Hyatt Hotels Corp (H) Q3 2026 Earnings Call Transcript

Good morning, and welcome to Hyatt's third quarter 2026 Earnings Conference Call. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star 1 to raise your hand. 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 Knuckles, Vice President of Investor Relations and Corporate Strategy. Please go ahead.

Thank you, and welcome. These statements are subject to 10Q. These risks, along with the comments, will not be updated. In addition, you can find a reconciliation of non-GAAP financial measures referred to in today's remarks under the financial 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 on our Investor Relations website this morning containing supplemental information. Please note that, unless otherwise stated, references to occupancy, average daily rate, percentage changes, disclosure in the call, are on a year-over-year basis.

Thank you, Ryan, and good morning, everyone. We appreciate you joining us today. I'm extremely proud of our teams and the exceptional results they helped deliver in the third quarter. Hyde continues to demonstrate the strength of our asset-light business model and our insights-led brand. And our teams are focused on delivering on-property experiences that truly resonate with our guests, deepen loyalty, drive durable fee growth, increase free cash flow, and generate attractive long-term returns. Our third quarter results provide another compelling example of our strategy in action. We delivered strong REVPAR, fee, and adjusted EBITDA growth, expanded World of Hyatt membership, and grew our development pipeline to record levels. Even as certain sub-regions experience temporary softness in demand. Our diversified global portfolio, focused on high-end experience-focused travelers and strong commercial platform, continue to drive performance and strengthen Hyde's position as a preferred choice among guests, owners, and developers. Together, these advantages support high-quality operational execution and growth, driving higher fee earnings and free cash flow. Turning to our operating results, third quarter system-wide RevPAR grew 7.2%, 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 in July and the timing of the Jewish holidays in September. RevPAR growth in the United States also exceeded our expectations, while most international markets delivered strong growth. Average rates grew in all brand categories, driving nearly 80% of our RevPAR growth. Our focus on driving high-quality RevPAR growth is intentional, as it supports higher cash flow for owners, and it also results in higher fees and fees per room for Hyatt. RevPAR increased across all customer segments, business, group, and especially leisure travel. Year-to-date, we have gained 100 basis points of market share across our portfolio, driven by gains and average rate index, highlighting that our strong REF PAR gains are much more than just favorable industry trends. Together, these results highlight the benefits of Haidt's differentiated strategy, premium brands that resonate with travelers and win in their competitive set, supported by a commercial engine that drives superior results for our owners. Business transient RefPAR grew approximately 1% during the quarter, with growth accelerating to more than 4% in September, a sign of renewed momentum after the summer, with strong results in our select service brands in the U.S. Group RefPAR increased a strong 8% in the quarter compared to last year, with some of that growth coming from the FIFA World Cup and the shift in the timing of the Jewish holidays. The strength and resilience of the Leisure Traveler drove Leisure Transient Rev Park growth of approximately 10%, once again led by our luxury hotels. Demand for high-quality experiences remained strong, with performance at our resorts in the Americas offsetting temporarily softer demand at our all-inclusive resorts in Cancun. Looking ahead, we see continued momentum across all customer segments, and the pickup and bookings into Cancun is very encouraging. World of Hyde continues to fuel increased performance across our brands and continues to grow at an exceptional rate, with more than 72 million members, up 19% from a year ago. But it is not just about scale. World of Hyde is central to our insights-led and brand-focused approach, and its continued growth reflects the appeal of our brand and the value the program