Speaker 1: This is Bloomberg Business Week inside from the reporters and
Speaker 1: editors who bring you America's most trusted business magazine, plus
Speaker 1: global business, finance and tech news. The Bloomberg Business Week
Speaker 1: Podcast with Carol Messer and Tim Stenebeck from Bloomberg Radio.
Speaker 2: Hi, everyone, Welcome to the Bloomberg Business Wee Weekend Podcast.
Speaker 2: This week back of US economic data, setting the stage
Speaker 2: for the upcoming FED meeting on Wednesday, and yet got
Speaker 2: to say top of mind an election outside the United States.
Speaker 2: Also the memes Talk Darling that continues to enrapt Wall Street.
Speaker 2: On the latter, we catch up with the author of
Speaker 2: the Trolls of Wall Street excerpted in the current issue
Speaker 2: of Bloomberg Business Week.
Speaker 3: Plus Franklin Templeton and b and Y Melon are two
Speaker 3: giants in the asset management business. Jenny Johnson, president and CEO,
Speaker 3: Franklin Templeton and Honika SMI's senior executive vice president and
Speaker 3: global head of Investment Management at BNY Mellen share their.
Speaker 2: Outlooks all of that to come. We begin with the
Speaker 2: elections in India and the surprising outcome as Prime Minister
Speaker 2: Narendra Moody's party lost its majority in Parliament, Moody must
Speaker 2: now rely on allies to form a government for the
Speaker 2: first time since he stormed a power a decade ago.
Speaker 3: India stocks had their worst day in more than four
Speaker 3: years following the results. To understand it all, we leaned
Speaker 3: on the expertise of Bloomberg News senior editor Bobby Gosho
Speaker 3: previously covered foreign affairs with a special focus on the
Speaker 3: Middle East and the wider Islamic world, and he was
Speaker 3: Time Magazine's Bagdad Buera chief prior to joining Bloomberg.
Speaker 4: Well, it's striking because this is a figure, Nardo Modi,
Speaker 4: who has dominated the Indian political landscape like no politician
Speaker 4: going back a couple of generations. For ten years, he's
Speaker 4: been front and center of Indian politics. He sort of
Speaker 4: commanded an aura of invincibility, and his party, which is
Speaker 4: very very good at messaging, very disciplined at messaging, conveyed
Speaker 4: that message ahead of this election. And this election was
Speaker 4: not just a referendum of his party. It was very
Speaker 4: much about him. The entire messaging of the election was
Speaker 4: around vote for Modi, even though this is a parliamentary election.
Speaker 4: So if you can imagine the closest American comparison would
Speaker 4: be if in the midterms the Republicans went out to
Speaker 4: all their voters in the Senate and in the Congress,
Speaker 4: but their message was vote for Trump, not for me.
Speaker 4: Vote for Trump. That was the kind of messaging that
Speaker 4: went into this election, and so this is a personal
Speaker 4: failure on the part of Mody. They'd set the bar
Speaker 4: very very high, four hundred seats they've gotten. The bare
Speaker 4: minimum to get a majority is two hundred and seventy two.
Speaker 4: The party by itself looks more likely to get two
Speaker 4: hundred and forty. Now it has allies and it can
Speaker 4: form a coalition, so it's very likely it will remain
Speaker 4: in government.
Speaker 5: More.
Speaker 4: They may remain Prime Minister, but his personal prestige has
Speaker 4: taken a real battery.
Speaker 3: MODI already spinning this as a victory. Where did the
Speaker 3: polsters go wrong? Why did we see the exit polling
Speaker 3: show such a stark difference to the votally explain?
Speaker 4: I think, I think some real deep investigations are going
Speaker 4: to have to be done into that exit polling. The
Speaker 4: numbers are so I mean.
Speaker 3: Shocking.
Speaker 4: Yeah, we've become used to it in recent years. All
Speaker 4: over the world. People tell polsters one thing and then
Speaker 4: they when they go to vote, they do something else.
Speaker 5: Right.
Speaker 4: This is a problem in this country just as much
Speaker 4: as another's. But the gap between what the exit polls
Speaker 4: are showing and what the results now seem to be indicating.
Speaker 4: I haven't seen a gap that wide in any major
Speaker 4: election anywhere in the world. So something, something has gone
Speaker 4: terribly amidst this is not simply, I would suggest, not
Speaker 4: simply a case of people telling polsters one thing and
Speaker 4: doing something else. I think something more structural might be
Speaker 4: maybe more structural problems here.
Speaker 2: I want to get your comments though, on voters feeling
Speaker 2: left of India's growth, the growing inequality, pervasive joblessness, rising
Speaker 2: labor costs feels very very similar.
Speaker 5: What is this a.
Speaker 2: Vote against though? Is it a vote against Modi the
Speaker 2: personality or vote against Listen, I don't feel so good.
Speaker 4: Well, For one thing, there's a strong anti incumbency vote, right,
Speaker 4: this party has been in power for a long time.
Speaker 4: People would like to see the other side get a try.
Speaker 4: That's just human human nature. That happens with democratic collections
Speaker 4: all over the world. But the other thing is that
Speaker 4: Modi's message of economic success has left out huge numbers
Speaker 4: of Indians. Is the world's most populous country. And a
Speaker 4: lot of Modi's messaging is, look at how many billionaires
Speaker 4: we've created in the last ten years or in the
Speaker 4: time that I've been in power. Eight hundred million Indians
Speaker 4: still depend on highly subsidized handouts from the government from
Speaker 4: food and that cohort of people. That's a lot of
Speaker 4: people were not included in this message of look how
Speaker 4: many billionaires we've created and a lot of the votes
Speaker 4: you know, as we're the patterns that we are seeing
Speaker 4: is that he seems to have lost a momentum in
Speaker 4: rural parts of the country. Farmers, those are the poorest
Speaker 4: to the poor in India tend to come from the
Speaker 4: rural heartland states where for a long time Mody was dominant,
Speaker 4: the BJP was dominant. Their message was vote for us
Speaker 4: and all voats will rise. You will rise up from
Speaker 4: this menial labor you're doing in the farm and will
Speaker 4: you too will have a chance at economic strip.
Speaker 2: Why isn't it rising up? I don't want to go
Speaker 2: trickle down, I feel like, but why isn't it spreading out?
Speaker 4: Well, that's the nature of so much of India's economic
Speaker 4: growth over the last many years is that it has
Speaker 4: not been a growth that has included everybody. The problem
Speaker 4: of unemployment has not been reckoned with in this growth.
Speaker 4: This is a jobless growth for a large part. For
Speaker 4: the most it is not creating enough jobs. There's a
Speaker 4: giant country, huge numbers of people. Tens of millions of
Speaker 4: people are coming into the coming into working age every year.
Speaker 4: The economy, even though it's one of the fastest growing
Speaker 4: economies in the world, is not creating tens of millions
Speaker 4: of jobs. So there's a square and there's a circle,
Speaker 4: and these are not going to matter.
Speaker 3: So continue with the economic implications of this. We saw
Speaker 3: the stock market, or we saw Indian stocks I should say,
Speaker 3: have their worst day in more than four years. Obviously
Speaker 3: market's not like surprises. But I do wonder about the
Speaker 3: economic implications of this globally, Bobby, and what it means
Speaker 3: for a country that is trying to transition from developing
Speaker 3: country to a developed country.
Speaker 4: I'm not terribly worried about the Indian economy. I will
Speaker 4: say this because so much of all these economic policies
Speaker 4: were built on a platform that the previous government dominated
Speaker 4: by Congress Party laid down. That laid down those foundations
Speaker 4: now the Congress is back in terms of economics, in
Speaker 4: terms of needing investments, not a whole lot of sunlight
Speaker 4: between the BGP and the Congress Party and its allies.
Speaker 4: There may be some differences in prioritization, but for the
Speaker 4: large part, they both agree that India needs foreign investment.
Speaker 4: Indian economy needs reforms, Indian businesses needs support. Indian needs
Speaker 4: to be creating more jobs, and those jobs have to
Speaker 4: come primarily from the private sector. There's a lot they
Speaker 4: have in common in their economic vision, although if you
Speaker 4: ask them directly they would deny that furiously. Equally on
Speaker 4: foreign policy too, this is the same thing. Both countries
Speaker 4: recognize that India's association India's ties with the United States
Speaker 4: are crucial, that India and the United States have a
Speaker 4: common concern about China's growing influence in the world. India,
Speaker 4: which borders China, which went into war with China in
Speaker 4: the early nineteen sixties, feels the heat very closely. I
Speaker 4: don't expect big changes there. I think a lot of
Speaker 4: this has been the election has been to a substantial
Speaker 4: degree about how the parties regarded minorities in the country.
Speaker 4: The BJP, which is a very Hindu Nationalist Party. During
Speaker 4: this election, more than ever before, there was some really
Speaker 4: strident anti minority and particularly anti Muslim speeches from the
Speaker 4: Prime Minister on down. The Congress Party and its allies
Speaker 4: come from an older, more secular, more inclusive kind of politics,
Speaker 4: and I think that is what won out at the
Speaker 4: end of the day. But more than again, to come
Speaker 4: back to where I started. More than anything else, this
Speaker 4: is the Indian voters voting against Modi rather than voting
Speaker 4: for anybody.
Speaker 2: So, Bobby, is this the beginning of a new chapter
Speaker 2: in terms of India's political history?
Speaker 6: It could very well be.
Speaker 4: We've seen this movie before. Coalitions, large, unwieldy coalitions trying
Speaker 4: to form a government, sometimes succeeding but not being able
Speaker 4: to hold together the some of their parts, and another
Speaker 4: election coming up in quick succession. Now, if Mody can
Speaker 4: hold together his coalition partners, and the two main coalition
Speaker 4: partners are notorious for switching camps, They've done it so
Speaker 4: many times in recent years. If he can hold together
Speaker 4: his coalition, he will continue to be Prime Minister, but
Speaker 4: he will no longer have that swagger and he will
Speaker 4: have to deal. Momentum is everything in politics, right he
Speaker 4: will have to deal with an opposition in Parliament that
Speaker 4: is much stronger than before, but feels like it has
Speaker 4: the win in his sales, that will feel more imboltant
Speaker 4: to press against his policies, to push against whatever he's
Speaker 4: trying to do, particularly on social issues, and so he
Speaker 4: will not be able to govern with the confidence that
Speaker 4: he had before.
Speaker 3: So, Bobby, if he's not able to govern with the
Speaker 3: confidence and swagger that he had before, where should we
Speaker 3: look to for change? Where would you expect to see
Speaker 3: changes as a result of this election outcome?
Speaker 4: Well, a lot of the changes will be more optical
Speaker 4: than actual, shall we say. I think the fact that
Speaker 4: the rejection of this politics of bigotry, the politics of
Speaker 4: identifying and targeting minorities, the politics of sort of a
Speaker 4: majoritarian view of religion that India should be Hindu. I
Speaker 4: think all of that will recede, at least for a while.
