Hyatt Hotels Corp (H) 2013 Q4 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the fourth-quarter 2013 Hyatt Hotels Corporation earnings conference call.

(Operator Instructions).

As a reminder, this conference is being recorded for replay purposes.

I would now like to turn the conference over to your host for today, Mr. Atish Shah, Senior Vice President of Investor Relations.

Please proceed.

Thanks, Philip.

Good morning and thank you for joining us for Hyatt's fourth-quarter 2013 earnings call.

Here with me in Chicago is Mark Hoplamazian, Hyatt's President and Chief Executive Officer, and Gephardt Rainer, Hyatt's Chief Financial Officer.

Mark is going to start by making some brief remarks and then we will read and respond to questions emailed to us this morning.

Finally we will take live Q&A towards the end of the call.

Let me remind everyone that certain statements made on this call are not historical facts and are considered forward-looking statements.

These statements are subject to numerous risks and uncertainties as described in our annual report on Form 10-K and other SEC filings which could cause our actual results to differ materially from those expressed in or implied by our comments.

Forward-looking statements in the earnings release that we issued this morning along with the comments on this call are made only as of today February 14, 2014, and we undertake no obligation to publicly update any of these forward-looking statements as actual events unfold.

You can find a reconciliation of non-GAAP financial measures referred to in our remarks on our website at Hyatt.com under the press release section of our investor relations link and in this morning's earnings release.

An archive of this call will be available on our website for 90 days and a telephone replay of this call will be available for one week per the information included in this morning's release.

Also I would like to remind everyone that we are holding an investor meeting in one month on Friday, March 14 in New York City.

If you haven't already registered we will be sending out a reminder early next week.

We expect a full house so please look out for the reminder and register.

We look forward to seeing you on the 14th.

And with that, I will turn it over to Mark to get started.

Thank you, Atish.

Good morning, everyone, and welcome to our fourth-quarter 2013 earnings call.

Overall 2013 was a strong year for Hyatt and one of our most active as well.

I would like to cover a brief recap of the year.

So adjusted EBITDA increased by over 12% compared to 2012.

Our comparable owned and leased margins increased by 100 basis points.

Management and franchise fees increased more than 11% over the prior year.

We opened 51 new hotels, one of our highest expansion years on record with meaningful high-quality growth around the world in places like Paris, New York, Orlando, Austin, Omaha, Bangalore, Ahmedabad and Shenyang to name a few.

We launched two new all-inclusive brands, Hyatt Ziva and Hyatt Zilara, with Hyatt Ziva Resort now open in San Jose, Del Cabo and a Hyatt Zilara Resort open in Cancun.

Our base of executed contracts for new hotels expanded to 240 hotels or 54,000 rooms, the largest it has ever been.

That represents a 20% increase over the past year and of course is calculated net of the openings in 2013 that I just mentioned.

We recycled a significant amount of capital selling over $500 million of full and select service hotels at attractive prices with new management or franchise agreements for each hotel.

We also realized more than $400 million of cash proceeds from repayments of loan receivables and the sale of preferred equity and joint venture investments.

We deployed over $1.2 billion of capital into acquisitions and other investments.

We expect this investment spending to generate strong returns in the years ahead.

We also returned more than $275 million to shareholders through our share repurchases.

We repurchased shares at a weighted average price under $42 per share and reduced our share count by more than 3%.

It was a great year and as we executed upon our strategy of expanding our presence and enhancing the value of existing hotels to deliver superior shareholder value over time.

I would like to focus my remarks today on three things.

First, progress on investments made in the past few years.

Second, our fourth-quarter 2013 results.

And third, transactions completed last quarter or recently announced.

First, with respect to our recent investments, we have taken important steps over the last few years to strategically expand our presence through investing our capital.

We acquired the Hyatt Regency Orlando at the beginning of the fourth quarter of 2013 and we've successfully integrated this great hotel into our sales, distribution and Gold Passport platforms.

We met our EBITDA expectations for this hotel in the fourth quarter of 2013 and we remain on track to earn $55 million of EBITDA for the full year of 2014.

Our results for the fourth quarter include the first reporting period of results from our investment in Playa Hotels & Resorts.

While our long-term outlook for the underlying performance of this portfolio of all-inclusive resorts remains solid, our current estimate for our pro rata share of 2014 adjusted EBITDA is $13 million to $15 million or about $5 million lower than we had previously expected.

These revised expectations are primarily due to changes in timing and scope of renovations, combined with certain preopening expenses and termination fees not previously included in our prior estimate.

We opened the Andaz Maui at Wailea late in the third quarter of 2013.

