管理層發言
Good morning, and welcome to Hyatt's Second Quarter 2026 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. If you would like to ask a question during this time, simply press star followed by the number 1. If you would like to withdraw your question, press star 1 again. As a reminder, this conference call is being recorded. I would now like to turn the call over to Ryan Nuckols, Vice President of Investor Relations and Corporate Strategy. Please go ahead.
Thank you, and welcome to Hyatt's second quarter 2026 earnings conference call. Joining me on today's call are Mark Hoplamazian, Hyatt's Chairman, President and Chief Executive Officer and Joan Bottarini, Hyatt's Chief Financial Officer. Before we start, I would like to remind everyone that our comments today will include forward-looking statements under federal securities laws. These statements are subject to numerous risks and uncertainties as described in our annual report on Form 10-K, quarterly reports on Form 10-Q, and other SEC filings. These risks could cause our actual results to be materially different from those expressed in or implied by our comments. Forward-looking statements in the earnings release that we issued today along with the comments on this call, are made only as of today and will not be updated as actual events unfold. In addition, you can find a reconciliation of non-GAAP financial measures referred to in today's remarks under the Financials section of our Investor Relations website in this morning's earnings release. An archive of this call will be available on our website for 90 days. Additionally, we post an investor presentation on our Investor Relations website this morning containing supplemental information. Please note that if not otherwise stated, references to occupancy, average daily rate, and RevPAR reflect comparable system-wide hotels on a constant-currency basis. And closed hotels in Jamaica are excluded from comparable metrics in 2026. Percentage changes disclosed during the call are on a year-over-year basis unless otherwise noted. With that, I will turn the call over to Mark.
Thank you, Ryan, and good morning, everyone. I appreciate you joining us today. Before I begin, I would like to once again thank everyone who joined us at our recent Investor Day, both in person and virtually. We appreciated the strong engagement throughout the event and the thoughtful conversations we have had with many of you since then. It has been encouraging to hear the positive feedback on our strategy and the long-term opportunities that we outlined. As we showcased at Investor Day, Hyatt has evolved into a more asset-light company with a differentiated operating model built around premium brands, a growing commercial platform, and disciplined capital allocation. Our objective is clear: to sustain a business model capable of delivering durable fee growth, increasing cash flow, and attractive long-term returns over a wide range of operating environments. Our second quarter results provide another example of that model in action. Despite meaningful regional headwinds in parts of our portfolio, we delivered strong RevPAR, fee, and adjusted EBITDA growth, expanded World of Hyatt membership, and increased our development pipeline to record levels. These results demonstrate the growing strength of Hyatt's commercial platform, the increasing preference for our brands among guests, owners, and developers, and the benefits of a business model where quality growth translates into higher fee earnings and free cash flow. Turning to our operating results. This morning, we reported second quarter system-wide RevPAR growth of 5.9%, exceeding our expectations. Performance was driven by durable demand from high-end travelers and continued strength across our luxury portfolio, with some benefit from the FIFA World Cup. RevPAR growth in the United States exceeded our expectations and we also saw strong growth across most international markets. RevPAR was up in all customer segments. Business and group travel was solid, with business transient RevPAR increasing approximately 2% during the quarter, and group RevPAR increasing more than 7% compared to last year. FIFA World Cup host cities delivered group RevPAR growth of more than 13% in June. Leisure demand from premium travelers remained exceptionally strong during the quarter, with leisure transient RevPAR increasing approximately 7% compared to last year, once again led by our luxury brands. As one example, FIFA World Cup host cities in the United States generated leisure transient RevPAR growth of more than 17% in June. Our performance reflects much more than favorable industry trends. Our brand-led strategy continues to differentiate Hyatt and we are gaining market share across our portfolio. During the first half of the year, our luxury and lifestyle portfolios increased RevPAR index by nearly 3 points with a large proportion of our hotels gaining share. This reflects growing preference for our brands, the strength of our commercial platform, and the impact of our brand-focused approach. A significant contributor to that growing preference is World of Hyatt, which ended the quarter with approximately 69 million members, an increase of 17% from a year ago. As World of Hyatt membership and engagement grows, we are continuing to enhance the value of the program. One recent example is our collaboration with Air Canada, which brings two highly