Speaker 4: You know, a great deal is going to depend on
Speaker 4: what the opposition opposition can do with the momentum that
Speaker 4: it has. Rahul Gandhi, who's leading the opposition coalition, has
Speaker 4: not been in this place before. He is an untested
Speaker 4: quantity in this situation. He has run a Congress party
Speaker 4: that has long been a family fiefdom, and nobody dares
Speaker 4: to raise a voice against him. He has not had
Speaker 4: to be conciliatory, he has not had to include lots
Speaker 4: of different voices in the decision making. As a leader
Speaker 4: of a coalition, he'll have no choice but to do that.
Speaker 2: Well, that's what I was thinking about, because in our
Speaker 2: reporting you put it out where the twenty opposition parties
Speaker 2: formed a united front against Mody, and I think about, okay,
Speaker 2: united front against one. But then you have to take
Speaker 2: those groups right and figure out the way forward.
Speaker 4: Yeah, So now do you make a play for Mody's
Speaker 4: allies and try to bring them on your side and
Speaker 4: try to form a coalition with twenty four twenty five
Speaker 4: different parties, or do you sit back and say, no,
Speaker 4: we're gonna let We're gonna be in opposition, we're gonna
Speaker 4: be a strong opposition, We're gonna let Mody dig himself
Speaker 4: into a hole. This is a very crucial decision that
Speaker 4: has to be taken first, and then the real practical
Speaker 4: day to day difficulties of hurding all these cats together.
Speaker 4: It's one thing when you have a common goal of
Speaker 4: defeating mody.
Speaker 3: That was Bloomberg New Senior editor Bobby.
Speaker 2: Gosh coming up from the series to the sublime came
Speaker 2: Stop a big trade this week again, how the outcasts
Speaker 2: and insurgents are hacking the markets.
Speaker 3: It's all in a new book.
Speaker 7: It's a fascinating topic that I do think most people
Speaker 7: forgot about since January twenty twenty one, when game Stop
Speaker 7: was really in the news and you couldn't avoid it.
Speaker 7: I think a lot of people thought that this was
Speaker 7: going to go away when when GameStop went down it
Speaker 7: but more than that, people thought it was going to
Speaker 7: go away when the pandemic was over and these young
Speaker 7: traders would go home.
Speaker 3: You're listening to Bloomberg Business Week. This is Bloomberg.
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Speaker 3: Game Stop was a focal point on Wall Street this week.
Speaker 3: The memestock darling during the pandemic surging after the Reddit
Speaker 3: account that who drove memestock Mania back in twenty twenty
Speaker 3: one posted what appeared to be a one hundred and
Speaker 3: sixteen million dollar position in the video game retailer. We're
Speaker 3: talking about none other than Keith Gill, who also goes
Speaker 3: by the name Roaring Kitty. GameStop shares were already up
Speaker 3: a cool one hundred and eight percent. This may its
Speaker 3: best month since January of twenty twenty one, and the
Speaker 3: stock was up another twenty two percent in the first
Speaker 3: week of June, even after share slumped thirty nine percent
Speaker 3: on Friday. This happened after the company unexpectedly released earnings
Speaker 3: and announced plans to sell up to seventy five million
Speaker 3: additional shares, and Gil hosted a YouTube livestream watched by
Speaker 3: hundreds of thousands of people.
Speaker 2: We can't talk about memestocks without talking about Wall Street bets,
Speaker 2: the Reddit message board that, according to our next guest quote,
Speaker 2: would eventually come to occupy a key position at the
Speaker 2: center of a movement that turned millions of young Americans
Speaker 2: into investors and traders.
Speaker 3: That line from a brand new book that comes out
Speaker 3: on June eleventh, called The Trolls of Wall Street How
Speaker 3: the Outcasts and Insurgents Are Hacking the Markets. The book
Speaker 3: by journalist and author Nathaniel Popper.
Speaker 7: It's a fascinating topic that I do think most people
Speaker 7: forgot about since January twenty twenty one, when Game Stop
Speaker 7: was really in the news and you couldn't avoid it.
Speaker 7: I think a lot of people thought that this was
Speaker 7: going to go away when when GameStop went down. But
Speaker 7: more than that, people thought it was going to go
Speaker 7: away when the pandemic was over and these young traders
Speaker 7: would go home. And you know, I write this. I'm
Speaker 7: writing this book about the story of how this happened,
Speaker 7: how this sort of online movement came to be, And
Speaker 7: one of the most surprising elements of the story is
Speaker 7: the way in which it has not gone away. You
Speaker 7: look at these statistics that we now have around retail traders,
Speaker 7: and you see that retail traders are still in there
Speaker 7: buying stocks and trading at the same level that they
Speaker 7: were back basically in twenty twenty one when game Stop
Speaker 7: was happening. So, you know, this latest game Stop moment
Speaker 7: is just a sort of reminder of the fact that
Speaker 7: this whole world has not gone away, all.
Speaker 2: Right, but it continues to play around with these stocks
Speaker 2: that you know, many of us question the fundamental stories here,
Speaker 2: So you know, I understand the lasting effect. It feels
Speaker 2: like a little bit like a video game and playing
Speaker 2: and so on and so forth. Is it something though? Okay,
Speaker 2: so it sticks around, But does it somehow broadened out
Speaker 2: and start to get into some names with fundamental stories.
Speaker 7: That's a very important question for the future of the
Speaker 7: markets and for the future of the portfolios of.
Speaker 6: All the people in this world. Right.
Speaker 7: Look, on one hand, you have the importance of the
Speaker 7: memestock movement in itself, and I think part of what's
Speaker 7: so interesting about memestocks and game Stop is that there's
Speaker 7: something deeper going on there. People figured something out about
Speaker 7: the markets. You're right that in the end, game Stop
Speaker 7: going up was not about fundamentals. It was about social
Speaker 7: media personalities. But there was some discovery in there by
Speaker 7: the crowd of these weird market dynamics around options and
Speaker 7: market makers, and there was this sort of educational process
Speaker 7: that was happening there. You know, it's derided as this
Speaker 7: sort of idiotic flare up, but there was something deeper
Speaker 7: going on there. And that deeper thing taps into your
Speaker 7: bigger question here, which is that our focus on memestocks
Speaker 7: and game Stop I think has distracted us from the
Speaker 7: fact that this whole movement has broadened out significantly and
Speaker 7: now is much bigger than memestocks, and in fact, memestocks
Speaker 7: have gone down as a proportion of all retail trading.
Speaker 7: I think what you've seen is that retail traders, you know,
Speaker 7: they are always thought of as the dumb money, but
Speaker 7: when you're in the markets and when you're investing and
Speaker 7: when you're trying things out, you learn things, and that
Speaker 7: you have seen that over time. You see that in
Speaker 7: this data that shows the trends, the trends that retail
Speaker 7: traders are following. And as I mentioned, the percent of
Speaker 7: all trading that's gone to memestocks has gone down, and
Speaker 7: the percent that's gone to electric cars and AI plays
Speaker 7: and Nvidia has been enormous.
Speaker 6: And so coming out.
Speaker 7: Of you know, twenty twenty two, twenty twenty three, we
Speaker 7: had this market downturn, and that was another moment where
Speaker 7: everybody said, Okay, these retail guys.
Speaker 6: Are going to get slaughtered. They're done.
Speaker 7: You see coming out of that that the retail guys
Speaker 7: were buying when the markets were at their low, and
Speaker 7: they were not just betting on they were not just
Speaker 7: betting on memestocks, they were betting on AI plays, and
Speaker 7: so you see this sort of interesting migration. Obviously, it's
Speaker 7: also present in the whole crypto world, and that keeps going,
Speaker 7: and that's come back in ways that people didn't expect.
Speaker 7: But the idea is this thing has gotten bigger than
Speaker 7: any one place, bigger than Walsh Bets.
Speaker 3: Certainly that that's so interesting, Nathaniel, But I do wonder
Speaker 3: to what extent the folks who you feature in the book,
Speaker 3: and then also the folks who just lurk in Wall
Speaker 3: Street Bets have actually made money because there were so
Speaker 3: many stories post memestock craze of twenty twenty one of
Speaker 3: individuals losing fortunes, losing everything.
Speaker 6: So I think you know you again.
Speaker 7: I want to sort of split this into two halves,
Speaker 7: one is which one of which is the sort of
Speaker 7: cultural phenomenon. And I think, you know, losing has actually
Speaker 7: been a sort of central part of the Wall Street
Speaker 7: Bets sort of culture going back to twenty fifteen, going
Speaker 7: back even earlier. I mean, this place has now been
Speaker 7: around for more than a decade, and part of the
Speaker 7: culture was a recognition we're doing something stupid. It was
Speaker 7: about getting tension it was about. It was it was
Speaker 7: part of this whole sort of four chain and trolling
Speaker 7: online culture that, by the way, I think is deeply
Speaker 7: interwoven with Donald Trump and the alt right. I mean
Speaker 7: all of this stuff. I sort of explain how it played.
Speaker 7: They these these different movements online played off each other
Speaker 7: over the years, and Donald Trump became this important figure
Speaker 7: on Wall Street Bets, and part of that was this
Speaker 7: weird trolling culture where you're both joking and being serious
Speaker 7: and you're doing stupid stuff, but it's also smart at
Speaker 7: the same time. It's a very sort of complicated online
Speaker 7: world that I tried to untangle. But so that is
Speaker 7: one piece of this, and losing is a part of it,
Speaker 7: and there are I you know, chronicle some of these
Speaker 7: sad stories in my book, and you know, including this
Speaker 7: this suicide that really hit this community hard because of
Speaker 7: some of these losses. But at the same time, I
Speaker 7: tried to look at the data for both how Wall
Speaker 7: Street Bets was doing and how retail traders were doing.
Speaker 7: More broadly, I think what you see there is a
Speaker 7: slightly different story. As retail traders have gotten into the markets, they,
Speaker 7: as I mentioned, have learned and the markets have come
Speaker 7: to seem less intimidating. And so, you know, the markets
Speaker 7: used to be a thing that young people largely avoided.
Speaker 6: You know, the markets were something for old.
Speaker 7: White dudes who you know, worked hired, and now it's
Speaker 7: something that kids care about. And the big picture data
Speaker 7: shows that it's very good that kids care about the
Speaker 7: markets because the markets are a very good place to
Speaker 7: have your money. And even if let's say you're you're
Speaker 7: making you know, you're trying to time in video or Apple,
Speaker 7: maybe you're not going to make as much as an
Speaker 7: index fund, but it's better you have your money in
Speaker 7: the markets than that you're just sitting on it, you know,
Speaker 7: in your savings account.
Speaker 6: So that's a bigger transition that interests me.
