InterContinental Hotels Group PLC (IHG) Earnings Call Transcript & Summary

Okay. Great. Hi, everyone. Thank you for joining. I'm delighted to be here today. I'm Vicki Stern. I head up the European leisure research team here at Barclays. Great to have with us Elie Maalouf, who's CEO of IHG. So Elie wants to make a few opening comments, and then we'll kick off with Q&A.

Good morning. Thank you for joining us on a cold New York Tuesday. I think some of you may know about IHG Hotels and Resorts, but for those of you who don't let me just give you a 5-minute cover on it. We're one of the leading global hospitality companies with nearly 1 million rooms open in the world, over 6,500 hotels. We have another 2,200 under development around the world, and that's about 30% of our open rooms, a very good growth profile ahead. We really have an excellent portfolio of brands, 19 brands. When I joined the company 10 years ago, it was 10. We've been adding brands in luxury lifestyle and mainstream and premium, where guests and owners have more interest to develop and travel. We are mostly focused on mid-scale and upper mid-scale, although our Luxury & Lifestyle business has been the fastest growing for us and probably fastest growing in the industry. We have about 1/3 of our rooms in upscale, in upper upscale and Luxury & Lifestyle chains. So that's a significant move from several years ago when we started expanding our Luxury & Lifestyle portfolio. We work in the asset-light model, that means we own very, very few hotels. I think we have 6 or 9 hotels around the world spilt of our 6,500. We mostly franchise and manage. As you're in the West, in the U.S. we're most -- about 90% franchised. When you go to Europe, it's a little bit less. As you start going into Middle East, Southeast Asia and China, we're still about 50% managed, 50% franchised, but it's moving more to franchise, which is higher fees and higher margins. We're very geographically diverse. About 55% of our rooms are in the Americas, that's pole to pole from Canada all the way to Argentina, mostly in the United States. So 27% are in EMEAA, that is everything but China. The EMEAA is Europe, Middle East, Africa, Asia, Southeast Asia, everything, that's 27%. 19% of our rooms are in Greater China, where we've been for 50 years. I'm going there in January to celebrate our 50th anniversary in Greater China. Now our pipeline, however, our pipeline of new hotels, those 2,200 rooms that are under development, that pipeline is about 1/3, 1/3, 1/3, 1/3 Americas, 1/3 EMEAA and 1/3 Greater China. And we have built this, what I call, very high barrier-to-entry business model. Because our 19 brands are heritage brands with high brand recognition, very hard to build a portfolio like that. We have thousands of owners around the world that have been developing hotels with us in generations of relationships, very hard to build. We have a loyalty plan of 130 million members. I think we just said recently that we're going to reach 140 million members by the end of the year in our loyalty plan. Very hard to build those relationships with customers around the world. We have a technology platform. It's taken us decades to build. We have a global sales force of 250 people around the world that sell to large corporations, all of whom around the world are our customers, clients of IHG, including Barclays. So that's a very broad ecosystem, and it builds a deep and wide moat and high margin. So it's very hard to replace, very hard to replicate. And our fee streams are high quality but because we're asset light, because many of our investments and costs are in the System Fund, System Fund is a fund of owner contributions that we use for marketing, for reservations, for global sales, for technology investments. So a lot of our costs are actually off the P&L and System Fund. And because we're a franchise and managed, it's a high-quality fee model, therefore, it builds a very profitable business model. That business model drives what we call our growth algorithm. We articulated a growth algorithm in February of 2024 at the beginning of this year to our investors. And that growth algorithm works in the following way. We target high single-digit revenue growth per year, high single-digit as a combination of unit growth and same-store sales growth, RevPAR growth. So between RevPAR growth and unit growth, we target high single digits, so 7% to 9% revenue growth per year. We then also target between 100 to 150 basis points of fee margin growth per year. We already have a pretty high fee margin, but we target 100 to 150 basis points of fee margin growth a year that comes from operating leverage, not anything in particular, just operating leverage. Anything else would be on top of that. The combination of those two leads to EBIT of about 10% or more low single -- low double-digit per year EBIT growth per year. And with our ability to convert 100% of earnings to free cash flow, that gives us the ability to invest in the business, increase our ordinary dividend, but also return surplus capital through share buybacks and those share buybacks, combined with the EBIT of low double digit, can lead to EPS growth of 13% to 15%, low double-digit growth per year. So if you look at this year, we're on track for all of those. We're on track for high single-digit revenue growth through 3 quarters and through the consensus for the rest of the year. We're on track for, I think, over 150 basis points of fee margin growth due to the ancillary fee growth that we've had already announced. We're on track to conclude an $800 million buyback for the year. And consensus has us at, I think, 15% or more EPS growth for the year. So in our first year of articulating our growth algorithm, we're delivering on it, actually exceeding it, and we feel pretty good about delivering it over the medium to long term going forward. And with that, I'm sure Vicki has a few questions really for us.

