Hyatt Hotels Corporation (H) Earnings Call Transcript & Summary

Hello, everyone. We're going to -- I think if you can go -- there we go. I think we're going to keep key things going here. So my pleasure to welcome the management team from Hyatt Hotels and Resorts. So to my left, Mark Hoplamazian, President and Chief Executive Officer. So Mark, welcome. This is your second year doing this with us.

I know. I'm really pleased to be here. Thanks for having me back.

So I know you have a disclaimer. I'm going to give you the airtime, because we're big into disclaimers.

Yes. Very important. So I know there's a loud din next door here, but of course, we're going to be talking about things in the future. We're not making any warranties to this, and we're not going to commit to update these things, and you can read all this on our website. So that's all I have to say. Let's come back to the pretty picture.

I actually have my disclaimer memorized from reading it.

Do you really? Then gave me a synopsized version of it.

Very good. Super well prepared. So maybe let's just start high level. Mark, you obviously came out of a couple of successful events. We've got a really strong summer. Summer travel has been really exciting. And of course, you had a big Analyst Day, multiyear even hosted down in Mexico, which I had the pleasure of joining, which was fantastic to see some of your all-inclusive product. So just give us a quick summary. Where we are on the scoreboard? How do you feel coming out of the second quarter? And what were some of your key messages from there?

Yes. Scoreboard is looking great. I think we had 5, if I remember, record quarters in a row through the second quarter of this year. All-time high level of fee revenue. That's not coincidental. That's a deliberate result or the result of a very deliberate strategy to move into a much more fee-intensive, fee-based business. And really firing on all cylinders. I think the key from my perspective in terms of what we've seen this year is, to date, at least leisure's held up very, very well. We've got very significant positive momentum in group, which is just beginning to be realized in the numbers, but we've got really strong bookings into next year and very solid rate realization into next year and the years after. And business transient is not zooming back to prepandemic levels, but it has been advancing. Of course, July and August are notoriously weaker months, because a lot of people take holidays during the summer. And so they're not traveling for business as much as they are for leisure. But we're heading into the fall now, so we'll see how business transient starts to evolve. I can tell you that just anecdotally, in New York, some of our outlets in our hotels are seeing increased levels of local traffic, which means that more people are back in the office. And there was -- there's a clear difference now versus at the beginning of the year. So we're starting to see the results of people being back in the office. That doesn't mean they're traveling as much for business transient travel. It just means that there's more activity in office and that will, over time, I think, contribute to business transient recovering.

Really encouraging. So as we take a step back and you're the sort of the second person already today, who can kind of give us a really good insight into this. I feel like the big theme coming out across travel was leisure normalization to some degree, right? What we're seeing is return to Europe, return to cities like you mentioned, right, where these were kind of off-line during in the pandemic and everybody only want to be a beach or a mountain or way off in the Catskills apparently, right? But things are kind of just getting back to normal. Of course, that has pulled some dollars out of some COVID-winning markets and move them to other markets. So help us understand a little bit across your broader business, Hyatt in particular, has made some big strides in leisure and your exposure there does differentiate you versus competitors. So how does this kind of play out? In the one case, we could probably see some markets that do need to see that, and we're probably going to talk a little bit more deeply about ALG. But on the flip side, you have exposure in Europe, you're global, your cities are also a big part of the portfolio, a very big part. So help us think through those crosscurrents a little bit. How do you see the leisure consumer?

