Richard Clarke

Richard Clarke inquired about Airbnb's strategy to defend against AI platforms potentially launching short-term rental services and the risk of sharing economics with AI platforms while retaining direct traffic.

Answer

Brian Chesky, Co-founder and CEO of Airbnb, emphasized that Airbnb's core value extends beyond its app to include robust payment processing, customer service, insurance, verified IDs, and unique inventory. He believes AI chatbots will serve as top-of-funnel traffic generators, similar to search engines, and that Airbnb's specialization and ability to post-train AI models with proprietary data will ensure its competitive advantage without significant economic sharing.

Richard Clarke asked about the potential for AI platforms to launch competing short-term rental services and whether Airbnb anticipates having to share economics or facing challenges in retaining direct traffic in an AI-driven landscape.

Answer

Brian Chesky, Co-founder and CEO of Airbnb, emphasized that Airbnb's core value extends beyond its app to include robust payment processing, customer service, insurance, and a vast network of verified IDs and unique listings. He noted that AI models are not proprietary and specialization will win, with Airbnb leveraging AI to enhance its platform rather than being disintermediated. He also suggested AI chatbots could be positive top-of-funnel traffic generators, similar to Google.

Richard Clarke inquired about the impact of the 'Reserve Now, Pay Later' offering on U.S. acceleration, early cancellation rates, and potential future payment tools to drive bookings.

Answer

Ellie Mertz, CFO of Airbnb, explained that the 'Reserve Now, Pay Later' offering, launched in Q3 for U.S. domestic travel with flexible cancellation policies, is highly popular, with 70% of eligible customers using it. She confirmed increased cancellations but stated the net impact is a lift to bookings.

Richard Clarke asked about the impact of the "Reserve Now, Pay Later" offering on U.S. acceleration, inquiring about its contribution percentage, cancellation rates, and future payment tool plans.

Answer

Airbnb CFO Ellie Mertz detailed the "Reserve Now, Pay Later" offering, noting its popularity among eligible U.S. domestic travelers (70% take-up) and confirming a net positive impact on bookings despite increased cancellations.

Richard Clarke inquired about the Q3 and Q4 guidance, specifically the headwinds from tough year-over-year comparisons and the potential for growth to be slower in Q4 than Q3. He also asked about the company's mid-term growth outlook given success in expansion markets.

Answer

CFO Ellie Mertz confirmed that tougher year-over-year comparisons could lead to a growth deceleration from Q3 to Q4 2025. This is due to a significant acceleration in bookings seen in the back half of 2024. Regarding expansion markets, she noted their strong performance is successfully diversifying the business away from North America, with Latin America gaining approximately 200 basis points of business share and contributing more meaningfully to overall growth.

Richard Clarke asked for details on the specific behaviors driving the U.S. guest slowdown, such as delayed booking windows, higher cancellations, or trading down, and whether booking trends improved in late April.

Answer

CFO Ellie Mertz noted that higher-income travelers remain stable, but softness is apparent in longer lead-time bookings (over a month out), suggesting some consumers are waiting to book summer travel. She observed strong growth in short lead-time bookings and clarified that Airbnb has not seen consumers trading down to lower ADRs or shorter trips. This pattern of truncated lead times was also seen the previous summer.

Richard Clarke asked about Airbnb's strategy regarding Artificial Intelligence, questioning if the company is leaning into AI operators or aiming to control the AI flow through its own platform.

Answer

CEO Brian Chesky stated that Airbnb is taking a different approach to AI, starting with customer service rather than trip planning integrations. He detailed plans to roll out AI-powered customer support later in the year, with the long-term goal of evolving this into a comprehensive travel and living concierge, believing value will accrue to platforms with the best applications.

Richard Clarke inquired about supply dynamics, asking for color on gross supply growth versus net growth after the recent listing removals. He also asked if these changes are shifting the mix towards professional hosts and if the new co-hosting initiative is successfully unlocking additional supply.

Answer

CFO Ellie Mertz explained that the focus has shifted to supply quality, which has improved guest ratings and reduced customer service contacts. She confirmed that supply growth still exceeded demand growth by a few points in Q3. CEO Brian Chesky added that the Cohost network is a key long-term strategy to unlock millions of listings from individuals who lack the time to host themselves, noting that 20,000 potential new co-hosts have already expressed interest since the launch.

