Earnings Call Transcript - H Q1 2025

Operator, Operator

Good morning and welcome to the Hyatt First 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.

Adam Rohman, Senior Vice President of Investor Relations and Global FP&A

Thank you, and welcome to Hyatt's first 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 the call, 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'll now turn the call over to Mark.

Mark Hoplamazian, President and Chief Executive Officer

Thank you, Adam. Good morning, everyone, and thank you for joining us today. I'm very proud of our many accomplishments in the first quarter, including strong RevPAR and adjusted EBITDA growth, the introduction of the Hyatt Select brand and being selected to the 100 Best Companies to Work For annual list of U.S. companies according to Fortune and Great Places to Work for the 12th consecutive year. While we began to experience greater macro uncertainty during the first quarter, we delivered great results because of our durable asset-light business model and Hyatt's culture of care. Before I comment on our results, I'd like to provide a brief update on the Playa transaction. On April 28, we extended the tender offer period until May 23rd, 2025, at which time we will evaluate if all closing conditions are met. We continue to advance discussions for the sale of Playa's real estate and expect to be in a position to enter into an agreement to sell the real estate in the near future. We will continue to provide updates on all aspects of the Playa transaction as we have additional information to share. We're also making progress to sell several of our owned properties, including one that is under a signed PSA, two that are under a letter of intent, and three hotels in a formal marketing process. We remain under contract for the sales of Hyatt Grand Central New York and Andaz London Liverpool Street, but do not expect either of those transactions to close this year. We will continue to share additional updates as these transactions progress, and consistent with the past statements, expect that we will continue to reduce our ownership of hotels. Turning to growth, we were very busy on the development front and ended the quarter with a pipeline of approximately 138,000 rooms, a 7% increase over last year. New signings replaced the rooms that opened during the quarter, and development interest in our brands remained very strong. We signed several exciting projects during the quarter, including the Park Hyatt Taormina in Italy, the Grand Hyatt Shiwalik Hills in India, and a Hyatt Centric in Downtown Cincinnati, to name a few. We are encouraged by the continued deal flow that we expect will translate to greater signings and expansion of our pipeline. We achieved net rooms growth of 10.5% during the quarter. We welcomed The Venetian Resort Las Vegas in January, and we are thrilled for our World of Hyatt members and group customers to experience these hotels on the Las Vegas Strip. Other notable full-service openings during the quarter included Andaz Doha and Hyatt Regency Bangkok Airport. In February, we opened the first Hyatt Studios Hotel in Mobile, Alabama. Hyatt Studios Mobile Tillmans Corner is off to an impressive start, including strong bookings through Hyatt direct channels and great feedback from guests and developers. We are excited about the future growth of Hyatt Studios and the momentum we are building to expand our brand presence in the upper midscale segment in the United States. We expect to further accelerate our upper midscale segment growth in the United States with the introduction of our newest brand, Hyatt Select, an upper midscale transient conversion brand, which we announced earlier this year. The brand expands Hyatt's offerings to travelers seeking shorter stays in secondary and tertiary markets. The Hyatt Select brand is flexible for both new builds and conversions designed to deliver attractive returns for owners and offers an opportunity for us to expand our owner network. As you will recall, during our 2023 Investor Day, we discussed the opportunity to grow our domestic brand footprint, especially in suburban, interstate and small metro markets, and we believe Hyatt Select, along with Hyatt Studios are the perfect brands for growth in these markets. There's strong interest in the Hyatt Select brand from owners who are looking for conversion opportunities and access to Hyatt's powerful commercial platform, especially in markets where Hyatt has significant white space for growth. We are very excited about the potential of this brand and the opportunity to provide more options for our members and guests in new markets. Now turning to operating results. This morning, we reported system-wide RevPAR growth of 5.7% for the quarter, which was positively impacted by the shift of Easter from the first quarter in 2024 to the second quarter in 2025. RevPAR growth was strongest among our luxury brands, in line with the trends that we have seen over the last two years