engaged loyalty programs together and gives members more ways to earn and redeem rewards while expanding the experiences available across both networks. World of Hyatt sits at the center of our network effect, creating more value for guests, owners, and developers as our system grows. Every new hotel we add expands opportunities for our members, while every new member strengthens the value of our commercial platform. The lasting benefits we create by driving quality growth fuel more direct channel demand, stronger owner returns, and durable fee growth. Development activity remained very strong during the quarter. We ended the quarter with a record development pipeline of approximately 154,000 rooms, up 10% from a year ago. The breadth of our pipeline reflects growing owner preference for Hyatt. Our luxury, lifestyle, and inclusive collection brands continue to generate strong owner interest, while our Essentials brands are building momentum and creating meaningful opportunities to expand Hyatt's brand footprint in markets where we have significant white space. The Hyatt Select brand is a great example of that momentum. During the quarter, in addition to strong signings in the United States, we signed a master franchise agreement with the Dossen Group to bring the Hyatt Select brand to Mainland China. This collaboration combines Hyatt's global brand recognition and the local market expertise and development capabilities of Dossen Group, one of the region's leading hotel operators, providing a strong platform to thoughtfully scale the Hyatt Select brand in an important long-term growth market. We delivered net rooms growth of 4.4% for the second quarter excluding rooms from the Playa Hotels acquisition that were removed from Hyatt's room count in the second half of 2025. Among our notable openings this past quarter were Miraval The Red Sea, our first Miraval property outside of the United States, and The Barai, part of The Unbound Collection by Hyatt, our first property in the Unbound Collection by Hyatt in Thailand. Both of these openings expand our brand presence in the luxury wellness segment while bringing two distinctive experiences to World of Hyatt members in sought-after destinations. Miraval The Red Sea is the first of a number of important openings planned in Saudi Arabia over the next several years. Development pipeline remains very healthy, and we expect net rooms growth to accelerate significantly over the second half of the year, with a large number of our expected openings scheduled for the fourth quarter. We continue to see meaningful opportunities from both conversions and new build openings. We have adjusted our full year outlook range to reflect the large number of fourth quarter openings, some of which could slip into 2027. I want to be clear: our confidence in delivering on the strong organic growth we outlined in our Investor Day presentation remains very high. Now turning to transactions, we continue to make progress on the planned sale of the Hyatt Grand Central New York. However, based on our current expectations, we no longer expect the transaction to close in 2026. We will continue to provide updates on this transaction as we reach key milestones. More broadly, we remain active in the market and are in discussions regarding the sale of certain assets to unlock additional value from our owned portfolio. Our disciplined approach remains consistent with our track record of pursuing transactions that achieve attractive values while ensuring our hotels remain in the Hyatt system under long-term management or franchise agreements, supporting continued fee growth and shareholder value. Looking ahead, we remain confident in Hyatt's long-term positioning. As we highlighted during Investor Day, we have transformed Hyatt into a more durable asset-light business that generates increasing free cash flow as our system grows, and cash conversion improves, allowing us to continue to invest in the areas of the business that matter most to our guests, owners, and shareholders. Our strategy is producing tangible results. We have led the industry in net rooms growth for the past nine years, delivered industry-leading RevPAR growth over the past five years, and today generate the highest fees per room among our largest peers. Together, these drivers have created a powerful compounding effect on fee growth. Importantly, achieving that growth requires only modest incremental capital, allowing us to reinvest in our brands, commercial platform, and future growth while continuing to generate increasing levels of free cash flow. We also believe the opportunity ahead remains significant. We have built a differentiated portfolio of brands serving high-end travelers, developed one of the industry's most attractive and fastest growing loyalty programs, and continue to see substantial opportunities to expand our brands in markets where Hyatt has meaningful white space. Together, we believe these advantages position Hyatt to deliver durable long-term growth and consistently create value for shareholders. I would like to close my comments by thanking our Hyatt colleagues around the world who bring our purpose of care to life every day. Their commitment to our guests, owners, and one another is what truly differentiates Hyatt and gives me great confidence in our future. I will now turn the call over to Joan to provide more details on the quarter. Joan, over to you.