Richard Clarke questioned the projected lower conversion rates of EBITDA to free cash flow and free cash flow to capital returns for 2026 compared to 2024, despite Hyatt's asset-light transformation. He also asked about a potential disconnect between the mid-single-digit RevPAR growth commentary and the 1%-2% guidance, and if refurbishments might be a factor.

Answer

Joan Bottarini, CFO, clarified that Hyatt expects 2026 free cash flow conversion to return to the low-to-mid 50s, with opportunities for delevering and contributions from the credit card. She explained that the 8%-11% top-line gross fee expectation for 2026, including Playa and credit card restructuring, translates to a strong 7.5% core fee growth at the midpoint, consistent with an almost 8% compounded annual growth since 2017. Regarding capital returns, she stated that the $350 million midpoint is a healthy start, and the company's capital allocation strategy remains unchanged: investing in growth, returning excess cash, and maintaining an investment-grade profile, with excess cash historically returned to shareholders.

Richard Clarke questioned why Hyatt's projected conversion rates of EBITDA to free cash flow and free cash flow to capital returns for 2026 are lower than 2024, despite the company's asset-light transformation. He also asked about a potential disconnect between RevPAR commentary and guidance, suggesting refurbishments might be a factor.

Answer

CFO Joan Bottarini clarified that Hyatt expects to return to low- to mid-50s conversion levels for EBITDA to free cash flow in 2026, with further opportunities from deleveraging and credit card contributions. She highlighted strong core fee growth, with a midpoint of 7.5% for 2026, and a historical compounded annual growth of almost 8% since 2017. Regarding capital returns, she stated the strategy remains unchanged: invest in growth, return excess cash, and maintain an investment-grade profile, noting that some free cash flow will go towards deleveraging. President and CEO Mark Hoplamazian added that the Jamaica impact is a 2026 issue, not a persistent structural one, and positions them for a strong 2027 with newly renovated hotels.

Richard Clarke asked about the $50 million increase in capital returns, specifically if it stems from the Chase payment and restructuring charges, and if the percentage of free cash flow returned to shareholders could approach 100% in 2026.

Answer

Joan Bottarini, CFO of Hyatt, confirmed that the $50 million uptick in capital returns for 2025 is driven by the bonus from the new Chase card agreement, offsetting restructuring charges. She stated that Hyatt is on track to move closer to its goal of 50% conversion on free cash flow to EBITDA in 2026, noting one-time items impacted 2025.

Richard Clarke asked about the source of the $50 million uptick in capital returns, specifically if it was from the Chase agreement and restructuring charges, and if the percentage of free cash flow returned to shareholders could increase closer to 100% in 2026.

Answer

Joan Bottarini, CFO, Hyatt, confirmed that the increased capital returns factored in the bonus from the new Chase card agreement and offset restructuring charges, both incorporated into free cash flow. She stated that the company is on track to move closer to its goal of 50% conversion on free cash flow to EBITDA in 2026, after one-time items impacted 2025.

Richard Clarke of Bernstein questioned the year-over-year revenue decline in the distribution segment (ALG Vacations) and asked for the mechanics of how the Playa acquisition is expected to generate additional distribution earnings.

Answer

CFO Joan Bottarini explained that the Playa portfolio did not previously use ALG's distribution platform, creating a new opportunity to optimize inventory and bookings, with the earnings impact expected in 2026. She attributed the segment's current softness to weaker demand in the lower chain scale markets it serves.

Richard Clarke asked about the current construction landscape, focusing on the level of cost inflation developers are facing, its potential impact on U.S. projects, and for an update on the percentage of Hyatt's pipeline that is currently under construction.

Answer

President and CEO Mark Hoplamazian reported that the portion of the pipeline under construction has increased to about 30%. He shared that while developers are factoring in cost contingencies as high as 20%, they are also finding innovative solutions like onshoring manufacturing to mitigate tariff impacts. He noted that pipeline signing activity in Q1 was vibrant.

Richard Clarke asked for a bridge to explain the nearly $300 million shortfall in 2025 free cash flow guidance compared to the $750 million target set at the 2023 Capital Markets Day.