as high-end consumers continue to prioritize travel. Leisure transient RevPAR was flat to last year, reflecting the shift of Easter, and increased approximately 4% across our luxury brands. We also saw solid results across our all-inclusive resorts in the Americas as Net Package RevPAR was up over 4% compared to the first quarter of 2024. Business transient RevPAR grew 12% in the quarter, driven by our large corporate customers, and group RevPAR increased 9% in the quarter as the timing of Easter positively impacted both customer segments. Our strong brand portfolio and growth into new markets and customer segments is clearly resonating with guests, driving the success of our award-winning World of Hyatt loyalty program. We added over 2 million members during the first quarter, ending the quarter with approximately 56 million members, a 22% increase over the past year. Loyalty room night penetration grew 170 basis points compared to last year as our members realized the benefits of our program, deepening their engagement with Hyatt and contributing to greater direct bookings. We also continue to see strong co-brand credit card spend, which increased significantly compared to last year. As we look forward, we are seeing mixed indicators as it relates to future booking activity. Based on what is currently on the books and recent booking trends, we expect RevPAR growth in our international markets to outperform the United States. We're also seeing positive bookings for our all-inclusive portfolio where pace is up approximately 7% in the second quarter for the Americas. In the United States, group pace for full-service managed properties is up approximately 3% compared to 2024 for the last three quarters of the year. We expect group to positively contribute to RevPAR growth in the U.S. for the remainder of the year, but we do anticipate growth in the second quarter to be softer due to the timing of Easter. As we look further out, group production for 2026 and beyond increased by double digits in the quarter, driven by corporate bookings and pace in 2026 is up over 10%. We are seeing softer booking trends for near-term leisure and business transient bookings in the United States, which have been down in the high single digits versus last year over the last few weeks with the greatest impact in our upscale brands. Our larger corporate customers are still on the road traveling for business. And while transient remains short-term, we believe that if visibility to macroeconomic policy improves, bookings could accelerate from what we have seen over the past few weeks. These trends informed our decision to adjust our full-year outlook, which Joan will review in a few minutes. But before I turn the call over to Joan, I want to highlight the benefits of our asset-light business model in the face of macroeconomic uncertainty. Through our asset-light transformation, we have grown our room base significantly and now have over 80% of asset-light earnings compared to approximately 40% at the time of our IPO in 2009. During the 2008 financial crisis, a 1% drop in RevPAR led to a nearly 2.5% drop in adjusted EBITDA due to our higher mix of owned and leased earnings. Today, as we benefit from a greater asset-light earnings mix, we anticipate a 1% change in RevPAR would lead to an approximate 1.4% change in adjusted EBITDA using the midpoint of our earnings model, which can be referenced on Page 14 of our supplemental investor deck. This sensitivity illustrates the positive benefits of our asset-light model, which is more durable and predictable through economic cycles. We have consistently invested in growth as a key part of our capital allocation strategy, which has enabled us to realize the benefits of scale. We believe our broader distribution across luxury, lifestyle, all-inclusive and more recently upper midscale segments positions us to meet our guests and customers in more places and engage them more frequently. As a result, our expanded reach and growing membership base have contributed to a pipeline that is now five times larger than it was in 2008, fueling the potential for continued fee growth well into the future. We've sharpened our customer focus, reinforced our financial foundation, and significantly enhanced our organizational agility, enabling us to respond more swiftly and effectively as market dynamics evolve. Our teams closest to the customer are making more data-informed decisions, leveraging new tools that deliver tailored insights, resulting in quick, high-quality decision-making. We remain committed to investing in talent, systems, and processes that strengthen our agility and ensure we continue delivering exceptional value to all stakeholders regardless of the macroeconomic backdrop. I would like to close by expressing my gratitude to all Hyatt colleagues who live our purpose every day by caring for each of our stakeholders, especially in uncertain times. Joan will now provide more details on our operating results. Joan, over to you.

