Good morning, and welcome to the Hyatt Third Quarter 2025 Earnings Conference Call. As a reminder, this conference call is being recorded. I would now like to turn the call over to Adam Rohman, Senior Vice President of Investor Relations and Global FP&A. Thank you. Please go ahead.

Thank you, and welcome to Hyatt's Third Quarter 2025 Earnings Conference Call. Joining me on today's call are Mark Hoplamazian, Hyatt's 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 and in this morning's earnings release. An archive of this call will be available on our website for 90 days. Additionally, we posted an investor presentation containing supplemental information on our Investor Relations website this morning. Please note that unless otherwise stated, references to occupancy, average daily rate and RevPAR reflect comparable system-wide hotels on a constant currency basis. 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, Adam. Good morning, everyone, and thank you for joining us today. I'd like to begin today's call by expressing my deep appreciation for our Hyatt colleagues around the world, especially those recently impacted by Hurricane Melissa. Our thoughts are with them and their families, and we're hopeful for their continued safety and well-being. I want to thank the many colleagues who have stepped in to provide care and support, including financial assistance through the Hyatt Care Fund. This care and compassion from the members of the Hyatt family reflects the very best of who we are. Over the past couple of months, I've had the opportunity to visit teams across both Europe and Asia Pacific. I came away deeply inspired by how our colleagues around the world embrace our evolution to a more inside-led and brand-focused organization and continue to bring Hyatt's purpose to care for people so they can be their best to life. Turning to the quarter, I'd like to provide an update on our transactions activity, starting with the sale of the hotels acquired as a part of our acquisition of Playa Hotels & Resorts. On September 18, we sold a property in Playa del Carmen to a third-party buyer for approximately $22 million, and net proceeds were used to repay a portion of the delayed draw term loan. This was one of two properties that were not subject to long-term management agreements with Tortuga Resorts. We remain on track to close the real estate transaction with Tortuga for the remaining 14 hotels by the end of the year. We also continue to make progress to sell several of our owned properties. We have three hotels under contract with signed purchase and sale agreements and three more hotels with a signed letter of intent. We expect all six hotels to close in the early part of 2026. We will share additional updates as these transactions progress. And we remain on track to exceed 90% asset-light earnings mix in the near term. Now turning to operating results. This morning, we reported system-wide RevPAR growth of 0.3% for the quarter, which was impacted by a holiday shift and lapping with one-time events last year. Our luxury brands continue to generate the highest RevPAR growth consistent with trends that we've seen since the beginning of the year. Leisure transient RevPAR increased 1.6% to last year and was up approximately 6% across our luxury brands. Our all-inclusive portfolio continued to deliver strong results, with net package RevPAR up 7.6% compared to the third quarter of 2024, demonstrating the strength of luxury all-inclusive travel. Business transient RevPAR was flat in the quarter, but we saw improved performance in the United States, which grew by 3% compared to last year, with select service delivering positive quarterly growth for the first time in 2025. Group RevPAR declined 4.9%, in line with our expectations, which assumed difficult year-over-year comparisons, including the Olympics in Paris and the Democratic National Convention in Chicago, and the shift of Rosh Hashanah into the third quarter of 2025 compared to the fourth quarter of 2024. Group pace for the fourth quarter is up approximately 3% as we lap easier comparisons due to the holiday timing and last year's elections in the United States. While we are still in the planning stages for 2026, we are encouraged by the forward-looking booking trends. Group pace for full-service U.S. hotels remains up in the high single digits and is expected to benefit from special events like the World Cup and America 250 celebrations. Corporate negotiated rate discussions are ongoing, and we expect average rates to increase in the low to mid-single-digit range in 2026 compared to 2025. Pace for our all-inclusive resorts in the Americas, excluding Jamaica, is up over 10% in the first quarter, reflecting the continued prioritization of leisure travel. We look forward to providing more details on our 2026 expectations during our fourth quarter earnings call. Turning to growth. We achieved