By way of reminder, we own this resort in a joint venture with Starwood Capital.

The resort has been ramping up nicely.

We have established great exposure with key customers and the resort has enjoyed superb guest feedback.

We expect the momentum and earnings profile of this resort to grow as it grows in popularity and as we continue the marketing of villas at the resort.

We also purchased the Driskill Hotel in Austin during the first quarter of 2013.

As expected, the hotel earned about $8 million in EBITDA for our ownership period in 2013.

We also opened a Hyatt Place in Austin of which we own 50%.

It has ramped up very well as the Austin market has been strong.

Our hotel in Mexico City which we acquired in May of 2012 and rebranded as the Hyatt Regency Mexico City, continues to perform well.

Last year we earned over $20 million and we expect earnings to continue to grow once we complete the renovations that are underway at this time.

Next, I will turn to our quarterly results and then finish up with a recap of some of our more recent growth and transaction activity.

This morning we reported strong RevPAR and revenue growth in the fourth quarter.

RevPAR for full-service hotels in the US increased 7%.

Over 50% of that increase was due to higher average daily rates.

We benefited from some easier comparisons due to the election and other events such as Hurricane Sandy last year.

At US full service hotels, transient revenue which represented approximately 60% of rooms revenue was up almost 8% and group revenue increased over 6%.

This increase in group revenue was due to strong performance in several important markets including Dallas, San Antonio and San Francisco.

Total group production increased 8% in the quarter.

While much of this business booked in the fourth quarter was for 2015 and beyond, our group pace for 2014 has remained steady and is up in the low single-digit percentage range.

In fact, looking back total production has been up in the high single-digit range for the past few quarters as the profile of this business continues to strengthen.

RevPAR at hotels outside the US grew at a lower pace but has been picking up quarter over quarter.

In our ASPAC region, RevPAR increased by 4.2% despite drag from major renovations at a few large Grand Hyatt hotels in Asia.

In the fourth quarter, China had the first positive quarterly RevPAR growth in 2013 compared to 2012 in part due to the easier year-over-year comparisons.

We are pleased to report that our business in China is stabilizing as we lap the start of austerity programs.

We continue to evaluate areas of opportunity for our hotels in China in light of a lower level of spending in governments and government-related business.

RevPAR in the EAME Southwest Asia region increased 5%.

The growth was driven by our hotels in the United Arab Emirates due in large measure to increased government spending in that region as well as some improved results in hotels in South Asia and in Germany.

Additionally, we realized more modest growth rates in the UK.

There was continued softness in Eastern Europe and some revenue disruption from political unrest in Turkey.

In summary for the quarter, our RevPAR increases were strong and our overall adjusted EBITDA results were also positively impacted by transaction activity, earnings from our new joint venture in Playa Hotels & Resorts and a $12 million termination fee from one hotel in the Americas.

Our comparable owned and leased margins grew 60 basis points overall and varied significantly by region.

In the Americas, comparable owned and leased margins increased 90 basis points.

We continued to manage costs efficiently at the hotel level even as we experienced record occupancy levels and some inflationary cost increases in the quarter.

Offsetting these gains were higher rent expense at selected properties.

Excluding these amounts, margins for owned hotels in the Americas would have increased by about 190 basis points.

Comparable owned and leased margins for hotels outside the Americas declined approximately 40 basis points.

Most of this decline was due to concentrated market weakness in two hotels.

Excluding the impact of these two hotels, margins for hotels outside the Americas would have increased 50 basis points.

We expect to see some continued weakness in margins at both of these hotels in the short term.

Overall fees grew over 17% in the quarter in large part due to a $12 million termination fee.

Incentive management fees declined approximately $5 million more than we expected.

These declines are mostly a result of our recently converted hotels in France.

At these four hotels, wage and benefit costs continue to be higher than expected and negatively impacted incentive fee earnings in the quarter.

Looking ahead in 2014, we are working with the owner of these hotels to accelerate hotel renovation plans which we expect to yield incremental revenues over the long term and in line with our original expectations.

Over the full-year 2014, we expect to earn base fees of approximately EUR4 million to EUR5 million.

We also expect to fund under the performance guarantee with the amount of the funding influenced by the timing of the inception of renovations of these hotels.

Amounts paid under the guarantee during 2014 will be recorded as other losses and are therefore not included in our adjusted EBITDA.

Also we expect to see significant variability in the results over the course of the year for these four hotels due to seasonality.

Our adjusted selling, general and administrative expenses in the fourth quarter were $10 million lower than we had expected driven by a number of items including bad debt recoveries, timing of project spend and the like.