Joan Bottarini, Chief Financial Officer

Thanks, Mark, and good morning, everyone. As we shared during our last earnings call, we expected first-quarter RevPAR growth to exceed the high-end of our full-year range, and we were pleased with our exceptionally strong 5.7% RevPAR growth. As Mark mentioned, business transient and group travel meaningfully contributed to RevPAR growth, and the highest end chain scales outperformed with our luxury brand categories up over 8%, leading to over 2 percentage points of RevPAR index gains. In the United States, RevPAR increased 5.4% a shift of Easter and the Presidential inauguration in Washington DC positively impacted growth by approximately 150 basis points and group and business transient segments each delivered double-digit growth in the quarter. RevPAR in the Americas, excluding the United States, increased 2.3%, and Net Package RevPAR for our all-inclusive properties in the Americas increased 4.1%. In Greater China, RevPAR was flat to last year as we lapped the strongest quarter of growth in 2024, but we increased our market share by approximately 1%. International inbound travel from the broader Asia-Pacific region increased 14% compared to last year. Asia Pacific, excluding Greater China, had another great quarter with RevPAR up 11.2%. RevPAR in Japan, India, Australia, and South Korea were up a combined 14%. International inbound continues to be an important driver of results in the region. RevPAR in Europe grew by 8.5% compared to the same period last year. Leisure travel in the region grew by 8% from growth in both rate and demand. We reported gross fees in the quarter of $307 million, up 16.9%. Our record level of fees was driven by strong RevPAR performance, new hotel openings and growth in non-RevPAR fees. Owned and leased segment adjusted EBITDA increased by 18% when adjusted for the net impact of asset sales. Distribution segment adjusted EBITDA improved by 9.6% when excluding the impact of the UVC Transaction. Performance in the quarter was driven by higher pricing, effective cost management, and favorable foreign exchange. In total, adjusted EBITDA was $273 million in the first quarter, an increase of approximately 24% after adjusting for assets sold in 2024. In the first quarter, we repurchased approximately $149 million of Class A common stock and have approximately $822 million remaining under our share repurchase authorization. During the quarter, we issued $1 billion of senior notes, and on April 11th, we closed on a $1.7 billion delayed draw term loan. We intend to use the net proceeds from our senior notes offering and the future proceeds to be drawn from the new term loan to finance the Playa acquisitions. We remain committed to our investment-grade profile, and as we've previously disclosed, we plan to use proceeds from the asset sales to pay down this incremental debt. As of March 31st, 2025, our balance sheet remains strong with total liquidity of approximately $3.3 billion, including approximately $1.5 billion in capacity on our revolving credit facility and approximately $1.8 billion of cash and cash equivalents and short-term investments. Again, $1 billion of our cash on hand is expected to fund a portion of the Playa acquisition. I'll now cover our full-year outlook for 2025 with the full details to be found on Page 3 of our earnings release. As a reminder, our outlook does not include acquisition or disposition activity beyond what we have completed as of today. We continue to monitor the dynamic macroeconomic environment, and while we had a very strong first quarter, the trends that Mark mentioned have led us to adjust our RevPAR expectations for the remainder of this year. We have seen signs of slowing customer booking behavior, particularly in short-term leisure and business transient demand. At this time, we anticipate RevPAR growth to moderate in the balance of the year. Our full-year 2025 RevPAR range of 1% to 3% implies RevPAR growth for the balance of the year up between flat to up 2%. For the United States, after a strong first quarter with RevPAR up over 5% to last year, we expect RevPAR for the balance of the year to be around flat compared to last year. For Greater China, visibility remains limited, but as we lap easier comparisons to last year, we believe RevPAR could be flat to slightly up for the balance of the year. We anticipate our properties in Asia-Pacific, excluding Greater China, will have the strongest growth in RevPAR of any geographic region as they continue to benefit from significant international inbound travel. We are maintaining our net rooms growth outlook range of 6% to 7%, driven by organic growth. Gross fees are expected to be in the range of $1.185 billion to $1.215 billion, a 9% increase at the midpoint of our range compared to last year. Adjusted EBITDA is expected to be in the range of $1.08 billion to $1.135 billion, a 9% 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. Adjusted free cash flow is expected to be in the range of $450 million to $500 million, which excludes $117 million of deferred cash taxes expected to be paid in 2025 related to asset sales that took place in 2024 as well as approximately $43 million of costs related to the planned acquisition of Playa. Our capital allocation strategy remains consistent. We are committed to our investment-grade rating, identifying opportunities to invest in growth that create value for our shareholders, paying a quarterly dividend, and returning excess cash in the form of share repurchases. We expect to return additional capital to shareholders in 2025 beyond quarterly dividends and our year-to-date share repurchases. In closing, we're proud of our first quarter results, which highlight the strength of our asset-light business model. We believe our commercial and growth strategy, the quality of our brand portfolio, and operational agility position us well to navigate this dynamic environment, and we remain committed to delivering against our long-term financial and strategic objectives. And this concludes our prepared remarks, and we're now happy to take your questions.

Operator, Operator

Our first question comes from Shaun Kelley from Bank of America. Please go ahead. Your line is open.

