Good morning, and welcome to the Hilton First Quarter 2024 Earnings Conference Call. Please note, this event is being recorded. I would now like to turn the conference over to Jill Chapman, Senior Vice President, Investor Relations and Corporate Development. You may begin.

Thank you, MJ. Welcome to Hilton's First Quarter 2024 Earnings Call. Before we begin, we would like to remind you that our discussions this morning will include forward-looking statements. Actual results could differ materially from those indicated in the forward-looking statements, and forward-looking statements made today speak only to our expectations as of today. We undertake no obligation to update or revise these statements. For a discussion of some of the risk factors that could cause actual results to differ, please see the Risk Factors section of our most recently filed Form 10-K. In addition, we will refer to certain non-GAAP financial measures on this call. You can find reconciliations of non-GAAP to GAAP financial measures discussed in today's call in our earnings press release and on our website at ir.hilton.com. This morning, Chris Nassetta, our President and Chief Executive Officer, will provide an overview of the current operating environment and the company's outlook. Kevin Jacobs, our Chief Financial Officer and President, Global Development, will then review our first quarter results and discuss our expectations for the year. Following their remarks, we will be happy to take your questions. With that, I'm pleased to turn the call over to Chris.

Thanks, Jill. Good morning, everyone, and thanks for joining us today. We are pleased to report strong first quarter results, which continue to demonstrate the power of our business model and the strength of our development story, both adjusted EBITDA and adjusted EPS meaningfully exceeded the high end of our guidance even with RevPAR growth at the low end of our expected range. We also announced several new partnerships and additions to our brand portfolio, which will enable us to build even more loyalty with customers and help accelerate growth. Turning results for the quarter, system-wide RevPAR increased 2% year-over-year, which was at the low end of our guidance range as renovations, inclement weather and unfavorable holiday shifts weighed on results more than we anticipated. Leisure transient RevPAR exceeded our expectations even with tough year-over-year comparisons given continued strength in international markets and holiday shifts. Business transient recovery remained steady with RevPAR across large corporates, up more than 3%, driven by strong demand in consulting and government contracting. Group RevPAR rose nearly 5% year-over-year, led by strong convention and social demand. Additionally, corporate groups continue to grow as a percentage of booking mix and booking windows continue to lengthen. As we look to the rest of the year, we continue to expect system-wide RevPAR growth of 2% to 4%, with the U.S. towards the low end of the range and continued strength in international markets. We expect positive RevPAR growth across all major segments, led by group performance at or above the high end of the range, business transient around the midpoint, and leisure transient towards the lower end of the range. For the full year, group position is up 13% versus last year. Turning to development, we started the year off strong, building on the positive momentum from 2023. In the quarter, we opened more than 100 hotels totaling approximately 17,000 rooms and achieved net unit growth of 5.6%. Hotel openings span nearly all brands, demonstrating the strength and breadth of our industry-leading brand portfolio. Conversions accounted for 30% of openings, largely driven by DoubleTree and Spark. In the quarter, we celebrated the addition of a number of new luxury and lifestyle properties, including the debut of LXR in Hawaii, the introduction of the Waldorf and Canopy brands to the Seychelles, and the highly anticipated opening of the Conrad Orlando. Located within the newly developed Evermore Orlando Resort complex, the Conrad Orlando features 5 distinct dining venues, an 8-acre lagoon and expansive pool complex, a world-class spa, and extensive meeting and event space. We also achieved several milestones in the quarter, including the opening of our 800th hotel in Asia Pacific, our 225th hotel in the CALA region, and reached 25,000 true rooms globally. Additionally, Hampton opened its 3,000th property worldwide. Since its launch 40 years ago, the Hampton brand has been a category leader with the largest global pipeline of any focused service brand and the recently announced new North American prototype. Hampton continues to demonstrate the strength of our legacy brands and the power of our innovative approach to brand evolution. We are confident that the best is yet to come for this iconic brand. In the quarter, we signed 30,000 rooms, increasing our pipeline to a record 472,000 rooms, up 2% from last quarter and up 10% year-over-year. Signings meaningfully outperformed our expectations driven by strength in international markets. In Asia Pacific, we signed agreements for 4 new Conrad properties, further strengthening our luxury pipeline. Globally, interest in Hilton Garden Inn remained particularly strong with the brand achieving the highest quarter of signings in its history. System-wide construction starts also outperformed expectations, up roughly 45% versus last year, with all major regions meaningfully higher. Approximately half of our pipeline is under construction, and we continue to have more rooms under construction than any other hotel company, accounting for more than 20% of industry share and nearly 4x our share of existing supply. We also recently announced several exciting partnerships and tuck-in acquisitions, further accelerating our expansion into the fast-growing lifestyle and experiences categories. Earlier this month, we acquired a controlling interest in Sydell Group to expand the NoMad brand from its existing London flagship location to high-end markets all around the world. Our development teams are fully engaged, and we have a great pipeline building. Additionally, we announced an agreement with AJ Capital to acquire the Graduate Hotels brand, a collection of over 30 lifestyle hotels in university-anchored towns, each Graduate Hotel steeped in local history, charm, and nostalgia and designed to reflect the unique character of its local university, offering the perfect setting for game-based graduations, reunions and campus visits. Graduate presents a unique opportunity to serve more guests, especially in markets where we're not present today. With thousands of colleges and universities around the world, we believe the addressable market for the brand is 400 to 500 hotels globally. For the rapidly increasing number of travelers looking to prioritize exploration and adventure, we recently announced an exclusive partnership with the premier outdoor hospitality company, AutoCamp. Stays will be bookable on Hilton's direct channels in the coming months, and we will offer our guests an experience that blends the spirit of an outdoor adventure with the hospitality and design forward thinking of a boutique hotel. Hilton Honors members will be able to earn and redeem points on stays and enjoy exclusive membership benefits while experiencing sought-after locations around the United States, including several properties adjacent to popular national parks. Along with our previously announced exclusive partnership with small luxury hotels of the world, these offerings provide incredible opportunities to further accelerate our growth and enhance our network effect by broadening and deepening our customer offerings in some of the industry's fastest-growing markets and segments. As a result of our strong pipeline and all the great progress we've seen to date for the full year, we expect net unit growth of 6% to 6.5%, excluding the planned addition of Graduate. To provide even more personalized experiences for our guests, we continue to leverage our industry-leading technology platforms from a digitally enabled concierge for our luxury brands, to the ability to choose your room from a floor plan and control your in-room entertainment from your mobile device. We continue to fully integrate the digital experience. Additionally, recent initiatives like add-ons Hilton for Business and improved search functionality are driving even greater conversion and higher revenue. We also continue to be recognized for our incredible workplace culture. Fortune and Great Place to Work recently named Hilton #1 on the list of best companies to work for in the United States, marking our ninth consecutive year on the list, and our sixth consecutive year in the top 10. In total, we won 20 Great Place to Work awards around the world with 5 #1 wins. These recognitions follow our ranking as the #1 world's best workplace and make Hilton the only hospitality company to have earned the top spot on these prestigious lists. Overall, we're very pleased with our first quarter results, and we expect our industry-leading brands, strong development story, and powerful business model to continue to drive growth. Now I'm going to turn the call over to Kevin for a few more details on our results for the quarter and our expectations for the full year.