net rooms growth of over 12% during the quarter, or 7% when excluding acquisitions. Notable openings included the stunning Park Hyatt Kuala Lumpur located in the tallest skyscraper in Asia Pacific, along with the Park Hyatt Johannesburg. In the United States, we welcomed Hyatt Regency Times Square to our system, following an expansive multimillion-dollar transformation, marking the first Hyatt Regency property in Manhattan and our 30th property in New York City. We ended the quarter with a strong development pipeline of approximately 141,000 rooms, an increase of more than 4% to last year. Momentum across our Essentials Portfolio continues to build following the introduction of the Hyatt Select and Unscripted by Hyatt brands earlier this year. We signed a number of new deals for each brand during the quarter and have many more in discussions. In addition, we signed a master franchise agreement with HomeInns Hotel Group to develop Hyatt Studios across China. This will further expand our upper mid-scale brand presence in China. Under this agreement, HomeInns plans to open 50 new Hyatt Studios hotels over the coming years while building a robust pipeline to fuel future growth across China. At the end of the third quarter, upper mid-scale brands now represent 13% of our pipeline, up from 10% at the end of 2024, and more than half of Hyatt Select, Hyatt Studios and Unscripted by Hyatt opportunities are in markets where we currently have no brand representation, helping to drive organic capital-light growth and increased network effect across our global portfolio. Our strong pipeline and the momentum we are seeing in our upscale and upper mid-scale brands underscore the significant white space that we believe will support strong growth for years to come. Before I close, I want to spend a few minutes highlighting one of the most powerful strategic assets of our business, our loyalty program, World of Hyatt. During the quarter, World of Hyatt surpassed 61 million members, an increase of 20% year-over-year. World of Hyatt continues to be the fastest-growing major global hospitality loyalty program, with membership having increased nearly 30% annually since 2017. Today, we have more than 40% more members per hotel compared to our closest competitor, clear proof of the deep engagement and strong preference we've earned from high-end travelers. While growth and scale matter, what truly sets World of Hyatt apart is our purpose. Our program goes beyond transactional awards to create an experience platform that delivers meaningful personal connections, whether it's through our Guest of Honor program, which allows members to gift their top-tier status to others, or the introduction of award gifting; we've redefined what loyalty looks like by making it personal. Being personal also means that our members receive the most consistent and guaranteed benefits in the industry. In addition, we reward deep engagement through our Milestone Rewards program, which delivers differentiated value even after a member achieves the highest elite status. The expanded agreement with Chase, which we announced yesterday, is a compelling proof point of how our differentiated loyalty program can deliver value to shareholders while providing rewarding experiences for members across all stay occasions. The significant increase in economics will be driven by the expanded collaboration with Chase, the continued growth of World of Hyatt membership, the strength of Hyatt's global portfolio of premium brands, and Hyatt's robust pipeline. Adjusted EBITDA recognized by Hyatt related to these economics is expected to be approximately $50 million in 2025. We expect this to grow to approximately $90 million in 2026 and more than double to approximately $105 million in 2027, and we anticipate continued growth in future years. We also expect to deepen engagement with our members and continue to evaluate additional card products in the future, building on the success of our current co-branded cards. When a loyalty program is designed with care at its core, it leads to greater guest preference and helps support a powerful commercial platform that delivers more direct bookings and makes Hyatt more attractive to owners. And as we continue to grow our portfolio and expand into new segments and markets, we believe the power of World of Hyatt will continue to fuel preference and long-term value creation well into the future. As I look ahead, I'm encouraged by the momentum in our business and the performance of our brands. Our evolution to a brand-focused organization is designed to position Hyatt to be the most responsive, innovative, and highest performing hotel company, and I'm incredibly excited about our future. I will close by expressing my gratitude to all Hyatt colleagues who care for each of our stakeholders every day. Joan will now provide more details on our operating results. Joan, over to you.