If you exclude these one-time items we would have ended the year with approximately $305 million of adjusted SG&A.

Finally, I would like to move to our growth in transaction activity during the quarter.

First, as I mentioned, we launched the Hyatt Ziva and Hyatt Zilara brands marking our entry into the fast-growing all-inclusive segment and providing a great opportunity to redefine that category using our innovative approach to brand differentiation.

Second, we acquired our joint venture partner's 70% interest in the Grand Hyatt San Antonio for $16 million.

We subsequently paid off a $44 million property level mezzanine loan and with the acquisition, we assumed approximately $200 million of property level debt.

Having full ownership of this hotel provides us with control and flexibility for an eventual sale of the property.

Those of you who do not know the hotel, the Grand Hyatt San Antonio is well situated adjacent to the convention center and is a popular destination for groups with about 75,000 square feet of convention space.

The multiple implied by the value that we paid for our 70% interest was approximately 11 times 2014 estimated EBITDA for an 8% cap rate on 2014 estimated NOI.

Third during the quarter, we continued the redevelopment of a new Hyatt Place in Minneapolis and subsequently sold the hotel to Summit Hotel Properties.

We continue to manage this hotel.

This is a good example of how we've utilized our relationships and balance sheet to grow the Hyatt Place brand in an urban market and effectively recycle capital in the process.

Fourth, our investment in the Hyatt Regency New Orleans was redeemed in full during the quarter.

We received a total of $109 million in the quarter representing a return of our $63 million preferred equity investment as well as a payout of our preferred dividends plus value for our residual common interest.

We continue to manage this well performing group hotel.

Fifth, we sold the 118-room Hyatt Key West to Inland American Lodging Group for $76 million or almost $650,000 a key.

We sold the hotel for an approximate 6.75% cap rate on trailing 12 month NOI and entered into a new management agreement for the hotel.

We are delighted that Inland American now owns its seventh Hyatt managed hotel.

Six, last week we announced that we expect to sell 10 hotels, nine of which are Hyatt Place and Hyatt House Hotels for $313 million to RLJ Lodging Trust with an expected closing date next month.

RLJ expects to spend an additional $25 million renovating these hotels in the near term and we will continue to manage the hotels.

Three of these hotels were previously branded Woodfin Suites and acquired by us in May 2011.

Six of these hotels were previously branded [Sierra] Suites and were purchased in the second half of 2011 as part of our acquisition of hotels from LodgeWorks.

This expected transaction demonstrates our ability to successfully execute on our recycling strategy by using our capital base to acquire hotels, successfully convert the hotels to Hyatt brands, improve operations and financial results and then sell at an attractive valuation.

After we close on the transaction, we will discuss in more detail the returns that were generated during our initial period.

In conclusion, I want to emphasize how pleased we are with the pace, value realization and deployment of capital associated with asset recycling.

This year when considering all of our buying and selling activities we have realized and/or invested a significant level of capital and as a result of all of this activity, we have also become more fully invested with net debt increasing from about $800 million to about $1.5 billion over the course of the year.

We also remain focused on improving the performance of our existing hotels as we expect to generate higher levels of RevPAR, owned and leased margins and fees over the long term.

As we look ahead to 2014, we have confidence in the group outlook and are particularly pleased about the enhancement we made to our group network in the US with the expansion of our presence in Orlando.

We continue to enjoy record levels of demand which should provide opportunities to realize incremental rate increases.

We expect to open approximately 40 hotels this year including the Park Hyatt New York, Park Hyatt Vienna, Andaz Tokyo, Hyatt Ziva Rose Hall in Jamaica, and several Hyatt Place hotels outside the US including our first Hyatt Place hotels in China.

On the deal front, we expect to make additional progress on asset recycling and investment in 2014.

We have engaged brokers to sell nine full-service hotels in North America.

These hotels in the aggregate earned over $40 million of EBITDA in 2013.

We are unable to predict if or when we will ultimately sell these hotels.

If we do, we plan to maintain presence through new long-term agreements.

As a reminder, the value drivers that we look at in connection with dispositions include price, owner profile, the level of capital committed to the hotels and the terms of our ongoing agreements.

By the way as a reminder, we generally do not announce sales until we have closed.

We also remain active in seeking out new investment opportunities to expand or enhance our presence in key markets and with this, I will turn it back to Atish for some question and answer.

Thanks, Mark.

Now we will start with the questions received this morning and then toward the end of the call we will take your questions.

The first group of questions that we received was in terms of group business and our outlook.