Yes. I think Americans have spread their wings and they are traveling longer distances this year than they did last year. So last year, they were staying closer to home. The business -- the pent-up demand into the second quarter and the third quarter, which was a monster quarter for Apple Leisure Group, especially was born out of omicron. People had -- basically had to put off their travel through the first quarter, and they hit the road with a vengeance. So third quarter last year was just a blowout. I mean, a complete blowout. I think ALG by itself, Apple Leisure Group, earned as much in the third quarter of last year as we did in the first quarter of this year. And the seasonality of that business is first quarter is peak, then second quarter, then third quarter, then fourth quarter declines over the course of the year. Last year, it went first quarter, second quarter, third quarter, fourth quarter. So we had a huge speak -- spike in the third quarter of last year because of all this pent-up demand. So the normalization that people are talking about happens to be highly concentrated in September, which is when the big flip -- the switch gets flipped, right? People stop traveling for leisure and they are back at work. That's been true since there's been a hospitality industry. Last year didn't work that way. So that's one major normalization that's occurred. The second is what I said earlier, which is there was a high concentration of Americans, who happened to be among the higher spending source markets, customers, staying closer to their home. Now they're spreading their wings and they're traveling further, and that's why you're seeing a huge increase in traffic to Europe. I would say even with that, we're lapping an extraordinarily strong third quarter of last year, second quarter and third quarter in Europe. European rates were on a rocket ship last year, because there was so much demand to come back to, including urban markets and we're owners of hotels and a number of those. So we realized the benefit of that last year. Those -- that demand profile has also started to normalize. You don't -- you didn't have quite a crush of excessive demand levels that we saw then. So we're lapping a couple of periods that are going to be more normalized as we move forward. But the underlying leisure demand is still alive and well and will remain that way, in our opinion, and especially for us, because we serve a higher-end traveler, their means and their -- any concerns that they might have about affordability in the face of a potential recession are not acute. So we're going to see our customer base continue to travel and be able to afford to do that and plan the trips and take the trips. So I can't say that that's true for the entire market, because some of the AlphaWise Morgan Stanley published this. There's been an AlphaWise study that households of $100,000 or more expecting to spend more in '23 than '22 in leisure travel. That's not true for lower income levels. They're expecting to spend less. So I do think you're going to start to see segmentation. But we happen to serve that higher echelon customer.

Help us push out a little further, like as we get into 2024, so we kind of get a little bit of the comp pattern that both is probably portfolio-specific and just a little bit, like you said, September has always been seasonal as long as we've been doing this. What is kind of the next 2024 to 2026 look like? You set out a couple of sort of longer range financial targets, and those were actually pretty encouraging as we think about the levels of kind of what those ranges would have looked like. You still feel good about that -- those ranges? And think about a couple of the building blocks of which segments give you the confidence to kind of look out a little further?

Yes. Still feeling really confident and encouraged about what our future looks like. A couple of things. First, I think group has got the longest lead time visibility and the strength of that is significant. We're still running -- we're well ahead of 2019 levels across the globe. Asia has just gotten back to 2019 levels, but growing progressively. So the recovery in Asia, looking forward, will benefit from more inbound travel into Asia from Western countries and that will drive rate. Right now, the recovery has been largely occupancy driven in China. Rate is above 2019 levels, but modestly. And I think it's -- we've gone from a 70% mix of domestic travel to a 90% mix of domestic travel. And they're just -- it's a lower rated customer base. So I think as flight patterns start to change and shift and business travel continues to elevate and all the visa restrictions that we are seeing for outbound Chinese travel start to alleviate and so forth, we're going to see continued strength in multiple markets around Asia. So that's a tailwind. Second, the 450 basis points, 400 to 450 basis points of gap in occupancy of what we see in our system versus 2019 levels is largely going to be driven and filled in by group as we look forward in the next year or two. Yes, business transient will continue to recover, the group is really the story there. And third, our outlook is that leisure travel will maintain. So as I look across the globe, I feel really great about each region. Europe has gone through a massive blow-off period. I don't think that, that extraordinarily high level of performance is going to sustain. I think it will come back and normalize, but still be higher than 2019 by a wide margin. So I feel good about Europe as a baseline, but we're going to -- we will have lived through sort of a roller coaster where we peaked and coming back down to more normal levels, but at a higher level than 2019. U.S., slower growth, but positive, and I think group will be a major driver of that. And in Mexico, we've had some measure of a shift in where demand is going or where travel is going rather. Cancun has been dropping and Jamaica and the Dominican Republic have been increasing. The West Coast of Mexico has been increasing. So we've got a bit of a readjustment, because last year was so concentrated in Cancun, that I think a lot of people said time to branch out. I'm not going back to Cancun this year. I think that's temporary. I think Cancun has got so many positive attributes: convenience, tremendous beaches and great facilities. So I think we'll see sustained demand there. So those are the main drivers that I see. And I think because it's diverse, it's not like one big bet on a narrow topic. It's a pretty distributed bet.

And maybe to kind of put the finer point on it. If we see some -- whether it's Europe or the Caribbean to some degree, if we see some of those patterns, those spikes or those shifts kind of normalize out, do we still have enough between what you see in group? Again, what we see in return to urban, the occupancy gap, which I think you highlighted, which is very interesting. Are those levers enough to continue to kind of put growth on top of growth? Is that enough to push the organization forward and see demand growth in...?