Speaker 3: Okay, Nathana, we got to talk about a couple of
Speaker 3: the main characters in the book here, Jamie Ragazinski and
Speaker 3: Jordan Zizia. Who are these guys.
Speaker 7: Jamie is the founder of Wall Street Bets. He's a
Speaker 7: guy back in twenty twelve who created this subreddit, and
Speaker 7: at the time it was basically an escape from his alcoholism.
Speaker 7: He was basically a thirty year old guy working at
Speaker 7: a job he didn't really like and he was looking
Speaker 7: for basically ways to fill his hour when he was
Speaker 7: at home drinking alone, and he began trading. And he
Speaker 7: realized that trading was much more entertaining than he thought
Speaker 7: it would be, and he liked talking about it with people,
Speaker 7: and so he created this subreddit which he called Wall
Speaker 7: Street Bets. And what's so interesting about Jamie is that
Speaker 7: it turned out that there were a lot of other
Speaker 7: guys in a similar situation, guys who were sort of
Speaker 7: struggling in life, struggling to find their place, feeling sort
Speaker 7: of alienated, and this community grew up around him and
Speaker 7: he found company in it, and it created this strange
Speaker 7: culture that we now know of as Wall Street bets.
Speaker 7: You know, by the time he got kicked out of
Speaker 7: Wall Street Bets, which is one of the interesting chapters
Speaker 7: in this book, wall Street Bets had attracted a million
Speaker 7: members and that was when the sort of next phase
Speaker 7: of Wall Street Bets happened, which was really during COVID,
Speaker 7: and that was when this young guy named Jordan Zarzara
Speaker 7: took over as the sort of main moderator for the subreddit.
Speaker 7: And he is another interesting character who's never really found
Speaker 7: his place in life, never really got a job he liked,
Speaker 7: and he found this community, and he found something so
Speaker 7: meaningful and rich in it, even in its all of
Speaker 7: its twisted humor and dark humor. I mean, it's a
Speaker 7: weird place. But the strange thing was this had a
Speaker 7: real hold on the people who came there, and it
Speaker 7: became a real community. And I think that's something again
Speaker 7: when we talk about meme stocks, it's easy to miss
Speaker 7: the way in which this feeds into this much bigger culture,
Speaker 7: in this much bigger set of needs that the young
Speaker 7: guys coming there have.
Speaker 3: I'm wondering about this idea of you know, quote unquote
Speaker 3: sticking it to the man, because there were moments during
Speaker 3: twenty twenty one where that was a big part of
Speaker 3: what Wall Street bets wanted to do. They wanted to
Speaker 3: show those hedge funds that they were smarter, They wanted
Speaker 3: to outsmart the hedge funds that were betting against Game Stop.
Speaker 3: Were they successful? Did they stick it to the man?
Speaker 6: Yes?
Speaker 8: And no?
Speaker 7: Is my maybe disappointing answer, but I think that what happened,
Speaker 7: what has happened, has led to a real chastening of
Speaker 7: institutional investors. Institutional investors have realized that these traders are
Speaker 7: a real hour in the market when they come together.
Speaker 7: You know the David Goliath story. There are a lot
Speaker 7: of these little Davids who lost money, but there are
Speaker 7: really also a lot of Goliaths who lost a lot
Speaker 7: of money in this Even when you look at just
Speaker 7: the amount of short selling that hedge funds on Wall
Speaker 7: Street to it has just gone down. I mean, it's
Speaker 7: not as though it just went down and came back up.
Speaker 7: There is a fear in the markets and it has
Speaker 7: changed the dynamics. And you know, that goes back to
Speaker 7: the idea that this online community, like so many online communities,
Speaker 7: is about distrust. And obviously that's playing out in politics.
Speaker 7: You know that's playing out in the presidential election, but
Speaker 7: that's also playing out in the markets.
Speaker 3: That was Nathaniel Popper, author of The Trolls of Wall Street,
Speaker 3: how the outcasts and insurgents are hacking the markets.
Speaker 2: Still ahead on Bloomberg BusinessWeek. Franklin Templeton has one point
Speaker 2: six trillion dollars in assets under management bn y MEL
Speaker 2: overseeing nearly fifty trillion dollars in assets for its clients.
Speaker 9: Developed economies have aging demographics, and developing tend to have
Speaker 9: younger demographics except for China obviously, and it's going to
Speaker 9: have an impact on investing. There's going to be opportunities,
Speaker 9: but it's also going to drag down economies as a younger,
Speaker 9: smaller workforce has to support the folks that are older.
Speaker 3: Franklin CEO, Jenny Johnson and Bny Mellons Global Head of
Speaker 3: Investment Management, Ponica Smith's are up next. This is Bloomberg.
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Speaker 2: Eleven thirty investors are uber focused on this week's coming
Speaker 2: FED meeting. I was in Nashville this past week for
Speaker 2: b and y ME and Pershing Insight twenty twenty four.
Speaker 2: It's a gathering for the wealth management industry. At IT,
Speaker 2: I moderated a keynote with two senior executives in the
Speaker 2: asset management business who see so much and who shared
Speaker 2: their outlook and views on everything from AI and alts
Speaker 2: to debt deglobalization, demographics, digitization, and geopolitics, and a lot more.
Speaker 3: Tim Here's some of that conversation that Carol had with
Speaker 3: Jenny Johnson, President and the chief executive Officer Franklin Templeton,
Speaker 3: and Hanikah Schmi's senior executive vice president and global head
Speaker 3: of Investment Management at BNY Mellon on the macro backdrop.
Speaker 2: Franklin Templeton one point six trillion in assets under management
Speaker 2: BN y mail and overseeing fifty trillion in assets for
Speaker 2: its clients. You both see a lot, Your firms see
Speaker 2: a lot. What are some of the broad secular trends
Speaker 2: that you are seeing that are really shaping the global
Speaker 2: economy and will influence the investing landscape for years to come.
Speaker 5: Jenny, let's start with you.
Speaker 9: Everybody's talking about kind of the whether you have five
Speaker 9: or three or six d's, but I'll start with the ds. Look,
Speaker 9: demographics is going to be key, and it's going to
Speaker 9: be you know, they're the develop economies have aging demographics
Speaker 9: and or developed economies have aging demographics, and developing tend
Speaker 9: to have younger demographics except for China obviously, and it's
Speaker 9: going to have an impact on investing there's going to
Speaker 9: be opportunities, but it's also going to drag down economies
Speaker 9: as a younger smaller workforce has to support the folks
Speaker 9: that are older, and then those economies that are developing
Speaker 9: with it, like India. Fifty six percent of the population
Speaker 9: of India one point four trillion people is under the
Speaker 9: age of twenty five. So as long as they can
Speaker 9: educate them, right, they can be participating in it.
Speaker 10: So demographics is important.
Speaker 9: Obviously, I'll call it disinflation, so we can say r
Speaker 9: d's obviously where the interest rate environment goes.
Speaker 10: You know, the supply chain.
Speaker 9: Sort of reorienting supply chains is going to be I
Speaker 9: think opportunity from an investment standpoint.
Speaker 10: It's also inflationary.
Speaker 9: There's a reason we were in China, the China plus
Speaker 9: one story. You were in China because it was cheap, right,
Speaker 9: So as soon as you start to decouple and you know,
Speaker 9: change your supply chain, you're going to end up adding
Speaker 9: some costs to that, not to mention tariffs and others
Speaker 9: from geopolitical decarbonization, right. You know. Unfortunately in the US
Speaker 9: it is a it's become this red and blue state conversation.
Speaker 10: You know, obviously honkey, you're.
Speaker 9: Based in London, you go to Europe, it is still
Speaker 9: a huge focus and the reality is over ninety percent
Speaker 9: of the world's you know, governments that control ninety percent
Speaker 9: of the world's GDP have committed to net zero. Whether
Speaker 9: they get there or not as irrelevant, but they're focused
Speaker 9: on investing on that. And then finally, I'll call it
Speaker 9: digitization is just this, Uh, we're living in a massive
Speaker 9: technological advanced age with AI things like blockchain and those
Speaker 9: are going to drive investment results.
Speaker 10: And then I got to throw in US debt.
Speaker 9: I don't think we're talking enough about the longer term
Speaker 9: impact of US debt.
Speaker 2: I feel like it's safe to say that all of
Speaker 2: us have spent our careers a few years ago, a
Speaker 2: few decades ago, where it came up in every market conversation,
Speaker 2: then it went away. It is back, and I feel
Speaker 2: like with a vengeance. All right, Hanaga, let's go to
Speaker 2: you in terms of the global macro.
Speaker 5: Yeah, so Jenny summed up.
Speaker 11: I summed it up very well, and we're sort of
Speaker 11: seeing the same trends. I was actually quite interested to
Speaker 11: see that the audience here, so you know, you think
Speaker 11: about the trends actually feel optimistic about investing.
Speaker 5: Are you surprised, Well, yes and no.
Speaker 11: And I would say the one thing, you know, we
Speaker 11: take a step back and think.
Speaker 5: About these trends.
Speaker 11: Trends create uncertainty, but trends can those trends and uncertainty
Speaker 11: can also create opportunities, right, because when there's more volatility
Speaker 11: in markets and in responses, people will respond differently, have
Speaker 11: different needs, and that can create investment opportunities. Now, having
Speaker 11: said that, in this world of what appears to be disinflation,
Speaker 11: we have an expectation that generally we're still at rates
Speaker 11: higher for longer, but we are expecting with the information
Speaker 11: that is starting to come out tighter sort of lower
Speaker 11: tighter employment, that we are expecting to see some cuts
Speaker 11: later in the year.
Speaker 5: But we're not going.
Speaker 11: To go back as low as where we've come from.
Speaker 11: And I do think we're going to get back to
Speaker 11: an environment we're having higher interest rates is more the
Speaker 11: norm than the environment we've come out of.
Speaker 2: One thing I want to ask you, and I think
Speaker 2: you know, we had the conversation that hey, folks, it
Speaker 2: was the low rate environment or zero rate environment, that
Speaker 2: was the abnormality. Yes, right, that what we're doing right
Speaker 2: now is getting back to normal. Having said that, you
Speaker 2: have a generation of investors advisors who were used to
Speaker 2: this dissiplationary environment. How does that, let me come back
Speaker 2: to you first, you know, how do we need to
Speaker 2: kind of address that? How do we have the smart
Speaker 2: conversation around that, you know, in terms of investing and
Speaker 2: what it means.
Speaker 11: So it's two ways, right, just sort of how we
Speaker 11: deal with it in our own organizations.
Speaker 5: We do.
Speaker 11: I'm sure you have it as well, Jenny, in our
Speaker 11: own organizations, people who have only been investors trained as
Speaker 11: investors this side of the GFC, of the generation that
Speaker 11: was also investing, well, good, Well, it's a lot of studies.
Speaker 12: And actually I call it the investor management is actually,
Speaker 12: thankfully an sector in which experience really matters, and you
Speaker 12: sort of do realize that they researching as cycles.