Answer

CFO Joan Bottarini attributed the difference to four main factors: accelerated asset sales, RevPAR growth materializing at the lower end of the original wide range, higher interest expense, and increased CapEx for strategic technology and ROI-driven hotel projects. President and CEO Mark Hoplamazian noted the CapEx is for short-term optimization, not a recurring issue.

Richard Clarke asked if the acceleration in credit card spending was solely due to royalty changes and whether discussions around interest rate caps or CCCA reform have impacted negotiations with Chase or American Express.

Answer

CFO Leeny Oberg clarified that the basic credit card business is expected to show high single-digit growth, separate from any new deals, and this, combined with the royalty changes, leads to the 35% increase in guidance. CEO Anthony Capuano stated that discussions on Capitol Hill regarding interest rate caps or CCCA reform have not had a measurable impact on the pace or progress of their credit card deal negotiations.

Richard Clarke asked for clarification on whether the 35% acceleration in credit card spending was due to the royalty changes or organic growth, and if discussions around interest rate caps or CCCA reform had impacted negotiations with Chase or American Express.

Answer

CFO Leeny Oberg clarified that the basic credit card business is expected to show high single-digit growth, separate from the approximately 35% increase in guidance for 2026, which is due to the royalty changes. CEO Tony Capuano stated that discussions on Capitol Hill have not had any measurable impact on the pace or progress of their credit card deal negotiations.

Richard Clarke inquired about Marriott's external use of artificial intelligence, specifically regarding opportunities to make hotels discoverable and bookable through emerging platforms like ChatGPT and other generative AI services.

Answer

President and CEO Tony Capuano confirmed that AI platforms are viewed as helpful new distribution channels, with guests increasingly using them for trip suggestions and planning. He stated that Marriott is optimizing content across its platforms to leverage GenAI services, ensuring broad reach across traditional and emerging channels.

Richard Clarke inquired about Marriott's external use of Artificial Intelligence, specifically regarding opportunities to make hotels discoverable and bookable through platforms like ChatGPT and other generative AI services.

Answer

Tony Capuano (President and CEO) confirmed that AI platforms are seen as helpful new distribution channels, as guests increasingly use them for trip suggestions and planning. He stated that Marriott is optimizing content across its platforms to leverage generative AI services and ensure broad reach across all traditional and emerging channels.

Richard Clarke of Bernstein questioned the volatility of residential branding fees and asked about Marriott's long-term commitment to the branded residential business.

Answer

CFO Leeny Oberg affirmed a strong commitment, highlighting Marriott's leadership position and the business's high-return nature, despite timing-related volatility in a small part of the overall fee stream. President & CEO Anthony Capuano added that the residential business is a meaningful contributor to the strength and premium perception of Marriott's luxury brands.

Richard Clarke of Bernstein asked for a reconciliation between the combined RevPAR and net unit growth of 7.5% and the lower gross fee growth guidance of around 5%. He also followed up on the expected growth of non-RevPAR fees for 2024-2025 compared to prior guidance.

Answer

CFO Leeny Oberg explained the variance is due to several factors: a $25 million FX headwind, a nearly 50% decline in lumpy residential branding fees, and flattish incentive management fees (IMFs) due to headwinds in Greater China and renovations in the U.S. She reiterated the key drivers of non-RevPAR fees are credit card fees, residential branding fees, and timeshare fees.

Richard Clarke from Bernstein questioned how strong Incentive Management Fee (IMF) growth in the U.S. aligns with the booking of a significant operating profit guarantee reserve, and asked for clarification on the nature of cost savings for franchisees.

Answer

CFO and EVP, Development Leeny Oberg clarified the operating guarantee was an isolated case unrelated to broader IMF performance, which was strong in the U.S. and Canada due to good performance at large city hotels and some insurance payments. President and CEO Tony Capuano added that the company is looking at providing tangible efficiency and savings opportunities to owners across all facets of their engagement.

Richard Clarke of Bernstein inquired about the impact of persistent free traffic headwinds on Brand TripAdvisor's 2026 stabilization goal and the company's engagement with new major shareholders.

Answer

CFO Mike Noonan acknowledged that free traffic headwinds have persisted, making it too early to definitively call 2026 stabilization, but noted ongoing work on operational efficiencies. President and CEO Matt Goldberg stated that while TripAdvisor values all shareholder engagement, he could not comment on specific discussions, reiterating the management's focus on creating shareholder value.