I mean, we don't plan our business on the back of what STR says, but STR's recently published their '24 outlook. And I think if I remember correctly, the numbers are something like plus 7% for luxury, plus 6.5% for upper upscale, plus 4% maybe for upscale and plus 2% to 3% for mid-scale-ish. The data is published, please don't take that to the bank, like go -- you have to go take a look at it, look it up. It's available publicly. So at least that -- I'm not saying that we adopt that. I am saying that they are looking at the market, that's the U.S., by the way. They're looking at that and saying, there's positive growth that we see in the future. Interestingly, 70% of our total portfolio is in the first 2 categories, right? So we've got 70 -- just about 70%, 69-point-something of luxury and upper upscale. 44% is luxury lifestyle and resorts. So our portfolio is sort of well positioned to say at least relative to at least that forecasted outlook. So I feel really good about underlying dynamics in the overall marketplace from a macro and a travel perspective. From a growth perspective, first of all, 2 things. One, we have continued to maintain and posted net rooms growth that's at or above what we've been saying we will do for the year. I think that's a bit exceptional, and we're maintaining our outlook for growth. Admittedly, we had a very heavy conversion quarter in the second quarter. About half of our total growth in the second quarter was from conversions. So that has elevated a lot, because the core programmatic development has slowed down. There's no question about that in the U.S. And the second point that I would make is that we had a record fee quarter in the second quarter. We're not just paying attention to net rooms growth. We're paying attention to net fee growth, because not all rooms growth is equal. Some rooms growth isn't as fee productive as other rooms growth. So we're not -- we don't declare victory and high five each other in the hallway, because we had a great net rooms growth result, we're looking for the fees. That's really what creates value. So we're highly focused on good quality growth.

So let's kind of get into the growth model a little bit. And I want to start with sort of the strategic question around you're pushing to leisure over the last couple of years, so we're going to start with kind of the backward look between luxury, lifestyle, hotels and a number of opportunities there. And then, of course, ALG, which really differentiates you relative to the peer set. Can you just help us through -- elaborate a little bit on that focus kind of what you identified there? And you were ahead of the curve, I mean this was -- some of this was perfectly cycle timed for the way that COVID played out. But what are the kind of future plans? You look at your mix today, and if you're balancing portfolio and everything else, are you comfortable with it? What's kind of the next move? Help us think through what the plans would be going forward.

Yes. I mean I think our strategy has entirely been based on preference -- driving preference. If I could synopsize at a very high level what the core premise of our strategy is, it is that every stakeholder that is our colleagues, our guests, our customers, corporate customers and our hotel owners, all seek to increase their engagement with Hyatt. They want to come work for us. They want to stay with us. They want to do their meetings with us and they want to build more hotels with us. That's at the core preference. That's not about ubiquity. It's not about scale, it's about preference. And we've driven preference in a much more targeted, focused way than maybe some of our larger competitors who have played a ubiquity and scale game. I'm not criticizing them. I mean, I guess if you force me to switch places with one of them, I probably would pursue the strategy that they're pursuing, because that's their strength. Our strength is actually driving preference. And so we're doing that through an elevated level of personalization in each case for each of those different constituencies and focusing. So we're focusing on the higher-end customer. That makes a big difference because getting to know that customer better and better and being able to serve them and care for them in more diverse ways means that we capture a bigger share of wallet, and we get to focus and concentrate our resources and our consumer insights. Secondly, we, in traditional terms in history, it was get the business customer, get them hooked on your points and then they'll want to stay in your -- they'll use those points to stay in resorts, and you capture them, that was the driver. Well, as you know, business travel is in flux. I think it will fully recover, it will look different. But we've decided that a more enduring way to actually capture loyalty is through great experiences, and that starts with leisure. So we've sort of -- kind of like shifted the portfolio alongside a very deliberate position, which is we can drive loyalty -- true loyalty that's experiential loyalty, more than it is the currency of the points then becoming a prisoner of your loyalty program. And that's worked. We've grown our World of Hyatt customer base by 20% over the last year alone. Our penetration levels of World of Hyatt members staying in our hotels has elevated a lot. So we're seeing positive momentum and mix shift in terms of our distribution channels. That's the result of the strategy. That wasn't the point of the strategy. That's what results from doing -- executing what we have done. So right now, we are a bit over 50%, maybe 55% of our revenue base is coming from leisure purpose of visit. I love that mix. I don't know that we need to get to a higher level than that. I think we need to get -- to grow the whole portfolio. I'm a big believer in group, long term. I'm not -- I don't subscribe to the big meetings are dead, and you won't see these huge meetings again. I just think there's too much efficiency and effectiveness for that. And people are finding the great feeling of being back together and reconnecting. So I think the mix right now feels pretty good to me. The key issue from my perspective is that we are underpenetrated everywhere. So we have so much growth. We are -- we only participate in about half of -- globally, there are about 680 market tracks. We only have representation at about half of those. Second, in the markets in which we do have representation, we have, on average, 4 hotels and our competitors have 14 on average. So we just have enormous white space. Hyatt Studios, we just launched upper mid-scale. We actually did the survey across the country, there are 130 markets that are well suited for Hyatt Studios. We have 0 representation in those, none, not even one hotel. So from my perspective, I just see multiple ways in which, we can and will continue to grow in a good way with good growth, with fees associated with that net rooms growth and enhance preference over time and, of course, cover more markets, which I think will be good for everybody.

