Hyatt Hotels Corporation (NYSE:H) Q4 2022 Earnings Call Transcript

So there’s a lot of demand that was leisure focused and that’s typical in what we would expect and that’s what we’ve seen in nothing elsewhere. The business travel is coming back. We see that, first and foremost, in our by Hyatt, which is our upper midscale in dense urban locations where it’s mostly business travel, and we’re seeing great performance in those brands. In terms of the pipeline, about 40% of the total pipeline is in China. So we have a significant measure of growth ahead of us. We expect to open 24 hotels in China this year, that’s even with the construction lags that I referenced earlier, and about two thirds of that — of the room count that’s opening, maybe even higher than that, maybe three quarters is what I would describe as legacy Hyatt brands and the remainder is by Hyatt.

So it’s still dominated within our portfolio, not in the upper midscale brand that we launched, but growing. I think that the outlook for construction this year is mixed. Yes, the restrictions have been lifted, but some of the private developers, not government controlled or own are digesting two things. One, they’re digesting still the aftermath of and some of the debt formation challenges that exist in China. But secondly, they have been targeted subsidies or targeted investments made by the government and especially in residential development in China to complete projects that are underway. And the reason is because the government wants to stand behind actually a soft landing for residential real estate, which is a big investment for many Chinese citizens.

So that’s going to get digested and the government will have some backstop with respect to that segment, that asset class. And I think by the end of this year, our expectation is by the end of this year, the normal cadence of construction of hotels into the first quarter of next year will return. So we think that this year is going to be a bit sloppy as we work our way through some of those dynamics that I just described. But I feel really good about, first of all, secular growth in the marketplace. And secondly, the quality of our core partners — development partners in China is very, very strong, very high quality level. So we feel good about the medium to long term prospects.

Operator: This will conclude today’s conference call. Thank you for your participation, and have a wonderful day. You may all disconnect.