Thanks, Mark, and good morning, everyone. During the second quarter, RevPAR exceeded our expectations, increasing 5.9% compared to last year, driven by resilient travel demand from premium travelers and incremental demand from the FIFA World Cup. In the United States, RevPAR increased a very strong 6.7% compared to last year, driven by robust leisure travel along with healthy group demand. The FIFA World Cup contributed approximately 70 basis points of RevPAR growth, with host cities delivering double-digit growth during the second half of June. Our select service hotels also performed well, with RevPAR increasing 3.5% driven by improving business transient demand and easier comparisons to last year. Outside of the United States, RevPAR increased nearly 5% and was up 7.5% excluding the Middle East. This strong growth reflects robust international travel demand and continued strength in higher-end travel. RevPAR in the Americas, excluding the United States, increased 9.5% benefiting from strong regional performance and international demand from the FIFA World Cup. Greater China RevPAR increased an impressive 7.2% compared to last year, supported by leisure transient demand and strong average rate growth across our largest markets. Asia Pacific, excluding Greater China, delivered robust RevPAR growth of more than 10%, reflecting strong inbound travel and demand in key markets where we have strong brand representation. Europe generated RevPAR growth of 4.5% as healthy domestic leisure demand offset softer inbound travel from the Middle East. RevPAR in the Middle East declined by 36% compared to last year due to the ongoing conflict in the region. Net package RevPAR in our all-inclusive portfolio declined 1.2% compared to last year, as the security incident in Mexico earlier this year and lower flight capacity had an impact on second quarter demand. Net package RevPAR for our hotels in the Dominican Republic was up over 8%, underscoring the strength of the high-end leisure guests in a stable operating environment. Our all-inclusive resorts expanded market share, reflecting the strength of our brands and the power of our commercial platform. Overall, our second quarter results reflect continued strength in premium leisure travel globally and healthy corporate travel demand. Turning to our financial results. Our core fee business continued to perform well, supported by strong top-line performance, healthy hotel-level profitability, increasing scale, and the quality of our portfolio. Gross fees increased 8% to $324 million, driven by strong performance across our managed portfolio, fees from newly opened hotels, the new management agreements from the Playa portfolio, and growth in license fees. In the second quarter, owned and leased segment adjusted EBITDA increased by 16%, adjusted for the impact of asset sales, reflecting the performance from the high-end positioning of our remaining owned and leased hotels. Distribution segment adjusted EBITDA declined compared to the prior year, in line with our expectations, due to temporary factors including hotel closures in Jamaica following Hurricane Melissa and softer demand in Mexico. Results were also impacted by lower demand for 4-star properties, and we continue to expect it will take time for demand to return to previous levels as flight capacity increases and travel spending improves among this consumer segment. Travel volumes into the Dominican Republic were up 7% for our distribution segment, reflecting continued strength and demand for this destination. Overall, our second quarter adjusted EBITDA reflects the strength of our core fee business and was up approximately 9% year-over-year after adjusting for asset sales. As of June 30, we had total liquidity of approximately $2.1 billion, including $1.5 billion of available capacity on our revolving credit facility. Year-to-date, we have returned approximately $175 million to shareholders through share repurchases and dividends, and during the second quarter returned approximately $26 million. We ended the quarter with approximately $1.5 billion remaining under our share repurchase authorization. We remain committed to our investment grade profile, and our balance sheet remains strong. Looking ahead to the second half of 2026, while travel demand continues to vary across regions, we remain confident in our outlook for the year supported by the strength of our brands. As we shared last quarter, we continue to expect hotel revenues in the Middle East to remain significantly below last year which we estimate will reduce full year fees by approximately $10 million. In Mexico, booking trends at our all-inclusive resorts are improving sequentially, but have not yet recovered to the extent we expected, resulting in an approximately $15 million impact to fees compared to our prior outlook. While we continue to expect positive full year net package RevPAR growth in the Americas, we now expect third quarter net package RevPAR to be moderately below last year. Despite these temporary regional headwinds, we are increasingly encouraged by the strength of our core fee business. In the United States, the FIFA World Cup provided a meaningful benefit during the second quarter and forward-looking trends remained strong for the balance of 2026, with group pace for our US full-service hotels up in the mid-single digits for the remainder of the year. We are also seeing improving trends in our select service portfolio as we lap easier comparisons. Outside of the United States, we expect performance in Asia Pacific to be strong through the balance of 2026. Reflecting these trends, we are increasing our full year system-wide RevPAR growth outlook to between 3.5% and 4.5%. We now expect full year RevPAR growth in the United States of between 3% and 4%. We expect RevPAR growth in international markets, excluding the impact of the conflict in the Middle East, to be slightly higher than the United States for the full year. We expect net rooms growth of approximately 6% for the full year, with momentum in conversions, including in our new brands, driving another year of strong organic growth. As Mark mentioned earlier, we expect the fourth quarter to account for over half of our openings for the year, and we remain confident in our ability to meet the long-term growth expectations that we laid out at our most recent Investor Day. We are maintaining our gross fees outlook for the full year and expect fees to grow between 9% and 11% in the range of $1.305 billion to $1.335 billion, reflecting continued growth across our asset-light platform, despite temporary hotel closures in Jamaica and