HLT
#I don't think we've seen a big increase year-over-year in that.
I think if you look at it over the last two or three years, we've seen a significant increase both by customer ---+ because of customer behavior ---+ but also technologies and apps that have come out that have accelerated the behavior.
We did do it ---+ and so yes, like others, we have seen that trend.
It's more prevalent in certain major markets around the country.
It is not as prevalent throughout the system.
We do think it's an important issue.
We are working hard on it.
We did do the test, as I mentioned I think on one of the last couple of calls, not necessarily because that's what exactly we want to do, but we wanted to get a sense of how customers responded to it.
We're working on a bunch of different approaches to it.
And the trick here is to do something that makes sense for customers, or that's what we're in the of business doing is serving customers.
But is also thoughtful relative to how we manage the inventory for ourselves and all of our owners.
We're one of the very few businesses I can think of that ties up basically all of its inventory with no downside risk.
And that, particularly in today's world with new technologies and these kinds of behaviors, that has a cost to it.
Now that cost ultimately is going to be borne, at some point, by the consumer.
So while it may seem like it's good for them, it may ultimately not be so good.
So we're ---+ I don't have the answer yet.
We're doing ---+ we have all of our, as I say, we've got all of our scientists working on it.
And we're trying to figure out, as probably a little bit later this year, how do we come up with a way to price our products in a way that customers understand it.
It works for them for the various things that needs that they may have, but it's a more sensible way to manage inventory.
And we're making some progress on it.
Nothing to announce.
Nothing to scare consumers about.
We're not going to do dumb things relative to ---+ that don't make sense for consumers.
But we may ---+ there are, like other businesses, there are ways to be able to look at pricing for those that need more or less flexibility and to create different sorts of pricing structures.
So we'll give you more when we have it.
We're very focused on it because I think it's in everybody's interest ---+ customers and owners and the system.
Yes, I mean, not anything dramatic.
There are parts of the world, China being the best example, where you have seen as they over the last year or two have sort of been evolving their economy and shifting to more of a services versus an infrastructure-based economy, you have definitely seen a slowdown there relative and a lengthening of development period between signings and opening.
But there's nowhere else in the world ---+ maybe a little bit in Europe as it's had ---+ as Europe has had its ups and downs.
But broadly speaking, if I went and actually statistically looked at the time lines that we've had historically between signings and openings, they're following pretty normal patterns ---+ maybe outside of those, particularly China, but a little bit of Europe outside of those examples.
So I think so goes on a lag to the signings.
You can sort of prognosticate that the openings will pick up as the gestation period ---+ as you get through the gestation period for development.
Given that we have doubled our net unit growth percentage at the same time we've been growing the Company since 2007 or 2008 by 50%, I think you've been seeing it.
We've gone from sort of a low point of unit growth of 3% in 2010 to 6% to 7%.
So we've doubled our growth rate.
At the same time the Company has gotten 50% bigger.
So I would say you're seeing it, hopefully appreciating it.
(laughter)
I am confident ---+ as I said in my comments, I've known Tom for 30 years.
Tom was not just on the list.
Tom was the number one top person on our list.
And we couldn't be more pleased that he was willing to come provide the leadership of our new REIT.
So it's an exciting day for all of us.
Some of it for sure.
There's no question.
It would be hard, <UNK>, for me to give you an exact number at this point.
Maybe when we get through the month and we have ---+ we can scrub all the data we can.
There's no question the reverse impact is benefiting you.
But there's also no question ---+ and I'm not trying to pound the table.
There's no question we're also seeing, broadly unrelated to that, a modest pickup in corporate transient business.
It's there.
I've been talking to a ton of corporate customers.
The great thaw that I describe, it's going on.
What I can't tell you is what is the result in terms of broader growth, exactly what is the shape of the uptick.
But I think all things being equal, meaning things stay in a relatively stable mode, it's just hard ---+ forgetting the Easter effect ---+ it's hard to apply common sense and not believe that you're going to see corporate transient pick up.
Yes.
We have, <UNK>, these two big transactions coming up that are ---+ that as <UNK> said earlier in response to Steve's question, have some expense associated with them.
So that's it.
And also as I said in my prepared remarks, we fully expect to target the same credit rating and start a share repurchase program once we get the spins ---+ or ask our Board to start a share repurchase program once we get our spins complete.