Speaker 11: But it does mean that we need to educate not
Speaker 11: only our own investors, but also our end clients in
Speaker 11: terms of what this type of environment and sort of
Speaker 11: having positive interest rates let's call it that means for
Speaker 11: investors and what it means for asset allocation. So we're
Speaker 11: spending a lot of time educating our end client, our advisors,
Speaker 11: but also our own, our own workforce.
Speaker 9: Jenny, your thoughts on that, well, I mean the reality
Speaker 9: is I think we're getting into what historically is a
Speaker 9: more normal interest rate environment, and if you look at it,
Speaker 9: you know the economy has actually been able to absorb
Speaker 9: the rates increases pretty well, uh.
Speaker 2: Pretty aggressive in the last year, right, yeah.
Speaker 10: Very aggressive.
Speaker 9: I mean I described to people as like, you know,
Speaker 9: of course you're going to see some slowing down data.
Speaker 9: They jammed on the brakes, right, you know exactly, it's whiplash.
Speaker 10: But we're also.
Speaker 9: In the camp and I caveat it with that Franklin Templeton.
Speaker 9: So we're one point six trillion, but we have we
Speaker 9: have five different uh CIOs who have slightly different views.
Speaker 9: Ci macro economic CIOs out have a slightly different view.
Speaker 10: So I'm gonna it's a little bit like there oh.
Speaker 9: Huge debate that matter of fact, that is insisted that,
Speaker 9: especially the ones that are the furthest apart to make
Speaker 9: sure that at least having an internal debate on it.
Speaker 9: But you know, I tend to and it's obviously converged
Speaker 9: over time, but you know, rates are higher for longer.
Speaker 9: The economy has definitely absorbed it pretty well. And you know,
Speaker 9: if I were to guests, I think it's maybe just
Speaker 9: one rate increase this year.
Speaker 11: But I think you're right because they're also to your
Speaker 11: earlier point. There continues to be inflationary pressure from animating
Speaker 11: from the supply chain as well.
Speaker 5: Right, So right, you look at also the conflicts around
Speaker 5: the world, which is putting pressure.
Speaker 11: Certainly we've seen this being based in London on our doorstep.
Speaker 11: We've seen it's an energy price, We've seen it in
Speaker 11: food prices.
Speaker 5: And it's coming down a bit.
Speaker 11: We're seeing that the Middle East conflict at the moment
Speaker 11: is also putting pressure on supply chain.
Speaker 5: You and I were talking.
Speaker 11: Earlier about aviation, Carol and flights. I mean, you can
Speaker 11: just simply fly or airlines can't have to reroot where
Speaker 11: they go. My flight, you know, anytime I go to
Speaker 11: Japan from long and it were now the flight is
Speaker 11: taking an extra two and a half hours because we're
Speaker 11: not going over Russia. So think about the cost of
Speaker 11: the time, the cost of fuel, and you know those
Speaker 11: costs will have to get passed on in the price
Speaker 11: of goods. So it's it's that inflationary pressure I think
Speaker 11: is still.
Speaker 10: There these big go ahead. I just go laugh.
Speaker 9: I was gonna say one of the advantages that all
Speaker 9: you have is you're from all different places in the US,
Speaker 9: because you know, sometimes you get I always say my
Speaker 9: mother was a doctor, and she said one thing that
Speaker 9: always bothered her as bad doctors is sometimes they didn't
Speaker 9: just look at what was in front of them. They
Speaker 9: always had to be proven through research. And sometimes it's
Speaker 9: obvious in front of you if you talk about the
Speaker 9: environment around you. I bought a truck for the farm
Speaker 9: this weekend. And I used to finance. I ran a
Speaker 9: financing company of autos, and so whenever I bought a car,
Speaker 9: I go into the dealership and say, show me your
Speaker 9: invoice and we'll start there and work our way up.
Speaker 9: It was let's start at manufacturers suggested retail price, and
Speaker 9: we'll tell you what fees we added. And it took
Speaker 9: me three months of walking out. I finally asked, somebody
Speaker 9: in California, can you see what you can get there?
Speaker 9: I was not going to buy a car for above MSRP.
Speaker 9: And you know what, in the end, I ended up
Speaker 9: doing that. Really, it has changed so much. And so
Speaker 9: you walk into a restaurant, are they still pretty full,
Speaker 9: you guys. You know, again, you only see where you're going,
Speaker 9: but as you ask each other around, it feels like
Speaker 9: it's still pretty robust out there.
Speaker 2: What concerns you do you have regarding the rise of
Speaker 2: nationalism and populism pushing us away from globalization and its
Speaker 2: effect on those emerging markets like what you folks are
Speaker 2: talking about feels like not going away anytime soon.
Speaker 10: Agreed.
Speaker 2: And that's inflationary, and that's inflationaty it.
Speaker 5: Is no, I agree as well. I mean it's a
Speaker 5: it's been a concern.
Speaker 11: Of mine and of ours for some time, this rise
Speaker 11: of nationalism, and also to benefit so our generation has
Speaker 11: already benefited from what I would call the peace dividend
Speaker 11: right sort of the Second World's War, and it was
Speaker 11: all about globalization. We all read the book The World
Speaker 11: Is Flat that came out, didn't you, Jenny, Yes, I
Speaker 11: did read some twenty years ago.
Speaker 5: But that is changing.
Speaker 11: We're all Jenny was talking about earlier we were all
Speaker 11: moving manufacturing to China. That is no longer happening with
Speaker 11: sort of reshoring, and that is adding to cost as well.
Speaker 11: So it's some mix of nationalism then a much more
Speaker 11: tense geopolitical environment as well. You throw that into the mix,
Speaker 11: and it is making for a much more combustible environment
Speaker 11: that I think will provide a challenge for corporates over
Speaker 11: the long term, notwithstanding what we're seeing.
Speaker 9: So just don't want to have hit on the debt piece,
Speaker 9: because again, let's go there. Yeah, I don't think we
Speaker 9: talk about it enough.
Speaker 2: So because there's a question wait wait wait wait wait
Speaker 2: wait wait, large debt has been an issue for a
Speaker 2: long time, but appears to we were to never how
Speaker 2: do we fix it?
Speaker 9: So it was funny because on Bloomberg this morning, they
Speaker 9: were like, well, come on, we've always always talked about that.
Speaker 2: Jenny listens to Blue Park, I love you all right,
Speaker 2: now you can go.
Speaker 9: You know, they were talking about, you know, come on,
Speaker 9: you know, we've always been an issue on.
Speaker 10: Debt and never seems to be a problem.
Speaker 9: Okay, Well, two thousand and seven, we had nine trillion
Speaker 9: dollars we're now I thought it was thirty three somebody
Speaker 9: thirty okay, thirty five trillion.
Speaker 2: One hundred and twenty percent of domestic product exactly.
Speaker 9: And then people say, well Japan's two fifty, and they're
Speaker 9: you know, okay, except our largest buyer of foreign debt
Speaker 9: is Japan at one point one trillion and China number
Speaker 9: two at eight hundred billion. Okay, we are not at
Speaker 9: thread of not being the reserve currency. We're going to
Speaker 9: continue to be to reserve currency because there's nowhere else
Speaker 9: SA anybody's going to go.
Speaker 2: That was Jenny Johnson, president and CEO at Franklin Templeton,
Speaker 2: along with Hanika Schmitt's senior executive vice president and global
Speaker 2: head of Investment Management over at B and Y Mellon.
Speaker 2: Catch that full conversation just had toymellon dot com.
Speaker 3: And that wraps up the first hour of the weekend
Speaker 3: edition of Bloomberg Business Week from Bloomberg Radio coming up
Speaker 3: in our next hour. Not easy being a CEO, especially
Speaker 3: in your first year. Enter Ty Wiggins, part coach, part
Speaker 3: cheerleader and part advisor.
Speaker 2: Plus women are increasingly stepping up to the tee golf tea.
Speaker 2: That is from the president of the PGA Tours superstore.
Speaker 2: And travelers. Yeah, they're still traveling. We'll talk about that
Speaker 2: with Hilton's CFO.
Speaker 3: And speaking of travel, why one hotelier is not putting
Speaker 3: guest needs first.
Speaker 2: I love this story. It's all coming Up. This is
Speaker 2: Bloomberg Business Week.
Speaker 1: You're listening to the Bloomberg Business Week podcast. Catch us
Speaker 1: live weekday afternoons from two to five pm Eastern Listen
Speaker 1: on Applecarplay and then Broud Auto with a Bloomberg Business
Speaker 1: act or watch us live on YouTube.
Speaker 2: Plenty Ahead in our second hour of the weekend edition
Speaker 2: of Bloomberg Business Week, including lessons from the top of
Speaker 2: the c suite with the author of the new CEO
Speaker 2: on the tips, tricks and mistakes to avoid for first
Speaker 2: time chief execs.
Speaker 3: Plus Hilton's CFO on opening two new properties every day,
Speaker 3: and our Pursuits team on the anti hotel and rise
Speaker 3: of regenerative tourism.
Speaker 2: Also move over, guys, okay, a record number of women
Speaker 2: are now hitting the green Jill Spiegel, president of the
Speaker 2: PGA Tour Superstore, on women taking on the game.
Speaker 3: First up this hour, you might recall that last month
Speaker 3: we got some news in the world of executive transitions, JB.
Speaker 3: Morgan CEO Jamie Diamond saying his succession was quote well
Speaker 3: on the way and could come sooner than five years.
Speaker 3: Morgan's Stanley chairman James Gorman has also announced he will
Speaker 3: seed his role at the end of the year.
Speaker 2: Managing CEO transitions can be a complex challenge for many businesses.
Speaker 2: Sometimes the new leader within their first few months, makes
Speaker 2: support decision or is unsuccessful in connecting with their employees
Speaker 2: or board. Bottom line tip not great.
Speaker 3: Enter ty Wiggins. His job is to guide CEOs through
Speaker 3: their first twelve to eighteen months, often acting part as
Speaker 3: a coach, part as a cheerleader, maybe a venting partner,
Speaker 3: a challenger, and always an advisor.
Speaker 2: I feel like I need one of those people, don't all?
Speaker 3: I mean, I know people who can be your challenger.
Speaker 2: You are I know lots? Actually all right, it's all though.
Speaker 2: In Tie's new book, it's entitled The New CEO Lessons
Speaker 2: from CEOs on how to Start Well and perform Quickly
Speaker 2: Minus the common Mistakes. Ty Wiggins is also Global lead
Speaker 2: of CEO and Executive Transition Practice at Russell Reynolds Associates
Speaker 2: and Executive Search Firm.
Speaker 13: The opportunity in the book here is to understand the
Speaker 13: pressures and the challenges that CEOs go through in their transition.
Speaker 13: And I think if you're a senior leader or an
Speaker 13: executive at an organization that's undergoing the CEO transition, the
Speaker 13: book will give you insight into how to best support
Speaker 13: and also slot in with with the new CEO.
