WEBVTT - Remote Work Allows Travelers to Stay Away Longer

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<v Speaker 1>You're listening to Bloomberg Business Week with Carol Messer and

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<v Speaker 1>Tim Stenebek on Bloomberg Radio.

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<v Speaker 2>People are going on vacation, folks. We are in the

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<v Speaker 2>thick of summer. We heard from the US airlines too

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<v Speaker 2>over the past week or so. United just yesterday, latest

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<v Speaker 2>major US carrier to benefit from strength and global travel.

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<v Speaker 1>Yeah, aren't you going overseas?

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<v Speaker 3>I'm going to Spain next week.

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<v Speaker 1>See, So everybody's on vacation.

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<v Speaker 3>Not looking forward to it.

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<v Speaker 4>Why so hot? Oh?

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<v Speaker 1>I know, it's hot. It's yeah, it's going to be rough.

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<v Speaker 3>I want to go to Alaska. Do you want to

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<v Speaker 3>go to the Arctic right now? I need to be somewhere.

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<v Speaker 4>Cool, Fyi.

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<v Speaker 1>It's melting.

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<v Speaker 3>Yeah, I know, but at least it's still chilly.

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<v Speaker 2>All right, So let's get to it. Let's talk about vacationing,

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<v Speaker 2>demand and pricing. I'm curious what our next guest to see.

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<v Speaker 2>Montage International founder, chairman and CEO, Alan Firstman is with

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<v Speaker 2>us on Zoom in Maui. Montage is a luxury hospital

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<v Speaker 2>to that, but at a luxury hospitality management company.

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<v Speaker 1>Try that again. It's got properties in California, Mexico, Bahamas

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<v Speaker 1>and more.

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<v Speaker 4>Alan.

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<v Speaker 1>Nice to be talking with you again.

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<v Speaker 3>How are you.

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<v Speaker 1>I think it's been about a year. Talk about great.

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<v Speaker 4>Great to be back.

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<v Speaker 1>Well, great to have you. How busy are you? Guys?

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<v Speaker 1>What are you seeing?

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<v Speaker 4>We were We're in the middle of summer, busy summer.

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<v Speaker 4>The resorts have been the place to escape the heat

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<v Speaker 4>and enjoy the relaxation, seeing a lot of families traveling

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<v Speaker 4>and an exciting time for us.

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<v Speaker 3>So what's it like out there? I mean, I Hawaii

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<v Speaker 3>is like a bucket list place for me. I've also

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<v Speaker 3>seen Mawana like a thousand times.

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<v Speaker 1>He has a young daughter, Maui.

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<v Speaker 3>The name Maui has a special place in my heart.

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<v Speaker 3>But it's hot here. I can't imagine wanting to go outside.

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<v Speaker 3>What's it like there?

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<v Speaker 4>Well, here, it's it's it's tropical beautiful. I mean, the

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<v Speaker 4>beaches and the pools amazing. I'm here with five grandchildren

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<v Speaker 4>and extended family. It's it's it's just a great opportunity

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<v Speaker 4>to work a little bit in the more and relax

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<v Speaker 4>and enjoy the afternoons with the family.

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<v Speaker 1>But eighty one degrees, Matt, Oh, that's nice humidity.

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<v Speaker 3>I'm just trying to get to what this heat wave

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<v Speaker 3>and what these air quality issues. What kind of effect

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<v Speaker 3>has that had on travel?

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<v Speaker 4>Well, I mean there's an escape to markets that aren't

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<v Speaker 4>as hot I would imagine, and it's important that those

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<v Speaker 4>areas that are hot are taking all the necessary precautions

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<v Speaker 4>to make sure the staff stays hydrated and there's plenty

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<v Speaker 4>of water stations for guests. We've taken some additional steps

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<v Speaker 4>of late to make sure that there's plenty of water everywhere.

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<v Speaker 4>But hotels and resources are a good place generally to

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<v Speaker 4>escape the heat.

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<v Speaker 2>All right, So let's like we said, it's about a

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<v Speaker 2>year since we last talked with you. Give me an idea.

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<v Speaker 2>You say, great, everything is a good place to be,

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<v Speaker 2>But give me an idea in terms of demand and pricing.

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<v Speaker 1>What it's like.