So we've talked about leisure. We talked about your mix, some of your movement there. Talked about ALG a little bit, which we'll probably come back to you and dig in a little bit more deeply on. But I want to dig in on the other big theme that I thought came out of the Analyst Day, which was sort of the asset-light transition, right? It's something that I've had sort of an ability to watch and to me, the Analyst Day put this nicely in perspective, just kind of being able to hear a little bit more of the history of actually how it had to happen in the order of things because we don't -- we're not always privileged to that until we kind of get the history lesson, so that was valuable. But let's start with the disposition side only because I think it level sets everything. You've got a target out there. What has changed is, and I believe, if I recall, like you at least spent a portion of your career in private equity, so you know this better than anybody, 9% interest rates are a big deal when you're out trying to sell assets and buy assets in -- for many of the sort of end market buyers out there. So are we still comfortable with the targets set out there? What's the dialogue like right now with potential purchasers? And just how do we feel about that target?

Yes. So to reiterate what we said, we've got 2 assets that have been on the market. LOI for one and the others we have bids in, and we expect to sign a contract for the first and select the buyer for the second soon. It still hasn't happened, which is telling. These things used to take 30 days or 45 days from LOI to signing. This is going to take 60 to 90 days. And that's endemic. It's part of the marketplace that you see this now partly because of capital formation and partly because of the nature of those particular assets. The market is slow. I just saw the stats for total property transactions, and it's down significantly. I forget who published it, but it was good data, just really stark that the total volume of activity is low, for exactly the reason you're talking about. Because when you're underwriting a property that you're going to pay a 6% or 7% cap for and you're borrowing at 9%, last time I checked, that's negative leverage. You're diluting your equity by borrowing money, right? So that tends to not be great for rating. Nobody has to be a rocket scientist to figure that out. So our outlook -- first of all, we have reaffirmed, I'm here to tell you that we will meet our target of selling down $2 billion in aggregate net proceeds by the end of next year. So we will do that. We have a number of different ways in which we can get there. We affirmatively have said, this is a time to take a breath and evaluate our best paths and decide how we're going to go to execute the remainder. So I do -- I don't know that the market conditions are going to like flip on the switch, but I do think that the marketplace in general is well equitized. There's a lot of equity out there. So the capital formation question happens to be on the debt side. And so we have to be thoughtful about that. I've been asked many times, are you going to provide seller financing? The answer is we're open to that. It depends on the deal, depends on the value. It depends on the contract, but we're open to it. So we have ways in which we can actually help facilitate deals to get done, which we feel will be very good risk-weighted returns for us even if we have to wait a little longer to get all the cash in the door. So that's my general outlook. I think the -- what we are finding, and we said this for years, but I think people tuned me out many years ago. We have an asset base that's got some very unique assets in it, that have unique locations, unique attributes, which will mean that we can sell these assets no matter what the marketplace looks like and realize good values for them. I'm confident that, that remains true, very confident. And that has to do with some reverse inquiries that we've received and dialogues that we are in right now about ways in which we can execute something or a series of some things that will have enough scale to get us to our goal.

We never tuned you out. I was -- see that picture of Paris.

There you go.

I kind of wish I was there. So I remember pretty well. Let's talk about the flip side. So if you are still recycling capital, balance sheet's improved dramatically post COVID and obviously, you've continued to grow. All of that leads to the ability to still return capital, which is in your guidance. So -- and then possibly go on offense to supplement your growth elsewhere. So help us think about those 2 priorities, balancing, returning capital with the possibility around acquisitions, because we do hear about that. Are there still things out there on the buy side that you would look at? And what would some of those parameters be?