Speaker 2: Well, you know, talk to us about who you talked
Speaker 2: to for this book to get some insight, and you
Speaker 2: know what is so important about maybe those first few days,
Speaker 2: first few weeks, first few months for CEO on the job,
Speaker 2: because I got to say, I feel like CEOs move
Speaker 2: around a lot as of late, and especially if it's
Speaker 2: a publicly held company and the stock isn't doing well,
Speaker 2: Activists are out there or media is all over it,
Speaker 2: and there's a lot of pressure now.
Speaker 13: In terms of the book, interviewed close to forty CEOs
Speaker 13: and then had the opportunity to speak to CEOs such
Speaker 13: as from on the Glider of PepsiCo and Hantzpsburg of Verizon,
Speaker 13: Carol Tomato of UPS and a string of others that
Speaker 13: are so cited in the book. You're right, CEO tenures
Speaker 13: are decreasing, which puts pressure on this early period in
Speaker 13: order to get a good start. And I think some
Speaker 13: of the early actions that CEOs take need to be
Speaker 13: really well thought through. We know that some key factors
Speaker 13: are the state of the business that they inherit, how
Speaker 13: quickly they assemble the right senior leadership team around them,
Speaker 13: and importantly what the former CEO does and how that
Speaker 13: individual leaves the organization.
Speaker 2: Share with us. Though, in some of the conversations that
Speaker 2: you had with CEOs, what did you get from them
Speaker 2: about that first year?
Speaker 8: A lot of humility, which was really good to hear.
Speaker 8: I mean, these are great CEOs, as.
Speaker 13: You've mentioned, and you know, some of them came internally
Speaker 13: within the organization, and I think there was a common
Speaker 13: thread around how difficult the CEO role is, how there's
Speaker 13: no real sandbox for it in terms of getting ready.
Speaker 8: It's a shock. We've talked about the.
Speaker 13: Loneliness a lot across different medias, and it's an actual
Speaker 13: issue for a lot of CEOs.
Speaker 8: And the responsibility.
Speaker 13: You know, when I asked what the best and worst
Speaker 13: part about being a CEO is, often the answers are same.
Speaker 8: The responsibility. You know, these are individuals that want the responsibility.
Speaker 13: That want to lead, They want to have an impact
Speaker 13: on the organization in their community, but they also feel
Speaker 13: the weight of that responsibility in terms of being responsible
Speaker 13: for the financials. But also you know, there are employees,
Speaker 13: their employees, families, et cetera. In terms of the market
Speaker 13: and the communities that they lead.
Speaker 2: What do you think about like those CEOs that are
Speaker 2: at a company leave and then they come back, like
Speaker 2: a Bob Iger, you know, Disney Revere, more like a
Speaker 2: Howard Schultz or a Howard Schultz right come back and
Speaker 2: you know their track record was incredible when they left,
Speaker 2: certainly by byger right and then came back into a
Speaker 2: situation where the company was under some pressure because if
Speaker 2: it's streaming, pivot and so on and so forth, you know,
Speaker 2: is he like kind of starting from scratch again a
Speaker 2: little bit because some of the dynamics have changed.
Speaker 13: I think it's you know, to have CEO return, you know,
Speaker 13: depending on the individual and the organization, it can represent
Speaker 13: a number of things in terms of a succession that
Speaker 13: hasn't been successful. It obviously shows a passion and a
Speaker 13: love for the organization to come back.
Speaker 6: You know.
Speaker 13: In many cases it's disruptive depending on the time period,
Speaker 13: you know, because we do expect the new CEO.
Speaker 8: To see the world differently and to take a new
Speaker 8: long term view of the organization.
Speaker 13: So if there are changes that need to be reversed,
Speaker 13: that could be a little bit unsettling.
Speaker 8: But I think for the individuals involved.
Speaker 13: You know, I think if they're leaving at the right
Speaker 13: time in their career, then you know, I think it's
Speaker 13: less than ideal for them to need to return. But
Speaker 13: each individual case will be different.
Speaker 3: Ty, We've heard criticisms about boards being too close to
Speaker 3: their CEOs. Tesla, for example, one of the board members
Speaker 3: there is Kimball Musk Elon Musk's brother. Are boards too
Speaker 3: close to their CEOs? Shouldn't they be more independent from
Speaker 3: one another? They're supposed to keep them honest.
Speaker 8: Right, absolutely?
Speaker 13: I mean the board, the board role is crucial to
Speaker 13: the governance of the organization and they do play a
Speaker 13: specific role in One of those key roles that they
Speaker 13: player is to hire and fire the CEO, And so
Speaker 13: this is any CEO transition lands heavily on the board
Speaker 13: as well as all groups of individuals, and you know,
Speaker 13: within organizations, it can be quite a challenge to continue
Speaker 13: to maintain that independence, especially when you have a very successful,
Speaker 13: very dominant CEO.
Speaker 3: Should CEOs be allowed to serve as chairs of boards
Speaker 3: in your opinion.
Speaker 13: Well, I think it's common practice in a lot of organizations,
Speaker 13: especially in the United States. In other countries it's less
Speaker 13: common I think as long as there is an independent
Speaker 13: senior director to provide that council, that support and that challenge,
Speaker 13: it does allow CEOs to move with greater pace. So
Speaker 13: if the organization is in trouble, then that allows for
Speaker 13: quicker decision making. But I think that if we look
Speaker 13: at the independence that we require, there's argument for the
Speaker 13: CEO to be separate to the chair role.
Speaker 2: Having said that, is there a common mistake in talking
Speaker 2: to CEOs that you find that they all say, this
Speaker 2: is the one I made? Is there a common mistake
Speaker 2: among them?
Speaker 13: The common mistake is generally around something that they say
Speaker 13: in a fairly public environment or an early action that
Speaker 13: they make without enough context and without enough information. And
Speaker 13: this is a question that comes up a lot, and
Speaker 13: the answer is, really it's any mistake that causes the
Speaker 13: board to doubt and to and where you might lose
Speaker 13: the confidence of the board because that obviously significantly impacts
Speaker 13: your tenure and your ability to delay the longer term.
Speaker 2: Hey, you know this kind of spoke to us. There
Speaker 2: is a section of the book about dealing with the
Speaker 2: street and here we are, you know, coming off an
Speaker 2: earning season, but we're always thinking about the next one.
Speaker 2: But you do talk about Mark Klaus, who was CEO
Speaker 2: at Pinnacle before joining Campbell's and just the level of
Speaker 2: engagement and communicating with investors when he got to Campbell.
Speaker 2: I mean, that's that can be a big thing and
Speaker 2: kind of a real eye opener, right for CEOs who
Speaker 2: are early and on the job.
Speaker 13: Absolutely, unless you've been a CIO or a CFO and
Speaker 13: had you know, extensive experience, the the investor relations will
Speaker 13: be fairly new and it's a challenging period of time.
Speaker 13: You know, the people will often underestimate the amount of
Speaker 13: preparation that goes into delivering results and doing the investor
Speaker 13: road shows and you know, trying to form that relationship
Speaker 13: really early to get buy into you know, what you're
Speaker 13: planning to do and what you're thinking about doing, so
Speaker 13: you know, this is where it's really important that you
Speaker 13: surround yourself with good IR people and you know, people.
Speaker 8: To support you in those conversations.
Speaker 13: And you know, if it's early in your tenure that
Speaker 13: you deliver results, then you have a little bit of
Speaker 13: grace and you should take full advantage of that.
Speaker 2: Hey, one of the things that we wanted to get
Speaker 2: into and Tim is and are prepping for this, Tim
Speaker 2: you kind of highlighted this, But executive compensation, CEO compensation.
Speaker 2: I mean, I think about sometimes when there's a company
Speaker 2: in trouble, right Peloton, you know, and you have Barry
Speaker 2: McCarthy comes in. He just stepped down his Peloton. CEO
Speaker 2: had total compensation one hundred and sixty eight million dollars
Speaker 2: in twenty twenty two. To be fair, most of that
Speaker 2: compensation ninety nine point seven was option awards, so tied
Speaker 2: to the company stock price. But it's a lot of
Speaker 2: money for a company that's you know, got a dwindling
Speaker 2: market cap. I think barely over a billion here at
Speaker 2: this point. You know, it's an like, I hear what
Speaker 2: you like. It can be a tough job. I understand
Speaker 2: there's a lot that comes out of CEO today, but
Speaker 2: it does feel like they're taken care of.
Speaker 13: Yeah, compensation is not an area that I get involved in.
Speaker 13: I know that it's a contested issue. I know that
Speaker 13: the CEOs that I work with certainly are really aware
Speaker 13: of that in terms of their role, you know, And
Speaker 13: you know, it's nice to it's nice to think that
Speaker 13: the people that I work with, especially, you know, this
Speaker 13: is not the driving force for what they're doing, why
Speaker 13: they're doing what they're doing. Oh, and it is really
Speaker 13: about the opportunity to have an impact over such a
Speaker 13: large group of individuals and a responsibility and I guess
Speaker 13: a belief that they can do better and make improvements
Speaker 13: and you know, really serve. So you know, again, you know,
Speaker 13: I probably have a privileged group, but that's not the
Speaker 13: key driver for why they're doing what they're doing.
Speaker 2: Hey, one of the things they do want to go
Speaker 2: to is chapter eleven, if I could do it all
Speaker 2: over again, and you share a collection of pieces of
Speaker 2: advice from some of the CEOs you talk to.
Speaker 13: Yeah, when when people reflect on their their time early
Speaker 13: in their CEO role, there's a couple of things that
Speaker 13: come up, you know, most often, the most popular is
Speaker 13: that they would move faster on their executive leadership team.
Speaker 8: You know, being CEO is a role you can't do
Speaker 8: on your own.
Speaker 13: You must have the right people around and for a
Speaker 13: bunch of reasons, you know, we don't move as.
Speaker 8: Quickly as necessarily.
Speaker 13: Our gut is telling us to move, and there are
Speaker 13: other restrictions in terms of momentum.
Speaker 8: So the first is that they would move faster.
Speaker 13: The second is that they would engage the board more
Speaker 13: effectively and earlier, so similar to dealing with the street.
Speaker 13: You know, working with a board for the first time
Speaker 13: as CEO, not as an a senior executive is quite
Speaker 13: a ship and it usually spend more time on board
Speaker 13: and board related activities in your first year than you expect,
Speaker 13: so you really need to factor that in.
Speaker 8: And the third is that they.
Speaker 13: Would flex their leadership style more so they hang on
Speaker 13: to some of the things that served them well before
Speaker 13: without really accepting and stepping into the full gamut of
Speaker 13: the CEO role, accepting the good and the bad parts
Speaker 13: of it. In terms of driving the outcomes that they
Speaker 13: that they know they need to deliver based on what
Speaker 13: they've promised the organization and the board and the market.
