well as strong performance in Europe and Japan benefiting our ownership portfolio. Management and franchise fees grew 30% year-over-year, driven by continued RevPAR improvement. Continued good cost discipline further benefited results. For the quarter, diluted earnings per share adjusted for special items was $1.24, increasing 75% year-over-year and exceeding the high end of our guidance range. Turning to our regional performance. First quarter comparable U.S. RevPAR grew 21% year-over-year with performance continuing to be led by strong leisure demand. Both business transient and group RevPAR finished above 2019 peak levels for the second consecutive quarter, driven by strong rate growth. In the Americas outside the U.S., first quarter RevPAR increased 56% year-over-year and 35% versus 2019. Performance was driven by strong leisure demand at resort properties where RevPAR was up over 60% compared to peak levels. In Europe, RevPAR grew 68% year-over-year and was 13% higher than 2019. Performance benefited from continued strength in leisure demand and recovery in international inbound travel, particularly from the U.S. In the Middle East and Africa region, RevPAR increased 32% year-over-year and 42% versus 2019, led by strong rate growth and group demand. In the Asia Pacific region, first quarter RevPAR was up 91% year-over-year and down only 4% versus 2019. RevPAR in China was down 5% compared to…

[Operator Instructions] And the first question is from Carlo Santarelli from Deutsche Bank.

Chris, just in terms of the way you guys are thinking about the year, your guidance, obviously, from a RevPAR perspective, up about 350 basis points at the midpoint. First quarter obviously contributes some of that lift. You guys spoke to a tougher macroeconomic situation in the second half of the year on your fourth quarter call. How much has your outlook on the second half changed as obviously, you get some contribution from the first quarter, you have a lot of visibility in the second quarter? Just trying to understand within the context of that guidance, if you've had any kind of change or pushing out of when you guys believe or when you're interpreting the macroeconomic conditions will toughen.

Yes, a really good question. Obviously, I think I used the macroeconomic uncertainty two or three times for a reason because there is an uncertain environment. I mean, what we're seeing today is, as you heard in what you saw in our numbers and in the prepared comments is very good strength across all our segments. Leisure continues to be super strong. Business transient in the quarter, both demand and pricing, has returned to prior peak levels and group is motoring on its way. It's just longer in gestation to get there. But based on the trends, it's going to get there in the second half of the year, I think, with a great deal of certainty. So we are not -- you didn't really ask it this way, but I think part of it is we're not seeing any cracks in terms of demand patterns. There is a lot of momentum. I sit at this very table every Monday morning with my entire executive committee, representing every region of the world. And the first question I ask, are you seeing any cracks? Any issues with demand broadly? Any issues regionally? Any issues from a segment point of view? And the truth is we're just not seeing it. Having said that, we know here in the U.S. and in many other places around the world, there's an inflation issue. Now it's being -- it is being managed. It's becoming -- it is in the process of normalizing, particularly here in the U.S., but it's not there. And the Fed has said it's going to deal with it. I believe that -- I take them at their word. And I think ultimately, that means you're going to continue to have a slowing of the broader economic environment that, at some point,…

Great. Thank you, Chris. And then if I could, just one quick follow-up. In the period, obviously, I think managed franchise RevPAR was 29%. Unit growth on the franchise side was 4.4. The fees -- franchise fees grew about 23%. I'm assuming that, that's a comp issue with some ancillary non-RevPAR fees in the 1Q of '22?

Correct. Yes. I mean, the way to think about those is those are normalizing in growth rates, above algorithm growth, above typical growth you would assume sort of on a same-store basis. But we're still particularly because of Omicron, on the fee side, we have a supercharged fee growth rate in the first quarter. But I think the way to think about, over the intermediate, even longer term, is we think all of those ancillary license fees and otherwise, they're going to grow better than our typical algorithm growth. You're just -- yes, you have some year-over-year normalization going on in Omicron impact.

And a little bit of mix as well, so the franchise business is a little more concentrated in the U.S. where RevPAR growth has not been as robust as outside the U.S.