Thank you. Yes, it's a great comprehensive overview of the medium term. Just wanted to start sort of bringing a little closer in, looking at the RevPAR outlook as we go into next year. So I think a number of your U.S. peers have talked to levels of growth probably quite similar to what's been seen this year, maybe around 2% to 3%. You obviously don't give guidance per se. But how are you thinking about the landing spot as we go into next year? Would you be sort of broadly in line with how U.S. peers are thinking about it? And any sort of geographic nuance you want to bring into that?

I think, let's start where we are in the U.S., which is our largest market in that of the industry. Industry forecasters are predicting about 2%, 2.5% RevPAR growth for the U.S. next year. Part of that is a pretty healthy economy, a pretty healthy consumer, continued government spending, strong financial markets, people in a pretty good place to unemployment, declining interest rates, steady inflation, all the things that create a pretty good economic environment. And ultimately, travel is a consequence of a pretty good economic environment. So that seems reasonable for us for the U.S. to be in that space. And by the way, you still have pretty low supply so that favors a strong same-store sales environment. Let's flip all the way to the other end of the world, in Greater China, which has had a pretty rough year in RevPAR this year. We've seen declines in RevPAR year-over-year, although it's still pretty steady with 2019. It's recovered to 2019 and stayed pretty steady. We have a residential real estate workout basically happening in the country, that's affected consumer confidence in RevPAR. It's been pretty flat to 2019, down year-over-year, but the industry data is showing a leveling off in this fourth quarter right now. And I think that, that is -- that's quite likely next year that things will level off or return to a small level -- small level of growth. So that would be actually a tailwind to 2024, between 2%, 2.5% RevPAR from forecasters for the U.S., You've got the China leveling off, that is accretive to 2024 already. And you take everything in between, Europe, Middle East, Africa, and Africa has been very big for us, but Southeast Asia, it seems to be still pretty strong, pretty strong. Low supply growth in Europe, strong destination, Middle East and Southeast Asia are really doing quite well with strong middle-class growth, strong GDP growth. So I think it could be, yes, as good as this year, maybe a little bit better.

Great. And it doesn't sound from those remarks as if you're seeing it. Are there any markets in the world where you're seeing any sort of inflection sort of on the negative side, you talked about China they're leveling off, but any other markets that would sort of concern you as you look into next year at all?

Look, we're in 100 countries, and that's not by accident. It's by strategy because being geographically diversified and also diversified by segment from upper, upper luxury to midscale is done on purpose because we know that not every segment, not every region will be at full steam every quarter, every year. So you're going to have some are going to be up, some are going to be a little bit down. On average, we continue to grow, but that diversification attenuates the variations, attenuates the ups and downs for us. So I'm sure that every year, we find something that happens in a market that might impact it in a negative way, but the fact that the middle class continues to grow every year, the fact that GDP globally continues to grow every year, therefore, travel continues to grow, mean that the total tide rises even though some small pools in the tide aren't rising as much. I don't look right now at anything globally and say this market will be impacted in 2025. I can tell you, I wouldn't be surprised if some emerge that aren't as hot in 2025 as they were in 2024, but then there will be some that will be hotter. And I think on average, we'll be okay.

What about the segment differences. Obviously, you've talked a lot already about the pace of group coming back, corporate leisure, and so just a little bit of color on how you see that trending into next year across the segment?