softer performance in Mexico and the Middle East. We are maintaining our full year adjusted EBITDA outlook and continue to expect adjusted EBITDA to grow at a strong rate of 13% to 18% in the range of $1.155 billion to $1.205 billion. This outlook reflects an approximately $25 million year-over-year decline in our Distribution segment for the full year compared to 2025. We are maintaining our adjusted free cash flow outlook for the full year in the range of $580 million to $630 million, representing an increase of between 20% and 30%. This reflects the conversion of adjusted EBITDA to adjusted free cash flow of at least 50% for the full year. Finally, we expect to return between $325 million and $375 million of capital to shareholders through share repurchases and dividends during 2026. For the third quarter, we expect global RevPAR growth towards the low end of our full year outlook range. We expect net package RevPAR to be moderately below last year. Gross fees are expected to grow in the high-single-digit range compared to the third quarter of 2025. As a reminder, this growth is after adjusting for the $30 million from owned assets sold in 2025 and the $13 million of pro rata JV EBITDA removed under our updated definition. These adjustments are outlined on page A-9 in this morning's earnings release. In closing, our second quarter results reflect the continued strength of Hyatt's asset-light earnings model. As we highlighted during Investor Day, our strategy is designed to generate high quality, durable fee growth and increasing cash flow over time, and this quarter's results are another demonstration of the successful execution of our strategy. As our system expands and our brands continue to outperform, we believe we remain well positioned to generate durable fee growth, strong free cash flow, and long-term value for our shareholders. This concludes our prepared remarks, and we are now happy to answer your questions.
分析師問答
At this time, the first question comes from Ben Chaiken with Mizuho. Please go ahead.
Would love to just revisit the net rooms growth adjustment. The prepared remarks were very helpful. Is the idea that, just so I understand perfectly kind of where you are coming from, is the idea that some of the expected rooms in 2026 flipped into 2027 or rather given the magnitude of the openings you see in Q4 and how that could be a swing factor you are proactively assuming some move to 2027 out of conservatism?
Thanks, Ben. Let me provide some context, and then I will answer the question very specifically. First of all, I think it is really important to put into context the first couple of quarters of this year. In fact, the first half of this year relative to what were very, very significant growth periods a year ago. Secondly, we had some rooms that came out of the system because of the Playa adjustments, which were hotels that we actually acquired but the rooms did not become part of the Hyatt system, but were reflected in the rooms that we owned, and some turnover in the UrCove portfolio and two losses in the Lindner portfolio. Those three factors were a drag in this particular quarter. But when you look at a two-year stack, which is a much, I think, healthier way to look at these things because really what I think people should be focused on is are the implications for fee growth? We have had very strong fee growth this year. We will continue to have very strong fee growth in the high single digits as Joan mentioned, or low double-digits, and that will continue to increase into next year because of ramp-up and so forth. But our two-year stack of net rooms growth in the first quarter and the second quarter of this year was 16%. So 16% growth in net rooms from first half of '24 to first half of '26. Secondly, as we said in our Investor Day, our organic growth compounded over the last eight years has been 7% and that is organic; total was over 9%. And the pipeline in the first quarter was up over 9%, 10% in the second quarter. So you put all these factors together, and we are set up for persistent significant net rooms growth. With respect to this year, we have seen two things. One, in the year-for-year conversions, especially in the context of two new brands that we launched, Select and Unscripted, in some cases the PIPs were heavier than we initially had modeled and the timing for the PIP completion has extended. And so we have seen slippage from Q2 to Q3 and Q3 to Q4 already. And secondly, about 50% of our pipeline openings are in the fourth quarter, and the majority of those, over 60%, are luxury, lifestyle, and full-service hotels, which inherently are more complicated to forecast. There are many more permits and facilities that need to be prepped and certificated for opening. Therefore, we are looking at a heavy concentration in the fourth quarter and we are proactively being conservative and assuming some of these may very well slip into the first quarter. I would say a proactively conservative estimate on how the year will actually shape out. The key from my perspective is not a hyper-focus on one quarter to the next, because first of all, the net rooms growth figure is not what I think is going to drive value. It is net fee growth. So the fee growth algorithm is what drives value. You cannot take net rooms growth to the bank. What we are set up for is significant persistent compounding fee growth in the upper single digits as we look forward in time. And our growth—how do I know that? Because the pipeline growth is actually in that same range. The final thing I will say about our confidence about the algorithm that we put into place or that we shared during Investor Day is between the very high demand that we see in the marketplace with respect to new signings, in addition to that, we put into place a financing vehicle with a third party, HALL Structured Finance, a $500 million facility. We have about a dozen of our already signed Hyatt Studios deals that are going through the approval processes or going through the negotiation process for financing to get those hotels underway. We already have a number of hotels that are under construction and a number that are opened, trending very well, but we want to accelerate that provided some credit support in that facility. So between the core demand that we are seeing for the brands and our pipeline growth and actually trying to address one of the key needs that we see in our owner community, which is financing for construction, we really feel confident that the 6% to 8% range that we gave during Investor Day is going to be realized. Very thorough and helpful answer. Appreciate it. Thanks.
