Christopher Nassetta : 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.
Robin Farley : 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.
Christopher Nassetta : 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.
Operator: The next question is from Brandt Montour from Barclays.
Brandt Montour : 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?
Kevin Jacobs : 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.