Thank you, Mark, and good morning, everyone. Over the past year, we've taken steps to align our above property and corporate teams in support of our brand-focused evolution, and we are confident these changes will deliver long-term benefits from multiple stakeholders. Our commercial teams have identified greater capacity to invest in initiatives that are expected to benefit our owners, including technology innovations and marketing efforts to further improve the performance of our brands. We also expect to realize lower run-rate adjusted G&A costs over time. We expect adjusted G&A in 2026 will be moderately below full-year 2024, despite two years of inflation and the addition of incremental payroll and other costs from acquisitions over the last year. As a result of these initiatives, we expect to incur approximately $50 million of restructuring charges this year, the majority of which were recorded in the third quarter. Now turning to third quarter results. RevPAR grew 0.3% compared to last year, in line with our expectations shared during our second quarter earnings call. In the United States, RevPAR declined 1.6% to last year, in line with our expectations, driven by select service hotels and the timing of Rosh Hashanah. Business transient RevPAR grew low single digits in the quarter, an improvement over the decline we saw during the second quarter. Full-service hotels were negatively impacted by the holiday timing, which led to lower group contributions in the quarter, while select service hotels were below last year due to softer leisure transient demand. RevPAR outside of the United States performed well, and we saw continued strength in international markets. Europe saw positive RevPAR growth driven by strong international inbound travel despite lapping a tough comparison from one-time events last year. Greater China grew RevPAR to last year due to increases in leisure transient demand. Net package RevPAR growth at our all-inclusive properties grew 7.6% in the quarter, highlighting the continued strong demand for leisure travel. Pace for our all-inclusive hotels in the Americas, excluding Jamaica, is up over 8% in the fourth quarter, and for the holiday festive period is up over 11%. As Mark mentioned, the sustained demand for luxury all-inclusive travel gives us confidence as we look ahead to 2026. We reported gross fees in the quarter of $283 million, up 6.3% excluding the impact of the Playa Hotel acquisition. Gross fee growth was driven by international RevPAR performance, new hotel openings, and non-RevPAR fees. Owned and leased segment adjusted EBITDA increased by 7% when adjusted for the net impact of asset sales and the Playa Hotel acquisition. Distribution segment adjusted EBITDA was down to last year from lower booking volumes and lapping a one-time benefit related to ALG Vacation credits from last year. The decline in travel from 4-star and below hotels led to lower booking volumes and earnings flow-through despite higher pricing and cost mitigation initiatives. In total, adjusted EBITDA was $291 million in the third quarter, in line with our expectations. During the quarter, we repurchased approximately $30 million of Class A common stock and have approximately $792 million remaining under our share repurchase authorization. During the quarter, net proceeds from the sale of a hotel in Playa Del Carmen were used to repay a portion of the delayed draw term loan, and we expect to close the Playa real estate transaction by the end of the year, using the net proceeds to repay the outstanding balance on the delayed draw term loan. As of September 30, 2025, we had total liquidity of approximately $2.2 billion, including $1.5 billion in capacity on our revolving credit facility. On October 30, we executed a new credit agreement that replaces the prior facility and provides for a $1.5 billion senior unsecured revolving credit facility, which will expire in 2030. We remain committed to our investment-grade profile, and our balance sheet is strong. Before I cover our full year outlook for 2025, please note that we continue to include additional schedules within the earnings release related to our expectations for Playa in the fourth quarter of this year. We've lowered our fourth quarter outlook for Playa by $7 million at the midpoint of our range as a result of Hurricane Melissa, while the full year outlook remains unchanged after a strong third quarter. For modeling purposes, our outlook assumes that we will own Playa's real estate for the entirety of the fourth quarter. I'll now cover our full year outlook for 2025, which does not include the impact of the Playa acquisition or planned real estate sales transaction. The full details of our outlook can be found on Page 3 of our earnings release. We were encouraged by the performance of our hotels over the course of the third quarter. We expect full-service hotels in the United States to deliver higher growth in the fourth quarter compared to select service hotels due to easier group comparisons. We also anticipate our luxury portfolio and international markets to perform well in the fourth quarter, supported by strong demand trends and high-end consumer resilience. We've tightened our RevPAR range and expect full year 2025 RevPAR between 2% to 2.5%, which implies RevPAR growth in the fourth quarter between 0.5% and 2.5%. The quarter is off to a good start with October RevPAR increasing in the United States by approximately 1% and globally by approximately 5%. For the United States, we expect RevPAR growth for both the fourth quarter and full year 2025 of approximately 1%. We expect fourth quarter RevPAR growth outside of the United States to remain an area of strength, especially in Europe and Asia Pacific, excluding Greater China. We're increasing our net rooms growth outlook range to 6.3% to 7%, which does not include rooms added from the Playa acquisition. Gross fees are expected to be in the range of $1.195 billion to $1.205 billion, a 9% increase at the midpoint of our range compared to last year. We've lowered our adjusted G&A range to $440 million to $445 million reflecting the run-rate cost efficiencies that we've been able to achieve throughout the year. Adjusted EBITDA for the full year is expected to be in the range of $1.09 billion to $1.11 billion, an 8% increase at the midpoint of our range compared to last year when adjusting for the impact of asset sales. As a reminder, owned assets sold in 2024 accounted for $80 million worth of owned and leased segment adjusted EBITDA last year. Our full year adjusted EBITDA outlook implies growth in the fourth quarter of 9% at the midpoint of our range. Adjusted free cash flow is expected to be in the range of $475 million to $525 million, which excludes $117 million of deferred cash taxes paid in 2025 relating to asset sales that took place in 2024. In the fourth quarter, we'll receive upfront cash of $47 million as part of the amended agreement with Chase. We are increasing our full year outlook for capital returns to shareholders and expect to return approximately $350 million in 2025, inclusive of share repurchases and dividends. Our capital allocation priorities remain unchanged. We are committed to our investment-grade profile, identifying opportunities to invest in growth that creates shareholder value, and returning excess cash to shareholders in the form of dividends and share repurchases. In closing, our third quarter results reflect the strength of our business model and the effectiveness of our long-term strategy. Looking ahead, we believe our talented brand-led organization, strong development pipeline, and differentiated loyalty program provide meaningful advantages in today's dynamic environment. As we continue to expand into new markets and segments, we're confident in our ability to drive sustained growth, enhance profitability, and deliver attractive returns to shareholders. This concludes our prepared remarks, and we're now happy to answer your questions.