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<v Speaker 2>Is demand up from a year ago? Is it down

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<v Speaker 2>from a year ago? What's pricing light? Is it a

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<v Speaker 2>pricing like in terms of deals?

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<v Speaker 3>Is I saw I will say, allan, we saw AMX today.

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<v Speaker 3>They had record volumes, but since they had such difficult

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<v Speaker 3>comps because last year was so great, the market was

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<v Speaker 3>a little bit disappointed.

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<v Speaker 4>Yeah, I think pricing might have has come down a

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<v Speaker 4>little bit over the highs of last year when you

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<v Speaker 4>think about so much of the luxury travel heading to

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<v Speaker 4>Europe and other markets that have opened up that weren't

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<v Speaker 4>available a year ago, but well above conditions pre pandemic.

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<v Speaker 4>So we're seeing some relatively strong numbers still. So that's

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<v Speaker 4>a very positive sign, and we're just seeing that there's

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<v Speaker 4>continued demand for highly differentiated special places.

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<v Speaker 2>What about for you guys specifically, right you're involved in

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<v Speaker 2>the management of these properties. Do you have the workers

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<v Speaker 2>you need or are you again having to pay up

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<v Speaker 2>for them?

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<v Speaker 4>Well, we've had to pay up. There's been certainly a

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<v Speaker 4>rise in costs, and again it's been market by market.

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<v Speaker 4>Some markets have been less difficult to attract labor, but

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<v Speaker 4>it's an important component of what we do. You've seen though,

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<v Speaker 4>part of the price increases that have been passed on

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<v Speaker 4>to guests have come from the need to pay up

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<v Speaker 4>both for wages and for cost of goods. There's that's

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<v Speaker 4>been the story of the inflationary time period we've been

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<v Speaker 4>going through. It's good to see it's settling down a

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<v Speaker 4>little bit and we're somewhat optimistic that things will stabilize.

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<v Speaker 4>We've had a very strong workforce fect we're in the

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<v Speaker 4>process of opening Pendry Newport Beach, which is going to

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<v Speaker 4>open in September, and we're hiring over four hundred new

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<v Speaker 4>associates there and have had great success in attracting and

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<v Speaker 4>finding superior talent.

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<v Speaker 3>Are there any have trend shifted at all, you know,

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<v Speaker 3>pre pandemic to now in terms of where people want

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<v Speaker 3>to go, what they want to do, what they're budgeting.

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<v Speaker 3>I mean, are they focused more on vacations, because certainly

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<v Speaker 3>I think a lot of employees are focused more on

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<v Speaker 3>life in the work life balance.

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<v Speaker 4>Yeah, I think so, And I think the advent of

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<v Speaker 4>being able to work remotely means doesn't mean working just

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<v Speaker 4>remotely from home. Why not extend your stay at a

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<v Speaker 4>vacation destination at longer and there's a lot of combination.

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<v Speaker 4>I'll work a little bit, but I'll also be enjoying.

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<v Speaker 4>So we're seeing longer length of stays as a result

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<v Speaker 4>of the need not to get back to the office

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<v Speaker 4>as promptly as we may have years a few years back.

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<v Speaker 4>So that's been a plus for us being able to

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<v Speaker 4>work from our hotels and resorts effectively.

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<v Speaker 1>Ell where are people going?

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<v Speaker 2>Because you guys have properties in Los Cabos, Mexico, obviously,

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<v Speaker 2>in Hawaii where you guys are Utah, Laguna Beach, California.

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<v Speaker 2>I know I'm leaving stuff out other places.

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<v Speaker 4>Big Big Guy, Montana, for example, it's it's such a

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<v Speaker 4>such a cool temperature wise and otherwise get away. And

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<v Speaker 4>when we opened there a year ago, essentially the first

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<v Speaker 4>luxury hotel in that market. It's opened up a new market.

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<v Speaker 4>And and in the case of Big Sky, you're an

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<v Speaker 4>hour from Yellowstone and you get to experience the park

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<v Speaker 4>but also the luxury amenities, the outdoor lifestyle. So we're

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<v Speaker 4>seeing some newer destinations like Big Sky Montana, and certainly

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<v Speaker 4>great strength in in the other mountain destinations. We were

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<v Speaker 4>in Deer Valley, we're in we have a penry in

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<v Speaker 4>Park City, so good good breath across our portfolios. So

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<v Speaker 4>we're seeing we're seeing strong travel throughout Big Skies.