I mean the group has been strong this year. Our bookings going into next year are very strong, accelerating actually in group. But we're optimistic. It's 15% of our business, not the largest part of our business, but it's enough to make a difference at 15% and growing. Business travel has been just methodically increasing and improving. The myth that business travel was dead is, I mean, this was a myth, it's not true. Airlines will tell you business travel is strong. Hotel company will tell you business travels strong surveys of businesses by third parties have indicated that corporations expect to spend more on business travel in 2025 than they did in 2024. Now professional services companies that we are more familiar with, including banks and financial companies, accountancies, consultancies, they're traveling less. But they're actually not a very, very big part. They're a very big part of the very high end of travel, but they're not a very good part of total business travel. Technology, manufacturing, retail, pharmaceuticals, medical, energy, that is the core, a large part of business travel, especially in the United States, and that's been growing. Small businesses have been growing rapidly and traveling more. So when we look at business travel, let's not think of our friends at Deloitte or PwC or in that law firm who is actually the reason they are traveling is their clients are telling them, you don't need to come. I don't need you to charge me for your flight and your hotel and your expensive meals to do 2 hours of work. I can send you a file, just like we did do in the pandemic, you stay over there, I'll stay over here and let's get the work done. That works in those industries, and many, many other industries, it doesn't work. And so in aggregate, business travel has been growing. And then you get the leisure, which sored post-pandemic, it's leveled off. It's still growing a little bit, but from a very high level. From a very high level. Let's not look though at leisure just in the United States. Leisure is growing in Europe. People going from U.S. is still exporting more leisure to Europe than it's importing, right? It's about 19% -- 17% or 19% higher travel from U.S. to Europe post-pandemic and maybe 11% less travel from Europe into the U.S. post-pandemic. Part of it is currency, strong dollar or weak euro, weaker pound to some extent. Part of it is people used to make a lot of money. I mean, let's not forget the rise in financial markets, the rise in alternative markets, the rise in housing prices. If you own, if you don't, that's a problem, but most people don't. The rise in employment, we're still at pretty low employment. And if you put all those things together, people have money, and they're traveling to Europe. So we catch that leisure if it's a little bit slower in the U.S., we can't sit in Europe. And then you've got Asia, Central Asia, Southeast Asia, where billions of people have not even had their first holiday in their life. And as they rise to the middle class, it may seem unusual for you to hear that somebody has not had a holiday vacation. Most -- 1 billion to 2 billion people in the world doesn't have not had a vacation yet. They only travel a necessity for funeral or wedding or birth of a child. But as we reach the middle class in India, in China, in Vietnam, in Malaysia, they take their first trip, and we're there with our hotels to greet them and meet them. So leisure, we think, is still strong in those markets. So we look at all three segments, and we think they're in a healthy place.

Great. So we're here in the U.S., fresh from the U.S. election results just a few weeks ago. And how are you thinking about the possible implications of that for you, your business? Obviously, there's the macro impact onshoring and the like, but any of the specific agenda items, be it tax, federal cuts, deportation, anything front of mind that you think could be significantly impact from there?

First, we've been in the U.S. over 70 years, maybe 80 by now through, of course, a lot of administration, a lot of different political agendas. We've prospered and grown throughout that, and we will prosper and grow throughout this administration, which is -- was the administration 4 years ago, plus or minus. And so we're not unfamiliar with that climate and we're unstressed about it. If you get into some specifics, clearly, continuing the current tax regime, which was put in place in 2017 as a result of the 2016 election is going to be favorable to all businesses, including ourselves. So we're not worried about that. It seems like it's more pro-growth, pro-business in approach. It was in the last round. If that continues, that's good. I mean, we don't need anything specific for hospitality or for our company whether it's here in the U.K. or anywhere in the world, we advocate for pro-growth policies, pro-business policies, pro-economic prosperity policies for all demographics. When that's happening, we do well. And the -- what this administration or new incoming administrations are articulated in terms of deregulation, lower taxes could be favorable for business travel, even for leisure travel. On the immigration front, we'll see what actually happens versus what is talked about, I mean we operate hotels, of course, with many, many colleagues. We require that everybody follows the laws in our hotels, which means we are not supposed to be employing undocumented workers. So in theory, there's no impact to our business from that. But in total, it could have an impact on labor markets in total. But that's if only the most extreme versions manifest itself. That's just not what happened last night. And it's not what really, we think will happen. I think there will be -- and there already is a limitation on the legal immigration, which would not impact our business directly.

So shifting then to net unit growth. So I think consensus seems to have around 4% for next year. You've obviously flagged the Las Vegas rooms, which will sort of impact the headline even if not the actual fees. If you can just help us understand how confident you're feeling about achieving that sort of level of 4% next year? Do we need to see another sort of large conversion deal to get there or that's just really the organic rollout?

I think we feel very good about that consensus. If you put in perspective our signings have been growing this year over last year and over the year before, which gives us a pipeline of hotels to open, many in the year for the year. Our ability to continue to increase conversions, which are quite a high level of our deals last year and this year. And those open up even more rapidly in the year. We will have a meaningful amount of the NOVUM rooms, the NOVUM deal rooms in Germany that we signed earlier this year to still open next year, which underpins our growth in the next year or 2. You put all those things together, with an improved rate, interest rate climate, with an improved inflation climate, with a strong economic climate, especially in the U.S., with record or near-record signings in China this year, you put all those things together, we're feeling good about that outlook. We always want to do better. We're confident we will do better over time and do more over time, but that's well within our algorithm and our ability to achieve.