Speaker 13: This is one of the things that you see second
Speaker 13: time CEO is doing much better than first time CEOs.
Speaker 13: Is this pre contracting with the board is outlining, you know,
Speaker 13: this conversation of when not if I want to make
Speaker 13: a significant change or point the organization in a different direction,
Speaker 13: how are you going to respond and enhance this case,
Speaker 13: he was really keen to make sure he didn't get
Speaker 13: six or twelve months down the track and have the
Speaker 13: board say I didn't know you were going to do
Speaker 13: this or I didn't know you were going to do that,
Speaker 13: and it was really key to him moving fast exactly.
Speaker 2: Hey, is Elon one of the new CEOs?
Speaker 5: In your view?
Speaker 8: I think he's a different CEO?
Speaker 13: Well, I think there's you know, there are very few
Speaker 13: individuals like him, and you know, in many ways the
Speaker 13: impact and influence has had in his space. Yeah, I
Speaker 13: would say he's definitely in that new category.
Speaker 3: That was Ty Wiggins, Global Lead of CEO and Executive
Speaker 3: Transition Practice at Russell Reynolds Associates his book The New
Speaker 3: CEO Lessons from CEOs on how to Start well and
Speaker 3: perform Quickly.
Speaker 2: You're listening to Bloomberg Business Week coming up Revenge Travel?
Speaker 2: Is it losing its appeal? Are travelers still booking that
Speaker 2: wellness trip to Dubai? Are you Tim Nope? Okay, Well,
Speaker 2: we'll see what the Hilton CFO Kevin Jacobs has to
Speaker 2: say about all.
Speaker 3: Of this, plus golf's growing interests from women since the pandemic.
Speaker 3: A member of the PGA team shares more. On the
Speaker 3: other side, this is Bloomberg.
Speaker 1: You're listening to the Bloomberg Business Week Podcast. Listen live
Speaker 1: each weekday starting at two pm Eastern on applecar Play
Speaker 1: and Android Auto with the Bloomberg Business App. You can
Speaker 1: also listen live on Amazon Alexa from our flagship New
Speaker 1: York station, Just Say Alexa, Play Bloomberg eleven thirty Bloomberg Opinions.
Speaker 2: Andrea Fels did writing this past week that after three
Speaker 2: years of rushing to book trips in the week of
Speaker 2: pandemic era strictions sharply hire fares, protests against tourism, fatigue
Speaker 2: from endless hours spent at airports, and income squeeze by
Speaker 2: inflation are all taking their toll.
Speaker 3: That was top of mind when Kevin Jacobs joined US.
Speaker 3: He's president and CFO over at Hilton at Worldwide Holdings
Speaker 3: home of course, to twenty three brands, including Hilton Hotels
Speaker 3: and Resorts, Waldorf Astoria, Hampton, Double Tree, Embassy Suites, and
Speaker 3: new brands like Spark by Hilton and Live Smart Studios
Speaker 3: by Hilton.
Speaker 14: I think leisure travel has been normalizing off of kind
Speaker 14: of the boom that it had during COVID, but we're
Speaker 14: still seeing growing demand for travel, and in fact, most
Speaker 14: people expect the summer travel season to be quite strong,
Speaker 14: and you know, business travel is coming back and Group
Speaker 14: actually is leading the way, which wasn't the case during COVID,
Speaker 14: But you now have a lot of pent up demand
Speaker 14: for meetings and events that is fueling growth in our
Speaker 14: business as well.
Speaker 15: So we're still seeing trends.
Speaker 14: You know, certainly same store sales growth is not going
Speaker 14: to be what it was last year, but it's still
Speaker 14: going to be quite strong for this year going forward.
Speaker 3: Where are you seeing the best growth, the biggest growth,
Speaker 3: like which portion of the hotel properties or which brands
Speaker 3: are seeing the best growth.
Speaker 14: Well, if you think, I mean really all of the
Speaker 14: brands are seeing the best growth, the higher segments are
Speaker 14: growing better than the really lower segments at the moment,
Speaker 14: and our same store sales outlook as two to four
Speaker 14: percent for the year, and we think the US will
Speaker 14: be sort of at the lower end of that range
Speaker 14: and everywhere else outside of the US will kind of
Speaker 14: be at the higher end of that range. So international
Speaker 14: growth is still a bit stronger than the US, but
Speaker 14: still growing, you know, reasonably well, like kind of low
Speaker 14: single digit same store sales.
Speaker 3: Growth, So you're seeing sort of the same growth, whether
Speaker 3: we're talking sort of the budget lower end brands in
Speaker 3: the portfolio versus the high end brands in the portfolio.
Speaker 16: Well, in our portfolio, we don't have a lot of budget.
Speaker 14: We have a premium economy brand that you mentioned called Spark,
Speaker 14: and we're really not as distributed at the really low segments,
Speaker 14: which you know, they've been.
Speaker 16: A little bit weaker, but that's a lot of that has.
Speaker 14: To do with more difficult comparables to last year because
Speaker 14: they were quite strong, and there's a little bit of
Speaker 14: an effect of that consumer sort of slowing down a
Speaker 14: little bit, but mostly across our growth is pretty consistent
Speaker 14: across the segments that we operate.
Speaker 2: Any signs of softness are folks trading down at all.
Speaker 16: We're not seeing trade down and we're not.
Speaker 14: Really again, other than the really low end of the business,
Speaker 14: which is a little bit lower than where we operate,
Speaker 14: we're really not seeing the consumer pullback. The consumer still feels,
Speaker 14: you know, really solid.
Speaker 10: All right.
Speaker 2: We know you guys have a ton of properties, about
Speaker 2: seventy five hundred properties including time shares. I think that
Speaker 2: was at the end of last year. I think when
Speaker 2: I was checking some of the data points, you own
Speaker 2: a small amount, you manage a bunch the bulk though,
Speaker 2: is franchise ease. What's top of mind for your franchies
Speaker 2: French cheese. They're not franchiese. That's like a grilled cheese sandwich.
Speaker 2: Franchisee owners, I'm a little hungry. What are their stress points?
Speaker 2: And again, does the growth cut of mirror or the
Speaker 2: upside mirror what you are telling us that you've already
Speaker 2: kind of shared with us.
Speaker 14: Yeah, I mean, like you said, you know, upwards of
Speaker 14: eighty percent of our hotels now, our franchises are are
Speaker 14: you know, we manage a bunch of hotels and our
Speaker 14: ownership segment is quite small, but you know, they're Our
Speaker 14: outlook is quite good. Our you know, our construction starts,
Speaker 14: you know, so new development. First of all, we think
Speaker 14: we're going to open will open nearly two hotels per
Speaker 14: day this year, right, So our prospects for growth are
Speaker 14: quite strong. Most of our franchisees are seeing the same
Speaker 14: thing we're seeing. The prospects for development are quite good.
Speaker 14: Our construction starts, so new hotels going under development was
Speaker 14: up forty five percent in the first quarter. We think
Speaker 14: that will continue to be up this year, and we
Speaker 14: actually we think we'll start more rooms under construction this
Speaker 14: year than we did pre pandemic.
Speaker 16: So I think, you know, look, it's not it's not
Speaker 16: equal everywhere.
Speaker 14: And you know, our franchises are looking at prospects for
Speaker 14: revenue growth. They're thinking about their cost profile, right because
Speaker 14: with this great inflation that has fueled the revenue in
Speaker 14: our business, you know, there's cost inflation. So we're working
Speaker 14: with them to think about how to drive incrementals cost
Speaker 14: savings in the hotels. But generally speaking, our owners and
Speaker 14: franchises are quite fullish as well.
Speaker 2: We want to talk a bit more about the cost equation,
Speaker 2: but I want to go back to that, you know,
Speaker 2: two new hotels every day. You guys did come out
Speaker 2: with some news about expanding your lifestyle portfolio, doubling it
Speaker 2: to seven hundred hotels within the next four years. How come?
Speaker 2: How and where? Like, where are you doubling? Where are
Speaker 2: you opening two new hotels every day?
Speaker 14: Well, it's really across the globe, and so yeah, we
Speaker 14: put out a press release about our growth and lifestyle
Speaker 14: we're celebrating our tenth anniversary in the lifestyle space. The
Speaker 14: lifestyle segment broadly has grown fifty percent over the last
Speaker 14: five years, and it's been double. The addition the additional
Speaker 14: hotel count and lifestyle hotels has been double out of
Speaker 14: the broader industry. So these are very popular type brands.
Speaker 14: We've been in the space for a while. We recently
Speaker 14: acquired the Graduate brand, and we entered into a joint
Speaker 14: venture with another group to bring the Nomad brand, which
Speaker 14: is a luxury lifestyle brand, into our portfolio. So we
Speaker 14: now have six great lifestyle brands. And yeah, we think
Speaker 14: we can go from what we have three hundred and
Speaker 14: fifty lifestyle hotels today. We think we'll have seven hundred
Speaker 14: within the next four years and the growth will really
Speaker 14: be around the world.
Speaker 3: So, Kevin, how do you make sure that the new
Speaker 3: properties that you add, as you mentioned two new hotels
Speaker 3: per day around the world, how do you make sure
Speaker 3: that the franchisees are geographically protected from competing with Hilton
Speaker 3: and other owners of Hilton when they're out there.
Speaker 15: Well, yeah, I mean we're pretty careful.
Speaker 14: Look where the interests are aligned, right, one hundred nearly
Speaker 14: virtually one hundred percent of the capital.
Speaker 15: For our growth comes from other.
Speaker 14: From hotel and people investing in hotels, either building new
Speaker 14: hotels or buying hotels and affiliating with them in our brands,
Speaker 14: and we're invested in their success because if they're successful,
Speaker 14: then they will choose us for their next deals, and
Speaker 14: that that obviously enhances our growth rate. And so the
Speaker 14: way you do it is you're you know, you're just
Speaker 14: very careful. We work with each and on each and
Speaker 14: every new hotel deal, we work with our partners to
Speaker 14: find the right locations for the right brands, and and
Speaker 14: we we want and need each of our hotels to
Speaker 14: be successful.
Speaker 15: So it's sort of it's it's pretty self regulating.
Speaker 14: Interests are aligned, and none of us want to put
Speaker 14: a hotel, you know, on top of another hotel where
Speaker 14: they're going to.
Speaker 15: Compete too much.
Speaker 14: And the reality is is we it's up to us
Speaker 14: to keep growing our customer base, having our brands be
Speaker 14: strong and driving that premium for fom rmans so that
Speaker 14: our owners make more money when they invest with us,
Speaker 14: And if they make more money when they invest with us,
Speaker 14: then they'll choose us for our next deals for their
Speaker 14: next deals, excuse me, which which enhances our growth rate.
