Mark Hoplamazian: Yes. I mean vacations is going gangbusters. Departures were about flat to last year. That’s the result of the normalization of seasonality but we had unit net revenue growth of 10% because pricing is really strong and our mix is very weighted towards 5-Star versus 4-Star. In fact, I did mention the Cancun dynamics versus cascading into other markets. The one thing that remains true in the Cancun Riviera Maya market is that 5-Star hotels are outperforming 4-Star hotels by 10 points. So even though employments and arrivals from U.S. customers, which are the highest-rated customers is dropping because they’re cascading into other markets that is not true with respect to 5-Star hotels. So our experience is going to look a bit different than the overall segment AI segment in Cancun at large.
The average unit price on the books for the second half for ALGV bookings is up 5%. And so we have more destinations on sale because we’ve added inventory that we’re selling through the platform. But pricing is maintaining. And concurrently the one other thing I did not mention is that the package prices are actually moderating by virtue of airfare coming down in some cases quite significantly because a lot of capacity got added into Cancun you can’t snap your fingers and change your segments and your system. And so airlines have dropped rates into Cancun to try to induce demand. That’s helped to sustain some demand but it’s also made the overall pricing capability of the hotel sector solid. With respect to Unlimited Vacation Club membership is up 10% year-over-year and about 25% of the contracts signed have been from existing members upgrading to higher tiers and that’s reflected in the higher price per contract, which is up 6%.
So we’re really encouraged by what we’re seeing. And by the way, if you remember from Investor Day we did this magnificent. I liked it because I’m in the math but the regression analysis was a perfect fit between member growth and size of system growth. And we have just in this past quarter added another data point to tighten that curve even further. Although there’s not much tightening left it was a 99% R-squared. Finally margins. Margins last year in the ALGV, ALG vacations business were stratospheric. First of all, by way of reminder this business before we bought ALG was running in the low single-digit margin level. Last year, we were breaking through to mid-20s. And so we said that we thought a more normalized level would be sort of in the 15% to 18% range.
And that’s exactly we expect to end the year in the range of probably in the higher end of that range for this business. So our expectations, the business is performing exactly as we expected it to. I think it’s more resilient actually than I might have thought as there were so many shifts and the reason is because they’re super agile. And they can cascade really quickly. So anyway, as between those two businesses nothing but good news. There is some higher direct expenses in UVC due to first about 37% of their total expense base is in pesos. So we had some FX headwinds. And secondly, we did have more promotional activity in the second quarter heading into the third and fourth for UVC members. And finally, we had a higher level of free nights that are part of the packages actually realized in the second quarter for which we made payment.
So those are the few factors that affected direct expenses but that’s leaving the FX aside that’s not a run rate issue for us. So we feel really good about both of these businesses.
Operator: Our last question will come from Shaun Kelley from Bank of America. Please go ahead. Your line is open.
Shaun Kelley: Hi. Good morning, everyone. Thanks for taking my question. So Mark one high-level one and then, kind of, wanted to probably beat the dead horse on ALG a little bit. But so on the high level just wanted to, kind of, get your thoughts on some other companies out there provide a little bit of color on 2024 expectations for net unit growth. And you’ve obviously given lot of detail just coming out of the Analyst Day. So my question is just, kind of, how do you feel about that at this point in time? And just can you remind us of some of the your pros and cons to that build as it relates to things like conversions, Hyatt Studios launch? Just anything that would — any movement or any things that have, sort of, kind of updated your thinking as it would relate to kind of how you’re expecting ’24 to look like? I know you’ve already addressed the financing environment. You don’t need to hit that twice.
Mark Hoplamazian: Okay. Thanks. So for everyone’s edification what we said at Investor Day is that we saw a 6% to 7% compounding net rooms growth into the future. And we feel really, really good about that. Excellent. I mean, first of all, yes, we’ve seen openings of a number of hotels that were under construction and then new starts have slowed down. So that is a bit of headwind. Based on our dialogue with a bunch of developers for whom we’re moving from LOIs to signed contracts for Hyatt Studios, we see a very high incidence of developers moving to construction pretty quickly. We’re going to open our first Hyatt Studios before the end of next year. And so we really feel great about the fact that we’re finding that really good developers are great partners are actually finding access to capital.