And the next question is from Joe Greff from JPMorgan.

Chris, I'd love to hear your views on and your understanding of what developers are feeling right now, just given changes in the credit markets and the banking environment, particularly with maybe limited service developers that are more reliant on regional bank for financing. Are they requesting more capital help from you guys? Do you think maybe they're pulling forward some deals maybe in an effort to circumvent future tightening? Can you talk about what your expectation is for maybe pipeline growth for the balance of the year? And then I have a follow-up.

Yes. I mean, it's early. So we've obviously been talking to a lot of our ownership community as the banking issues have sort of taken hold. And I would say there's a broad range that anecdotally go from, we haven't seen much impact. We're still getting finance. As you can see in our numbers in starts in the U.S. being so far up. Now part of that was before the banking, the regional local banking set of issues, but part of it was after. They're still getting the best owners with the best relationships are getting their deals done, and our market share in a tougher environment goes up. So proportionately relative to others in the industry, we typically do even better. But we also have folks that are saying very hard to find the money and some in the middle that are saying like they're talking to their banks and their banks are saying, "Hey, we're going to be there for you. Just give me like 90 days. Let me see how this all plays out." And so I think it's early to know. I think being objective about it, which I always am trying to be, I think the Fed seems to be managing through this reasonably well. There's some ongoing things today or this week going on, but I think the Fed, I think, is pretty committed to making sure there isn't sort of a run on regional banks broadly. So I think we're in reasonably good shape that way. But I think that the net result is for a period of time, there'll be less credit available, okay? I still think we'll get more than our fair share of it because our brands are better performing, and we'll see our share go up as we historically…

Great. Thank you for that, Chris. And just my follow-up question is this, the system-wide RevPAR is flat, which is sort of what's baked into the second half guidance. But if we just think about it for the intermediate term, not that you're guiding to anything beyond the second half, do you think fee growth can be in excess of RevPAR growth, just given the rooms growth in the last few years?

Should be, yes. It should be mathematically, yes. The algorithm is, as you know, so the same-store plus unit growth. And we've been delivering on average even through COVID, 5-ish, maybe a tick over, even in an environment that is being impacted by some of the things I just described. We believe we'll continue to do that as we manage our way over the next couple of years back up to the 6% to 7%. And so even in a no growth same-store environment, which is not certainly what we're experiencing now for the record, as you can see, but even in that environment, fees would continue to grow with unit growth.

And the next question is from Shaun Kelley from Bank of America.

Chris, I kind of wanted to stick with the development activity, but maybe let's just go out a little bit longer term. And if you could help us pull from a little bit of your experience of how this played out during the global financial crisis a little bit. Just help us think about, if we think about some of the -- there's kind of three drivers, I think, about domestic unit growth, obviously, decently reliant on the financial system; the conversion activity, where you've got a pretty interesting pipeline of brands that might even be stronger than back then; and then the international side. Can you help us think about sort of buckets 2 and 3? And as we get on to '24 and '25, how much could those help carry the weight? And how protected do you think, let's call it, a broad mid-single-digit net unit growth target should be in a variety of different scenarios as people are just trying to think about broader fallout here from financing and again, a more difficult macro broadly?

Yes. I mean, that's the right question to ask. And that's why I said, yes, we do expect to see some impact. But I also said, maybe I backed into it but I'll say it more directly, we feel good about being in that range you described. We've been around 5 through the toughest down cycle in recorded history. Through COVID, we've stayed sort of 5-ish or a tick above. And we think over the next period of time, as these things sort of work their way through the system, that we'll be able to say there. How are we going to do it? Well, one, we're going to gain share because our products perform better, and we have the highest market share brands in the business. We're going to keep pushing market share higher. And so while there's going to be potentially less new build activity domestically, we will plan to work hard to get an even larger share of that. Conversions, we do believe that we're uniquely suited certainly relative to The Great Recession by having not only more shots on goal in terms of brands. But Spark, again, there's -- long term, we think Spark is probably the most disruptive thing that we'll have ever done in terms of giving customers, at that price point, a really good product. But it's also, the timing of it is convenient and helpful because it depends very little on financing. Most of the other conversions still depend on financing. A lot of conversions, not all, but a lot of conversions do happen around asset transactions where people say I'm a buyer and a seller and I'm going to change brands and upgrade properties. We'll still convert a bunch of other types of properties that -- where they're not changing ownership,…

And the next question is from Smedes Rose from Citi.