Speaker 2: Hey, Kevin, our Bloomberg intelligence team of analysts, noting that
Speaker 2: you guys cleared your debt maturity schedule before twenty twenty five,
Speaker 2: the majority now do in twenty twenty eight and beyond
Speaker 2: cushioning it against sector headwind So it sounds like it
Speaker 2: really gives you, guys, really some you know, freedom to
Speaker 2: move around no matter what might happen in the economic environment,
Speaker 2: at least for a couple of years.
Speaker 16: Is that fair.
Speaker 14: We've always been focused on financial flexibility, right, So it's
Speaker 14: not just the ultimate quantum of our debt or the
Speaker 14: cost of our debt, which of course we care about
Speaker 14: a lot, but we're always looking for opportunities to push maturity.
Speaker 14: We have one small maturity in twenty twenty five, and
Speaker 14: then and then we don't have maturities for a while,
Speaker 14: and that served us well in COVID, you know, and
Speaker 14: COVID when our revenues went to year zero, we didn't
Speaker 14: need to amend our credit facility because we didn't have
Speaker 14: any near term maturities. We didn't breach any covenants and
Speaker 14: always been leally focused on financial flexibilities.
Speaker 3: That's Kevin Jacobs, President and CFO at Hilton Worldwide Holdings.
Speaker 2: So Hilton is home to golf properties in case you
Speaker 2: didn't know, and increasingly you may find more women playing
Speaker 2: on those properties. Thanks to the pandemic, more women are
Speaker 2: engaging in the sport.
Speaker 3: The National Golf Federation reported last year that one of
Speaker 3: the most notable aspects of the pandemic driven rise in
Speaker 3: participation over the previous three years was the influx of
Speaker 3: women and girls. It noted that there are about six
Speaker 3: point four million female golfers. That's up from five point
Speaker 3: six million in twenty nineteen, with the female golfer pool
Speaker 3: jumping fifteen percent compared to a two percent lift among
Speaker 3: male golfers.
Speaker 2: All right, so that brings us to the Women's US Open,
Speaker 2: which wrapped up last Sunday at the Lancaster Country Club
Speaker 2: in Pennsylvania. We talked with Jill Spiegel, president of the
Speaker 2: PGA Tour Superstore, ahead of the final round.
Speaker 17: Really fun to watch twenty six percent of all golfers
Speaker 17: or women, and sixty percent a lot of new people
Speaker 17: came into the game, and sixty percent of new golf
Speaker 17: that came into the game over the last few years
Speaker 17: have been women. So we we anticipate that twenty six
Speaker 17: percent climbing over thirty here in the new future. And
Speaker 17: what's really exciting as well is, you know, over forty
Speaker 17: percent of eighteen and under golfers or girls, which is great.
Speaker 17: So that trend is going to continue, and it's really
Speaker 17: exciting to see not only in women's golf, but in
Speaker 17: women's sports in general. You know, if you look back
Speaker 17: just a couple of months ago with the craziness around
Speaker 17: Caitlin Clark and how that's translated into the w MBA,
Speaker 17: it's it's really exciting. And you know, viewership is much
Speaker 17: much higher on the LPGA and twelve. You know, the
Speaker 17: media consumption is twelve million viewers a week versus just
Speaker 17: what was just four million a few years ago, So
Speaker 17: it's really fun to watch. We are very supportive of
Speaker 17: the female customer in our stores. In several of our
Speaker 17: locations we lead with women's apparel, and our resort locations
Speaker 17: we actually saw more women's apparel and men's apparel. So
Speaker 17: it's always been an important business for us, but we're
Speaker 17: continuing to really focus on it and continue to grow it.
Speaker 17: And you know, if it's twenty six percent of the business,
Speaker 17: we want it to be thirty five forty percent of ownership.
Speaker 2: I wanted to take a step back. Why do you
Speaker 2: think more women, more girls in particular, are engaged. What
Speaker 2: is it particularly, is there a player? Is it like,
Speaker 2: what's going on?
Speaker 17: Well, you do have that, I mean you have you know,
Speaker 17: you have Nelly Corda, which has been amazing to watch.
Speaker 17: You know, she's won six of our last seven tournaments.
Speaker 17: And I think, you know, I think COVID was really
Speaker 17: good to the golf industry in general, and I think
Speaker 17: it attracted more women at the time. You know, people people,
Speaker 17: you know, adults who were working from home, had more flexibility.
Speaker 17: And we're getting out on the course and you're seeing
Speaker 17: the demographs changing a lot, which is nice. You know,
Speaker 17: it used to be middle aged white men, and you're
Speaker 17: you're seeing not only are you seeing more women, but
Speaker 17: you're seeing more people of color and a lot more youth.
Speaker 17: So it feels more accessible, more fun. It's you know,
Speaker 17: I think golf can be very intimidating if you're new
Speaker 17: to it, and I think some of those barriers are
Speaker 17: getting broken down, and I think it's a little more
Speaker 17: casual than it was.
Speaker 3: I'm wondering about how much that growth from the COVID
Speaker 3: era has continued. I think of I'm a cyclist, and
Speaker 3: I think the cycling industry got a huge boon during COVID,
Speaker 3: but it is just getting crushed right now. Some sports
Speaker 3: are not seeing that bump continue. What can you tell
Speaker 3: us about golf?
Speaker 17: Well, it's a really good question, and you know, we
Speaker 17: you quote us some stats from the NGNGF and we
Speaker 17: look at it closely too. And twenty twenty three, you know,
Speaker 17: twenty twenty and twenty twenty one were record years, and
Speaker 17: the last four years rounds of golf have been at
Speaker 17: an all time high, with twenty three at a peak.
Speaker 17: Over it, five hundred and thirty million people. Rounds of
Speaker 17: golf were played and participation was almost twenty seven million,
Speaker 17: and twenty twenty four rounds of golf are up over
Speaker 17: twenty twenty three. So we were all holding our breath.
Speaker 17: You know, our business doubled during COVID, which is tremendous,
Speaker 17: and we were thinking, you know, when is the air
Speaker 17: going to come out of this balloon? And it really
Speaker 17: hasn't happened. Industry has never been healthier. And what's exciting
Speaker 17: to see too is not only are people playing golf
Speaker 17: on the golf course, more people are actually playing off
Speaker 17: course golf. And when I talk about off course, what
Speaker 17: I mean is simulate our golf. They're either going into
Speaker 17: a five iron or a top golf and ten percent
Speaker 17: of those people are converting to green grass golf. So
Speaker 17: it's the growth continues in your right. There's a lot
Speaker 17: of sports that saw a huge fightering COVID and they're
Speaker 17: regressing down. In golf, recreational golf has never never been happier,
Speaker 17: you know, healthier. One in nine people are playing golf,
Speaker 17: and the beauty of it is all ages can play,
Speaker 17: all abilities can play, and you can play together regardless
Speaker 17: of your skill level. Now it's you know, people are
Speaker 17: sparking an interest and we're seeing in our business. You know,
Speaker 17: the technology business is really really healthy, and the simulator
Speaker 17: business is healthy. And you know there's a launch of
Speaker 17: an interactive league this starting this January with professional golfers
Speaker 17: called TGL, and it's you're going to see that the
Speaker 17: you know, twenty four of the top players on tour
Speaker 17: playing simulator golf down in Florida on Monday nights.
Speaker 3: That's really cool.
Speaker 17: There's a former surgeence of different ways you can take
Speaker 17: in the sport and simulator golf doesn't take four hours,
Speaker 17: and you know, you can play it in a couple
Speaker 17: hours or an hour. Even so, it's opening it up
Speaker 17: for and making it more welcoming, you know, without the
Speaker 17: time commitment.
Speaker 3: That was Jill Spiegel, president of the PGA Tourist Superstore.
Speaker 2: Still ahead on Bloomberg Business Week. The hotel ya that
Speaker 2: says it's time to stop putting guest needs first. And
Speaker 2: on the flip side, the hotels that are finally prioritizing
Speaker 2: one significant group of travelers.
Speaker 3: It's coming up in pursuits. This is Bloomberg.
Speaker 1: You're listening to the Bloomberg Business Week podcast. Catch us
Speaker 1: live weekday afternoons from two to five pm Eastern. Listen
Speaker 1: on Apple car Play and and brout Auto with a
Speaker 1: Bloomberg Business apt or watch us live on YouTube.
Speaker 2: The hotel with no front desk, no keys, no set
Speaker 2: check in and if you get hungry, well the local
Speaker 2: villagers will cook for you. Sorry, guests, your needs are
Speaker 2: not really top priority. Contrast that Tim props with hotels
Speaker 2: definitely and finally putting one group of travelers first.
Speaker 3: And once you get to a hotel in New York City,
Speaker 3: how about the best shows to see? You know, it's
Speaker 3: time for Bloomberg Pursuits with us. The editor of Bloomberg
Speaker 3: pursuits Chris Rouser and at Bloomberg News, travel reporter Lily Germa. Chris,
Speaker 3: I want to start with this great story that Lily
Speaker 3: wrote about hotels finally catering to neurodivergent travelers. First, I
Speaker 3: think the term neurodivergence is not on everyone's radar, So
Speaker 3: talk a little bit about that.
Speaker 18: Yeah, I think, I mean that's that's a great point actually,
Speaker 18: and I think if you know, sometimes you can put
Speaker 18: us something like that in a headline, people say, oh,
Speaker 18: I don't know what that means, So that you know
Speaker 18: that that means it's a whole spectrum of things, you know,
Speaker 18: from people experience autism to other disorders, and it means
Speaker 18: that going through the world can be quite different. And
Speaker 18: in Lily's story, we talk about how seventy eight percent
Speaker 18: of individual or families who experienced neurodiversity don't travel. They
Speaker 18: just don't bother. This is specifically aesism actually, and that
Speaker 18: means because loud noises can be a problem, textures can
Speaker 18: be a problem, lots of people can be a problem,
Speaker 18: and it can be such a headache that you know,
Speaker 18: families just stay home because it feels safer and it
Speaker 18: feels easier, and finally, some hotels are figuring out how
Speaker 18: to make travel easier so that families who want to
Speaker 18: try it and want to see the world can actually
Speaker 18: do it.
Speaker 2: I love it because for kids it's so important, whoever
Speaker 2: they are, whatever their background, whatever you know they are
Speaker 2: dealing with, it's really good to experience life in some way. So, Lily,
Speaker 2: I'm curious how this story came up on your radar,
Speaker 2: and then talk to us a little bit about what
Speaker 2: hotels are doing.