delivers to members and, ultimately, to owners. The way we connect and engage with our members differentiates their experience and provides us with valuable insights into what matters most throughout their travel journey. We see this reflected through the Thank you. Together, Delta and Hyatt aim to make travel more connected and rewarding through exclusive benefits and experiences through travel journey. We're excited about this collaboration and look forward to sharing more as the program develops. Together our differentiated brands, commercial platform, and growing base of highly engaged World of Hyatt members strengthen our value proposition for guests, owners, and developers. This drives demand for Hyde Hotels and supports attractive owner returns, underpinning our quality growth strategy. Hyde's value proposition continues to resonate with owners and developers, as reflected in our exceptionally strong development activity during the third quarter. We ended the quarter with a record development pipeline of approximately 158,000 rooms, up 12% from a year ago. Year-to-date, we have signed 70% more deals compared to last year, and our construction starts are up over 40%. The performance of our luxury lifestyle and inclusive collection brands continue to generate strong owner interest and signings, while our essentials brands are building continued momentum and expanding Hyatt's reach. In fact, during the quarter, over half of the signings for our Essentials brands in the United States were in markets new to Hyatt. Third quarter net rooms growth was 3.9%, excluding rooms from the Playa Hotels acquisition that were removed from Hyatt's room count in the fourth quarter of 2025. Notable openings included the Thompson Sevilla, our second Thompson Hotels property in Spain, and Hyatt Vivid Punta Cana. Our expansion into upper mid-scale continues to gain momentum with 14 hotel openings in this segment during the quarter. As we look ahead, we expect over half of our openings for the year to occur in the fourth quarter. Approximately two-thirds of our anticipated fourth quarter openings are hotels in the final stages of pre-opening. The remainder of our anticipated growth is largely comprised of multi-property conversions that, in some cases, have taken longer to finalize than anticipated, and strategic partner hotel additions. We've built a strong and rapidly expanding international pipeline that we believe will deliver accretive fees per room. We also see significant opportunities to expand our brand presence in the United States. Together, these opportunities give me confidence in our ability to deliver the net rooms growth target, the fee growth, that we outlined at our investor day in May. Now, turning to transactions. We continue to make progress to sell behind Grand Central New York and are also advancing discussions to sell several additional properties. We will continue to provide updates as we make progress on these sales. Throughout these sales, our disciplined approach remains consistent with our track record of pursuing transactions that achieve attractive values while securing long-term management or franchise agreements, supporting continued fee growth and shareholder value. We continue to sharpen our brand focus, invest in our talent, and leverage technology to deliver high-quality experiences and operate more effectively. The appointment of Amar Lalvani as Hyatt's first chief creative officer reflects that commitment. He's helping bring our brand strategy to life across the company and equipping colleagues to deliver it. We believe these capabilities strengthen Hyatt's competitive advantages and support long-term value creation. As we shared at Investor Day, we've built a powerful flywheel that creates value for guests, owners, colleagues, and shareholders. Our third quarter results reinforce the strength of our strategy and our confidence in Hyatt's long-term potential. Our opportunity is reflected in the strong development pipeline and the significant activity behind it. But this is not about growth for the sake of growth. We are and will remain intentional about where and how we grow, focusing on openings that strengthen our network, further drive owner returns that will result in high-quality, durable, and compounding fee growth into the future. I'll now turn the call over to Joan to provide more details on the quarter. Joan, over to you.