I just wanted to ask you quickly on that extended-stay launch. We've seen a lot of products from different brands being launched to the extended-stay segment. And I was just curious, what do you think is driving so much interest from customers? And are they abandoning another segment of mid-scale? We don't get data or at least in our case, we don't get extended-stay data specifically. We just see the chain scale data. I'm just wondering what sort of shifts you're seeing within that, that it's leading so many people to launch into that sector.

We were already seeing it pre-COVID, where there was just a demand for workforce housing and people -- more mobility in their lives and they wanted to be places and work from different places. And they didn't -- they were going to be there long enough to commit. They're like, get an apartment and pay a one year's deposit and all that fun stuff. And so we are already seeing demand that was outstripping supply. And then COVID hit. And while a lot of things have normalized, and I've talked about this on prior calls a bunch of times, the one thing that happened is it accelerated the idea of mobility. While the office environment is normalizing, a lot of people are going back. It's not exactly what it was. More people are going to be remote as a percentage of the workforce permanently. More are going to have flexibility and sort of different times of year, times of the week, Mondays and Fridays. And all of that is continuing to just -- as those patterns shift, it's building more and more demand against a limited amount of supply. And so the fundamentals we think are just great. The way I think about the product that we're developing, and I'm getting ahead of myself, but it's coming really soon. I mean, down we have -- we've built it. We've done 99% of the work. It's almost a hybrid. It's like an apartment efficiency meets hotel. And I'd say it's almost like 60-40. It's more apartment efficiency. There's so many workforce housing needs that are just unmet with this kind of product for somebody who needs to be somewhere 30, 60, 90, 120 days. So you're talking about average length of stay of probably 20 to 30 days on average versus…

And can I just ask you a quick other question? The difference between the gross room additions in the first quarter and then that room just seemed kind of wider than what we've seen. Is that -- was that just -- is that sort of a seasonal thing or was there something in particular on the deletion side that you can call out or...

Are you talking about the difference between -- if you do Q1 in the guidance, Smedes?

Well, just the first quarter gross room additions and then the net room additions that seem just pickup...

No, there's -- no. Removals is right in line with normal. We'll end up about 1%, 1% and change for the year. Just the gross rooms from a timing perspective -- I mean, I think I don't want to repeat what Chris said earlier on the call. But I think from a timing perspective, for the full year, gross room additions were lower in the first quarter and deletions were about the same. So that's the difference.

And the next question is from Stephen Grambling from Morgan Stanley.

Maybe following up on some of your comments about the new brand launches, Spark and then it sounds like another one in the extended-stay. When you think about going into some of these lower-end chain scales, I think many of the peers often see higher attrition rates or deletion rates. What can you do to ensure that the attrition rates from your brands are more resilient long term? And have you seen any evidence of that from your current lower of chain scale brands such as Tru?