Very thorough and helpful answer. Appreciate it. Thanks.
Your next question comes from the line of Michael Bellisario with Baird. Please go ahead.
Good morning, everyone. Mark, want to focus on the demand front. Can you just talk about booking windows if you are seeing those expand at all for both group and transient? And then have your property managers changed their revenue management or pricing strategies given the recent RevPAR improvement that we have seen in the United States? Thank you.
Yeah. I will start, but I will ask Joan to comment as well. With respect to group, we have 96% or 97% of the rooms sold this year, so we have revenue realized on-the-books volume, which is exactly what we would expect to see, and we have about between 55% and 60% of next year booked now, which is right on path with what we would expect this time of year. So I think the booking window with respect to group has not really changed. The one thing I would note is that the quarter-over-quarter mix does shift somewhat materially over the course of the year. Corporate is really the key driver for our group realization, which is actually very good news because there is more in-house banqueting and F&B, so higher revenue base for our owners. So I would say that the mix is important as well as the booking curve. The booking curve is basically the same and the mix is actually favorable, and that is true globally but especially true in the U.S. With respect to leisure, we are about on track as well with respect to volumes, and Joan can talk about this with respect to Hyatt Inclusive Collection specifically because that is the place where we have probably the most visibility in terms of mix and market. Business transient remains very short-term. The good news is that if you look, business transient group is up about 5.5% and business transient was up over 2% year-to-date, and I think that is a very positive sign. In our case, it is more heavily concentrated towards luxury and full-service hotels. Joan, maybe you want to talk about Hyatt Inclusive Collection outlook.
Yeah, would just say to add on to what Mark mentioned that those numbers are our first half numbers, and it is true that our booking windows have not changed much on the peak side. We have seen some increasing and encouraging activity. In our outlook for the full year those booking windows still remain shorter on the business transient side and for leisure we have booking windows that are 30 to 60 days out, except for maybe the Hyatt Inclusive Collection business where flight and a longer booking necessity from our guests to actually make those reservations exists. When you look at Q3 and Q4, slightly negative overall, and we reported negative 1.2% in the second quarter for net package RevPAR, and we are seeing sequential improvements week on week into Cancun in particular because that is the market that has been the most disrupted post the February security incident. So improving but not as much as we had anticipated. When we look out a little bit further, toward Q1 of 2027, still early days, but it is a very important indicator for us to start looking at now as we go into our planning season in the fall, the Q1 pace is up in the high single digits overall for the region. So we are seeing Cancun a bit flat, but other areas, the West Coast of Mexico and the Dominican Republic are up significantly. Dominican in particular is up over 20%. That core leisure traveler and their demand for travel in those high season periods is growing, and that gives us a lot of confidence into how Q1 of 2027 is going to shape up. Again, backward to the sequential into this year, we think it will be growing throughout the rest of this year.
I would just say a quick editorial comment. Flat or flattish for Cancun in the first quarter at this point might seem unimpressive, but do not forget that the security event did not occur until the very end of February of 2026. So the first quarter of this year was actually pretty strong for the Cancun region. For us to be flat at this point, with a lot of booking remaining and a dynamic where both the West Coast of Mexico and the Dominican have gotten a lot more expensive because a lot of the increase in the revenue pace is coming through rate increases, that will cascade into Cancun. So we expect to see Cancun sequentially improve from here on out and see Q1 serially improve.
Your next question comes from the line of Richard Clarke with Bernstein. Please go ahead.
Hi, thanks for taking my question. I just wanted to follow-up on the net package RevPAR in Q2. I guess it was quite a big delta from Q1 to Q2. So like in Q1 you were able to offset the weakness in Mexico with strong demand elsewhere. So what changed in Q2? Is Q2 just more naturally a Mexico-heavy quarter that meant the effect was felt a bit harder? And if I can ask you a quick second one, wondering why the buyback number was so low in Q2, just $12 million. Was there some reason you could not buy back stock in Q2 that we maybe did not know about previously?