But we're really just saving our cash for the transactions at this point.
Yes, we're hunkered down to get these things done.
There's a lot of moving pieces, all of which are manageable.
But we want to get it done, create three pure play companies and we'll get back on it.
It did, honestly, surprise us to the up side a little bit.
In talking to our China teams, which I talk to our team constantly around the world, they were a little bit surprised.
And part of what's going on is part of the great thaw ---+ the reason for the great thaw is I think there is a little bit more stability in the Chinese economy.
Certainly the world is starting to settle down on China.
I think if you're in China, which our guys are, and operating and running business, I think it feels like things are, to our teams, more stable.
The business is showing up.
And so, yes, we feel pretty good about what will happen for the year.
I'm not going to say we're being conservative.
It's not going to make a huge difference in the numbers if we're a little off given it's a relatively low percentage of our overall EBITDA.
But things are reasonably good, yes.
Surprised it's a little bit the up side.
Not so much so that we thought we should change our guidance at this point.
Some of it driven by some particularly strong group bookings in some of the bigger hotels in China, but all good.
It's nothing but good.
And we ---+ same thing on the development side.
We shifted the strategy there appropriately a couple of years ago to more of the mid scale side of things.
And we're continuing when others are not to accelerate both signings and, particularly, accelerate openings.
I think we'll probably open 20% more rooms this year than we did last.
And last year was I think the best year we've ever had in openings in China.
So China feels reasonably good.
Thanks, <UNK>.
On an overall basis for the segment, we've seen cost per occupied room for the first quarter was still below 2%.
So we've had pretty good cost containment there.
In the US hotels, we'll detail all this in the Form-10s and the like and how it breaks up, but a little bit higher.
But we've been doing a good job of containing costs.
Even in wage and benefit environment, it's been pretty high growth across the nation.
I'll let <UNK> maybe give a little more specifics because he's more active day-to-day in working with our owners.
But at a high level, I think it's been reasonably steady.
I think most of our stuff, if you use the US, because it's a big chunk of where the development is occurring, most of it is getting financed by local and regional banks where you have owner operators, some big, some small, that are financing with generally a decent chunk of equity, full recourse on the debt.
It the way they do the business.
And the local and regional banks have continued to be pretty stable.
The end of last year and very beginning of this year when all the world ---+ my description ---+ froze up, you were starting to see little telltale signs, certainly on Wall Street, of less capital available.
I would say, my opinion, it didn't really trickle through to Main Street very much.
And now with the world being stabilized with a whole bunch of our owners that are building these things ---+ a few weeks ago when I asked them, are you seeing any difference in your ability.
And they said, no, maybe a teeny bit more expensive, a little bit more equity, but after ---+ but no real difference in sort of the Main Street kind of lending environment, or nothing that they viewed as material.
The best ---+ the quality developers are still able to get it and still able to finance our stuff.
<UNK>, I don't know if you want ---+
I think that's a good way to describe it is the Wall Street versus Main Street.
The Main Street side of it is where the lion's share of our development is getting done, especially in the US.
On the Wall Street side of it, I think for existing cash flowing assets when you had the world freeze up the way <UNK> described it, CMBS in particular, spreads did gap out quite a bit.
But those marks have restabilized and they're looking a lot stronger than they were.
But again, on the Main Street side of it, I think specific to your question about development, that is almost all local.
They're highly equitized.
They're financed on a loan-to-cost basis.
And it's just a little bit different environment than some of the things you've been hearing out of Wall Street.
Yes, <UNK>, we saw those comments, of course, like you did.
And we have not seen ---+ that particular activity has not existed in our business.
And frankly, our customer ---+ who's a little bit different customer ---+ has been quite strong.
So our default rates are not ticking up.
Our average FICO on new loans is almost 750.
So a quite high credit profile for our customers.
And frankly I was just looking at our default rates were not up really at all in the quarter.
So we're not seeing that issue.
Thanks, <UNK>.
I just want to say thanks, everybody, for spending so much time with us this morning.
We continue to make great progress.
You should be looking out in the not too distant future for our Form-10s to get more information on the spins.
We look forward to catching up with you on the next quarterly call or before.
Thanks.