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<v Speaker 3>Also close to Bozeman, so it's an easy, uh drive

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<v Speaker 3>from the airport. And I have to say, my family,

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<v Speaker 3>we go skiing in Big Sky. Love that big backcountry.

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<v Speaker 3>You know, nice off piece of powder, very cool.

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<v Speaker 1>It looks gorgeous.

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<v Speaker 3>Can I ask you, Unlus, you've got a very exclusive

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<v Speaker 3>resort on the backside of the mountain. Sounds like Yellowstone.

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<v Speaker 1>Okay, sold sold?

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<v Speaker 2>Is it the in the Bahamas, there's a forty eight

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<v Speaker 2>acre private island resort and community that I guess you

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<v Speaker 2>can rent out.

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<v Speaker 4>No, we're under construction there. We're building abbocos called Montage

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<v Speaker 4>Key private Island. We're selling real estate there now homes,

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<v Speaker 4>amazing homes on the on the ocean front, and building

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<v Speaker 4>building the resort. Well, we should open the end of

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<v Speaker 4>twenty four to early twenty five, and it will be

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<v Speaker 4>an amazing destination, easily accessible the entire East Coast, and

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<v Speaker 4>it'll be a truly global destination, very special resort under construction.

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<v Speaker 3>Allen, what's the rates? How is the rates picture affected that?

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<v Speaker 3>Because I when you say that, I think, well, I

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<v Speaker 3>want to buy a house there, But then I realized

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<v Speaker 3>I don't want a seven percent mortgage. I guess those

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<v Speaker 3>people maybe pay cash.

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<v Speaker 4>Yes, I think there's the buyer for that. Markets is

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<v Speaker 4>less interest rates sensitive.

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<v Speaker 2>Yeah, sorry, Matt, Hey, listen twenty years in that you

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<v Speaker 2>guys are happy twentieth anniversary. What do you think about

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<v Speaker 2>You talk about the you know, the development you're doing

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<v Speaker 2>in the Bahamas, but how do you think about what's

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<v Speaker 2>to come.

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<v Speaker 3>The next twenty years.

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<v Speaker 4>Now we've got fourteen hotels open today, seven montages and

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<v Speaker 4>seven pendries, so we have the two luxury brands. We

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<v Speaker 4>have another twelve projects that are either under construction or

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<v Speaker 4>in design right now, and of those eight are pendries

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<v Speaker 4>and four are montages. And we're seeing some real international growth.

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<v Speaker 4>Initially we were mostly North America. Now we're expanding globally.

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<v Speaker 4>We've announced a couple of projects in the Middle East.

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<v Speaker 4>We've just announced two hotels in Puntomita, which is near

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<v Speaker 4>Porta Villarta, Mexico, both a Montage and a Pendri there.

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<v Speaker 4>We announced a project in Barbados. So I think you're

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<v Speaker 4>going to continue to see both domestic and international growth

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<v Speaker 4>for our company.

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<v Speaker 2>Sounds like you're moving ahead. You're not worried about a recession.

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<v Speaker 2>Are those higher rates?

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<v Speaker 1>Is that fair? Just got about thirty seconds or tell me, yeah,

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<v Speaker 1>we are.

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<v Speaker 4>But high interst rates are concerning obviously for capitalizing new projects.

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<v Speaker 4>It's obviously a big concern, and we're hopeful that we've

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<v Speaker 4>seen the height of the interest rates. But we are

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<v Speaker 4>very optimistic. We build hotels for generations to come, so

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<v Speaker 4>we'll withstand small blips if they happen which are due

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<v Speaker 4>to happen.

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<v Speaker 3>So cool, you know, to think that a kid from

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<v Speaker 3>New Milford could go to Gettysburg. Then he runs the Phoenician,

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<v Speaker 3>then he runs the Bolagio, and now you found this

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<v Speaker 3>great big business. I think it's a super a super cool,

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<v Speaker 3>story inspiring dream.

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<v Speaker 4>I've got to say how fortunate I've been and how

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<v Speaker 4>I'm truly lucky.

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<v Speaker 2>Well, enjoy Maui and always good to check in with you.

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<v Speaker 2>Alan Firstman, founder, chairman and CEO of Montage International joining us,

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<v Speaker 2>as we said from Hawaii,