No. You mean, attrition meaning losing hotels out of the system? No, I mean, here's the -- listen, and not to be too simplistic about it. But what we do is really made much easier by delivering commercial performance. So having great brands that resonate with customers, loyalty that connects the dots, that customers are engaged with, product and service in those particular brands that really resonates with customers. And ultimately, our commercial engines and commercial strategies that deliver the highest level of market share. And so if you look at our -- if you look at like Tru or Hampton almost -- I would say, almost 100%, I don't know, 90% to 100% of the deals that exit the system within those brands. And I don't think any Trus have exited the system that I'm aware of. It's a relatively new brand. I'm probably -- probably none. But Hampton is by our choice, meaning that their time is up. They're in a location or they're in a physical state that we just don't think works anymore. And so that's by our choice. We have very little attrition. And back to where I started, the reason we have very little attrition is our mega category brands are category killers. They drive incredibly high share. So as we think about Spark, as we think about our new extended-stay brand, we have to get it right, which we will. We have to drive really high share, which we will. The product has to really work for customers, which is what drives that. And people don't want to leave, right? So our history is super, super good in the mega categories. If you go through the whole list of all our extended, Home2, Homewood, Hampton, Tru, the attrition there is almost all. The vast, vast majority of it is by our choice.

That's helpful context, and that's my one question.

The next question is from David Katz from Jefferies.

I wanted to just go back to Spark because obviously, a lot of enthusiasm and success and it's unlike things that you've done before. If we look at the makeup of the deals that you've put together, I'd love some color on what's in there. Are those independents that are looking for a brand? Are those switching from other brands for one reason or another? Are any of the hotels switching within your system into it that may have otherwise departed for one reason or another?

Yes. Of the 300 -- I'll get this direction. Of the 300 bang around it, I would say it's almost all. It's very little of us. So there are a few Hamptons of the 300. So a teeny number of Hamptons that we would probably otherwise say will exit the system that we think for Spark will work even though they wouldn't work for Hampton. But that's a teeny tiny amount. The rest of it is almost -- there's a little bit of independent on that data point, but it's almost all coming from other brands in that -- in the economy space and spread around what you would guess. And I have some of that data but I'm not sharing it.

Fair enough and understood. My follow-up is when we look at the revenue intensity of adding in this category, how does that measure up with your other brands? Obviously, the upper upscale, a unit is generating more, right? But how does the fee structure and the revenue intensity of this measure up and add to your system?

Yes. The fee structure is quite similar to other fee structures. They are smaller and it is at a lower rate. We think the rate here is probably $80 to $90 versus the net Tru, which is $120 -- in the $120s with Hampton being at like $140. So it's -- they're a similar size so a lot of the Trus and Hamptons, they're at a lower ADR by design. And so yes, per pound fees will be a little bit less and certainly versus upper upscale business. You have to remember in our world is we're trying to create a network effect. So this is a massive customer acquisition tool for us. There's 70 million or 80 million people traveling in this segment, half of whom are younger people that travel and this is all they can afford. And while we serve some of them, we're not serving many of them. So the opportunity is for us to get them hooked on our system early by giving them the best product that they can find in the economy space because every single hotel, every customer-facing element of the hotel has to be done or it doesn't get our name. And we regulate the gate. Nobody comes in. Nobody passes through the gate until that's done. And so the other thing to remember is it's an infinite yield. So we built -- we bring in tens of millions of new customers that are going to trade up. They're going to grow up and they're going to use our other products. They're going to trade in and around our products. And we built this brand with a lot of hard work and elbow grease from the standpoint of the deals that we're getting. While they may be per pound a little lighter, we're not paying for them. I mean, thus the infinite yield. There's no investment. We continue to build these incremental fee streams. And when you add up what the potential, I mean, I suspect 30 years ago, somebody said that about Hampton. Well, I mean, Hampton at that time was a $50 rate, and it's 100, 120-room hotel. How much money can that make you? Well, Hampton is a value well into the billions of dollars because turns out when you do a few thousand of them, it adds up. And the ultimate potential of Spark is bigger than Hampton because it's a bigger slice of the pie. So we're very excited about it. We think it is going to add not just new unit growth, but it's going to add significantly to earnings as it ramps up and ultimately to the overall value of the company.

Sounds like no meaningful key money there either?

No.

Yes, I think David, just to add just a little bit, and Chris covered it, yes. I mean, the capital intensity of our -- in our business is much higher at the upper end, right? So the higher you go in the chain scale, the more the deals are competitive and you're contributing capital. And the other thing I'd say is why I think sort of working with you for a while, I think where you were headed with that. I think from a revenue intensity perspective, Chris described it. As you layer in these lower fee per room hotels, mathematically, of course, your fee per room does go down. But when we model it out over a long period of time, you'd be surprised the fees per room do not...