Richard Clarke of Barclays inquired about TripAdvisor's full-year guidance, asking if it would have been raised absent macroeconomic uncertainty, and questioned what strategic opportunities are unlocked by the completion of the Liberty TripAdvisor Holdings merger.

Answer

CFO Mike Noonan confirmed that while Q1 performance was strong, the company is maintaining its guidance due to macro uncertainty, noting positive pricing at Brand Tripadvisor and strong unit growth at Viator. CEO Matt Goldberg explained that the merger simplifies the capital structure, enhances shareholder alignment, and allows management to focus on key value drivers like marketplace performance, AI integration, and board renewal.

Richard Clarke asked for details on Tripadvisor's membership program, including member growth, the nature of its redeemable rewards, and who funds them. He also questioned what strategic changes would be enabled after the controlling shareholder transaction closes.

Answer

CEO Matt Goldberg reported that membership grew mid-single digits for the year, accelerating to double-digit growth by Q4 on a base of over 130 million members. He confirmed that Tripadvisor funds the rewards, which are proving effective at driving repeat business. Regarding the ownership change, Goldberg explained it simplifies the capital structure, removes a potential overhang, and provides greater flexibility for organic investments, M&A, and other capital allocation decisions.

Richard Clarke asked about the discrepancy between the high market growth expectations for online experiences and Viator's current booking growth rate, and also requested more color on the stated restrictions on share repurchases.

Answer

CFO Mike Noonan explained that Viator's current growth rate was expected as it laps prior-year price increases and is blended with the slower, profitability-focused growth from the Tripadvisor point-of-sale. CEO Matt Goldberg added that the company is well-positioned to capture share in a growing market. Regarding buybacks, Goldberg confirmed that the company's ability to repurchase shares is limited due to various factors, including the 'ongoing consideration of a variety of potential strategic alternatives,' but declined to provide further detail.

Richard Clarke from Bernstein asked why IHG did not provide 'on the books' revenue commentary as it did in Q1, whether the higher level of hotel closures would persist, and for an update on the competitive progress of the Garner brand.

Answer

CFO Michael Glover explained that the Q1 'on the books' data was provided specifically to clarify the Easter shift and is less relevant now given very short booking windows. CEO Elie Maalouf addressed closures, stating that while currently elevated, they are not a structural shift and the long-term target of 1.5% remains. He described the Garner brand as 'powering ahead of expectations,' with 51 open hotels and a pipeline of 138 across 10 countries, noting the market is large enough for multiple players to succeed.

Richard Clarke of Bernstein questioned the absence of 'on the books' revenue commentary this quarter, whether the recent increase in hotel closures would persist, and the competitive progress of the Garner brand.

Answer

CEO Elie Maalouf reported that the Garner brand is performing ahead of expectations with 51 hotels open and a pipeline of 138. Regarding closures, he stated the recent elevation is not a structural shift and expects a return to the 1.5% long-term trend. CFO Michael Glover explained that 'on the books' data was provided in Q1 specifically to clarify the Easter shift and is less indicative now due to very short booking windows.

Richard Clarke of Bernstein asked why IHG did not provide 'on the books' revenue commentary as it did in Q1, questioned if higher hotel closures would persist, and requested an update on the Garner brand's competitive progress.

Answer

CFO Michael Glover explained the Q1 'on the books' guidance was specifically to clarify the Easter timing impact and is less relevant now given very short booking windows. CEO Elie Maalouf addressed closures, stating that while currently elevated, they are not a structural shift and the long-term target of 1.5% remains. On the Garner brand, Maalouf reported strong progress with 51 open hotels and a pipeline of 138, noting that international demand is ahead of expectations and the market is large enough for multiple players to succeed.

Richard Clarke asked about the impact of agentic AI, noting that OTAs are early partners, and questioned if Hilton would work with these agents directly or allow OTAs to manage that distribution.

Answer

Christopher Nassetta, President and CEO, emphasized Hilton's focus on direct customer relationships and stated the company has no plans to outsource this to third parties. He explained that Hilton is deeply engaged in using AI and other technologies across the entire customer journey to create a frictionless experience. While they may work directly with some AI players, the goal is to avoid indirect relationships and maintain control of the customer interaction.