Thank you, Mark, and good morning, everyone. Our third quarter results provide another proof point of the strength of premium leisure travel globally and healthy group demand. As Mark mentioned, RevPAR exceeded our expectations, increasing 7.2 percent compared to last year, driven by resilient demand from premium travelers and incremental demand from the FIFA World Cup. In the United States, RevPAR increased a strong 8.2% compared to last year, driven by robust leisure travel and healthy group demand, with the FIFA World Cup contributing approximately 50 basis points to growth. Our select service hotels also performed well, with RevPAR increasing 6.8%, reflecting strong business transient demand and easier comparisons to last year. Outside the United States, RevPAR increased nearly 6% in the third quarter. Outbound travel from the U.S. to our international hotels was up over 10%, reflecting robust international travel demand and continued strength in the higher-end U.S. traveler. Asia-Pacific, excluding Greater China, delivered robust REVPAR growth of more than 10%, driven by healthy inbound travel and demand in key markets where Hyatt has strong brand representation. Greater China REVPAR increased 2.1% compared to last year, supported by leisure transient demand and strong average rate growth. Europe generated REVPAR growth of 4.3%, driven by healthy domestic leisure demand and continuing growth of international inbound travel. In the Middle East, REVPAR declined by only 3% compared to last year, as strong domestic travel helped offset a 40% decline in international inbound travel. In the Americas excluding the United States, REVPAR increased 9.2%, benefiting Highlighting from strong resort performance in the Caribbean, highlighting the exceptionally strong demand for high-end leisure travel experiences. Net package RevPar in our all-inclusive portfolio declined only 2.5% compared to last year. Strong demand for travel in the Caribbean and other parts of Mexico largely offset the more than 10% decline in Cancun. Despite these demand pressures, I'm very pleased to share that our all-inclusive resorts in Cancun Kuhn have gained 400 basis points of market share this year, reflecting the strength of our brands and the markets in which we operate. 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. Growth fees increased 15.2% to $327 million, ahead of our expectations, driven by strong performance across our managed portfolio, contributions from newly opened hotels, the new management agreements from the Playa portfolio, and the quarterly timing of non-REVPAR fees. Our strong fee growth highlights the benefits of our broad, diversified and differentiated portfolio and our ability to deliver growth even as certain geographies face demand pressure. Distribution segment adjusted EBITDA declined compared to last year and was below our expectations as softer demand in Mexico and the reduction in flight capacity was more pronounced than anticipated. Results continue to be impacted by lower demand for four-star properties, and we expect a gradual recovery when flight capacity increases and travel spending improves among this consumer segment. Overall, third-quarter adjusted EBITDA was up over 19% year-over-year, adjusted for asset sales, reflecting the strength of our core fee business. As of September 30th, we had total liquidity of approximately $1.8 billion, including $1.3 billion of available capacity on our revolving credit facilities. During the quarter, we also returned approximately $161 million to shareholders through share repurchases and dividends, bringing our year-to-date returns to $336 million. We ended the quarter with approximately $1.4 billion remaining under our share repurchase authorization. Our balance sheet is strong, and we remain committed to maintaining our investment grade profile. Looking ahead to the fourth quarter of 2026, while travel demand continues to vary across regions, we remain confident in our full-year outlook, supported by the strength of our brands. Let me start with the two regions that are experiencing demand pressure this year. In the Middle East, while REVPAR declined by only 3% in the third quarter, we expect fourth quarter performance to be below those levels due to the seasonality of the business and the ongoing geopolitical conflict. We continue to anticipate an approximate $10 million impact to full-year fees. In Mexico, booking trends at our all-inclusive resorts are improving sequentially, but have not recovered to the extent we expected for the fourth quarter. Despite the headwinds in Mexico throughout the year, our teams have delivered exceptional results, managing to mitigate the impact to a $20 million decline in fees for the year, which equates to about 1.5% of our total annual growth fees. Looking ahead to the first quarter of 2027, forward booking trends are encouraging, with first-quarter booking at our America's all-inclusive resorts up in the highest single digits, and air capacity showing signs of improvement from lower levels. The continued strength of our core business reinforces our confidence in its underlying fundamentals, even as we navigate temporary regional challenges. In the United States, forward-booking trends remain strong for the balance of 2026, with fourth-quarter group pace for our U.S. full-service hotels up in the mid-single digits. We expect fourth-quarter U.S. RevPAR growth to moderate relative to the second and third quarters, reflecting more difficult year-over-year comparisons and the impact of the November midterm elections. Outside the United States, we expect continued strong performance in Asia Pacific through the balance of 2026. Reflecting these trends, we are increasing our full-year system-wide RevPAR growth outlook to between 5% and 5.5%. We now expect full-year RevPAR growth in the United States of between 5% and 6%. We expect RevPAR growth in international markets to be slightly lower than the United States for the full year. We continue to expect full-year net rooms growth of approximately 6%, with momentum and conversions, including within our new brands, driving another year of strong organic growth. As Mark mentioned earlier, we expect more than half of our openings for the year to occur in the fourth quarter. The strong development activity we are seeing reinforces our confidence in achieving the long-term growth expectations that we laid out at our investor day. We expect full-year gross fees to grow between 10% to 11% in the range of $1.32 to $1.335 billion, reflecting continued growth across our AssetLite platform. Importantly, we are delivering this strong growth despite the temporary hotel closures in Jamaica and softer demand in Mexico and the Middle East, reinforcing my confidence in the strength of our fee business and long-term fee growth. We expect our full-year adjusted EBITDA to grow at a strong rate of 14-17% in the range of $1.17 to $1.20 billion. This outlook reflects strong fee performance, slightly lower adjusted G&A, and an approximately $30 million year-over-year decline in our distribution segment compared to 2025. We are maintaining our adjusted free cash flow outlook for the full year in the range of $580 to $630 million, an increase of between 20 to 30 percent, and adjusted EBITDA to adjusted free cash flow conversion of at least 50 percent. Finally, we are raising our full year outlook for capital returns to shareholders to between $375 and $425 million. In closing, our third quarter results demonstrate 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 our results this quarter are another demonstration of the successful execution of our strategy. This concludes our prepared remarks, and we're now pleased to answer your questions.