Thanks, Chris, and good morning, everyone. During the quarter, system-wide RevPAR grew 2% versus the prior year on a comparable and currency-neutral basis. Growth was largely driven by strong international performance and continued recovery in group. Adjusted EBITDA was $750 million in the first quarter, up 17% year-over-year and exceeding the high end of our guidance range. Our performance was driven by better-than-expected fee growth largely due to better-than-expected international RevPAR performance, license fee growth and timing items. Management and franchise fees grew 14% year-over-year. For the quarter, diluted earnings per share adjusted for special items was $1.53. Turning to our regional performance, first quarter comparable U.S. RevPAR was down 40 basis points year-over-year as renovations, holiday shifts, and weather impacts dampened transient trends. Group performance remains strong. In the Americas outside the U.S., first quarter RevPAR increased 7% year-over-year with strong transient demand driving RevPAR growth of 10% in urban markets. In Europe, RevPAR grew 10% year-over-year with solid performance across all segments. A number of large events in the region drove strong group performance across several key cities. In the Middle East and Africa region, RevPAR increased 15% year-over-year, led by both rate and occupancy growth. Several prominent events, including the Asian Cup in Qatar and holidays in Saudi Arabia contributed to strong performance in the region. In the Asia Pacific region, first quarter RevPAR was up 8% year-over-year, led by rate growth in Japan and Korea. China RevPAR was flat in the quarter with strong results in January and February, offset by difficult year-over-year comparisons in March. RevPAR in China's top cities increased 6% in the quarter, but an uptick in outbound travel pressured demand in secondary and tertiary markets, which benefited early in recovery from strong domestic travel. Turning to development, we ended the quarter with more than 472,000 rooms in our pipeline, up 10% year-over-year with approximately 60% of those rooms located outside the U.S. and nearly half of them under construction. Looking to the year ahead, we expect net unit growth of 6% to 6.5%, excluding the planned acquisition of Graduate Hotels. Moving to guidance, for the second quarter, we expect system-wide RevPAR growth of 2% to 4% year-over-year. We expect adjusted EBITDA of between $890 million and $910 million and diluted EPS adjusted for special items to be between $1.80 and $1.86. For full year 2024, we expect RevPAR growth of 2% to 4%. We forecast adjusted EBITDA between $3.375 billion and $3.425 billion. We forecast diluted EPS adjusted for special items of between $6.89 and $7.03. Please note that our guidance ranges do not incorporate future share repurchases or any contribution from Graduate Hotels which we expect to close in the second quarter. Moving on to capital return, we paid a cash dividend of $0.15 per share during the first quarter for a total of $39 million. Our Board also authorized a quarterly dividend of $0.15 per share in the second quarter. Year-to-date, we have returned more than $900 million to shareholders in the form of buybacks and dividends. And for the full year, we expect to return approximately $3 billion. Further details on our first quarter results can be found in the earnings results we issued earlier this morning. This completes our prepared remarks. We would now like to open the line for any questions you may have. We would like to speak with as many of you as possible, so we ask that you limit yourself to one question. MJ, can we have our first question, please?

