Mark Hoplamazian : I think of it is a great baseline from which we can grow. And there are a couple of reasons. One, yes, it’s possible that the first quarter, quote, blow off period, if you will, the huge increase year-over-year was more to do with the 2022 volumes than it had to do with massively outside 2023 volumes. By the way, our case of plus 12 into Cancun is just absolutely proof positive that that’s true. Second, we have already experienced tremendous headwinds of the rotation away from Cancun, which really took hold in the second half of the year. And, and that’s going to be I think, that’s going to be returning and adjusting back to a more normalized sort of total demand level and departures into the Cancun market.
By the way, my confidence in that is buttress by a further increase in airline schedules, which we just learned about two days ago into Cancun. We were already up, I think, in the mid-teens, and they pushed it further. So they’re more scheduled carrier flights into Cancun into the first quarter of next year than we previously expected. That’s proved positive, because the airlines get to move their aircraft around wherever there’s demand. So that tells you something about the demand level. Third 2023 is the massive ramp year for Europe. We struggled in 2022, to catch up to what turned out to be a very compressed level of demand. Our results in 2023 are fantastic. I think our third quarter was up 20% in RevPAR over year-over-year in Europe. Our five star properties which were really lagging badly, in ’22, have really caught on and we are seeing continuous demand.
Now, yes, Europe is much smaller as a earnings contributor. But we’re just getting started here. We’re nowhere near run rate in Europe for our five-star properties our four-star properties have held up very well. And we’re expanding in Europe. So I think that when you put all those things together, our confidence is extremely high because we’ve got facts, data and pace, not to mention a trendline with respect to Europe that all point one direction. So I think you can rest assured that this level of earnings is baseline from which we intend to grow next year in the year after.
Joe Greff : Great, thank you Mark.
Mark Hoplamazian : Thank you.
Operator: Our next question comes from Chad Beynon from Macquarie. Please go ahead, your line is open.
Chad Beynon : Good morning. Thanks for taking my question. Wanting to zone in on the Luxury Portfolio, it looks like a lot of the RevPAR growth in the quarter continues to come from occupancy ADRs, it looks like it’s becoming a little bit harder to push higher, maybe save kind of what you did at Park Hyatt. But just wanted to ask about some elasticity on pricing in the mature markets, maybe absent China, if you’re starting to see some pushback, or do you still have the ability to raise pricing, given the wealth effect and how strong that leisure traveler is towards your luxury properties? Thanks.
Mark Hoplamazian : Excuse me. Thank you, Chad. I would say we do feel very good about the pricing capacity that we have. And that remains. I think that when we think about the progression, Asia has had a disproportionate effect on our reported results for our — when you look at it by brand, leisure demand remains very high. So I think what we’re going to see is a tailwind from increased international travel into China. We’re going to see continued leisure demand. I know that I think rumors of the decline of leisure have been greatly exaggerated. And we are seeing strength across the board. And we are also have a — we have a sharper focus on how we go to market for luxury hotels. And we’re seeing through our consortium partners, a lot of high-end travel advisors, some very encouraging signs with respect to level of travel next year, which implies demand, which implies pricing power.
So we feel very good about it. Luxury ADR right now is running at about 25% 26% above 2019 levels. And so that is quite strong. And I think it’s not only going to be maintained, but will improve. And of that it’s plus 30% in the Americas. So I think what we’re going to start to see is that the enhancements over 2019. So I think what we’re going to start to see is an enhancement of those ADR comparisons to 2019 as we go into ’24.
Chad Beynon : Okay, great. In terms of group, you said it’s pacing 8% up 8% for 24. What percentage of ’24 is kind of on the books right now? And then just in terms of the mix between group BT and leisure, should this look drastically different in ’24 versus ’23? Or should it be similar? Thanks.
Mark Hoplamazian : So the first question, I think we’ve got a bit over 70% of the business books isn’t next year. So which is about where we would typically be at this time. Notably, the bookings what’s on the books right now is reflecting equal measures of improvement of growth in corporate actually corporate, the highest then association, then regional and specialty groups. But they’re all strong, and it’s balanced. So we’re not, we’re not sort of writing a single customer base to have confidence in our group pacing into next year, it’s quite well spread. Associations, as we’ve been predicting, are building in date ranges and pattern stay patterns that guarantee them what they need, that’s compressing inventory. At the same time, what we’ve got looking forward with respect to business transient and group is a continued blurring of the line between what means group and what means business transient.
Some of the use cases have continued to move from what we used to call business transient into what we would call group which is 10 or more rooms and a room block. So I would say the fact that we are now recovered on the business transient side by 90%. I think we just built from here, but also continue, my own take is that group will continue to lead this from a corporate travel perspective. I think I’ve been saying this for a long time. But if I look at the total commercial base, commercial base of customers, that’s whether you want to call it business transient or group in corporate that total demand level is going to be higher and grow from — grow over time from 2019 levels. And I think all the data that we’ve seen year to date proves that to be true.
Joan Bottarini : Yeah. The only thing I would add to that is Mark mentioned the strong, really strong production we saw in Q3, which was over an excellent Q2. And as we look out beyond, you know, these bookings out beyond 2024, are in the over 7%, range, base range. And a lot of that about half of that is driven by rates. So we’re still yielding really strong rates on the group side, and really strong demand even further out. So as the windows look further out, we have even more enhanced ability to yield rates on that group. And then also, the more near term business as we get into future quarters. So it’s all really, really great sign for group business into the future.
Chad Beynon : Great, thanks. Appreciate it.
Operator: Our next question comes from Richard Clarke from Bernstein. Please go ahead. Your line is open.
Richard Clarke: Hi, good morning. Thanks for my questions. I just wanted to ask a couple of questions about the property disposals. Given you’ve signed the purchase and sale agreement, are you in a position to tell us any more about what that property is? Maybe what the multiple might be? And you haven’t changed the capital return guidance. Could it happen early enough this quarter, to increase the capital return guidance? And then if I can think about a follow up, I just want to how you thinking about future disposals, you’ve said you’re confident in this program. Will you announce further tranches at some point or will it move to more of an ad hoc disposal program beyond this $2 million tranche?
Mark Hoplamazian : Thank you, Richard. We’re not going to really go into the details of individual property transactions until we’ve closed that’s our practice. And that is by virtue of the fact that to quote a famous yankee, Yogi Berra it ain’t over till it’s over. So but we have high confidence given that we have a definitive purchase and sale agreement sign with a very known and credible counterparty. And we also have the LOI for the other asset, again, with a very known and capable counterparty with whom we’ve done many deals in the past. So we have, by virtue of the sort of qualitative aspects of who we’re dealing with and how the deal processes have gone, we feel really good about those. And as your question about whether that could affect return of capital to shareholders, our priorities remain the same, which is, first and foremost, we want to we want to invest in the business.