Shaun Kelley, Analyst

Hi, good morning, everyone. Mark or Joan, just wondering if you could give us a little update on sort of how you expect some of your line items or business units to perform in, let's call it, this choppier macro environment. Specifically, a little color on your expectations around distribution, given I think you called out some slower bookings and then owned and leased and incentive management fees as these are tough for a lot of people to model and understand the kind of sensitivity points given when RevPAR especially gets down to around the zero level, which I think you're implying for the balance of the year. Thanks.

Mark Hoplamazian, President and Chief Executive Officer

Thanks, Shaun. It's Mark. I'll begin with some broader comments before Joan discusses the specifics regarding the owned and leased properties and distribution that you mentioned. Overall, it’s a somewhat unstable environment. Nonetheless, the first quarter performed well across the board, and we are witnessing some near-term strength. As we approach the end of April and into May, leisure travel seems to be tapering off a bit, except for our all-inclusive business, which remains very strong. Our all-inclusive business pace for the second quarter is up 7%, and actual revenues for April in this segment show a 9% increase. This includes the effects of Easter, with 7% of that 9% growth attributed to ADR. Currently, the pace for Q3 is flat, with Q2 having 88% of business booked and Q3 having 45% booked. The leisure market is significantly weaker in U.S. resorts compared to non-U.S. Americas. We have observed an increase in Canadian tourists traveling to Mexico and the Caribbean, and overall, this segment is performing well on the leisure side. Regarding business transient and group, the first quarter was exceptionally strong, increasing by 12%. Looking ahead, we see three notable segments. The luxury segment remains strong well into the future, particularly until the end of May, and the upper upscale segment is also positive for that same period. While these segments do not comprise a large share of total volume, they are showing very encouraging trends. However, the upscale select service segment is showing negative performance in business transient travel. While our top negotiated accounts in select service remain positive, the overall pace in this area is declining. On the group front, we expect an increase of nearly 3% for the remainder of the year, corresponding to an annual growth rate of around 4.5% to 5%, which is a promising outcome. It’s particularly encouraging to note that with about 50% of business booked for 2026, we are seeing over a 10% increase in pace, along with significant rate hikes. Currently, the near term is clearly challenged, but it’s crucial to keep in mind that 70% of our portfolio is in the luxury and upper upscale segments. As we analyze how these trends develop, monitoring by segment and price point is vital for understanding the overall picture. That summarizes the macro situation at this time. There are certainly risks, as indicated by the recent GDP figures, which are not particularly favorable. While it doesn't seem like we are on the verge of a significant economic downturn, I’m not an economist, so I’ll refrain from speculating further. Now, I'll let Joan address the other aspects of your question.

Joan Bottarini, Chief Financial Officer

Sure, Shaun. I'll just comment on the owned segment and distribution. So owned is a smaller portfolio now, less than 20% of our earnings mix, and there is a bit of a higher concentration to luxury. So the performance that we're seeing in those chain scales is obviously helping the portfolio in the quarter. And also because of the shift in Easter, New York had a really great quarter, and we have a couple of owned hotels there. As we look forward, this portfolio, we expect to continue to be strong. We have concentration in the U.S. So we're watching that closely as far as the short-term pickup. We have a Q3 difficult comp because of the European hotels and what we generated last year in Paris with the Olympics. But all in all, on balance, the own portfolio is performing strongly and margins are up in the quarter, up over last year by 70 basis points, which is really a result of our teams in the field and our asset management teams really pushing on productivity and costs that we can control.

Mark Hoplamazian, President and Chief Executive Officer

And Joan, I would just add that that strength that you just described continued through April.

Joan Bottarini, Chief Financial Officer

That's right. We had actually a very good April. Part of that was actually driven by New York too, but continuing to be strong on the business side.

Mark Hoplamazian, President and Chief Executive Officer

Yes.

Joan Bottarini, Chief Financial Officer

For distribution, we had a good quarter in the first quarter, and it was a little bit better than expectations actually, as our teams are being very, very disciplined about cost efficiencies. They are seeing some slowdown in booking activity at the lower chain scales, not into some of the five-star locations in Mexico and the Caribbean, but in lower chain scales. So they're working hard to make sure that we're very disciplined about the cost structure and driving pricing in those upper chain scales that they're delivering to. So that really helped results in the quarter, and we had a little boost from foreign exchange too in that segment. As we look towards the remainder of the year, again, we think we're watching the bookings closely. We do think that the $5 million to $10 million upside to last year will probably be closer to around flat, which means a slight pullback in the last three quarters of the year relative to the first quarter, but nothing material. And again, the teams have some levers at their disposal as they manage through the business into the coming weeks, where that's where visibility is. It's really in the next couple of weeks.