We will now begin the question and answer session. Please limit yourself to one question to maximize the amount of questions we can take. If you would like to ask your question, please press star 1 to raise your hand. To withdraw your question, press star 1 again. We ask that you pick up your handset when asking your question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Connor Cunningham with Mellius Research. Connor, your line is open. Please go ahead.

Hi, everyone. Thank you. Just, you know, you have a competitor out there that's talking about 3% to 4% REVPAR growth next year. Joan, you just listed a lot of headwinds that you had this year that shouldn't necessarily repeat next year. So just trying to understand the context of how you view REVPAR or REVPAR right now, just given where you sit on the demand commentary. And then maybe if I could just sneak a little one on top of that, just bringing it back to fees, like what gives you confidence in the NUG performance next year? I mean, obviously, this year has been a little lumpy. So just any thoughts on the 6% to 8% you laid out at Investor Day would be helpful. Thank you.

Sure. Maybe I'll just start 2027. We're in the middle of our planning process, and we will absolutely update you at Q4 with more specifics around guidance for 2027. But right now, it's setting up really nicely. Trends are mentioned many times in our prepared remarks, and we have every reason to believe that those will continue. As we're looking into Q4, we're seeing that continue into Q4. So expect that to continue into the first part and throughout 2027. Group is also setting up nicely for next year. We are lapping some outsized group performance from the World Cup, but even despite that, we've got good group pace on the books for next year. And we also have, you know, the disruptions from this year, which are temporary, are going to help us next year as we go into early in the first part of the year. We already mentioned that the pace into our all-inclusive segment is up in the high single digits. So as we think about leisure, we've got visibility into those net package RevPAR numbers that they will be improving. So, we feel good about next year's setup, and there's several tailwinds that are going to help us into next year, including, I'll just mention, the hotels reopening in Jamaica as well. So, there's several items, and we'll unpack all of that for you in the fourth quarter when we give guidance for next year. And that also just reaffirms what we said at Investor Day as far as our expectations around REVPAR growth and fee growth going into next year. And so maybe Mark will cover NRG.

Yeah, I'll just add one thing to what Joan just said to support and substantiate the pace that we see as we speak serially, and we see that continuing into plan next year. Jamaica is significant growth in airlift. Of course, the year-over-year numbers are stratospheric because they got cut back so severely in 26, but it is a restoration, a very quick ramp to restoration. of Lyft into Jamaica, and the Dominican Republic is holding. The second is really meaningful for us, is that if you look at pieces of group from corporates, and if we look into the full year, this year, it looks like it could be up in the range of 7% or thereabouts, and is up almost 10%. Corporate makes, first of all, we serve a relatively higher, secondly, of course, we had a massive MRF business that had to do with FIFA. But even if you sort of ignore the FIFA impact really strong, as to NRG, there's no question that we expect NRG to be more even over the course of the year in 27. Now, unforeseen in the year, for the year, opportunities that come up between now and the end of the year or into the first quarter, we will be solidly in above that range in the first quarter is our current outlook with respect to openings, year-over-year increase. The increase in the number, but we also, some of the, so that's our outlook in the near term for it. And firmly, I just reaffirm what we said at the 28 time period. We still feel very confident about 68%.

Awesome. Thank you.

Your next question comes from the line of Brant Montour with Barclays. Brant, your line is open. Please go ahead.

Good morning, everybody. Thanks for taking my question. Maybe just following on that, Mark, I want to hear from you regarding the new development solutions that you rolled out in early October relating to conversions. You know, what sort of prompted that? How sort of linked was that to some of the, I guess, the sort of lowered revision on NRG last quarter? Do you think that that sort of improved any sort of slowdown or sort of slow steps that you had in the process in terms of how we should think about next year?