Yes. Yes. So we are 100% committed to both grow the business and return capital to shareholders. I mean, last year, if you just want to measure of cash flow generative capacity of Hyatt, we repurchased $360 million of stock and we paid down $880 million of debt last year, okay? That's not trivial for our company of our size and scale and given our now lower than several weeks ago, market capitalization. So to me, I think that's a really important to note about what kind of capacity we've got on the balance sheet front. We, of course, are committed to continue to return capital. We've provided actually for the first time, I think, some more specific guidance on what the returns of capital is going to look like. We reinstated the dividend, obviously. That's going to maintain. The -- on the M&A side or potential acquisition side, admittedly, it's going to be much more focused on incremental brand or portfolio or not portfolio in real estate, by the way, but management platform and/or brand portfolio acquisitions. Really, all of the deployment of about $3.6 billion of acquisitions that we made have been in asset-light platforms that are -- that have inherent growth in them. If you just look at ALG, for example, we have opened 8,000 new rooms since we've owned the company. About half of that has been through conversions. So we've maintained and actually grown our pipeline. I think we started off at 8,000 or 9,000. I think we still have 8,000 or 9,000 even after opening a whole bunch of hotels. So I feel like the thesis -- and Two Roads was the same. Miraval, we're starting to see some traction in third-party managed properties. So across the board, we have bought platforms that have inherent growth and we've realized that growth and in fact, grown it. If you look at across the last 5 years, we've added about 50,000 rooms of luxury lifestyle and resort hotels. And we have 20,000 keys of pipeline in those segments. So we've really been able to maintain a tremendous level of future growth, and that's an embedded option that we didn't pay for when you think about it, if you want to do it in financial terms. When you get a free option, that's usually a good thing. So we've made that happen, because we've applied ourselves to it and it's not part of a bigger system, more enabled system. But those are great acquisitions, very value-accretive. So if we find others like that, we will look to execute on them. But it will be very disciplined, and it will be based around the customer base. Is it a customer base we understand? Is it either demographically very important that it's similar to our existing customer base or higher? But it could be adjacent, meaning a lower, say, age cohort. So when we bought Dream, Dream average age's -- their customer base is about 20 years younger. And that's fantastic. Well-heeled younger is good for us. Same is true for Two Roads, which was also younger, not as much as Dream and Miraval was a different category of customer, much higher in demographic household income level and very much looking for a broad set of experiences that we are now pulling into the rest of Hyatt. So the criteria are those. They haven't changed really. So we will be on the lookout for these things. And we're seeing more opportunities actually, because there's a generational shift in ownership in Europe. There are other dynamics in the United States, primarily capital market-driven. And even in Asia, we're starting to see a turnover of contracts that were signed 15 and [ many ] years ago that are terming out. So we believe that there will be start to be some more conversion activity in Asia as well.

Interesting. Well, you alluded to this a little earlier, and I want to dig in on the net rooms growth side, right? So one thing that has changed this year is certainly that availability capital point, especially here domestically and then probably double especially if you throw in full-service hotels, higher price points, anything above $50 million to $100 million, it starts to become very complex. And so, a, what is kind of -- what is that financing environment, development environment, feel like? Have you seen anything loosen up? And then, b, what are you doing to supplement, because you're still -- your targets out there are still 6% to 7% industry-leading net rooms growth like -- so what's the backfill if the U.S. is weaker? International conversion sounds like one. And obviously, what you've been able to do with ALG, may be 2, but help us fill in a couple of the other blanks. Is it China coming back because that's been off-line for a bit? Is it the huge build-out of the Middle East? I'm imagining you've probably been over there at some point in the last 6 months or a year. So just, yes, just help us fill in the building blocks, because we get that a lot from the investment meeting.

So you've nailed it. I think we are seeing continued growth -- sorry, continued construction starts. So I think it's about 1/3 of our pipeline is under construction at this point, maybe 30% to 35% in that range, down from 40%. And -- so we're opening the ones that were in construction and the new starts for new construction have come down a bit. And that's going to persist until we see this capital cycle run through. We've not seen a dramatic improvement in that front in the United States. The one difference, I would say, is for the Hyatt Studios developers that we're working with. Their access to capital, first of all, the model that they are underwriting on allows them to provide relatively higher level of equity and still have the math work. So in some cases, they're overequitizing. They're increasing the equity commitment. And at the same time, they're leaning on local bank relationships to get their bank financing. That's different than some of the more programmatic upscale kind of developments where local banks are an option, but you're really looking at regional or super regional, right? So -- and the mess of mini crisis, if you will, of Silicon Valley Bank and First Republic and so forth has kind of contorted that a little bit this year. I think that's going to persist. So what we have is we're still positive on a continued recovery in China. I'm not going to go into the detail of it, but the government, it has been and will continue to step in to normalize and stabilize the capital market environment because they have to. There's -- they really don't have a choice. Too much of the savings base of the Chinese citizens are in residential real estate for there to be any cracks in that network. There is more conversion in Europe in a pronounced way because of generational changes and family ownership. There is the coming tailwind of the Middle East, it's not yet showing up in our numbers, but it will. And in the U.S., our conversion activity has gone up a lot, both in all-inclusive, but also in Legacy Hyatt brands and we are competing in a differentiated way. We don't find ourselves really -- these aren't bake-offs as much as they are crafting a bespoke solution for an owner of an asset or an owner of a portfolio that's looking for some sort of unique structure. So we feel like that's a better playing field for us to be on than doing an auction at every turn. So it's really the combination of all those things that we feel good about and still feel like we can maintain that higher level of net rooms growth. And then very importantly, translate that net room growth into net fee growth.