Keep going up.

They keep going up over time, and we continue to grow at what we often talk about as algorithm. So if you take same-store sales plus NUG, the fees per room and the fee growth continues at that pace. And part of that is because of the non-RevPAR-driven fees that Chris mentioned earlier in the call, which we think will continue to grow at a higher rate than algorithm. So you put that all in your model and it's -- it's surprisingly steady/continues to grow.

There is no year where fees per room are going down just because the arithmetic. And we continue to have RevPAR growth on the existing pool of assets that continues to go up. And yes, fees per room as we model it 5, 10 years out, just keep going up.

The next question is from Robin Farley from UBS.

I wanted to ask a little bit about the business transient performance in the quarter. I know you talked about RevPAR being ahead of 2019 levels. But I wonder if you could give us a sense of where either occupancy or number of business transient nights in the quarter compared to Q1 of '19. It seemed like from kind of broader industry trends, that Q4 didn't show that much sequential improvement from Q3 in terms of that change versus 2019. And maybe you'll say, of course, it may not matter at all when you have RevPAR performance as strong as what you have. So I'm certainly not saying it's not a strong quarter, but I'm kind of curious what's going on with that business transient night piece event.

Yes. On a global basis, business transient, actually fourth quarter to first quarter ticked up. So on a -- it was about -- in the fourth quarter, about 1.03 and it went to 1.04. But importantly, on an aggregate occupancy basis in the first quarter, for the first time, it actually got back or slightly above where it was at the prior peak. Now that's not a U.S., that's a global number. So why is that happening in the face of everything you're reading? And it's really simple, which is why I said it in the comments, it's SME. It's like what we're all filtering through is big corporate America. Big corporate America is worried about the world, all the uncertainty and maybe curbing some of their appetite for travel. Having said that, I've met with -- we had a big customer event, and I didn't get that impression even at a big corporate America. I think incrementally year-over-year, they're all traveling more but maybe not as much as they would have thought. But the SMEs continue, which are 85% of our business, continue to perform really, really well. And the big corporates weren't really back in any event. And so since they had not come back to prior levels, while they may recover more slowly, they're not, my impression from talking to a bunch of them, they're not really cutting because they already had cut so much and they hadn't built it back. They're just -- maybe it's flattening for them. But I said it many times over the last few years. We have, by choice, we were always quite dependent 80% of our business was SMEs. It's 85% now by choice, meaning we have shifted our mix because it's higher rated business, it's more resilient in the sense that it's more fragmented by the very nature of what it is. So business transient is alive and well. And I'd say in the first quarter, both the price was above and volume was at or slightly above, and that trend continues into Q2 although we're early in Q2.

Okay, great. Very helpful. And then just the other question, kind of a small one is your distribution through OTAs, I have to imagine that as business transient is coming back, that your OTA distribution is moving down compared to last year, just given that leisure is not as big a percent of total.

It's normalizing. It's slightly elevated relative to pre-COVID but not much and has come down a bunch. And we expect probably by the end of the year, certainly into next, it will be normalized with where it was, which is where we want it to be.

The next question is from Brandt Montour from Barclays.

I was wondering if you could just dig in a little bit to the drivers of the conversion activity, taking Spark out of it. Chris, you mentioned potentially lower hotel transaction activity from financing headwinds putting pressure as well as financing being a headwind in and of itself for doing non-Spark hire and conversions. I guess could you stack that up against some of the maybe positive tailwinds, perhaps enforcement of brand standards across the industry, foresee more trade down or even more independents getting more nervous looking for brands? How do you look at all those factors on a net basis later into the year?