Operator, Operator

Our next question comes from Michael Bellisario from Baird. Please go ahead. Your line is open.

Michael Bellisario, Analyst

Thanks. Good morning, everyone. Just want to dig in a little bit more on the booking trends. Are you seeing cancellations or is it all just less bookings at this point? And then on the group, what markets, what customer types are you seeing the hesitancy from in that 3% pace for the remainder of the year? Where was that 90 days ago? Thanks.

Mark Hoplamazian, President and Chief Executive Officer

Yes, first of all, while government business only makes up a small percentage of our total group, there have been significant cancellations in that area. It may be a small part of our overall business, but the cancellations are noteworthy. This year has mostly been led by corporate performance, which is strong in all respects, especially in future bookings, while associations are experiencing a downturn. We've seen impressive growth from the corporate sector. The main sectors driving our business, both in business transient and group, are IT, consulting, and banking and finance, all of which have shown double-digit growth in Q1. These sectors are currently performing very well. The main difference we’re noticing now is the pullback from associations compared to the proactive stance taken by corporations.

Joan Bottarini, Chief Financial Officer

Yes, I would just add that when we look at the global markets, the international segments are showing significantly stronger performance, particularly in both business transient and leisure transient sectors. In fact, the U.S. market has been somewhat slower compared to international markets over the past few weeks. On a global scale, business is up, while leisure is slightly down, which reflects the contrasting dynamics we are experiencing between international markets and the U.S.

Operator, Operator

Our next question comes from Ben Chaiken from Mizuho. Please go ahead, your line is open.

Ben Chaiken, Analyst

Hi, good morning. Thanks for taking my question. Would love to get more color on the progress around Playa. Language in the release seems to suggest a little faster timeline than was indicated the last time we spoke, when I think you were referencing 2027. Not sure if that read is fair. And then any color on the number of potential buyers would be great. Thanks.

Mark Hoplamazian, President and Chief Executive Officer

Yes. As I mentioned, we expect to be ready to sign a deal regarding asset dispositions. Beyond that, it’s difficult to provide more details due to some uncertainties around timing. Just to remind you, at the end of 2027, we set a commitment to a total sell-down of $2 billion. This was not specific to whether it would involve acquiring Playa assets or existing owned assets in our portfolio. So, that’s the reference to 2027. We have a long history of establishing our goals and giving guidance on our portfolio activities, and we are confident we can achieve them. We have exceeded every goal we’ve set, in terms of time, dollars, and valuation. This is a track record we are very proud of and aim to uphold.

Operator, Operator

Our next question comes from Richard Clarke from Bernstein. Please go ahead. Your line is open.

Richard Clarke, Analyst

Hi there. Good morning. Thanks for taking my question. So just a question on the construction landscape. What level of cost inflation are your developers seeing? And is that having any impact on maybe your U.S. construction? And any update on the percentage of your pipeline that is under construction that was up, I think, 25% over the last quarter?

Mark Hoplamazian, President and Chief Executive Officer

Thank you, Richard. I recently attended the grand opening of the first Hyatt Studios in Mobile, Alabama, where I engaged with several developers, including those involved in establishing the brand. They mentioned that they are currently factoring in contingencies of up to 20% in their cost estimates for construction. On an encouraging note, two developers shared their proactive measures, with one indicating they have partnered with U.S. case goods manufacturers to mitigate the impact of tariffs on imported goods. Many construction materials, such as drywall, lumber, steel, and ready-mix concrete, are not significantly affected by tariffs due to their local sourcing. I was impressed by the creativity and resourcefulness demonstrated by the developers. We are observing a trend toward sourcing case goods domestically, which historically have come mostly from China. Carpeting and hardware are largely supplied by U.S. manufacturers, influenced by shipping costs. While we can't ignore the potential impact of tariffs, it's clear that necessity drives innovation, and our developers are adapting effectively. Currently, around 30% of our pipeline is under construction for 2025, and the activity levels in the first quarter were strong. We opened over 4,000 new rooms from the pipeline during this period and added more in the same quarter. As you're aware, the first quarter typically sees fewer signings, so we're pleased with our progress and the activity feeding into the current negotiations, from which we are confident we will secure further deals. Overall, the pipeline activity feels more promising than it did a year ago, and our performance so far this year has been quite robust.

Operator, Operator

Our next question comes from Patrick Scholes from Truist Securities. Please go ahead, your line is open.

