Net Unit Growth and Acquisitions
Q: Can you detail what's contributing to the increased net unit growth and what's changed from the previous quarter?
A: The increase to 7%–7.5% net unit growth is primarily due to the addition of Graduate Hotels, contributing about 0.5 point, and better-than-expected performance from our SLH partnership, adding about 1.5 points. Organically, growth is slightly less due to some projects shifting from Q4 into next year, but we're hitting historic highs in signings and starts, excluding partnerships or acquisitions. We feel confident about maintaining organic growth within our 6%–7% algorithm next year, given our strong pipeline.

Contract Acquisition Spend
Q: Should we expect contract acquisition spend to remain at current levels over the next few years?
A: Last year's spend was elevated due to specific high-end deals. This year, it will moderate and be lower than last year. Going forward, we expect contract acquisition spend to be comparable to this year's level. In Q2, key money was involved in 7%–8% of deals, with overall key money still less than 10%. We haven't seen significant changes in these figures and expect them to remain stable over the next 2–3 years.

Macroeconomic Trends and Consumer Behavior
Q: How are macro trends and consumer behavior impacting your business?
A: In China, despite economic slowdown, travel remains robust but is offset by increased outbound travel and insufficient inbound traffic, ending the year likely down 5%. APAC ex-China is strong, led by Korea, Japan, and India. In Europe, leisure demand has slightly softened but remains high. In the U.S., group and business transient segments are strong, while leisure transient is normalizing. Lower-income consumers are spending less due to depleted savings, but higher-income consumers remain active. Overall, we're seeing normalization in leisure travel but growth in other segments.

Non-RevPAR Fee Growth and Outlook
Q: What's driving the growth in non-RevPAR-related fees, and can this continue?
A: Non-RevPAR fees outperformed in the first half due to timing and some one-time items. Longer-term, we expect these fees to grow at or above our algorithm. We're actively influencing this growth through strategies like enhancing our co-brand credit card offerings and partnering with Hilton Grand Vacations, including involvement in their acquisitions. We have dedicated teams working on maximizing these opportunities, and we anticipate ongoing positive contributions from these efforts.

EBITDA Margin Expansion Outlook
Q: How much more room is there for EBITDA margin growth in the coming years?
A: We anticipate 50–100 basis points of embedded margin growth annually as we focus on our fee-based segments and maintain disciplined cost control. Our margins are now 1,000 basis points higher than pre-COVID levels. This year, we expect to exceed 100 basis points in EBITDA margin growth, and while results may vary year to year, we believe consistent margin expansion is achievable over time.

RevPAR Outlook and Drivers
Q: What factors could drive you toward the higher end of your RevPAR outlook in the second half?
A: The implied RevPAR growth of 2%–3% per quarter reflects current trends. The third quarter has been slightly softer, but we expect an acceleration in the fourth quarter as business travel and group bookings pick up, especially in October and November. Our strong group position and anticipated strengthening in larger urban markets could contribute to higher RevPAR growth, with U.S. economic performance being a key driver.

Conversions and Net Unit Growth Outlook
Q: Can you discuss the role of conversions in your net unit growth and expectations for acceleration?
A: Conversions are accelerating and will account for over 50% of net unit growth this year, partly due to partnerships and acquisitions. Excluding those, conversions are increasing from 30% to just under 40%. We're capturing a disproportionate share of conversions thanks to our strong brands and commercial engines. We expect to maintain organic growth solidly within the 6%–7% range next year, supported by our strategic focus on conversions.

SLH Hotels and Fee Contribution
Q: How do SLH hotels contribute to your fees, and what are you expecting from them?
A: Some of the resilience in our EBITDA guidance, despite lower RevPAR expectations, is due to better-than-expected fees from SLH hotels. We earn normal franchise-like fees based on the business we generate for these hotels, which have average rates 5–7 times higher than our system-wide average. This contributes positively to our fee income as SLH performs well.

Impact of Bundling Resort Fees on ADR and Demand
Q: Have you seen any impact on ADR growth or customer demand from bundling resort fees into a single rate?
A: No, we haven't observed any impact on ADR or customer demand from this change. It's still early, but we view bundling as enhancing transparency for guests. We do not expect this to affect our pricing power or demand moving forward.

Outlook for High-Growth Regions
Q: Can high-growth regions like Middle East, Africa, and Asia ex-China maintain their momentum?
A: Yes, we feel good about the second half prospects in these regions. APAC ex-China is expected to perform very well, driven by strong markets like Korea and Japan. Similarly, the Middle East and Africa are maintaining robust growth. We don't anticipate convergence around lower global RevPAR guidance in these high-performing areas.