Of course, the first question today comes from Stephen Grambling with Morgan Stanley.

I just touch on the guidance in the first quarter. It seems like, clearly, some positive commentary in there. I just want to make sure I'm clear. I guess, when you put it all in the blender, if you will, what's really changed in your mind as you look at the back half of the year and take into account what you've seen in the first quarter, both as it relates to development versus some of the deals you've made and then also what you're seeing on RevPAR.

Sure. Happy to cover that. That's a broad array of topics, so really intriguing questions, Stephen. I would say when you flesh it all out, obviously, and Kevin covered it in his prepared comments, the first quarter from a RevPAR point of view is a little bit lighter than we thought, but it's easily explained based on what Kevin already talked about. We had a lot more under construction than we had anticipated, which is a good thing, but not enough rooms out of inventory in a lot of those assets, particularly in our limited-service brands to take it out of the comp set. So that weighed on us. Weather definitely played a role; we didn't anticipate what was going on in the Northeast at the beginning of the year. And while we certainly knew about the holiday shift of Easter moving in, it was a little more impactful, and spring break sort of ended up being like a rolling 4 weeks of spring break. We underestimated that. As we think about the full year, the way to think about our outlook aligns with how most people are viewing the broader economy, which is reasonably strong and seems to be very resilient. Employment numbers are quite good. Corporate profits, depending on the industry, are still strong. Therefore, as we factor that in for the rest of the year and think about the various segments, it leads us to feel positive, similar to how we felt when we talked to you last time. Looking at the big segments, the group business is still incredibly strong. Demand is great, and every month that goes by it remains strong. While the first quarter was choppy due to the holiday movement, customer conversations are positive, indicating that people are traveling more for business. Our bullish view on the market comes from the strong economy and resilient employment rates, and leisure is normalizing from high levels. Overall, we have reasonable confidence for modest growth, mostly in the form of rate because we still possess a decent amount of pricing power. So when you put that all together, we maintained our guidance. The first quarter was a little choppy, but some of that will reverse because of the holiday shift, and we feel similarly based on a consistent consensus view that the economy will maintain relative strength. On the development side, both Kevin's and my comments indicate we feel a lot of momentum. We believe we'll reach 6% to 7% in net unit growth over the next few years as we've experienced strong expectations and momentum from the previous year, better than we originally anticipated in terms of signings and starts and openings. Our confidence stems from the strong interest in our brands and the profitability of our existing portfolio, encouraging continued expansions and developments.

The next question comes from Joe Greff with JPMorgan.

Chris, just kind of going back to your comments on how you're viewing the balance of this year. You mentioned all 3 major segments you would expect to be degrees of growth year-over-year from a RevPAR perspective. If you were to bifurcate it between the full-service chain scale segments and the select service chain scale segments, would you expect the lower-end chain scale segments to be positive year-over-year?