Patrick Scholes, Analyst

Hi, good morning, everyone. A quick question for you on the Playa transaction. What if anything at this point would make you not go forward with this deal? Thank you.

Mark Hoplamazian, President and Chief Executive Officer

We have a committed transaction and are currently in the process of a tender offer. There are certain conditions that must be met for the completion of this tender offer. I won’t list all of them, but I want to highlight a few important ones. First, we need to reach an 80% tendered percentage, meaning 80% of the shares must be tendered. Second, we need to obtain all necessary antitrust clearances. Lastly, if we don't achieve 100% in the tender, there is a prescribed process that we must follow, which will take several weeks to acquire the remaining shares. Those are the key conditions, and I hope this clarifies what is ahead of us.

Patrick Scholes, Analyst

Okay. Can I follow-up?

Mark Hoplamazian, President and Chief Executive Officer

Sure.

Patrick Scholes, Analyst

How confident at this juncture do you feel about those key conditions being satisfied? Thank you.

Mark Hoplamazian, President and Chief Executive Officer

We're confident that we'll get through this. If you look back over the last four to eight years, the predictions regarding antitrust, particularly in Mexico, have been somewhat less predictable than they seem now. I don't believe that the tender process will end up being a constraint. We're currently just waiting for clearance on antitrust, which is our main focus. I believe we will reach the tender level that is our minimum requirement.

Operator, Operator

Our next question comes from Chad Beynon from Macquarie. Please go ahead, your line is open.

Chad Beynon, Analyst

Good morning. Thanks for taking my question. With respect to the 2025 outlook, has anything changed with the non-hotel related fees, and with any softness that you've seen recently in the leisure traveler? Does that usually correlate with kind of what you see in that line? Thank you.

Joan Bottarini, Chief Financial Officer

No, Chad, in the first quarter, we experienced significant growth in our franchise and other non-hotel related fees. This was partly supported by the UVC Transaction that closed last year in the middle of the quarter, which helped enhance our first-quarter results. We expect strong growth in both franchise and other non-RevPAR related fees for the remainder of the year. Additionally, regarding our various fee streams, incentive management fees were robust across all aspects of our fee growth this quarter. It's crucial to consider the health of the U.S. and China markets. While we reported flat performance in China this quarter, we are optimistic about improvements based on recent trends, as April showed slight improvement there. For the U.S., short-term bookings have been somewhat softer, but we believe that as conditions evolve, we may see better performance since bookings are currently short-term. April also showed positive results in the U.S. We need to monitor this situation closely, ensuring that we target our efforts in areas with rising demand. This approach should help sustain our fee growth numbers for the rest of the year. We achieved a 17% growth in the first quarter and expect a full-year growth rate around 9% at the midpoint, indicating strong performance for the remaining three quarters of the year.

Chad Beynon, Analyst

That's great. Thank you.

Operator, Operator

Our next question comes from Stephen Grambling from Morgan Stanley. Please go ahead, your line is open.

Stephen Grambling, Analyst

Hi, thank you. I think last quarter we talked about this a little bit. But as we think about your co-branded credit card, is there a path to this being potentially renegotiated early as some of your peers have? And any reason to believe that your terms would be different than some of those recent renewals?

Joan Bottarini, Chief Financial Officer

So, Stephen, we don't have an update today to share, and we will absolutely provide an update when we have more information. We do believe we're going to achieve a very competitive new deal because of our brand portfolio, our distribution, the growth, the options we provide. So serving the high-end traveler helps us in this regard. And of course, the performance of the World of Hyatt program is also a key contributor to why we think we'll have a successful deal when we get to be able to share the negotiation specifics with you.

Stephen Grambling, Analyst

Great. And then I think that you touched on this with Chad's question, but have you seen any big deviation in the spend on your existing co-branded credit card, whether it's shifting more towards goods versus services that may mirror some of what you're seeing on the other side from a RevPAR standpoint?

Joan Bottarini, Chief Financial Officer

No particularly strong results have been observed personally or reported by our issuers. There is nothing concerning or materially different from the strong results we have seen.

Operator, Operator

Our next question comes from Duane Pfennigwerth from Evercore ISI. Please go ahead, your line is open.

Duane Pfennigwerth, Analyst

Hi, thank you. On the favorable all-inclusive pacing, you briefly mentioned or alluded to Canadians overflying the U.S. I wondered if you had any stats on how the point-of-sale might be changing for all-inclusive? Is U.S. point-of-sale stable or are you seeing other geographies meaningfully perk up?