So last question, I'm probably going to have time for, but I want to talk a little bit about Hyatt Studios. And maybe if you could help us put this in perspective of kind of the franchising operation a little bit more broadly, right? I mean if we think about the organization, you talked about, I think it was 70% or 69% kind of luxury and upper upscale, that being your mix today, but you did launch a brand that kind of brings you down into this. And you already have obviously exposure that you've got Hyatt Place, you have Hyatt House.

Although this is below that.

And this then slots and below that. So kind of help us understand, a, how would you rate your own franchising organization, because it gets real competitive? There's a lot of brands, and we've seen a lot of launches recently. And I think they're not exactly where Studios is, but we've seen a lot of sort of launches, trying to basically back engineer the math for what the development cycle will allow. Makes sense, right? I mean, like -- but we've seen a lot going in there. So how are you going to compete? You do have market-tracked availability, but you still have to get developers to then be familiar with you. So do you have the support to grow the organization like you want and then what do you like about the concept?

So we have grown the organization. In '21, we made a big investment to expand the franchising group, Franchise & Owner Relations is what we call it. So the Franchise & Owner Relations group is, we call it FORG internally, F-O-R-G. So the franchise organization, it was expanded in '21. It's already embedded in our SG&A and so we built more capacity in anticipation that we would do more in franchising globally. Second, we hired Dan Hansen. I mean, we hired an industry expert who knows -- he's forgotten more about franchising and dealing with other brands and developers than a lot of other people put together. And he is an amazing leader, and we have built out that team already. It's already built. And we've got a new cadre of developers that are dedicated to Hyatt Studios. We've got operations people. We've got design people all dedicated to the effort. And we'll be breaking ground on the first one soon. We expect 2 to open by the end of next year. So we're really going. This is moving. Third, the brand itself, the hotel area program and the design of it was designed by a team, an agile team that was dominated -- a majority of that team was outside developers and a minority of them were actually weren't even Hyatt people, it was Dan and two Hyatt people, and we had 5 developers involved. So we actually feel like we did do what you said, we reversed engineered except we didn't think about reverse engineering. We actually have the people, who are going to build these things at the table designing it with us. So we feel great about where we've ended up in terms of cost of construction and delivery. We launched the brand with LOIs that cover over 100 Hyatt Studios. We're now working on converting those into signed deals and into development rights agreements, so that we have a number of launch customers that are going to speak for multiple properties. And that's all progressing. It's progressing really well because the economics really are compelling. Our brand representation being really -- we are going to -- being the only Hyatt brand representation in a lot of these markets is really exciting for developers. So I feel really confident about where we're positioned and how we're positioned. And we understand that some of our competitors have went (sic) [gone] to other, maybe I'll call them, adjacent concepts. But the facts and circumstances on the ground are just really different. And so we feel like we've got it. And the final thing I'll say is the way that the product was designed provides inherent tremendous flexibility for developers. So if it's a market in which they want to have an elevated build-out, if it's more of an urban -- like a secondary location in an urban market, they can do that. We also have room mix flexibility in terms of how much -- how many more transient-oriented rooms versus extended stay. The brand is an extended stay brand, but you have the choice of how you actually program the hotel more specifically and with clear options that we've provided. So I think people will find us very responsive and very flexible in how they want to execute within the confines of a brand that can be recognized by guests. So it will be programmatic, but flexibility within the framework.

Unfortunately, that's what we have time for. But Mark thank you for joining us. Thank you to the team for joining us. Thank you, Adam, Joan. Yes. Great.

Thank you very much. Appreciate it.