Yes, modestly. I mean we think they will be lower in performance, but our forecasting and outlook indicate they will be positive but modestly so, significantly impacted in the first quarter by the factors I previously mentioned. Overall, we performed relative to the industry, significantly better than the industry, which was mainly driven by the select service brands. The comparison gets easier in Q2 for the record as well, but we think that performance will improve in the second half of the year from a comparison standpoint. Thus, our expectation is that while the lower-end chain scales will see positive growth, it may be lower than the higher chain scales.

The next question comes from Robin Farley with UBS.

Great. I wonder if you could kind of remind us where we are. You talked about the Group being up 13% year-over-year, but where we are with Group and business transient relative to 2019? And then I kind of have a part 2 of the question, which is just when we look at the broader FTR trends and occupancy in the U.S. has been down for depending on how you measure a month there from sort of 7 to 12 months with all the RevPAR coming from rate increases. I'm just wondering in your long experience looking at trends over the years, does that worry you at all that occupancy is down even with, I think, not getting back to 2019 levels yet and kind of what that might mean for rate and RevPAR later in the year?

Yes. Taking one at a time. In terms of Group and business transient versus 2019, they are both eclipsing from a revenue point of view, but they remain below demand occupancy, modestly. Business transient is slightly better than Group. That relates to the gestation period for recovery, I anticipate that by the second half of the year, demand for Group will return to where it was based on underlying strength in the segment. Business transient is also building up, with small and medium business already surpassing. As noted, big corporates are lagging behind. Overall, while the first quarter was more leisure-oriented due to holiday shifts, we had strong growth relative to challenging comparisons. As we progress, we think Group demand will advance, provided the economy continues on its current trajectory. In terms of occupancy versus rate trends, we remain optimistic, although we must be cautious in interpreting first-quarter results given the extraordinary conditions affecting that period. However, overall trends indicate a strong Group demand and a gradual rise in occupancy moving forward.

The next question is from Shaun Kelley with Bank of America.

Chris, just hoping we could get a little bit more color on sort of the regions. You gave some in the prepared remarks, but specifically, to dig in the U.S. at the lower end of the range. So I think we've talked a little bit about what could get that coming. But anything you're seeing on April there in terms of some of the shifts back from Easter? And then I think more importantly, you called out some strength elsewhere, Europe, Japan. Could you dig in a little bit there? And specifically on China, just flat performance; the exit rate wasn't that great. What needs to happen there one way or another to impact Hilton?

Yes. Thanks. I'm going to ask Kevin to take that.

Yes, Shaun, I'll take this one. I think, yes, in the U.S., what we're seeing so far is in line with our expectations. The Easter calendar shift is flipping back the way we thought, so if you consider our 2% to 4% guidance for the entire company, I think the U.S. will be at the lower end of that range. However, I believe the U.S. will positively trend from here. Globally, Europe remains resilient, up 10% in the quarter despite various economic challenges. In the Asia Pacific region, we will maintain similar performance; however, we think it will hover around flat for the year in China due to the implications of outbound travel overshadowing domestic demand. More flights from major destinations will start as we proceed further into 2023, boosting demand not only within China but creating additional transport routes to other regions of Asia.

Yes. That’s absolutely correct. As you said, while people aren't coming into China, we are seeing a shift, with much more intra-Asia travel set to occur, benefitting markets such as Southeast Asia and Japan. While we are not surging in China, we are beneficiaries in these markets.

The next question comes from Carlo Santarelli with Deutsche Bank.

Kevin, I know you touched on it in your prepared remarks a little bit, but specifically on the base and other fees, I think they were up about 32% year-over-year, a dramatic acceleration. In terms of the things you mentioned, I would assume some of that is international, but any way you could provide a little bit more color on the drivers there?

Yes, sure. I mean, part of it is, as you said, it's a mix. In regions where we have more managed hotels, that drives increased management fees and incentive management fees. We achieved significant growth in license fees, as we mentioned, which were up considerably relative to 2022. Also, our purchasing business has seen remarkable performance and continues to grow, taking share beyond our system, allowing it to perform commendably. Overall, those have been positive drivers contributing to the fee growth.

The next question comes from David Katz with Jefferies.

With respect to net unit growth, I know you said previously that the acquired entities may add 25 or 50 basis points. Can you just sort of paint us a longer-term picture of how the addition of those should roll into your net unit growth? Is that sort of included, Chris, when you say 6% plus? How should we think about those brands in the context of that?