Yeah, I think there are several things that are here. It's not just the utility we approach already paid dividends in the region that sort of we're taking structural considerations into account plus brand standards. We feel like we've got, secondly, a deal is pitched continuum. I'm not going to go into further details because of reasons, but to see some, I think the timelines that it has taken in the past conversions, you know, there's the, The old adage, if you can't untie the Gordian knot, you sometimes have ways to reduce cycle time for systems conversion, is we're actually developing some tools to be able to actually work around that and be able to make conversion faster by virtue of plugging in World of Hyatt. So those are the kinds of changes. I believe that we will be largely complete with the end to end product that we are working on now in the first quarter of next year, and I think It'll continue to benefit us because conversions remain a significant proportion of our total.

That's good color. Thanks, Mark.

Thank you.

Your next question comes from the line of Sean Kelly with Bank of America. Sean, your line is open. Please go ahead.

Hi. Good morning, everybody. I think you've tackled a lot of what we had to ask, Mark. It might be helpful. We've seen a lot of developments on the agentic AI front in the last few months, specifically. Really, since early September. And I know you are having a lot of conversations. You're pretty thoughtful on this subject. So just would love your view on, you know, how do agents specifically impact a little bit of the booking journey and how is Hyatt able to sort of directly steer those agents to your direct channels as opposed to, you know, other aggregators that are out there already kind of seeing on that distribution funnel? Thanks.

Yeah, so thank you, Sean. We are absolutely focused on being available, that the capabilities within these LLM frames are different from being very early in representing Hyatt directly in the apps, GPT's platform. We have a bet on the people who are coming through those channels. They are younger and rather in that environment as to be a significant portion of our total distribution picture. You know, over the next couple of years, I think we'll see that expand. The key is that our strategy is really focused on elevating our brands, sharper you can define your brands, the clearer when a personal agent is searching for a particular trip. So we believe that for our clientele, I would not say that this matters in economy, for example, or budget hotels. It matters a lot in resorts. It matters a lot in luxury and lifestyle. It matters a lot in some full-service hotels. So I would say in the categories that we play in, it matters a lot. And that's why we are so hyper-focused on really elevating our brands and making them sharper, more defined, more findable, and more precise. And so we are continuously test and learn.

Your next question comes from the line of Ben Chaykin with Mizzou. Ben, your line is open. Please go ahead.

Hey, good morning. Thanks for taking my questions. Yeah, you know, we've covered a lot of important topics, just one for me. There was a number of impacts this year. Joan, you alluded to this, and maybe we can take it offline if you prefer. But to the extent we can kind of quickly review the impacts in 26, as they sound like most, if not all, will help in 27. I believe, Joan, you said 20 million Mexico impact, 10 million from Middle East. I guess, was that the total impact, or is that strictly within the kind of managed and franchise hotel business as opposed to destination? And then part two, could you remind us the total Jamaica impact in round numbers, and then as well as the destination business? And if I'm missing anything else, thanks.

Sure. So I'll just reiterate for you, Ben, our fee growth for the full year, and the 14 to 17 percent of EBITDA growth for the full year, Which has been raised in this release this morning, reflects the impacts that we've experienced across the year. So really strong. And EBITDA. And with respect to your question, just to summarize it for you, the fee impacts in Mexico and the Middle East for the year relative to our Q4 original guidance is about $30 million. And that's just slightly higher in our latest outlook relative to our Q2 outlook for Mexico. So $30 million in total for the year, embedded within our full year, experiencing stronger demand, including significant rates at $30 million. For EBITDA, the impacts, when you include the fees plus the distribution business, it's a total of $60 million. So that is just wrapping it up into the aggregate numbers, again, from the beginning of the year till now, and we are remaining with this 14 to 17 percent EBITDA growth outlook, which is very, very strong and very consistent with our algorithms embedded With respect to REVPAR growth and the flow through. So very good results, and that's the summary of the impacts for the year. Again, temporarily, we believe these are temporary. As we've seen now, improving sequential is more than the dynamics that have impacted us, particularly in Mexico, which is the vast majority of that number, we're seeing improve. And that is a really good sign for us as we look ahead into 2027. For Jamaica, we announced that in our original guidance, which was a $15 million headwind. As we look ahead into next year, our owners are very focused on opening up these hotels. So, our current estimate right now is late Q1, early Q2 for reopening at those hotels in Jamaica. So, we'll get some of that tailwind into next year and then into 2028 as well.