Let me answer the first question, Richard. In the quarter, we had anticipated that we would have increasing demand. We saw it when we reported Q1 results, and so that is what gave us confidence in what we reported at the end of the first quarter, and then it sort of leveled out. Other regions were very strong. The Dominican was up 8% in the quarter, so people were sort of redirecting some of their bookings and that is the dynamic we saw. But as we mentioned, week on week demand has grown sequentially better, so we believe that this is very much temporary and as Mark mentioned that this will accelerate into the latter half of this year as occupancies fill up into these other regions as well. With respect to buybacks, we were locked out for Investor Day for a period of time in the second quarter. So that was part of the activity that you saw. We reaffirmed our guidance with respect to capital returns for this year between $325 million and $375 million. So that is what you can expect to see, the difference between what we have achieved year to date and our outlook at this point in the year.
Your next question comes from the line of Smedes Rose with Citi. Please go ahead.
Oh, hi. Thank you. Switching gears just for a moment away from operational outlook. I was wondering if you could talk about what you are seeing in transactions in the market. It seems that higher-end properties are gaining some traction with investors. Is that what you are seeing? Would you expect to be able to execute on that going forward?
You took the words right out of my mouth, Smedes. The fact is that quality properties in high-barrier-to-entry markets is what is garnering the most attention, and that is where all the activity is. The rest of the market is, I would say, flattish in terms of activity level. It is not surprising. If you have great properties in higher-barrier-to-entry markets they always retain value; there is always a market for them. It just happens that there has been a flight to quality that has been more pronounced over the last six months or so. That is what we are seeing in the market. Thank you.
Next question comes from the line of Brandt Montour with Barclays. Please go ahead.
I was hoping to drill in a little bit on U.S. outlook. If you look at the first half, you guys did a mid single-digit number in the U.S. Obviously, there is some FIFA World Cup in there. If I am reading your language correctly, Joan, for the full year U.S., you are looking for 3% to 4%. I think that was a RevPAR number, but it basically implies a pretty steep step down in the second half. I was wondering if you could give us some sense of how much of that is conservatism and other calendar things to note as we move through the back half.
Sure. You are right about the year-to-date; it was about 5% growth for the U.S., and it was pretty evenly split growth rates if you look across the two quarters between leisure, business, and group. So that was obviously more heavily weighted into the second quarter with respect to group and the impact of the FIFA World Cup, which was significant. As we look at the second half of the year, group, as I mentioned, is up in the mid-single digits which is where we have the greatest visibility to demand, and part of what is embedded in our outlook is the lower visibility that we have to leisure and business. Given the momentum we have had, there is upside there. Probably some conservatism there, but we want to make sure that we are sharing what we are seeing and the booking windows that we are seeing. So that is basically what is embedded in the outlook.
I would just add one other thing: reminder, Labor Day hit at the very beginning of the second quarter of 2025, so there is some lapping of that. That had more pronounced impact on upscale and upper midscale hotels than it did luxury. For us, luxury and leisure continue to lead every dimension and in every market around the world. I went back and looked at the last eight quarters running; there is no exception. Luxury had the highest RevPAR growth with the highest ADR growth in every region and every quarter, and leisure has been the engine that has continued to propel us. China, interestingly, was very strong; China luxury properties were up 11% this past quarter. China is on fire. We are up almost 10% in the first half in RevPAR in China, and the UrCove performance has also been very robust because we are in key locations within the principal cities. Leisure and luxury is where it is at, and that is what we are seeing. Thank you.
Your next question comes from the line of Duane Pfennigwerth with Evercore ISI. Please go ahead.
Hey, thank you. Just on the cadence of the second half guide or the implied second half, from an EBITDA growth perspective, it feels like the full year would imply some pretty big acceleration from the low double-digit in Q3 into the fourth quarter. You may have touched on some of the drivers, but can you just remind us, is there something in the 4Q comparisons or what would you view as the key drivers of that growth acceleration from the third quarter into the fourth quarter?
So we do have some factors that drive a stronger back half. Distribution actually has most of the impact that we outlined is in the first half of 2026. We have forecasted in the fourth quarter that we will have some improvements and a big factor driving that is the hurricane impact in the fourth quarter of 2025, which had some disruption to results in the fourth quarter of 2025 that we will be lapping. So there is some upside there. The fee growth from the core business in the U.S. and internationally will continue to be strong in the fourth quarter. We also have a little bit of G&A because we had a little bit heavier G&A in the first half. So as you look across our guidance, there is a little bit of a pickup there. And finally, I would just mention Playa: the Playa hotels that entered the portfolio, the fourth quarter is a strong quarter seasonally for those hotels, which helps the distribution segment.