Our first question comes from Steve Pizzella from Deutsche Bank.

Just wanted to start on net rooms growth, if we could. Good to see you raise the core NUG guidance for the full year and the pipeline increased. As we start to think about next year, realizing it is still early, but with the trends you are seeing in your pipeline and the positive commentary, how are you thinking about net rooms growth going into 2026 and beyond?

Thanks, Steve. I appreciate the question. The headline here is organic growth is extremely strong. We are on track to more than double our core organic growth rate from last year to this year. Last year, we had a number of inorganic adds to our portfolio. This year, we are seeing tremendous strength in organic growth, and that's thrilling. We have real momentum in signings as we head into the fourth quarter. That's really the new brands that we launched this year, Hyatt Select and Unscripted, are based on the momentum that we're seeing right now. We are expecting continued acceleration of signings through the fourth quarter. In terms of net rooms growth, we have about 38 hotels that we have planned to open in the fourth quarter, seven of those were opened in October. Just for reference, we actually opened 34 hotels in the fourth quarter of last year, and we feel really good about completing those openings. Now I'll say what I say on this call every year, which is if some hotels end up opening in early January versus December, the growth story and the momentum is not impacted whatsoever. Even if it may impact the actual calculation at December 31. And as you all know, opening a hotel is a complex thing and an educated guess until the first guest actually spends a night. But having said all that, it really looks good at this point based on what we're seeing across the globe. The pipeline additions are also coming about 35% in Asia Pacific and 35% in the U.S. So we're seeing good strength across the board. And I am very, very confident about 6% to 7% growth again next year. And if I had to take up that, I would say there is more glass half full than glass half empty in that number.

Our next question comes from Smedes Rose from Citi.

I guess I just wanted to ask you a little bit about kind of what you're seeing so far in terms of group pace in the U.S. and kind of internationally for 2026, anything you can share on that.

You're going to start? I'll start and Joan can provide additional commentary. We ended the third quarter with a pace heading into 2026 in the high single digits. October was an exceptional month for total bookings, with full cycle bookings increasing by 15%, which is quite significant. However, bookings specifically for 2026 were weaker than we anticipated. Still, we have over 60% of the business secured, likely closer to 65% now. We also have very appealing booking patterns remaining for 2026. Our confidence in group business performing strongly into 2026 remains very high, despite October being somewhat weaker for 2026 bookings. Overall, the full cycle across 2026, 2027, and 2028 is looking very strong, indicating great progression. Regarding Global Group, we've maintained consistent strength in group bookings, although we've faced some tough comparisons like last year's Olympics, which makes positive comparisons challenging. Overall, group performance is strong across the board. Joan, do you have anything you want to add?

The only thing I would add is you didn't mention this, Smedes, but we've obviously are encouraged by what we're seeing in Q4, which is what we had expected all year round because of the holiday shift. So we're up 3% in the production that we saw in October is strong for really short-term, high-quality corporate bookings. So we feel really confident about Q4. And Mark had mentioned several years out, we're seeing increased levels of booking activity, really strong booking activities out, which is positive because that means associations are booking and confident in their future outlook into future years.

Yes. I mean, I think in terms of the actualized business in October, group was up almost 4%. So we're seeing very, very strong group actualized business.

Our next question comes from Ben Chaiken from Mizuho.