Yes. We did indicate last time that we are incorporating SLH into our growth forecasts, and that has been reflected in our 6% to 6.5% guidance. We will ultimately add Graduate, but it is prudent to add both the EBITDA and earnings impact alongside the net unit growth impact once we actually close on that. The way to visualize that going forward is that SLH will be phased into our system incrementally over the next couple of years. We're witnessing a high percentage of existing SLH members expressing interest in joining our system, and we foresee no reason why that trend will change. We anticipate integrating technology effectively, which will enhance the customer booking experience by the mid-summer period.

The next question comes from Smedes Rose with Citi.

I just noticed that the percent of the pipeline under construction just ticked up a little bit from fourth quarter and first quarter. I was just wondering, is that concentrated in the U.S. and could you just maybe talk a little bit about what developers are seeing in terms of getting properties out of the ground on the financing front or getting the supplies of the workers they need? Just any color there?

Yes, sure. I mean, I think the percentage under construction is from both regions. We have been noticing a higher percentage of conversions, which allows for faster movement to under construction status. Developers report that while costs have leveled off since COVID, they face challenges in labor and raw material costs. Capital remains more expensive, though it is slightly less expensive compared to the end of last year. However, the more experienced, better projects are still securing financing, and this reflects broadly across the industry. Although fewer new projects are emerging, we are able to share take and continue maintaining momentum on quality brand developments.

The next question comes from Brandt Montour with Barclays.

And maybe for Kevin. Kevin, you mentioned timing items. If you could just elaborate on that and sort of what and where and when we should expect any of that to reverse, please?

Yes, I mean timing will largely reverse in the second quarter. It's not huge; it's around $5 million to $10 million of timing items in the first quarter. To clarify at the risk of seeming overly detailed, we increased our guidance at the midpoint by $45 million, but that also carries an incremental headwind of approximately $10 million to $15 million due to foreign exchange fluctuations over the course of the year.

The next question comes from Chad Beynon with Macquarie.

Wanted to ask about Group beyond '24. Is this continuing to build in terms of multiyear commitments? Maybe just kind of a stat in terms of what you're seeing on the books for '25 at this point versus what you historically have seen during these periods?

Yes. I don't have the data point in my head, but I do know this, yes, it's building for '25, '26. I believe both years are forecasted with high single, low double-digit increases compared to historical figures. So yes, they are indeed showing improvement in relative growth.

The next question comes from Patrick Scholes with Truist.

On the NoMad news, that's a pretty small change at the moment. What are your plans for that? Where do you see that brand going in the next 5 years?

Yes. Look, we think it will evolve. It is a strong brand; that's why we wanted to acquire a controlling interest in that company. Though it's small currently, we believe it can grow significantly over time. The brand is well-regarded, and combined with our strengths, we're confident it will compete effectively in the luxury lifestyle space, aiming to reach upwards of 100 hotels over time.

What we love about it is the business background of the NoMad brand. This partnership allows us to gain a foothold in modern luxury lifestyle markets which could take years to achieve independently. We've analyzed the market extensively and believe Andrew Zobler and his team will facilitate rapid growth, especially as they already have development pipelines and strong teams in place.

The next question is from Duane Pfennigwerth with Evercore ISI.

I appreciate it. Just coming back to the fee rate growth, if we just look at fees as a percentage of total room revenue. Can you speak to what drives seasonality, if anything, on this percentage? And in terms of the year-over-year improvement, you showed nice improvement here in the first quarter. Can we hold on to that as we progress through the year? Or is it lumpy?

Yes, I think it’s a bit of both without getting into too much detail. There was a touch of timing in fees in Q1, but a lot of it is driven by overall strength. Parts of the world where our managed capacity is larger, especially in urban settings, will keep incentive management fees as strong contributors throughout the year.

The next question comes from Michael Bellisario with Baird.

Two parts for you on loyalty. Just first, what was Honors occupancy in the quarter? And then bigger picture. Just aside from offering customers more options, how are you driving how are you thinking about incremental engagement? I know you're still having to educate travelers about loyalty and the benefit of loyalty, especially compared to all the book direct and marketing campaigns you had to do pre-pandemic?