So, Ben, I think there's one thing I would... Yeah, I would just add one thing, and that is that we're tracking, obviously, how things are starting off in the fourth quarter. There are two areas that I just wanted to make mention of in passing. One is this we would be, and then the U.S. continues to hold up very well. The juggernaut of completely and mapped out the year to date. We are not taking any early indicators in October to the bank at this point. The world's a very volatile place, and we have midterms coming up. One thing we can say is that things are not falling through cracks or falling off the table.

Understood. Very helpful. Thank you.

Your next question comes from the line of David Katz with Jeffries. David, your line is open. Please go ahead.

Thanks very much. Good morning. You've covered a ton of territory. I wanted to ask about the growth for Hyatt into the more moderate or limited service areas of the business. You know, understanding the strategic importance of, you know, of having that as part of your portfolio, what I observe is that, you know, many of the other, you know, larger hotel platforms are trying to increase the economic intensity, right, of fees per room, you know, of each new unit, right, added to NUG. And on the surface, that may appear to decrease in economic intensity. But I presume that it has other economic benefits across the entirety of the platform that you consider, not just necessarily each contract on the surface of it. Can you maybe help us just understand those economic benefits and, you know, how that adds to the totality of Hyatt, which is, you know, such a strongly growing enterprise?

Absolutely. Thanks, David, for the new upper mid-scale studios, 50, over 100. The signings that we have made looking at travel, and we didn't. We were absent. And so that's been the, I think it's things in these brands have been in markets that we had identified as part of that research. We're absolutely on strategy for covering new markets, already traveling, staying outside of our system. And so the purpose of it is to do, is twofold. One, to be at the high end of their – we want them to have a quality experience in the upper mids that when you have a hotel that's got a leading rate of – it is not an acute issue right now, meaning we don't – including these 150 hotels, fees per key in the pipeline is actually accretive. It's higher than our current fees per key in our open and operating hotels. Years for that to start to show up in terms of our total mix, because the hotels that we are opening, luxury and our fee base continues. I'm not worried about it from a system perspective, and you shouldn't be either. I think the key is being present where our travelers are traveling and being there with a high-quality representation that you see across all chain scales right now. Um, and I think that in either new market opportunities, it really helps.

Perfect. Thank you so very much.

Your next question comes from the line of Dwayne Fenigvert with Evercore ISI. Dwayne, your line is open. Please go ahead.

Hey, thank you. Good morning. I was hoping you could expand a little bit on the recent announcement with Delta this past quarter. Any unique aspects of that partnership, maybe versus past relationships, and what future steps or opportunities in how you might work together? Thank you.

Yeah, the one thing I can say is what we've already announced, and that we've made is a deal that is new to that we did talk about. We will tell you a lot more in the first quarter. So when we announce fourth quarter earnings, we will say that the teams are working extraordinarily well together. The customer base, the member opportunity in terms of expanding member utilization opportunities, there to be significant opportunity. And it's really important to us as we continue to hyper-focus on elevating our brands that we really continuously deepen our relationship with the premium customer, with the high household income customer. And that's what we feel like we are gaining.

Thank you.

Your next question comes from the line of Lizzie Dove with Goldman Sachs. Lizzie, your line is open. Please go ahead.

Hey, good morning. Thanks for taking the question. Could you maybe just talk about generally what you're seeing in the environment for key money overall? I guess on the near term, I think you raised EBITDA, but lowered CapEx guidance and maintained free cash flow. So I wasn't sure if that was kind of related to key money or something else, but curious just kind of over the long term as well.

Yeah, first of all, key money is actually, I think, the intensity of it very chain scale. I think the thing we actual needs are for developers, you're presenting you with actual need in your capstone transaction, and what we get is a return of capital. So we've been doing more by way of, I would say, innovative key money intensive. They still are capped, but maybe in a different way. I think we actually laid out that we would be $170 million a year in key money, or we'll be in and around that range. It might be higher in one year and lower in another year, but my guess is that.

Thank you.

Your next question comes from the line of Rose Smeeds with Citi. Rose, your line is open. Please go ahead.

Oh, hi. Yeah, thanks. It's Smeeds. I wanted to ask you just two quick ones. I guess the first one, just going back to Mexico for a moment, you said that it was weaker than expected than your expectations in the third quarter. And I was just wondering, what sort of points were you looking at going into the third quarter that turned out to be, you know, maybe not so predictive or accurate, and just kind of what gives you confidence now that we're in the fourth quarter that we're not just seeing sort of another head fake, or maybe there's something competitive going on, you know, on the ground in Cancun that's not necessarily related to the political disruption we saw earlier this year?