So the first question was please provide an update on group trends and general thoughts around propensity to hold group meetings?

Is Corporate America getting more optimistic or still cautious?

So I guess overall as I have mentioned, total production and activity has been quite positive and it has been positive now for the last several quarters running.

We have seen increased demand both in corporate an association business and overall as we look at the profile of business being booked, we see healthy levels of business into 2015 and 2016.

And as I mentioned during my remarks, the pace heading into 2014 has remained steady up in the low single-digit range.

So overall I would say that the trends and the profile are improving.

Demand remains relatively robust.

The profile I can say that in the quarter for the quarter bookings have been a bit more volatile quarter over quarter if you look back over the last four quarters, but overall production levels remain high.

So I can't say that we are definitively seeing a shortening of the booking curve in a definitive way.

What I do see is relative strength as we look out one and two years from now.

Great.

Second question on group, you seem to be adding large group hotels to your own portfolio.

Should we expect more of this going forward?

Orlando was a key addition to our network in the US so there is no question that that is an important addition for us.

And what I would say is convention hotels has consistently been one of the four targeted areas that we have been looking at.

But we have made great progress and we feel like we are well covered in the major group markets in the US.

So as I look forward in time, my guess is that we will end up spending more time and focus on the other areas which are gateway city hotels, resorts and urban select service hotels.

Shifting ahead to trends on group, on the domestic full-service side, were there any markets that were particularly strong and what impact did renovation projects over the last year or two have on these group results?

Particularly strong markets for us were Dallas, San Antonio and San Francisco and the renovations continue to progress well especially in San Francisco, San Antonio and New York.

When you look at the owned portfolio renovations New York, San Francisco and some other renovations, they all positively contributed towards the results.

The management has including markets like San Diego and Washington and Dallas by example if you look at the Grand Hyatt Washington DC which was renovated over the past year, that is a very, very positive for us given the (inaudible) conditions.

So overall we need to have great presence in key cities in key markets and we have a refreshed product.

The last questions on group had to do with our mix.

So first question was related to the US business, how much of it is group?

So group is approximately 40% to 45% of our US managed full-service room revenue.

Then the second question was group mix for the owned business particularly given the acquisitions.

Mix is approximately 40% to 45%.

It is lower in owned hotels, full-service hotels outside of the US.

So worldwide, it is in the high 30s.

The US component is the higher component.

Great, thanks.

Next question was on Playa Resorts, how much EBITDA if any did Playa contribute in the quarter and can you give us an update on future plans for Playa including a potential IPO?

Sure.

So in the quarter, the EBITDA recorded in our results from Playa were about $4 million.

In terms of the future, this is a very active year for the Company.

A significant amount of renovation I would describe it as a redevelopment of the resort in Jamaica is consuming a lot of time and attention and so there is a lot going on this year and therefore too early to really talk about a potential liquidity event relating to Playa.

Great.

Next question is on margins.

How should we think about flow-through margins from RevPAR growth to EBITDA growth going forward now that we are at peak occupancies?

The way to look at that would be if you look at our US owned occupancy levels which are at peak primarily due to strong brands and demand which means that rates should continue to be the driver of RevPAR growth going forward which should drive improved flow-through.

We expect higher rate progression this year as our group rate is strong and our corporate negotiated rates are increasing in the mid single-digit range.

Our flow-through on a mix of RevPAR that is mostly rate would be north of 60%.

Additionally it is worthwhile mentioning that we have the opportunity to drive flow-through higher as group recovers which drives higher margin banquet revenues as well.

Great.

The next question is around our acquisition in San Antonio.

How much incremental EBITDA did you generate in the fourth quarter from buying out your partner in San Antonio?

The answer is really very little, less than $1 million.

The second question is why is now the right time to buy the San Antonio asset?

First of all, the Grand Hyatt San Antonio is a great asset so we have been very happy to be present in that hotel and managing it since it opened and we are happy to own it.

We have been a JV partner in the hotel for some time.

In terms of timing and profile and so forth of course we as you heard, were positive on the group outlook but I guess more importantly as we look at it, it is a JV interest and increasingly we would like to either control those JV interests or sell our JV interests and we have done both.

So in Seattle we sold some JV interest a couple of years ago.

In this case, we bought out our partner and ultimately the benefit for us is going to be to have full control over the asset.

As we look forward in time at some point, we will look to include this in our recycling program and having the flexibility to do that is really the key issue.

Great.

We received a few questions on our international business.

The first one was what was China RevPAR in the fourth quarter and what are our expectations in 2014?

