Charles Scholes

Charles Scholes inquired about the company's current level of commitment to its dividend. He also asked which areas of the guest experience, aside from Park City, the company is focused on improving to boost customer satisfaction.

Answer

CFO Angela Korch affirmed the company's commitment to the current dividend level, highlighting strong free cash flow generation. CEO Kirsten Lynch identified reducing wait times as a key focus, pointing to investments in technology like Mobile Pass and My Epic Gear, as well as physical lift upgrades, as primary strategies to reduce friction and get guests on the mountain faster.

Charles Scholes questioned the drivers behind the significant RevPAR outperformance in the economy and midscale segments, asking if factors beyond market share, like geographic concentration, were at play. He also asked for an explanation for the apparent underperformance in the upscale segment's RevPAR.

Answer

CEO Patrick Pacious attributed the outperformance to factors like increased road trips due to lower gas prices, long-term trends like manufacturing reshoring, and a growing retiree customer base. CFO Scott Oaksmith added that strong growth in business travel (up 10%) was a key contributor. Regarding the upscale segment, Oaksmith clarified that the reported RevPAR decline was due to portfolio shifts on a full-system basis, and on a same-store basis, the segment's RevPAR was slightly positive.

Speaking for Dan Leonard, Charles Scholes asked for the reasons behind the strong performance in the regulatory services business compared to biosimulation services. He also asked to compare the current inbound interest in non-animal testing to the interest seen after the FDA Modernization Act 2.0 was passed.

Answer

CEO William Feehery attributed the strength in regulatory services to a fully built-out and well-executing commercial team, as well as easier year-over-year comparisons. He contrasted the current high interest in non-animal testing with the period after the Modernization Act 2.0, noting that the key difference is the FDA is now sending a clear signal of its intent to the market, which is driving significant engagement.

Charles Scholes questioned the change in full-year group pace from +6% to +1%, seeking an apples-to-apples comparison for Q2-Q4 versus prior projections, and also inquired about group booking trends for 2026 and 2027.

Answer

CFO Sean Dell'Orto clarified the group pace, noting Q2 is roughly flat, Q3 is weaker (down 10%) due to tough comps, but Q4 is very strong (up 18%). He stated that about 90% of the year's group business is on the books and holding steady. For future years, he noted a drop-off in 2026 pace, attributing it to current market uncertainty causing delays in decision-making.

Charles Scholes requested an update on full-year KPI expectations previously provided, specifically regarding tour flow and VPG growth.

Answer

CEO Mark Wang confirmed that while Q1 tour flow was down due to a focus on tour quality and hurricane-related sales center delays, they still expect tour flow growth for the full year. He noted that VPG significantly outperformed expectations in Q1 and that the company now anticipates mid-to-higher single-digit VPG growth for the remainder of the year, assuming stable market conditions.

Charles Scholes asked about the resolution status of the EVH sales integration, whether the lowered guidance was solely due to hurricane impacts, and for an update on previously mentioned softer local market trends.

Answer

CEO Mark Wang explained that the integration is progressing well, with the new regional structure in place and cost savings on track. CFO Dan Matthewes confirmed the guidance adjustment was primarily due to hurricanes, with minor additional factors. Mark Wang clarified that softer local marketing was a result of prioritizing other tour types amid staffing shortages, an issue that is now improving.

Charles Scholes asked about the Playa transaction, specifically what conditions might prevent the deal from closing and how confident management is that the key closing conditions will be satisfied.

Answer

Mark Hoplamazian, President and CEO, outlined the key conditions: achieving an 80% share tender, securing all necessary antitrust clearances (primarily in Mexico), and completing the process to acquire any remaining shares. He expressed confidence in completing the deal, stating that the primary outstanding item they are waiting on is the antitrust clearance.

Charles Scholes of Truist Securities asked if Hyatt needs an upscale conversion brand similar to Hilton's DoubleTree and requested the specific EBITDA impact from hurricanes in Q3.

Answer

President and CEO Mark Hoplamazian responded that while he would 'never say never,' creating a lower-tier conversion brand is not a current priority due to potential risks to brand equity. CFO Joan Bottarini quantified that the Americas all-inclusive net package RevPAR was down about 4% due to hurricanes, which equated to an EBITDA impact of approximately $4-6 million for the quarter.

Charles Scholes sought clarification on how hurricane-related impacts were being treated in the 2025 RevPAR guidance.

Answer

CFO Michele Allen clarified that the 2025 RevPAR guidance of 2% to 3% growth has been built on a baseline that excludes the 140 basis point benefit from hurricanes seen in Q4 2024. This creates a 30 basis point headwind for the full year 2025 and a particularly unfavorable comparison for the fourth quarter.

Charles Scholes asked for a direct, specific figure for the year-over-year net supply unit growth in percentage terms for the third quarter.

Answer

CFO Ellie Mertz provided a direct answer, stating that Airbnb had 'over 10% growth of supply as of the end of Q3, which is down several points based on the removals' of lower-quality listings.

In a follow-up, Charles Scholes of Truist Securities asked if Marriott Vacations' new cost-saving initiative was related to a similar program recently announced by its former parent company, Marriott International, or if the timing was purely coincidental.

Answer

CEO John Geller stated the initiatives are 'totally coincidental' and 'totally unrelated.' He emphasized that Marriott Vacations has operated as a separate, independent company since its spin-off in 2011, and their business strategies are developed independently despite the brand licensing agreement.

Charles Scholes of Truist Securities asked for clarification on the strategy of 'adjusting inventory mix,' the current availability of new inventory across brands, and the company's approach to share repurchases versus deleveraging.

Answer

CFO Jason Marino explained that adjusting the inventory mix involves selling lower-cost repurchased inventory and modulating product offerings, a process that is not transparent to the customer. CEO John Geller added that they are in a good inventory position across all brands. Regarding capital allocation, Marino stated that while the long-term goal is to lower leverage to around 3x, the company views its shares as 'materially undervalued' and will balance buybacks with debt reduction.

Charles Scholes of Truist Securities inquired about the drivers behind the increase in full-year CapEx guidance and asked for details on the potential expansion of the Gaylord Rockies property, including its targeted return on investment.

Answer

Executive Jennifer Hutcheson clarified that the modest CapEx increase is due to the timing of cash payments, not new projects. Regarding the Gaylord Rockies, CEO Colin Reed, EVP & COO Patrick Chaffin, and President & CFO Mark Fioravanti explained they are targeting mid-to-high teens unlevered returns for a potential two-phased, 450-room expansion, supported by strong forward bookings and existing F&B and meeting space capacity.

Charles Scholes from Truist asked about the impact of China's recent economic stimulus on hotel performance and questioned the initial RevPAR growth expectations for the region in 2025.

Answer

President and CEO Tony Capuano stated that the stimulus has not yet materially impacted consumer performance, though development signings remain strong despite a lack of support for the property sector. He noted that an early peak into 2025 suggests China's RevPAR could be flat. CFO and EVP, Development Leeny Oberg added that Q3 and October RevPAR in Greater China was slightly better than expected, with a marginal pickup in cross-border travel to Tier 1 cities.

Charles Scholes of Truist Securities asked for an update on the balance of reserve funds held by credit card processors, which was $1.7 billion in the prior quarter. He inquired about the current balance and the timeline for this cash to be released and used for debt reduction.

Answer

CFO David Bernstein clarified that the reserve fund balance had increased to $2.2 billion at the end of Q2, corresponding with the growth in customer deposits. CEO Josh Weinstein reiterated that the company expects the vast majority of these funds to be released by the end of 2024, with the remainder in 2025, and that the cash will be used to continue the deleveraging process.