I want to clarify the G&A comment earlier. I think you said 26%, if I heard you correctly, I believe you said 26% down moderately versus 24%, is that versus the $445 million of adjusted G&A, just so we're on the same page. And then can we touch on maybe what's driving that lower?

Sure. We discussed some organizational changes we implemented this year and additional efficiencies we discovered throughout the year. This is the reason we adjusted our expectations for 2025. The mention of below 2024 refers to 2026, and we do anticipate a slight decline in 2026. We are still in the process of planning for that year, and we will provide the complete guidance range during our Q4 earnings call. What's particularly noteworthy is the M&A activity and some added resources that have allowed us to assess a two-year period, leading us to expect a decrease in 2026. Overall, we are seeing positive results from our organizational changes and their impacts.

Our next question comes from Richard Clarke from Bernstein.

I have a question about the $50 million increase in capital returns. Is that increase coming from the additional $47 million you’re receiving from Chase, along with the $50 million restructuring charge? Where did that extra $50 million originate? I assume this means you will return about 70% of free cash flow to shareholders this year, or adjusted free cash flow. Is there any reason that percentage can’t increase next year to possibly approach 100% of free cash flow returned to shareholders in 2026?

So Richard, you have the offsets exactly, right. We factored in that bonus that we realized in the negotiation of the new card agreement. And also the offset for this year is for those restructuring charges, which is all incorporated into free cash flow. As we look ahead into next year, we are on track to move much closer to our goal of 50% conversion on free cash flow to EBITDA. So we feel really good about that. We had some one-time items impacting us in 2025, but we're on path for 2026.

Our next question comes from Stephen Grambling from Morgan Stanley.

I was hoping you could maybe outline a little bit more on the assumptions that underpin the EBITDA step-up from the co-brand credit card in '26 and '27. As we think about changes in the terms of deal versus future sign-ups of new cardholders or even increased spend in cardholders? And do you include the fees that you'll recognize from the upfront payment?

There are a few important points to discuss, Stephen. First, regarding your last question, the accounting for the upfront payment will be amortized over the term of the agreement, which is simply an accounting recognition point. Now, we are very pleased with the outcome of the new agreement. The benefits are evident, and as Mark mentioned, doubling our earnings by 2027 is a significant achievement. This agreement is advantageous not only for HHC but also for the World of Hyatt program, which offers numerous benefits to our members and owners. It effectively creates a win-win scenario for all stakeholders. While our estimates are robust, we've seen remarkable growth in the World of Hyatt program and in our room availability. As these factors continue to grow in the coming years, we anticipate potential upside to the credit card fees we will earn over time. We have made reasonable assumptions for 2026 and 2027, and we will keep you updated as we receive further results.

Our next question comes from David Katz from Jefferies.

I wanted to ask about the master agreement with Home Inns. Number one, a little more color on the economic intensity of those; presumably, it's lower because of how those structures usually are. And then secondarily, how are we thinking about it in terms of net unit growth today and what that could provide over time?

Thank you, David. We've partnered with Home Inns for five years and launched UrCove by Hyatt in 2020. The brand has been very successful, although it took some time to gain momentum due to the timing of the launch. It resonates well with Chinese travelers, and its appeal within the Home Inns portfolio is very strong since it is their highest quality brand. We are also expanding our World of Hyatt base, which was the goal to cater to that next tier, essentially an upper mid-scale brand by U.S. standards. The locations for UrCove by Hyatt are very attractive, mostly involving the adaptive reuse of office spaces, with a few new builds in prime city locations. We're successfully attracting World of Hyatt customers. Regarding Hyatt Studios, most will be new builds, although we can also do adaptive reuse. Gaining momentum in China for Hyatt Studios wouldn't be feasible without a partner skilled in development and construction, which we've seen from the quality of UrCove's output, giving us strong confidence in future prospects. Both initiatives have different economic structures; UrCove is a joint venture where we earn fees and have a half stake in the venture, while Hyatt Studios will also bring in fees. This will enhance their existing member network, allowing over 100 million loyalty program members to upgrade into superior offerings. We anticipate these clients will eventually trade up to our full-service hotels. Therefore, the network effect here is significant. We're set to be fee positive for Hyatt Studios and earn fees directly while maintaining a 50% interest in UrCove. Overall, this partnership is flourishing, and it’s not just about adding rooms for the sake of figures. We're discussing around 50 hotels with about 100 to 125 rooms each, so the impact on our net room growth won't be huge, but it is genuinely commercially impactful.