China was up approximately 5% in the fourth quarter of 2013 and full-year declined in the low single digits.

Growth in 2014 could be in the single-digit percentage range based on stabilization and an easier comparable prior-year results.

Second question, has Hyatt seen any impact on the pace of development for new hotels in China given the government austerity measures?

There has really been limited impact on actual openings or pace of development at this point.

Our pipeline in China currently includes 60 hotels so we've got a lot of activity underway, a large number of them are under construction.

We have planned openings over the coming few years and right now very limited impact.

Last question on international business, can you provide some additional commentary on trends in your international markets?

Which markets contributed to the 1.3% RevPAR decline in Asia-Pacific?

First, the decline in reported RevPAR was primarily due to currency.

We are up 4.2% in constant dollars in Asia-Pacific and the strength of the dollar relative to the yen was one of the primary drivers for the reported RevPAR decline was constant dollar.

I also mentioned in my remarks that there was some continued drag from renovations from some of the Grand Hyatt hotels which is probably close to being in the range of about 100 to 150 basis points RevPAR for the quarter.

Next category of questions was on acquisitions in the transaction market.

First question, what is the transaction market like domestically and internationally?

I guess overall the environment for transactions remains healthy and high.

Lots of activity and there have been some larger deals both on the buy side and the sell side, some portfolio deals and the like and as we have been actively engaged in a number of different places, we are also seeing some increase in activity in Europe.

I think that has something to do with some activity on the part of the banks and other financing sources for existing properties.

So the answer is it has been very active and it remains very active and that is how we would expect to see 2014 unfold as well.

I guess the other reflection I would make is that over the past year we have done deals with private equity firms, with private REITs and with public REITs across the board and so we have seen activity in a -- amongst a number of different types of buyers.

And in terms of areas that we continue to look at consistent with what we said over the last several years, we have really been focused on four targeted areas as I mentioned earlier gateway cities, resorts, urban select service and convention hotels.

We have done a number of deals in each of these four areas.

Great.

Are there any geographic markets that you are likely to target as you look for acquisitions?

There are a number of them.

I had mentioned in the past that we continue to be active in looking at gateway city opportunities in Europe.

In the US, Miami and Los Angeles remain high priorities for us and so I would say among the four areas of activity the key focus for us at the moment is gateway cities.

Great.

We received a few other questions so first one being, can you provide an update on the opening of the Park Hyatt in New York?

Would you expect to put property level debt on this hotel?

Can you update on depreciation guidance if it incorporates this acquisition?

So first of all, just by way of reminder the way this deal is structured is it is a commitment to purchase the hotel upon completion at a fixed price of $375 million.

It is 210 keys so about $1.8 million a key.

We are a two-thirds joint venture partner in the JV that has a commitment to buy the hotel.

In terms of depreciation, we did not include any depreciation in our outlook for 2014.

At this point we don't expect to be consolidating this hotel in our financial results for 2014.

In terms of opening schedule, we remain focused on opening it midyear and in terms of financing for it, we do plan to go and seek property level debt probably in the range of 50% of the total purchase price.

So that is something that we will be pursuing in the near future.

Next question, what is the timing of other development projects in the pipeline?

So I guess if you mean on balance sheet, we have projects in Rio with the construction of a Grand Hyatt in Rio that we expect to open late in 2015.

We have a number of select service joint venture investments in the US and outside the US so we expect to see openings over time including some openings in 2014 and into 2015 from those.

And we have got a number of other investment activities underway so the answer is we will continue to be active in using our capital base to find opportunities through JVs or otherwise.

Great.

Next question, what is the $29 million in other income and how should we be modeling other income in the future?

Other income inherently is difficult to model.

As you know, we are an active investor and we are active in our asset recycling.

So in the fourth quarter, the return rate to the New Orleans preferred investment interest and the sale of the Company's residual interest is reflected in other income.

We have transaction costs in there and a number of other things and special items that are reflected in other income.

Okay.

How much tax expense, if any, was related to the Hyatt Regency New Orleans investment and what was included in the tax line item on the income statement?

There was a $20 million tax included in relation to New Orleans and this is really a reflection of the high state tax in Louisiana.

Okay, great.

Our last question was on a new line that we provided on our fee detail which is on page 8 of the schedule.

The question was are you going to keep providing this?

What was it by quarter historically and what is driving it?

And so this line is other fee revenue.

It is a new breakout.

We are going to provide this into the future.

Historically you could look at the fact book that we will be posting on our website to see how that number has developed, what's in it is really termination fees and other more one-time in nature type fees.

That wraps up the questions we received in advance.