Yes. Honors occupancy was, I think, at our historical high, 64% and change, up a little over 300 basis points year-over-year. Honors is working. Our customers are more engaged than I think any other program in the industry. We are implementing various initiatives, such as partnerships we've announced, including SLH and AutoCamp, to continue expanding engagement. We plan to introduce more experiential partnerships, allowing us to connect with travelers in ways that align with their interests. Our goal is to increase Honors occupancy, aiming for 75% or even higher over time, which requires a series of strategies tailored to diverse customer needs and engaging them effectively.

The next question is from Bill Crow with Raymond James.

Two parter here, Chris. First, how much risk do you think exists? Or are you seeing any signs that the weaker demand we're seeing at the low end of the chain scale could migrate upward as the Fed's hire-for-longer stance persists? And the second part is simply third quarter, how much impact do you anticipate from the Olympics, if any, on overall results?

We anticipate the Olympics will be a positive boost for Europe broadly, especially for Paris and France. While it won't dramatically impact our overall metrics since Europe encompasses a vast array of our portfolio, it will definitely help locations in closer proximity to the events. Regarding the first question, the risk exists, but it deeply ties back into the overall economy. Our outlook reflects a consensus that the economy will experience healthy growth and continued strong employment. Although the 'higher for longer' Fed tactics aim to temper growth, the overall momentum seen provides confidence for our projections moving forward.

The next question comes from Richard Clarke with Bernstein.

In the quarter versus 2019, it looks like U.S. occupancy is still 450 basis points below where you were pre-COVID. Obviously, there's some seasonality in there, but that doesn't seem to get you anywhere near that. Is it just now a matter of time to get that occupancy back, or can we now think that maybe there has been some structural shift in travel that means kind of...

I believe you highlighted an important point; that drop in occupancy is largely due to seasonality and changes in holiday timings. Ultimately, first-quarter metrics were heavily influenced by increased leisure demand balanced against a lower corporate occupancy rate, resulting from shifts in bookings due to various seasonal factors.

The next question is from Conor Cunningham with Melius Research.

Could you just talk a little bit about the competition for conversions? Where things are most intense and where regions or areas that you're having more success? You obviously did really well in the first quarter; I think you said 30% of your new development was there. Just any thoughts there on competition?

Yes, Conor. It sort of depends on the deal. Sometimes it often depends on which flags are available in that particular market. In the luxury tier, competition is frantic; however, in the middle tier and below, it becomes more about us and a couple others vying for second place. Overall, we had a robust performance last year, capturing 40% of all conversion deals in the U.S. Our brands have made considerable strides with the launch of disruptive brands like Spark. We won’t limit ourselves here, as further robust performance is observed across the globe, and brands like DoubleTree and our soft brands continue gaining traction.

The next question comes from Daniel Politzer with Wells Fargo.

Europe seems like it's certainly a bright spot within your portfolio. Can you maybe even outside the Olympics for the rest of the year, could you maybe frame where you're seeing that demand? Is it on the business or leisure side? Is it kind of the higher chain scales or middle tier? Any additional detail there would be helpful.

Yes. I think it's really across the board. We're witnessing strong Group demand, a solid performance in both business and leisure segments. Notably, the strength of the dollar makes it an attractive destination for leisure travelers. This pattern of strength is evident in various key performance indicators throughout our portfolio in Europe.

The next question comes from Ben Chaiken with Mizuho.

Great flow-through on revenue to EBITDA in 1Q. That's in the context of what sounds like some calendar headwinds. Anything you would call out as a tailwind or a comp dynamic or just good blocking and tackling. If I heard correctly, I believe you mentioned there was a $10 million good guy in 1Q that I believe reverses in 2Q? Just anything you could call out as we progress through the year?

A little bit, but I think it’s just good blocking and tackling. Our flow-through revenue to EBITDA is consistent with what we've previously outlined. The accomplishments last quarter are more so indicative of strong business management rather than extraordinary external factors.

Yes, and as stated earlier, since fees represent our highest margin business, any increment in fees and IMF drops straight to the bottom line. Strength in the fee segment can be anticipated to continue, as it's our largest and fastest-growing segment, resulting in enhanced flow-through and margin growth moving forward.

Ladies and gentlemen, this concludes our question-and-answer session. I would now like to turn the call back to Chris Nassetta for any additional closing remarks.

Thanks, everybody. As always, we appreciate you dedicating this much time as we've described. We feel good about the business, good about momentum, good about where broadly economies are to deliver the results that we've talked about and super good about the momentum we have on the development side. We will look forward to talking to you this summer after we complete Q2. Thanks again and talk soon.

The conference has now concluded. Thank you for your participation. You may now disconnect your lines.