Our next question comes from Shaun Kelley from Bank of America.

Mark or Joan, whoever wants to take it, would love just a little bit more insight on the cost program, your initiatives there. I know. I think we talked about strategically a little bit about what you're doing, but just kind of what catalyzed the decision sort of the why now question. It's obviously encouraging, but it takes a lot to move a big organization. And what are some of the key building blocks or things that this can allow you to do a little bit more efficiently, maybe specifically on behalf of the owners? We sometimes hear feedback that these things can have an impact and help streamline some communication there.

Thank you, Shaun. Our primary objective is to transition into an organization that relies on insights and focuses on our brands. While that may sound like jargon, it reflects our genuine effort to deeply understand the various customer segments within our portfolio, which are indeed distinct. The methods we use to reach these customers, including our distribution channels and marketing strategies, vary as well. Therefore, we have divided our business into five brand groups, which will guide how we operate moving forward. This initiative coincides with our enhanced practice of agile working methods, which we have been refining for four years. This approach aims to accelerate our processes, enabling us to test, learn, and innovate more rapidly. Additionally, we are expanding our use of artificial intelligence and machine learning models. We have developed several internal platforms, some of which focus on revenue generation while others target cost efficiency, all aimed at improving overall performance. For instance, these platforms assist our hotel teams in optimizing the performance of their properties, directly benefiting owners. I recently returned from Europe, where I attended an Owners Advisory Council meeting and discussed our latest platform in detail. We can identify measurable outcomes from our efforts thus far, showing positive results that we are committed to building upon. By integrating agile practices, which are inherently cross-functional, with our all-inclusive approach, we are reevaluating how we support our brands compared to our previous methods, necessitating a change in how the company is structured. During this reorganization, we have discovered significant efficiencies in our staffing, contributing to cost savings. Some of these savings also come from reducing third-party expenses as we automate many functions and processes that can be handled more cost-effectively in-house. We are just beginning to explore these possibilities, and we are fully committed to this direction, which will serve as a positive force for us in the coming years.

Our next question comes from Duane Pfennigwerth from Evercore ISI.

Joan, I appreciate your comments on capital allocation. Maybe you could speak to priorities in the intermediate term. Does the order maybe change? Is deleveraging more of a focus, capital return, maybe less emphasis on finding opportunities that will accelerate your growth further?

Sure, Duane. Regarding the leverage comment, we have committed to reducing our debt in the near term. We will use the proceeds from the Playa asset sale to pay down the delayed draw term loan that I mentioned earlier. This is coming up soon. Additionally, we are committed to achieving investment-grade leverage by the end of 2027. We are currently working on some asset sales and expect to complete more by the end of 2027, which will help improve our leverage. Now, I'll let Mark discuss the M&A opportunities we see. As for returns to shareholders, we have consistently provided those returns when we have excess cash, and that will remain our approach. We will provide more insights during our fourth quarter earnings call regarding 2026. We have seen some incremental free cash flow through the credit card agreement, which has improved our capital returns guidance for this year and for 2025. We are utilizing that excess cash as we committed to.

Yes, it's crucial to consider our history and actions. You can have increased confidence that we follow through on our commitments. Since 2013, we have consistently prioritized reinvesting in our business and returning capital to shareholders, initially through share repurchases and more recently through both dividends and share buybacks. We have repurchased stock every year for the past 12 years, even while executing acquisitions totaling over $5 billion, close to $6 billion, and transforming our balance sheet in the process. We view returning capital to shareholders as a key priority and believe we can maintain this while pursuing strategic growth in highly profitable segments where we can establish a competitive advantage. You can expect us to continue on this path. Additionally, with the increased conversion to free cash flow that Joan mentioned earlier, we anticipate finding more opportunities to return additional capital to shareholders over time.

Our next question comes from Michael Bellisario from Baird.

Just on loyalty, can you remind us just how the room night contribution from World of Hyatt has tracked year-to-date, I think it was at 45% last year. And then just looking at how do you keep narrowing the gap to peers? And kind of what does that do for the value prop for owners and developers?