Philip, if we could queue up the live Q&A and we can take our first question.

(Operator Instructions).

Joe Greff.

Good morning, guys.

Most of my questions have been asked and answered.

Mark, toward the end of your prepared comments, you referenced being confident in 2014 group outlook.

Can you just elaborate what you mean by that and are you incrementally more positive on 2014 group than say your level from three months ago?

Thank you.

Sure.

I would say our overall confidence in group has grown over the last several quarters.

As I mentioned, the level of production has been really strong for the last several quarters.

Total production has been up in the high single-digit range over that period of time.

I would say 2014 remains pretty steady in terms of our current outlook in that our pace looking into the next year is sort of up in the low single-digit range as it was a quarter ago.

The thing that is evolving though is that if I look out into 2015 and 2016, pace looks incrementally stronger to me.

So I guess overall my confidence level is higher and I am encouraged to see the continued level of high production and I do believe that we will see good demand throughout 2014.

I would describe if I parse it very precisely, I would say my outlook specifically for 2014 is probably consistent with a quarter ago.

My overall outlook is more positive.

Excellent.

Thank you.

Steven Kent.

Just following up on Joe's question, just how much would you have booked at this time for 2014 on the conference convention front?

So just if you could just sort of say how that progresses as you go out through the year?

And then as we have talked about many times with you before, other hotel companies are very clearly pursuing an asset light strategy, you are pursuing more of an asset recycling strategy.

How do you long-term look at those opportunities as a seller especially on the valuation front because it looks like prices are so high right now that maybe the opportunity is more on the selling front rather than on the buying front?

So first on the group front, we would expect to see 70% to 75% of the group business booked going into the year and that is about where we are.

So it is consistent with prior years and that is about the level.

In the quarter for the quarter business that has been booked -- has not been, it has been consistently positive over the last few quarters but it has gone up and down in part of that has to do with just some shifts quarter over quarter in terms of group activity and timing of holidays and the like.

It is not something that I can say I have got a consistent bead on in the same way that total production has been consistently up in the high single digits but a lot of that just has to do with timing I think.

But again, consistently positive.

In terms of our strategy, we have been very consistent about how we were going to approach our business.

We laid it out four years ago as part of our IPO roadshow and we remain committed to it and dedicated to it and I think all you have to do is look at the activity level.

We haven't stated some kind of a long-term three-year goal for some level of activity in terms of either dispositions our acquisitions but if you look at our activity base over this past year and into this year, we have been extremely active.

And so I think our actions can stand on their own and speak for themselves.

We have been able to get tremendous access to a number of different markets and some key properties through this activity base and as I mentioned during my prepared remarks, the results of the big investment that we made have been pretty solid.

So overall we are pretty happy with how things have gone.

And concurrently, we are being able to return a significant amount of capital to shareholders.

We have repurchased over $800 million worth of stock over the last few years so we have done I think, we have traveled a long way in terms of demonstrating the efficacy of our strategy.

But, Mark, in the next let's say 12 to 24 months, do think you are likely to be more of a net seller or a net buyer of hotel assets?

It is really difficult to say.

We have been a net buyer, we were a net buyer this past year and net investor I would say because not everything was a whole acquisition.

But -- so that has been the case over the last couple of years but as we mentioned, we are in the market with what we just announced obviously this -- the sale of the 10 hotel portfolio.

Not closed yet, just announced at this point with RLJ and we are pursuing the sale of another nine full-service hotels.

So we are, we continue to look at disposition opportunities.

At this point very difficult to predict whether this year will prove to be as productive on the acquisition side so difficult to say at this point.

Thank you.

Bill Crow.

Yesterday Starwood indicated that 2014 EBITDA would be negatively impacted by about $30 million from the sale of assets, either those announced over the course of 2013, or those that have been announced over the last month or so.

As you think about all of the sales that you have accomplished and your capital churn has been terrific, and all of the acquisitions that you have also announced including Orlando, can you provide any sort of ballpark estimate of how we should think about the impact of 2014 EBITDA on a net basis, given the gives and takes?

And if you are not prepared to do that, I would certainly look forward to your event up in New York as an opportunity to provide that sort of information.

First of all, just by way of reminder for you and everyone else, we include a schedule every quarter that summarizes the impact of additions and subtractions from the portfolio.

So you will see that as part of our earnings release.

And we have done that and we will continue to do it consistently quarter over quarter.

We will provide an update on the announced deal to sell the 10 hotels once we close.

That has been our practice in the past.

That is what we will do as we go forward.

