Christopher Nassetta : 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.
David Katz : 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?
Christopher Nassetta : 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.
David Katz : Sounds like no meaningful key money there either?
Christopher Nassetta : No.
Kevin Jacobs : 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…
Christopher Nassetta : Keep going up.
Kevin Jacobs : 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.
Christopher Nassetta : 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.
Operator: The next question is from Robin Farley from UBS.
Robin Farley : 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.