And you touched there on interest rates. You're seeing much progress in terms of things easing on the ground, financing getting a little bit easier now that rates are paring back. What's the sort of on the ground feeling across your key geographies?

Well, I was on the ground in -- 2 weeks ago in Las Vegas with 5,000 of our owners and hotel managers from the whole Americas. Every 2 years, we have our investor conference that's investor, not share investors, that's Hotel Investors Conference for our mainstream hotels. That's Holiday Inn, Holiday Inn Express, Staybridge, Candlewood have it. And it's a great time, by the way, you connect with thousands of these owners and franchisees, and you show them the progress you're making and you show them the technology you're bringing in the marketing, you're bringing in, you just wine and dine with them and take 1,000 pictures with them, and I mean it, 1,000 pictures. And they go back to their hotels and show everybody they spend time with IHG executives. It's a spiritual event and drives adoption and growth and loyalty to the company. And you talked to a lot of them, and you hear what's happening. I would say this is my fifth conference that I've gone to since I joined IHG 2015. I really felt a strong confidence from them in the economic climate and their ability to get deals done and their ability to get them financed. It's not going to be overnight. I said to you before, and I say again, it's not going to be a V shape, but it's continuing to improve. They feel that the demand is strong. They feel that rates have leveled off, which is good. They're not -- they may not even go much lower, but they've leveled off. There's not a great risk of interest rates going up. They feel inflation has leveled off, and I think we feel the strength and performance of our brands compared to the competition. So I felt a strong level of optimism from them.

And the best-in-class out there amongst your peers are doing levels of unit growth around 6%. So a couple of percent ahead of you. What would it take for IHG to be at that sort of level? What's holding you back from that today?

Well, If we look at the industry, I already think that we're at the top 2 to 3 of the industry globally, when you adjust for acquisitions and partnerships because those will happen from time to time. We may do them, we've done them before, but we've got to adjust for those because they're not recurring and that's how we look at it -- how we think others look at it. There is one entity that even when you strip those out, is higher than on an underlying basis, and we don't dispute that. We think we're right up there in the top of the industry. More importantly, our deals, and you've heard me say, are keys with fees. We look for growth that is accretive to fees, not just for units, but pile on and don't drive a healthy level of fees, market appropriate fees, but healthy level of fees. So we think our growth is healthy. We're confident we will continue to grow and do more. In 2019, we were in the 5s in net unit growth with a removal rate that was in the mid-2s, I think. Today, we're targeting and delivering removal rates that are a whole 100 basis points less. And since 2019, we have more brands, not just in Luxury & Lifestyle with the Regent with Six Senses, with Vignette, but also in mainstream with Atwell with Garner recently, which is getting strong traction. I mean, we have nearly or over 90 Garner hotels open in the pipeline around the world. Launched it about a year ago, we're at 90, and those open very quickly. We're over 100 vocos open and under development around the world. And so our new brands are getting very good traction, and we didn't have those in 2019. So when I look at that, I say that as the interest rate climate improves, as the inflation climate improves, there's a lot of firepower for us to hit the consensus and do better.

You mentioned earlier China signings openings going very well, I think, for yourself and a number of your peers at the moment as well. How are you feeling now about the medium-term prospects for China? And within that, any sort of concern about the supply growth that's coming through or the pace of that?