Thank you. First of all, our penetration has continued to grow. We're still in the mid-40s, but we've made incremental progress year-over-year. Membership growth remains exceptionally strong, compounding at over 20% per year nearly every quarter. The importance of our membership is increasing, particularly among our lead members who engage deeply. They stay longer, spend more, and visit more frequently, which significantly enhances the value of our elite membership base as well as our overall membership base. This is evident from the card arrangements we recently renegotiated due to having a higher-end customer demographic with increased household incomes and investment portfolios. Looking ahead, we believe our penetration will continue to rise, which is important in many respects. It's worth noting that we may have the highest percentage of group business in the U.S., around 40%, and group customers are not eligible for World of Hyatt points, so they don't contribute to our penetration figures. Nonetheless, our total direct channel delivery aligns with our peers. Interestingly, even with our smaller size, we perform similarly to competitors in group channels, including direct bookings through World of Hyatt, hyatt.com, and Hotel Direct. While there’s often talk about size and scale being crucial, in this case, being ten times their size does not seem to give them an advantage. A significant factor is the strong platform we have built, which ensures that World of Hyatt delivers excellent experiences and value. Additionally, we manage a bigger portion of our total network than any of our larger competitors, which is important because it results in consistent delivery of benefits. Our elite members experience minimal variability across our hotels since we control the delivery of benefits directly at the hotel level. This approach matters.

Our next question comes from Brandt Montour from Barclays.

Several of your competitors have shared some insights or early thoughts on how next year's RevPAR might develop in the U.S. and globally. Mark, based on what you're observing in business transient, group, and leisure segments, and considering the upcoming World Cup, how confident are you about the RevPAR environment improving as we head into next year?

Yes. I mean, I think Joan and I will tag team this. So look, there are a number of tailwinds heading into next year between the World Cup and America 250 celebrations. The infrastructure build continues at pace. Hyperscalers are moving from planning stage to construction phase in their data center construction. The minimum size of investment in those projects is $5 billion. Some of them are much, much bigger than that. So there's a tremendous level of activity in terms of mobilization of resources to lean into the data requirements of AI of the future. So I think there's a lot of tailwind into economic activity in the United States as we look forward. Part of that, I think, is anticipated and maybe driving some of the group pace that we see into next year. Joan?

I would just add that we are still early in the planning cycle, but the situation in the U.S. has given us confidence that we will be at or slightly positive as we head into next year. The group is a significant factor in this, as it builds on those strong pace numbers and helps improve our rate. Looking at this year, we had some easier comparisons in the second and third quarters, which we expect to continue into next year for the U.S. Outside the U.S., we have achieved very strong results this year. Our teams are indicating that these results should remain strong, and the demand in international markets continues to be robust. While we may face some tougher comparisons on that side, we still anticipate being incrementally positive overall globally in 2026.

Leisure demand remains very robust. In October, leisure demand in the U.S. increased by 3%, while globally it rose by 7%. This trend is not diminishing. There have been ongoing questions about the sustainability of leisure demand and pricing levels, but the data consistently supports it. I'm unsure what additional evidence is needed; our numbers reflect this clearly. It's important to note that we cater to a different customer segment, and my comments are specifically about our situation.

Our next question comes from Patrick Scholes from Truist Securities.

Mark, three months ago, you had noted you were feeling cautious and conservative about China. How are you feeling today about that market?

I feel somewhat more optimistic. Part of this improvement comes from my recent trip to China a few weeks ago. Each time I visit and engage with my teams about the current situation in the market, it energizes me. Even taking that short-term boost into account, I want to highlight a few points. Firstly, some of our well-established offerings in China continue to perform impressively. We recently launched the first urban Alila hotel in Shanghai, which is truly remarkable in every aspect, not only the outstanding physical product but also the guest experience. Currently, we are performing over 20% better than the previous luxury brand that occupied that hotel, despite the market being relatively weaker. Our performance remains strong, which is leading to significant new openings. I visited a brand-new Andaz in Macau with over 700 rooms, and more hotels are expected to open there in the future. I also toured the newly opened Thompson hotel and an adjacent Unbound Collection hotel, located next to a mini central business district by the convention center. While some may think that focusing on lower chain scales can drive room growth, we are actually seeing strength in our core upper upscale and luxury brands. Our food and beverage revenues have faced challenges due to ongoing government pressures, leading people to be more cautious about spending on luxury items. We have adapted our approach accordingly. Although banqueting and food and beverage sales are weaker, our rooms business remains strong in the upper upscale and luxury segments, and we are also considering upscale and upper mid-scale options with plans like Hyatt Studio. Overall, I see positive operating dynamics. The government appears to be shifting its policies to better support consumer-driven initiatives as consumer spending increases in the economy. They are also addressing the slow recovery from the Evergrande debt situation, and while capital markets have not returned to pre-Evergrande standards, many of the properties I mentioned, except Alila Shanghai which is from a private developer, are part of state-owned enterprises. Our inventory is expanding there, and I believe our opening schedule, particularly in the Asia Pacific region, is very robust, especially in Greater China. So, I feel incrementally better about the situation.