Mark Hoplamazian, President and Chief Executive Officer

I believe the answer is yes in this case. We are observing an increase in Canadian visitors and consistency from American travelers. The percentage rise from Canada in actual stays was substantial in the first quarter. However, the U.S. remains the primary source market. Therefore, a significant portion of the overall performance for state business in the first quarter, as well as the pace, is driven by the U.S. The noticeable percentage increase in Canadian visitors seems to be partly a result of some U.S. resorts, with one of the most significant increases observed at a non-all-inclusive resort in the Bahamas, where we saw a remarkable rise in Canadian travelers during the first quarter. Anecdotally, this may be related to a fly-over trend. It's definitely a current trend, and while the U.S. market is performing positively, Canadian travelers are contributing significantly to the overall results for Q1 and influencing what we anticipate in the coming months.

Duane Pfennigwerth, Analyst

Thank you for that. And then I just wonder, big picture, I know you have a longer-term goal, but how should we be thinking about dispositions this year, excluding potential Playa transaction? Thanks. Thanks for taking the questions.

Mark Hoplamazian, President and Chief Executive Officer

Sure. I believe the timing is somewhat less predictable right now. One consequence of policy decisions and instability in fiscal matters has disrupted the fixed income markets, which you are likely aware of. This results in disruptions in capital formation, particularly affecting pricing rather than availability. There seems to be some awareness about the best ways to finance property acquisitions at this time. Some of the properties we have for sale are located in Europe, making capital formation there a bit more straightforward. We do expect to close on some of the items we mentioned earlier, but currently, the timing for executing these plans is quite unpredictable.

Operator, Operator

Our next question comes from Smedes Rose from Citi. Please go ahead, your line is open.

Smedes Rose, Analyst

Hi. I wanted to ask about the potential real estate sales. You've experienced many cycles and know this market well, having succeeded in it. You mentioned some challenges related to financing. Are you considering offering seller financing in certain situations? Have potential buyers pushed back on pricing due to the current uncertainty, or are they generally unfazed by it? Additionally, what are your thoughts on the growing institutional interest in the all-inclusive space, which you briefly touched on last quarter, particularly since we haven't seen much activity in real estate ownership in that area?

Joan Bottarini, Chief Financial Officer

Thanks, Smedes, for the question. Whenever a trade is executed, it locks in the available pricing at that moment. There is a trade-off because we believe in the long-term value creation of our asset base. We want to avoid finalizing a sale that could be overly impacted by debt costs. There are various ways to address this, including seller financing, which is what you mentioned. Currently, we're assessing how banks and non-bank lenders are pricing risk, looking for opportunities to provide credit support or seller financing that would allow buyers to borrow more efficiently, knowing we have strong asset coverage and an appropriate risk-rated return. This approach is especially pertinent in today's market. Valuation fundamentally relies on asset quality, and we emphasize that the quality of our portfolio, the resilience of our hotels, and current performance are crucial. Joan has highlighted the positive performance of our owned and leased properties, and our all-inclusive segment also demonstrates strong results. Remember, valuations should be tied to earnings, and with sustained and improving earnings, valuations can be preserved or even increased. This is a delicate balancing act as we navigate this landscape, whether regarding all-inclusive assets we may acquire through Playa or our existing portfolio.

Operator, Operator

Our next question comes from Conor Cunningham from Melius Research. Please go ahead, your line is open.

Conor Cunningham, Analyst

Hi, everyone. Thank you. I'm sorry to revisit the short-term question, but I'm trying to understand the current state of business travel and leisure in general. There seems to be a lot of disruption due to calendar changes, but has demand stabilized in April? Excluding those calendar impacts, is it now stable compared to where it was before the uncertainty affected the market? Also, regarding international markets, you mentioned they are performing better than the U.S., which makes sense, but it appears that the entities are in very different situations. Could you share your thoughts on where you see the most potential for growth and areas that might have more subdued outcomes? Thank you.