I mean, we put China -- let's talk about the long term first, I'll come back to the short term, but the long term for China, we're undeterred in our view of China, a population of 1.3 billion, which even if it may not be growing, you have a middle class that's still growing a lot, 75 million households in China. Under any projection, there are three independent external projections saying it's going to double in the next 10 years, 75 million households becomes 150 million households. By the way, the government -- the Chinese government's projections are much higher, we're going with external projections. That means 200 million people at three people for household, that's a lot of travelers. I mean the middle cost in the U.S. is 150 million. So you're adding in China, at a lower GDP per household agreed, but still new travelers, 200 million travelers over the next 10 years. That's very exciting. And so we've seen how that growth in the middle class over the last 50 years that we've been in China has powered our growth. We have -- we're going to finish the year at 800 hotels open in China. We have another 600, 700 under development. And I think we're just getting started. I think we're just getting started in China. So long term, we think is still as bright. In the short term, yes, they're digesting a residential real estate oversupply, a vast oversupply of residential real estate, but they have been digesting it. This has been going on for -- this is the third year we think, in my experience, and I started my career in residential real estate. The U.S. has, by the way, overbuilt its residential real estate before. That's why we had the GFC in about, what, 8 years ago. So -- actually more than a 2008, 2009. So it takes about 5 to 6 years to go through that digestion process. They're in their third, fourth year of digestion process. So I think we're probably bottoming out. But the investors in China see the long-term outlook, that's why they're signing more hotels with us. That's why they're opening more hotels with us. And the occupancy rate stayed pretty steady. It's down 1 point or 2 year-over-year. Most of the drop has been in rate. Occupancy has been fairly steady, which means that there's not really oversupply. And now occupancy levels in China tend to run about 10 points lower than you do in the West. But there's two reasons for that. One is -- they just tend to build for the future in China more. It's a growing economy, still growing at mid- to high 4s in GDP, by the way. No, it's not 7% to 8% GDP, still mid- to high 4s on a $20 trillion economy, $20 trillion. No other economy even gets into double digits. U.S. at 30-plus, China 20, everything else is single digits. So just to putting things in perspective, there's still a growth economy. People are building for the long term. The other reason occupancy tends to be structurally lower is the labor costs are so much lower that you can operate profitably 60%, even at 50% occupancy, which you can in some parts of Europe, in some parts of the U.S. like New York City. So with occupancy being stable, that's an indicator for us that supply is not overreaching.

Great. Just changing tack to the balance sheet. So I think you've been operating slightly below your range, the 2.5x to 3x net debt-to-EBITDA range for a while, even though there have been significant share buybacks coming through. So why? Why operating below the range? And is it reasonable to think that you'll be quite keen to get back into that range as we look into next year?

We do target that range of 2.5x to 3x. We also target remaining investment grade. So we look at a variety of things. I think part of the reason we're below the range is the business has performed very well and our free cash flow generation has been strong. And we managed to keep our costs while growing, investing in the business, keeping our costs under control. So the margins have been expanding. And you've seen us add ancillary revenues with point sales and now the credit card agreement, which will start to deliver in 2025. And so I think that it's a combination of things, and we target a range of 2.5x to 3x. Sometimes it's a little bit close here and a little bit close there. But to me, it's not -- it's certainly not an indicator of a change in our policy and a change in our strategy. But yes, we do have the firepower to do things should we find opportunities, organic or inorganic to invest in the business, we do have the firepower to do that.

And on that last point, if we were looking at inorganic, what are the obvious gaps to you? What kinds of things could be of interest from an acquisition perspective?

I mean we think we have a strong complement of brands in our portfolio from upper luxury with Six Senses and Regent to your traditional luxury with Intercontinental, Kimpton lifestyle and luxury hotel. I mean -- and then in premium, we're strong and in mainstream, we're a powerhouse. But we can always add. I mean consumer tastes do change. Investors come up with interests in investments that we're not meeting. And so when there's that intersection of where hotel owners want to invest and guests want to stay and we're not participating, we look to participate. That's why we launched Garner last year because owners were interested in a conversion brand in mid-scale, guests were staying there. The standards are rising in that space. We weren't participating and now we are, and we're doing very well in it. So there could be an opportunity. I've talked before about wanting about exploring the urban micro space where you can have more small, very small sized rooms and high-density urban locations where the returns to the investors can be higher because you're putting 25% or 30% more rooms in the building where real estate prices have been high. And guests are willing to stay there just because it's a great location in center cities or in urban sites. That's a space. We have not foreclosed adding more in luxury and lifestyle and upper luxury should the right opportunity. We've done very well with our Six Senses acquisition. We bought it right before the pandemic. We've grown that business from some teens open hotels to some teens in pipeline to 25 open, over 30 in pipeline in some of the best destinations in the world at an average rate of $1,000 per night, but it goes way up to $15,000, $20,000, $30,000 a night in some of the suites and some of the destinations. And I think it's the best and most revered upper luxury brand in the world today. So we've been successful there, and we don't need anything else there, but we wouldn't foreclose another opportunity.

I think we'll pause there and just see if there's any questions in the room from anybody. Yes.

Talking more about China. You said that you're getting more sign-ups than you ever had before, but it's just the rate. Can you just talk more about China? What's like on the ground and kind of just paring why the rate has fallen so much while occupancy has stayed the same? Would be great.