Speaker 19: Sure, so, I noticed that hotels were increasingly getting their
Speaker 19: staff certified to you know, understand how to handle and
Speaker 19: how to serve nearro divergent families. And there were a
Speaker 19: couple of surveys that came out in April from Hyatt Hotels,
Speaker 19: and I thought, well, this is interesting. It seemed like
Speaker 19: to be a bigger push. And that's pretty much what's
Speaker 19: been happening with some of the larger hotel brands, including
Speaker 19: Virgin Hotels, Hyatt Hotels, some of the resort brands in
Speaker 19: the Caribbean, such as Charisma Hotels, and they are going
Speaker 19: to a couple of different certification bodies to train their
Speaker 19: staff and know how to handle, you know, any situations
Speaker 19: that come up at the hotel or understand what the
Speaker 19: need might be for NewYork virgen families. So I thought, well,
Speaker 19: this is interesting. It seems to be gaining traction, and
Speaker 19: I learned quite a bit as the research unfolded.
Speaker 3: Yeah, so, Lily, I'm really interested in not just the hotels,
Speaker 3: but the travel agencies that have sprung up around this.
Speaker 3: Tell us about Magical Storybook Travels.
Speaker 19: Yeah, so, Magical Storybook Travels is led by this lady
Speaker 19: who early on discovered that her son had ad adhd
Speaker 19: and didn't really know, you know, how she would continue
Speaker 19: to travel. And when she asked her peers, they were
Speaker 19: all like, well, we just don't go anywhere. And she
Speaker 19: didn't want that to be her story for her family,
Speaker 19: and so she set up this agency and she trains
Speaker 19: basically families to be ready to handle their first vacation.
Speaker 19: And that includes several meetings you know what she calls
Speaker 19: you know, pre travel counseling, where they sit together and
Speaker 19: she goes over what works for them day to day
Speaker 19: in their you know, regular routine, what doesn't work, what's
Speaker 19: a trigger And once they go all over all of
Speaker 19: that and she starts getting ideas together for them of
Speaker 19: where they could go, and she usually recommends certified hotels
Speaker 19: or destinations that she thinks they could handle. But sometimes
Speaker 19: they want to go to Disney World, so that definitely requires,
Speaker 19: you know, ideas on how they could handle a whole
Speaker 19: vacation there. And what she does is she tells them
Speaker 19: to go and spend the night at Grandma's for example,
Speaker 19: you know, get used to doing something different away from home.
Speaker 19: I think it really is a long process.
Speaker 18: Yeah, and she knows, you know, for the hotels that
Speaker 18: she recommends, right Lily, is she that she can provide
Speaker 18: video tours or show them video tours. She knows four plans.
Speaker 18: You know, she knows about sensory triggers that she can
Speaker 18: tell people about and she you know that really helps.
Speaker 18: All that prep really is means everything.
Speaker 19: Yes, absolutely, she did mention that was a big part
Speaker 19: of her work was the video tours for the kid
Speaker 19: to be able to visualize himself or herself in its place,
Speaker 19: you know, so that's a part of her job as well.
Speaker 2: You know what's interesting too, I was thinking, like what
Speaker 2: about things like a Disneyland or a Universal park where
Speaker 2: I think you know, any of us who've got kids
Speaker 2: like one of the best things is taking her kids
Speaker 2: to like experience at Lego Land. You know, I know
Speaker 2: Tim went are with this on like I just think
Speaker 2: how magical that is. Are they those types of institutions,
Speaker 2: those companies, those types of experiences. Are they warming up
Speaker 2: to this and providing opportunities for kids?
Speaker 19: So what I understand Legoland is one of them. Disney World,
Speaker 19: that's from what I from what the travel agent told me.
Speaker 19: Their hotels are not doing so well in this in
Speaker 19: this area, but the actual parks are. So that's an interesting,
Speaker 19: you know, a differentiating factor. But yes, some of them
Speaker 19: are warming up to it. I will say that, you know,
Speaker 19: I could say about two hundred of them have been
Speaker 19: certified with IBCCS, which is one of the main bodies.
Speaker 19: Maybe one hundred more with another one. But it's generally
Speaker 19: it's you know, it's it's not enough, and I think
Speaker 19: that it should really speed up.
Speaker 2: I think what's interesting too is when you write about
Speaker 2: it in the story about employees really becoming sensitive to
Speaker 2: families and their needs so that they can help parents
Speaker 2: when their kids need assistance, you know, whether there's a
Speaker 2: meltdown or something, and helping with other people you know
Speaker 2: in the general public who always think they know better
Speaker 2: and they really don't necessarily.
Speaker 19: Yeah, that was really eye opening for me as well,
Speaker 19: because a lot of times you might see, you know,
Speaker 19: a kid having what we call it tantrum, but really
Speaker 19: it's not behaviorally right cause it's a neurosensitive condition, all right, So.
Speaker 2: We want to go from finally meeting the needs of
Speaker 2: an underserved group to another approach and hospitality about stopping
Speaker 2: putting guests needs first. I love this story. It's kind
Speaker 2: of a place I want to go, although I don't
Speaker 2: think I can afford it. Chris tell us though about
Speaker 2: this story, and I don't know the pitch or how
Speaker 2: it can.
Speaker 5: Yeah.
Speaker 18: So, first of all, you know, Lily, as you may
Speaker 18: have noticed, is an expert on sensitive travel, and she
Speaker 18: has a column that we've recently started with Pursuits called
Speaker 18: the Better Travel Bureau, where we talk about the business
Speaker 18: of making tourism more equitable, more inclusive, and less harmful
Speaker 18: to the environment. And we talk about the people, you know,
Speaker 18: sort of transforming the industry and figuring out ways to
Speaker 18: make travel not only less harmful, but actually a positive
Speaker 18: influence on the world. Yeah, because we really believe in
Speaker 18: travel you know, sometimes sometimes people are like, oh, if
Speaker 18: you really care about climate change, don't travel at all,
Speaker 18: And we just don't see the world that way. And
Speaker 18: travel can be everything from taking the train to something
Speaker 18: that's in your city's backyard to going around the world
Speaker 18: and doing some eco tourism and learning about communities that
Speaker 18: you never would.
Speaker 6: Have known about.
Speaker 18: And so Lily has found a very interesting hospitality project
Speaker 18: that really involves a community and it's actually much more
Speaker 18: about the community than it really sort of is about
Speaker 18: you travelers. So, Lily, why don't you want to tell.
Speaker 2: Us about it?
Speaker 19: Sure? So I have to credit our incredible travel star
Speaker 19: Nikia Texting, who's actually tipped me off on this. On
Speaker 19: Tierry Tetier, who's really avant garde hotelier and started this
Speaker 19: new concept, you know that's called seven hundred thousand hours
Speaker 19: Impact and he's been in the industry for a really
Speaker 19: long time, but he says that it took him just
Speaker 19: about as much time to realize that hospitality really should
Speaker 19: be about elevating and empowering communities and not so much
Speaker 19: about catering to guest whims. So that's really interesting because
Speaker 19: he's on a very you know, he's on a luxury bracket.
Speaker 19: He does his hotels in a very unusual way where
Speaker 19: you don't have a typical restaurant or you know, check
Speaker 19: in out or you're basically free the vacation the way
Speaker 19: you'd like. And he has these pop up surprise dinners
Speaker 19: and lunches and different locations on the property. But now
Speaker 19: he's you know, he did this every six months and
Speaker 19: a different location, and he had a very huge following
Speaker 19: you know, that would go wherever he was. But he
Speaker 19: realized that the six months pop ups were harmful to
Speaker 19: communities because they've become dependent on the revenue, and then
Speaker 19: he would just disappear again for another six months. So
Speaker 19: he decided to you know, change the model. Partnered up
Speaker 19: with an expert international development who's worked on you know,
Speaker 19: different projects in the global South for many years at
Speaker 19: the World Bank and other institutions, and together they've come
Speaker 19: up with this really unique model where it's still a
Speaker 19: small you know, what they call micro hospitality. So they
Speaker 19: only have a certain number of guests per year, per season,
Speaker 19: about fifty and it's about thousand, two thousand dollars a night.
Speaker 1: But before you.
Speaker 19: Can even book, you have to donate, so it's like
Speaker 19: a membership fee, and.
Speaker 2: If you don't right, there might not be a room available.
Speaker 19: Basically, yeah, if you get five hundred euros, you might
Speaker 19: not it just might not be able to go. But
Speaker 19: once you donate, then you book and while you're there
Speaker 19: you get to experience, you know, a whole range of
Speaker 19: locally owned cooperative for cooperatives that are providing the activities
Speaker 19: but also building businesses. So you automatically know that your
Speaker 19: funds are going towards setting up these cooperatives and the
Speaker 19: idea is for these communities to become independent long term.
Speaker 2: I have to say, this looks fascinating. I love the trend.
Speaker 2: We didn't get to it, but I'm just going to
Speaker 2: give Chris thirty seconds. Best show in New York City.
Speaker 2: There's a lot going on.
Speaker 18: Yeah, So there are tons of shows opened this spring,
Speaker 18: like a dozens literally in New York dance shows, Broadway,
Speaker 18: blah blah blah. And so we did a recommendation list
Speaker 18: of what to see this summer and my my top
Speaker 18: two picks are Oh Mary, which is a hilarious sketch
Speaker 18: from the comedian Cola Scola was Downtown has a brief
Speaker 18: Broadway transfer you'll laugh until you Mary Todd Lincoln, right,
Speaker 18: Mary Todd Lincoln as an alcoholic cabaret star. Nothing like it.
Speaker 18: It's completely idiotic and totally brilliant. And then there's Cats
Speaker 18: at the new Pearlman Performing Arts Center, Yeah, which you know,
Speaker 18: Mayor Weber was a big sponsor of Yeah, Cats, and
Speaker 18: it's but this is not.
Speaker 3: Do you have Nine Lives?
Speaker 9: You know?
Speaker 18: Sorry, it's not cats with ears and tails. It's reinterpreted.
Speaker 18: The cats are actually in ball room culture. So like
Speaker 18: voguing down the runway. I think the show pose and
Speaker 18: it's weird. A story on the costumes. All the costumes
Speaker 18: are tear away. It's a really it's going to be
Speaker 18: wild and crazy and everyone's.
Speaker 6: Going to be talking about it.
Speaker 3: The Outsider is also on the list, which I've heard
Speaker 3: is just fantastic. Yes say yes, good one.
Speaker 18: It's very original and people really like it.
Speaker 2: Cat sounds perfect.
Speaker 3: I guess we got to go. Hey, j Big thank
Speaker 3: you to Bloomberg News travel reporter Billy Germa, also the
Speaker 3: writer of the Better Travel Bureau column in newsletters, so
Speaker 3: do check that out on the Bloomberg terminal and at
Speaker 3: Bloomberg dot com, and also the editor of Bloomberg Pursuits
Speaker 3: Chris Rouser.
Speaker 2: The Amazing Chris Rouser. All right, everybody, that wraps up
Speaker 2: the weekend edition of Bloomberg Business Week from Bloomberg Radio.
Speaker 2: Thank you so much for joining us.
Speaker 3: Be sure to tune into Bloomberg Business Week Monday through Friday,
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Speaker 2: I'm Tim Stenovieck and I'm Carol Masser. Have a good
Speaker 2: and safe weekend.