Yes, I'll take this one, Brandt. I think outside of Spark as we've covered that, I think you've got a couple of factors. One is yes, in sort of an environment where people are expecting demand to soften, they tend to seek out brands more often, and obviously, they tend to seek out the stronger brand. So it's being driven by somewhat of demand for independent hotels converting to brands. And then I think the other factor is in an environment where credit's tighter, a cash-flowing hotel, right, so acquiring a hotel and that's already cash-flowing, it's easier to finance than new construction. So I think those are the two primary drivers. And then you think about some of the things that are going on around the world. But they're generally driven by transactions and generally in a softening demand environment, easier to finance and more demand for the branded systems.

The next question is from Bill Crow from Raymond James.

As we think about the change to your guidance for 2023, how much of that is driven by areas outside the U.S.? And has there really been any change or any positive change to U.S. expectations?

Yes. I think, Bill, what you're seeing is it's kind of -- it's across the board. It's positive change to all regions. Largely, I think Chris covered this earlier in the call, largely concentrated with the demand strength continuing into the second quarter and us taking the second quarter up a little bit, a little bit in the third quarter and then the -- and if you think about pushing out the anticipated slowdown in the back half of the year, but there is improvement in the outlook in all regions, including the U.S.

A follow-up. I'm going to actually switch my follow-up, and I want to actually address something you just said, Chris, which is that large corporates seem to be flat in their demand. And I'm just curious whether this early in the recovery, and I know there are issues going on in tech and financial services in particular, but does this give credence to that argument that business travel never fully recovers?

I mean, I don't think so. Well, the #1 prima facie evidence it has. So I mean, Bill, but I just finished on a couple of questions ago, in the data in the first quarter, business travel has already recovered. I think what it means for us is in the intermediate term, as you get more certainty in the environment, there's upside in business travel, meaning we've done a good job of shifting to SMEs. With that shift, we're sort of, on a volume basis, back to where we were. Rate base is higher. The big corporates still have to travel. By the way, the big corporates are also not one size fits all. It's really where you see the impact is technology, banking consulting. If you look at a lot of the other big corporate sectors, they're still growing, but those sectors weighed it down. As those sectors stabilize and start to think about the future and being competitive and getting their sales forces back out and get out of cost-cutting mode, which they will, they always do, I look at it as upside. So I think when you wake up in a year or two and we're in a little -- we're in -- whenever we get to a more certain environment, hopefully it's sooner than later, I think the opportunity will be that business travel, both volume and price, will be higher than the prior peak. I think the same thing for the group business. I think this has done -- what's happened in the last three years has done nothing but reinforced -- I mean, we're definitely benefiting from a lot of pent-up demand, but it's done nothing but reinforce, as I talk to all of our group customers and the like, that the need for people to be congregating to do the things that they do in culture and collaboration and innovation and all of those fun things. So I kind of famously said when we get through this in like April, May of 2020, I think it will look a lot more like it did than it does. And I think that's -- I still think that. And I think the data largely supports it. If you look at the business mix, like this quarter versus pre COVID and the big segments of business transient, leisure transient and group, we're within a point. I mean, right now, the only difference is leisure is a point higher then group's a point lower. Otherwise, it's about where it was, right? And that's because group takes time to sort of -- to come back. And in the meantime, leisure has been strong. But ultimately, as we get strong high-rated groups back, we will continue to mix more of that in. So I do not personally believe there is credence to that argument. I think the data supports that argument at this moment.

Look forward to seeing you early next month.

Yes. Same.

Ladies and gentlemen, this concludes our question-and-answer session. I would like to turn the call back to Chris Nassetta for any additional or closing remarks.

Thank you, Chad. Thanks, everybody, for the time today. Interesting times with all -- the word of the day is uncertainty. But as you can see, we feel very good about what we delivered in the first quarter. We feel great about the second quarter. Frankly, we feel pretty good about the full year. We're making sure that we're keeping our eyes wide open about what's going on in the world. But we continue to do well and deliver, and most importantly, return more and more capital, which we'll continue to do. So thank you for the time, and we look forward to catching up with you after the quarter.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.