Yes, Smead. We actually saw some demand weakness in September, particularly in the third quarter. So it was slightly worse than our expectations, and we actually thought that flight capacity would be improving as we were looking at this Q2. It's been a little slower, but we're seeing it sequentially improve, as both Mark and I mentioned. So as we head into Q4 and to next year, my comment about market share in my prepared remarks is really remarkable, and our owners are pleased, you know, despite what's happening in the competitive environment, that we are delivering, and our commercial and operation teams are delivering market share gains, and that's what we need to be doing in this environment. And as we see the recovery continue from here, we'll be able to just drive more top line and cash flow for owners into the future.

Yeah, I think it's if you think about the level of disruption in the Riviera Maya area, because that's really where it's been. Yes, it's significant. It's it's a bit over a third of our total. If you think about the severity of the disruption, to gain 400 basis points of market share and only have fee degradation of 1.5% of our total fee base, I think just demonstrates that the diversity, even within our inclusive business, let alone our total business, we are not highly in volatility as a result of what's going on in Mexico in a given area. Yeah. Joan mentioned, in case you didn't pick this up, it's an extraordinary number. America's ex-US is up 9% in the third quarter. That's extraordinary. A lot of that is in the Caribbean in our other resorts. So all I'm saying is that the luxury leisure traveler is very, very good, and we are capturing that in different ways. And we do have the seaweed problem, and they are also Times that it gets worse are in the weaker group. We did expect Lyft to improve more than it actually did into Cancun in the third quarter, especially in September, and that did not come through. Hopefully, it rounds out how we see our business.

It does. I appreciate that. And then I just wanted to ask you quickly, you mentioned what looks like a really good pace of corporate group for 27. What sort of percentage is corporate group of your overall kind of group segment, usually?

Corporate, yeah, corporate usually is about associations, and also very much FIFA.

I guess it's FIFA, right? Yeah.

Yeah, exactly. It's all FIFA.

I mean, are you able just to provide or characterize the pace of group bookings just overall for 27? Is it like mid-single digits, or maybe…

Yeah. If you remove FIFA, it's mid-single digits right now. And, you know, I think the year is young. The corporate demand is varying. It's not just corporate. If you look at our negotiated business, we were up 5%, 4.8%, something like that in the third quarter. I think that we're the signal that we stand out.

We'll see now. That's why Hyatt isn't on Citi's travel portal. You're doing too well. But thank you for your time.

Our last question comes from the line of Dan Pulitzer with J.P. Morgan. Dan, your line is open. Please go ahead.

Hey, good morning, everyone. Thanks for taking my question. I just wanted to follow up on the distribution business, kind of how you're thinking about the recovery into next year, you know, and the path to getting back to that. It was 2025 EBITDA levels for that business. And then similarly, can you maybe talk about your attitude or willingness and how you're thinking about, you know, keeping or selling this business and if this is something you had inbounds on? Thanks.

Sure, Dan. As we look into, again, we're in the early cycles of planning for next year, but we do see this airlift capacity will have sequentially improving in the data. And, you know, half of the business is in the four-star category. Spending improves over time. And, you know, we're seeing in the U.S. We'll see that. And finally, with Jamaica reopening, a nice tailwind as they have more inventory to sell into next year. So if you want to comment on the other question Dan had.

I think the answer is we really don't have any further update in the gain of market share that we have seen, because we're able to track where Lyft is coming from and where demand is coming from, primarily because we have a booking platform in use by over 175,000 travel advisors and travel agents. So we have a pulse on the market, and that allows us to be responsive to what we're seeing come through the system. Admittedly, the vast majority of that which we are focused on is five-star. That's really our core. But with now Bahia Principe activities that we've got going under the Alua brand, we will see more four-star activity over time. So I think the value of the platform is not diminished in value. In fact, it's probably grown in value during tough times. And the ability to do the positioning remains, but nothing more. Thank you all for joining us. I really appreciate the time that you've taken out of your busy days to listen. And stay tuned for really what will be another active quarter ahead. And we have, as you've heard from us, a very constructive, positive outlook for the future. So thank you again and have a good day.

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