Joan Bottarini, Chief Financial Officer

So Conor, you mentioned earlier that April was an unusual month due to the Easter holiday occurring later in the month, overlapping with spring break that lasted several weeks prior. We are currently looking at preliminary numbers for April, which are positive. Despite some slowdown in bookings, April still shows positive results and strong momentum outside the U.S., particularly in Asian markets outside of Greater China, although I noted that Greater China also performed positively. In our all-inclusive business, we shared that the pace numbers were up 7% in the Americas for that segment. This leads to my comment about the mix. We’re monitoring the situation closely and will consider May and June as indicators of a more normalized environment where we can accurately track performance, given the current uncertainty. One notable aspect is that luxury has been outperforming while the upscale segments have been a bit weaker. We will be watching these segments closely in May and June, which should provide a clearer view as we expect a healthy business environment during those months. We'll be able to provide better insights on those months in next quarter’s call.

Conor Cunningham, Analyst

Okay. Thank you.

Joan Bottarini, Chief Financial Officer

Sure.

Operator, Operator

Our next question comes from Brandt Montour from Barclays. Please go ahead, your line is open.

Brandt Montour, Analyst

Good morning, everybody. Thanks for taking my question. I was curious if you could give us an update on the ground signing momentum in China. And specifically, Mark, I was hoping you could kind of talk a little bit about the bigger-picture question or idea that's been in the news a lot lately of America Inc. And if you're seeing any sort of hesitation from local developers in China in terms of signing on with an American brand?

Mark Hoplamazian, President and Chief Executive Officer

Thank you, Brandt. The signing activity in China began as we anticipated, slowing down in the first quarter, which is not unusual. The ongoing activity in our upper midscale brand, UrCove by Hyatt, has been robust, with over 70 hotels in the pipeline. This brings us close to 130 hotels under that brand, and the expansion is promising as we continue to open more properties. I believe it offers a desirable option for business travelers looking for central locations, as these hotels are primarily developed from repurposed office and residential buildings in prime areas but at a more affordable price point. This has been particularly successful across our portfolio. However, the pipeline under construction in China is lower than the overall 30 percent mentioned earlier due to projects that were either paused or delayed during the significant shutdowns two years ago. We are closely monitoring this situation. To alleviate concerns regarding the financial stability of the pipeline, we have deliberately partnered with state-owned enterprises, having formed joint ventures with three companies, two of which are state-owned. Our collaboration with them in expanding the portfolio has been consistent and reliable. While there have been reports of Chinese consumers turning away from American products in the consumer goods sector, we do not observe the same trend in our business.

Operator, Operator

Our last question today will come from Kevin Kopelman from TD Cowen. Please go ahead, your line is open.

Kevin Kopelman, Analyst

Thanks so much. I just had just a follow-up on the RevPAR comments. First, could you clarify that the 0% to 2% that you're thinking of for the rest of the year, is that also a good range for how you're thinking about the second quarter? And on all-inclusive, could you help us translate the pacing numbers that you gave for how you're thinking about Net Package RevPAR in Q2, understanding obviously that it's pretty volatile right now? Thanks.

Joan Bottarini, Chief Financial Officer

Sure, Kevin. The first question, and I'm going to ask you to repeat the second question around the second quarter. The answer is yes. We expect around to be in that same range between 0% to 2%. I told you the numbers for April that are preliminary. So we're tracking, I would say, to the higher end of the range in April, and that's boosted by leisure because of Easter in the month and also boosted by the international markets, Asia Pacific outside of Greater China and Europe in the month of April. So answer is yes, and that's kind of a little bit of context of where we're tracking quarter-to-date.

Kevin Kopelman, Analyst

Great. And regarding the all-inclusive, you've provided some promising pacing data. Could you explain how that might translate to Net Package RevPAR for the second quarter in comparison to the first?

Joan Bottarini, Chief Financial Officer

Yes, you can expect a high single-digit pacing number is going to be about a mid-single-digit result on the Net Package RevPAR similar to the first quarter. And that is strong and actually on the books is healthy because we have a little bit more visibility into that business because it takes a little bit more time as travelers make the decisions about the second quarter. So we feel good about that result for all-inclusive in Q2.

Mark Hoplamazian, President and Chief Executive Officer

Yes, I would say we feel really good about it in Q2 because 88% of the business is already booked. So there's not a lot of open-to-buy, so to speak or remaining revenue that we need to generate in order to meet those numbers. Well, thanks, everybody. I appreciate all of you for taking your time this morning, and we appreciate your interest in Hyatt. We look forward to welcoming you into our hotels and resorts so that you can not only experience the power of the care of the Hyatt family, but also give our RevPAR boost, which we would greatly appreciate. So thanks, and we'll talk to you soon.

Operator, Operator

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