Your next question comes from the line of Shaun Kelley with Bank of America. Please go ahead.
Good morning everyone. Thanks for taking my question. Mark or Joan, just maybe come up a little bit more strategically for a moment. I wanted to get your thoughts on the owner value proposition at this point in the cycle or over the last number of years. I am curious how Hyatt thinks about this topic or debate. You have a much larger managed concentration, so it may not be quite as relevant to you, but thoughts on that mix, how your owner conversations are going, and anything you are doing to help them out or work with them a little bit on the broader fee burdens, as it has come up a bit elsewhere in the industry? Thanks.
Yeah. Shaun, thank you for the question. As you know, we have been owners of hotels over time, and our portfolio is as small as it has been since the 1960s. We sold down a lot of assets, but the DNA of thinking as an owner has not left us. It is not been that long ago since COVID hit, and we were shoulder to shoulder with our big owners figuring out how to reduce breakeven levels for our full-service hotels from the mid-40s to the low-20s, which we actually accomplished in the space of about four months. So it is a muscle that is highly developed and very toned at Hyatt. It is constant effort; it is in our DNA. We have done exhaustive work on pulling apart our systems costs—not IT systems in the generic sense, but commercial services systems and technology systems on a comparative basis—and we have extremely high confidence based on a lot of comparisons across FDDs that have been filed and clarity around what is included in what line items that we are highly competitive if not at a cost advantage to our largest competitors. That may be counter to accepted wisdom in the industry, which is you have to be gargantuan in order to be efficient, and that is just not the case. Some specific initiatives we have undertaken: we have removed IT implementation fees for all new openings. The technology cost reductions are significant. We converted to a completely new platform, a fully new CRS, the implementation of Opera Cloud, and a new RMS, all three concurrently over the last 18 months. You might question our judgment for trying to do all three of those, but we accomplished all of them on time and on budget. As an example, on a per-room basis our PMS cost to owners has been reduced by 40%; that is a significant move as a result of a big investment that we made. These were not bills sent out to owners to pay for the systems that we put into place—we paid for that out of our funds, and they derive the benefit on a run-rate basis. Over the course of this year, we have developed an AI-enabled platform to help identify signals that our hotel teams can go after; they primarily relate to revenue opportunities, not costs, but they also impact costs. We have a dedicated team now that is using an AI-enabled tool to look at things like vendor optimization and an overlay with respect to revenue management, which is one of the things that I think accounts for some of our market share performance. We have developed a large-scale AI platform to actually score and value every piece of group business that comes through the door. Put all of that together and we are seeing real significant flow-throughs, and we still own enough hotels to track that. We also have 100% visibility to all of our managed hotels, which is about 70% of our rooms around the world. Conclusively, we are seeing really healthy flow-throughs as a result of all these initiatives. It sounds like a lot and it is. We have come through this in a really healthy way. We had an owner advisory committee meeting a couple months ago and we went over all of these data with our owners. Quite a few of them said it has not gone unnoticed, and our transparency with them about where the costs lie and how we are going after them has led to increased demand for our brands. Thank you so much.
Next question comes from the line of Daniel Pollitzer with JPMorgan. Please go ahead.
I wanted to go back to the net rooms growth. Mark, you mentioned some stuff shifted around this year. Going back to that Investor Day guidance where you put up that 6% to 8% number, is it fair to say that going forward as we think about 2027, you should be at least in the midpoint or above part of the range as you benefit from some of the stuff that shifted out of 2026?
Yeah. I think the answer is yes, but I will also give you a historical reference. If you go back, and we presented this during Investor Day, over the last eight years from 2017 to 2025 our organic net rooms growth over that period of time was 7% and our total was 9%. I am not asking you to bend your imagination, I am pointing out that our pipeline growth has never been stronger. We are addressing some of the key pain points like financing. Our performance continues to improve. Our systems costs, as I just described, are highly competitive. All of that sets up for a very solid outlook for net rooms growth in 2027, 2028, and beyond. As we find more efficient ways to get conversions through the funnel we will see a more consistent opening pace. We launched two new brands that are conversion brands and we are learning that our standards and the PIP requirements are a little bit more significant than we initially imagined, and they are taking longer. But that is good news because what you end up with is a higher-quality, higher-rated, more profitable hotel coming out the other end. I really think we are talking about more of the same as opposed to some massive inflection point. The two-year stack I mentioned earlier is another proof point of that.