And then finally on the other properties that are now -- for which we are now pursuing potential sale, I would say it really obviously just depends on timing, which is impossible to predict at this point.

So what we have been trying to do is be clear about the magnitude of the types of activity that we are engaged in.

That is why we provided an approximate estimate for the total EBITDA associated with the full-service property that we are now pursuing investigating a sale of.

But it is really very difficult to provide specific estimates of EBITDA impact until you know more about timing.

So our practice has been and will continue to be for us to update as soon as we are able to.

The only thing I would add is that the biggest drivers, the acquisition in Orlando, will be a net $45 million of incremental EBITDA.

Playa would be about $10 million this year versus last.

And then San Antonio would be in the $15 million range as a positive.

And then you have to deduct some of the sales we did last year, particularly the full-service sale.

That would be probably in the $20 million range so net net, it is a positive and we can walk through that in a little bit more detail to help you get there.

Perfect.

Thanks.

Thomas Allen.

So we have been dealing with some pretty terrible weather so far this year.

Has that resulted in any large groups canceling and if they have, have they been rebooking for dates soon thereafter or have they not rebooked?

A little bit of both really.

We have seen overall negative impact on some of our hotels because of weather but (technical difficulty) positive impact at some of the resort destinations and some airport location hotels.

So at the moment, the net impact is really not material but how long this extreme weather (inaudible) is going to go on and what the end result is going to be but right now it is sort of on both sides.

Thanks.

And then New York is the city that you have most exposure to in the US.

How was the Super Bowl?

How did it impact results and did it come in line with expectations or better or worse?

Thank you.

So the Super Bowl was a bit mixed.

I think there was some, I think given the weather on the day of the game, some overreaction with respect to the weather problems and then also by virtue of the fact that the NFL is actually headquartered in New York the pickup from the NFL itself was lower than for cities outside of New York which was also an interesting dynamic for the game.

So I would say there was a bit of a negative impact but overall really not very material.

Great, thank you.

Shaun Kelley.

Good afternoon.

So just wanted to ask a little bit more about just the overall capital recycling.

So maybe at a higher level just because it is always difficult to predict exactly how this is going to come out, where do you guys think we are in the cycle right now and just kind of big picture terms and how should we think about how that might impact your buying and selling activity?

Do you really think along those lines or are you guys thinking so long-term that if you just find a good asset even late, late in the cycle you just kind of have to jump on it?

So a couple of things.

First of all, let's break down the question a little bit because if you think about operating results and where we are in that cycle versus capital formation and third would be cost of capital, those are all dynamics that will impact level of activity and also attractiveness of activity.

So I would say on the operating results front, the evolution of the cycle has yielded continued positive momentum and that remains the outlook for the industry.

I think a lot of that has to do with relatively more modest new supply in the US which has been discussed a lot so I'm not going to go back through that.

On the capital formation front, a lot of capital has been raised in and amongst the types of buyers that we have been dealing with, private equity, private REITs and public REITs and so there is capital available and demand and cost of capital has actually remained very low.

When you look at fixed rates based off of treasuries, treasuries have actually yielded decline since the beginning of this year and so all of that bodes well for continued high levels of activity.

For us, we have been active, we have been active, we are active and we will plan to continue to be active through the cycle.

Our view is less about trying to market time and be traders and rather think about the fact that we are going to be realizing value out of dispositions and investing capital in acquisitions or new investments in relative close proximity in terms of timing.

So we will benefit from higher valuation in the deal environment both on the exit and it will impact our entry point.

So we are really thinking about doing this -- executing this over time and over the cycle.

We do recognize that the activity level is quite strong and the valuations are good which obviously informed a lot of our selling activity.

We have obviously been very active sellers and we continue to pursue dispositions as we go into this year as we have talked about.

So that is the way I would think about it.

That is really helpful, Mark.

Thanks a lot.

David Loeb.

Thanks very much and thanks for taking a bunch of our questions that we submitted.

I wanted to ask as you are approaching the sale to RLJ, you have exited and you are approaching the exit of a lot of the stuff that you purchased in Woodfin and LodgeWorks.

Can you give us an update on how you view the returns so far in those investments?

Yes, we will absolutely happily do that once we close.

I think it is appropriate for us to wait to do that and we will definitely go through that once that has happened.

So assuming that the timing works out, we would plan to do that next month in the investor meeting.

Mark, will that include a look at LodgeWorks in its entirety since you still own a number of those assets?

Yes, it is interesting.

So we can talk about operating results over time.

It becomes virtually impossible to do a quote LodgeWorks comparison once you start breaking up the portfolio which we have already done.