Our next question comes from Conor Cunningham from Melius Research.

Could you provide some insights on free cash flow conversion? I understand you're aiming for around 40% this year, and you've mentioned a target of over 50% for next year. It seems there have been several positive developments from the credit card deal, along with your comments on general and administrative expenses and the resurgence in RevPAR heading into next year. This makes the over 50% target appear quite achievable. Please discuss the free cash flow conversion in detail, particularly if there are any constraints from working capital or hotel sales affecting it. Any information you can share would be appreciated.

Yes, Conor, you noted that the credit card deal will be beneficial next year. We experienced some one-time items affecting us this year, but we expect to return to a normalized rate in 2026. Additionally, we will see extra fees from Playa next year following the asset sale, which will contribute positively to our free cash flow conversion.

Our next question comes from Chad Beynon from Macquarie.

Mark, I wanted to ask about the impact of the government shutdown so far in the fourth quarter, and then on the back of, I guess, it's fairly real-time on the back of the FAA's announcement to further cut some airline traffic starting this week, how that could affect travel in the fourth quarter?

Sure. Thank you for the question. Firstly, direct government business within the Hyatt system is relatively small, so it does not significantly impact our results. In fact, government-related business has been positive because many defense contractors and service companies working with the government continue their activities despite the broader shutdown. The key focus now is on agility and how well our hotel teams can adjust. They are tasked with monitoring their revenue sources and managing potential risks, while also exploring different distribution channels. We are facilitating this process by incorporating AI tools alongside our revenue management system. I believe any potential negative impact will be minimized as they adapt in real-time. Looking ahead, it would be unrealistic to assume that a decline in air travel won't affect overall travel; it inevitably does. However, the adaptability we've strengthened since the early COVID days will serve us well, particularly concerning leisure travel. Thus, there are factors that could help mitigate the situation. I recall that in a previous extended government shutdown, issues with air traffic control contributed to a resolution. So, with reduced travel, there might be increased pressure on lawmakers to reach an agreement. While it's speculative, it's worth noting the past experience during similar shut downs. There is a potential risk here because it would be naive to claim there won't be any risks at all with about 10% of the capacity being removed from the system. Currently, our insights from key markets like Cancun and Punta Cana indicate that demand is strong, especially regarding all-inclusive options. We remain optimistic about the trends we're observing, and we have options with charter flights if we need additional air capacity.

Our last question comes from Meredith Jensen from HSBC.

Just circling back to what you just mentioned about the ALG business and all-inclusive. I was hoping knowing the importance of optimizing that distribution strategy from ALG. If you could speak a little bit more about this channel and what you're seeing in terms of broad B2B consumer and potentially how broadening the offering to ALG through Playa programs. I know they introduced like ALG Luxe, can continue to increase the mix of client within the ALG.

Yes, I may have lost you towards the end. However, ALGV is a vital distribution channel for us. The insights it gives us regarding the leisure travel landscape are significant. More than 2.5 million customers are booking through that platform, and there are hundreds of thousands of travel agents and advisers connected to our systems. It is the largest packaging platform in North America, making it a strategic asset in every respect. The team has excelled at maximizing the potential of this business by focusing on profitable markets while exiting unprofitable ones. Additionally, the automation and AI integration that I mentioned earlier is just beginning. We anticipate transforming this business into a more efficient platform with enhanced predictive analytics and a much better signal-to-noise ratio, providing actionable insights from AI that will improve the booking process for travel agents and advisers. As we have indicated previously, 4-star and below has shown weakness. The key point is that our direct production into our own resorts is increasing year-over-year, continuing to rise since we acquired the company. This is important because it mainly involves 5-star properties, which are in our portfolio. The addition of Playa Hotels has also greatly appealed to the customer base booking through ALGV. Thank you all for joining us this morning. We appreciate your interest in Hyatt and look forward to welcoming you to our hotels and resorts so you can experience the excellence of Hyatt Care firsthand. Have a good rest of the day and a great week. Thank you.

This concludes today's conference call. Thank you for participating, and have a wonderful day. You may all disconnect.