I would just add at our Investor Day we commented that our gross fees per room are in excess of the industry, and we look at our pipeline and the pipeline is accretive. So even with having some of these new brands being added, which will be dilutive because of the fees per room in that category, we are very much modeling the fact that accretion is going to come. As we talked at Investor Day, the 9% to 11% compounded rate over the next couple of years is absolutely our expectation at this point.
Yeah. I did not follow my own admonition to you all—Joan just reminded me. It is net fee growth that matters. Let's focus on the fees. So organic fee growth over the last five years has been over 10%, 10.4%, and that is in excess of our peers' total fee growth over that period. So this algorithm we are talking about—9% to 11% on the fee side, 6% to 8% on the net rooms side, fees per key embedded in the pipeline being higher than they are on the existing portfolio—nothing has changed. All of those facts and dynamics remain in place. Please pay attention to fee growth. That is where you can take money to the bank. Understood. Thanks so much.
Next question comes from the line of Trey Bowers with Wells Fargo. Please go ahead.
Hey, guys. Appreciate the time. Just another net rooms growth question for me and more for modeling. As we look to the next couple of years, managed versus franchise, obviously total fees matters the most, but curious: will the growth across those two look a lot like it already has? Or will there be a heavier skew towards managed or franchised given that franchise is a little bit more of a predictable fee stream than straight managed IMS fees?
I think the answer is this: the mix we have ahead of us is about two-thirds international and about two-thirds full-service, and that is what is embedded in the pipeline. In terms of the rate of growth across managed versus franchise, we are seeing higher rates of growth in our Essentials brands. Nonetheless, we have 154,000 rooms in our pipeline, so there is the inevitability of the opening of those hotels which looks a lot like our current mix. Over time, with a continuous acceleration of our Essentials brands filling in important markets where we are not represented today, we will see franchise increase as a percentage of the total. I do not think you are going to see a material increase over the next two years; in five years you will see a perceptible increase in the franchise mix.
Your next question comes from the line of Stephen Grambling with Morgan Stanley. Please go ahead.
Hey, thank you. I think you mentioned a few things around China, including some turnover in the UrCove portfolio, but you also referenced strength in the market and a new agreement in the release with Dossen. Can you compare and contrast these agreements as we think about target brands and markets, the royalty rates, and also provide color on the turnover in the UrCove portfolio specifically, if that is a one-off?
Thank you for the question. The key fact you need to understand is that the segment we are talking about—upper midscale, both for UrCove and for Hyatt Select—are executed fundamentally differently than the hotels that are built in upscale and above. The vast majority of those hotels are leased properties that are primarily offices being adaptively redeveloped into hotels. That is not a business we are in directly. We need a partner who can act as a lessee and who has the capacity and infrastructure to execute efficiently. We have two great partners. Dossen has done a remarkable job and the combination of our brand power and World of Hyatt with their technical and operational expertise for these types of hotels has led UrCove to be a great success, with something on the order of 120 to 130 hotels open and in the pipeline and real vibrancy there. Turnover: some of the hotels that became UrCoves were already in Dossen's portfolio. These lease deals tend to be 10 years in length, which is commonplace for the marketplace, and so you end up with some turnover when you get to the end of lease terms. With respect to Dossen, they are a large, capable group with specialization in adaptive reuse for upper midscale properties, and they also play in other markets including economy and upscale. Our focus with them is Hyatt Select to gain access to properties we would not otherwise have an easy way to execute against unless we built a lessee organization and execution organization, which is not a smart idea for us. Meanwhile, our core business, heavily dominated by full-service and luxury, is thriving. We have appropriate go-to-market strategies for the segments we participate in China. Does that make sense? That is helpful. Thank you. I want to thank all of you for your time this morning and your interest in Hyatt. We are, of course, incredibly excited about our future, and I think you have heard loud and clear from Joan and me this morning that our confidence with respect to our model that we laid out during our Investor Day and our momentum into 2027 is very, very high and very strong. I really appreciate the time and attention, and also welcome you to stay at Hyatt as much as possible so we can make our annual numbers and you all will be very happy with us, but also to experience the power of Hyatt's care firsthand. Have a great rest of your day, and we will talk to you next quarter.
This concludes today's conference call. Thank you for participating and have a wonderful day. You may now disconnect.