We have already sold two of the hotels this past year, the Andaz in Napa and Andaz in Savannah which were part of that acquisition.

So we don't have a unified core body of properties that still exist that you could look at and say that is LodgeWorks.

So it becomes more challenging over time.

Bu yes, we can absolutely give I think some very good reference points on the progression of performance in those properties, how they have performed over time and also specifically with respect to the Woodfin assets and the selected LodgeWorks assets that are part of the RLJ deal to provide more specifics about what kinds of returns we have realized over the ownership period.

Okay, great.

Thanks.

(Operator Instructions).

Harry Curtis.

Just turning to your share repurchase, can you give us a sense of whether the shares repurchased were A shares, B shares or some mix?

Over the course of 2013, they were a mix of Class A and Class B shares and I don't know if we have got a summary in the public domain I guess -- I'm trying what has actually been the specifics that we have disclosed.

You can piece it together.

If your question is with regard to this last quarter or to date activity that we put in the release this morning, all of those were A shares.

Okay, all of those were A shares.

So is your sense and you may not know this but is your sense that most of the kind of remaining family members are pretty satisfied and is it less likely that you will be able to buy B shares going forward?

It is really impossible for us to predict that, Harry.

Okay.

Last question is can you just give us an overall sense of when you do buy shares back and you balance it against your capital recycling or your asset recycling, how does share repurchase fit in?

It fits in pretty directly and as a regular matter.

So we have been very consistent about being in the market over a number of quarters now and we view it as an important tool in our toolkit for how we think about total returns provided to shareholders including returns of capital and that is the way we will continue to look at that.

Okay, very good.

Thank you.

Nikhil Bhalla.

So my first question is about -- can you just remind us what your exposure is to New York and Washington DC?

I recall that you (inaudible) if you can just update us.

So we are having a bit of a hard time understanding you.

I don't know if you are on a mobile or could get closer to a phone but I think the question you asked is what is our earnings exposure to New York and Washington DC.

Is that accurate?

Is that correct?

That is correct, yes.

So in the earnings release, we provided a schedule that shows that exposure to -- this is for our owned and leased portfolio -- our exposure to New York is around 10%, our earnings and in DC it is quite small.

Is it even on the list of the top markets?

It is not on the list of top markets.

So this is page 15 of these schedule so this gives you a breakout for our owned markets and what is the top markets.

So New York is 10%; DC actually is not one of our top 10 owned markets but it is a big managed market for us.

If you look at it on a managed basis, DC, Chicago would be the markets in which we have the most exposure from a managed portfolio perspective.

Thanks, Mark.

Any way to quantify how much of the managed portfolio do you have in DC as opposed to just total?

I don't have a figure off the top of my head.

We can do that and get back to you with an exact number of what we finished out the year at for that.

Okay.

Just one other follow-up question.

You referenced your pace being very strong in 2015 and 2016.

Are there any specific markets that are driving that or is it fairly broad-based at this point?

Yes, at this point it is pretty broad-based.

Great, thank you.

Sure.

Joshua Attie.

Thanks.

I remember on the last conference call I think you mentioned that property taxes and rent increases were going to put pressure on owned hotel margins kind of through the first half of 2014.

Can you just update us on how to think about that?

Yes, I would say that remains the case.

We will end up effectively lapping the time that those changes came through so that remains accurate from what we said before.

So through the first half is the way you should think about the drag.

I did mention in my remarks what the impact of those increases were which if I remember off the top of my head was almost a 100 basis point difference in margin progression in the fourth quarter of last year.

Okay, thanks.

One question on Playa, it seems like the EBITDA forecast for next year has come down substantially and there are some one-time items in there.

But can you just address has your overall view of that investment changed at all?

No, actually it remains positive and our outlook is quite solid.

Business is healthy.

The resorts are doing well.

A number of the resorts are undergoing a lot of renovation.

Jamaica really is a very extensive renovation.

It is practically a redevelopment and an expansion at the same time which is really consistent with how we went into the investment and what we expected to see.

So overall our outlook is quite positive and remains consistent with how we have been thinking about it since we made the investment and it is also true that we have a lower estimate for this year based on the things that I mentioned.

Okay, thank you.

Currently at the time, we have no further questions in the queue and I would like to turn the call back over to Atish for closing remarks.

Great, thank you very much, Philip.

Thank you very much everyone for joining us today.

We look forward to seeing you on March 14.

Thanks very much for your interest in Hyatt.

Have a good day.

Ladies and gentlemen, that concludes today's conference.

Thank you all for your participation.

You may all now disconnect.

Have a wonderful day.