I'll be in China. I mean I go once or twice a year. I'll be there in January for our 50th year celebration, but also to spend time with our teams and with investors and owners and government leaders. The reason rate has fallen -- I mean, there are three reasons. First, there is some impact on consumer confidence from the real estate oversupply. Let's not kid ourselves when you have Chinese investors individuals, families would invest in residential real estate as a form of savings versus here in the U.S., we invest in the stock market. We invest in bonds, we invest in residential real estate to some extent, but it's not our predominant form of savings. So that's part of it. Another part of it is, at the same time, the Chinese consumer has been traveling a lot. But in 2023, they traveled domestically almost exclusively when the lockdowns were lifted. In 2024, they started going to Southeast Asia, into Japan, into South Korea, into Singapore. And we saw actually our business boom double digit and more in those markets. And so we're picking up that business, but -- and that was the high-rated consumer. the higher-rated consumers travelers started leaving China. Part of it is the much lower yen and you saw just a surge of Chinese travelers into Tokyo into Kyoto and Osaka and sometimes just over the weekend just to do some shopping and then to come back. But Vietnam, Singapore, Malaysia, Indonesia, Cambodia, South Korea saw a surge of Chinese travelers that had not left the country in multiple years. And China also relaxed visa requirements. You may not know, but in China, not only do you need the visa to go away in the country, as a resident, you need a visa to go out the country. And so they relaxed visa requirements in and out of a lot of Southeast Asian countries. I think the third reason is the business international inbound has not anywhere near recovered to where it was, and that usually is a high-rated traveler. Now 80% plus of our business in China is domestic. So our occupancy has held up, plus or minus, but we felt the impact of rate over 2023. But I think indications are that, that could stabilize going into 2025 based on industry data that's come out in the last few months. Part of it is the Chinese who traveled outbound are now spreading their money a little more domestically. Part of it is just the comps get easier. And the international inbound is grinding ahead a little bit, but I think it's going to be a very slow recovery of that international inbound just due basically to the capacity isn't there. And there are some other anachronisms to it, including the fact because a lot of Western airlines cannot fly over Russia, say, London, Beijing used to be an 11-hour flight, and it's a 14-hour flight because you got to go south instead of going over Russian over the pole. So U.S. and European airlines are actually been cutting back flights to China because it's so expensive to operate, while the Chinese airlines can overfly Russia, so they're undercutting them and getting there faster. So there are some -- and hopefully, that conflict subsides in time and you can return to more normal travel patterns. So there are some idiosyncratic issues, but we think it's leveling off into next year.

Great. I think we're about up on time. Any -- sticking one, a quick one.

You mentioned for your net unit growth rooms keys. What is it, keys with fees? But then you mentioned your revenue growth sort of algo right, implies 7% -- or you assume 7% to 9%, and that's RevPAR and net unit growth. I guess my question is, where does the mix from keys with fees? Is it factored already on the 7% to 9%? Or can -- are we assuming that the net unit growth is just volume net unit growth and doesn't include that mix of having better fees as you mentioned?

No, it's in there factored in the 7% to 9% because otherwise, the fee growth -- the room growth would never feed any RevPAR growth if it didn't have fees associated with it. So it's factored in there. The combination of room growth that has fees associated with it and then the same-store sales growth, we target high single digit, 7% to 9% growth over the mid- to long term.

I guess my question was more on the mix in terms of like as we see -- how much in...

How much is the rooms growth and how much in RevPAR?

No, how much the mix from new rooms growth. So imagine rooms growth with the same sort of fees or rooms growth with, as you said, a better fee luxury...

Yes. Look, in a mass business like ours, some -- a lot of things are going to average themselves. On the one hand, we are growing our Luxury & Lifestyle business at a faster rate than our mainstream business, which is our biggest business, but at a faster rate of growth in the Luxury & Lifestyle business just because it started off smaller. On the other hand, we're growing in China at a faster rate than we're growing in the U.S. in terms of rooms, and that comes at a lower RevPAR. And so when you average all these factors in, we think we're either even or slightly accretive in that mix. We think some others are actually negative in their mix growth. But because our luxury lifestyle is growing faster and because our Middle East business is growing faster and our Southeast Asia business growing faster, and those tend to be high RevPAR businesses, we think that the combination of those with say, lower RevPAR markets like China growing more units, we think it averages at about even or slightly up.

All right. Thank you so much.

Vicki, thank you. Great to be with you.