WEBVTT - Bloomberg Surveillance TV: August 12, 2024 0:00:02.440 --> 0:00:06.800 Bloomberg Audio Studios, Podcasts, radio News. 0:00:11.640 --> 0:00:15.440 This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 0:00:15.480 --> 0:00:18.680 with Lisa Bromwitz and Amrie Hordern. Join us each day 0:00:18.720 --> 0:00:22.280 for insight from the best in markets, economics, and geopolitics 0:00:22.440 --> 0:00:24.920 from our global headquarters in New York City. We are 0:00:24.920 --> 0:00:27.680 live on Bloomberg Television weekday mornings from six to nine 0:00:27.720 --> 0:00:31.240 am Eastern. Subscribe to the podcast on Apple, Spotify or 0:00:31.320 --> 0:00:33.960 anywhere else you listen, and as always on the Bloomberg 0:00:34.040 --> 0:00:35.880 Terminal and the Bloomberg Business App. 0:00:36.400 --> 0:00:39.400 Joining us now is someone who really has inside knowledge 0:00:39.520 --> 0:00:43.240 and is a wonderful macro investor who has a ton 0:00:43.280 --> 0:00:46.200 of respect. Keysquare Group founder and CEO, Scott Besson. 0:00:46.400 --> 0:00:48.199 Scott, thank you so much for being with us. I 0:00:48.240 --> 0:00:50.240 want to start with that the idea of. 0:00:50.159 --> 0:00:53.240 The Federal Reserve and it's independence. What do you make 0:00:53.280 --> 0:00:55.680 of this actually being such a hot topic on the 0:00:55.720 --> 0:00:57.080 presidential campaign trail? 0:00:57.240 --> 0:00:59.920 Well, I think it's kind of a canard. The final 0:01:00.080 --> 0:01:03.480 Joel Press is blown up. You know, all all presidents 0:01:03.680 --> 0:01:07.080 want a say, and I think they have a right. 0:01:07.280 --> 0:01:09.880 You know, Donald Trump is going to make his opinions known. 0:01:10.319 --> 0:01:15.840 I think Senator Warren before the FED decision, they recently 0:01:16.120 --> 0:01:18.600 the day before said they should cut. The day after, 0:01:18.800 --> 0:01:20.640 she came out and said they made a big mistake 0:01:20.720 --> 0:01:23.480 not cutting. And I think that's within her right. And 0:01:24.000 --> 0:01:26.800 you know, I'm not sure you know what all this 0:01:27.040 --> 0:01:30.880 is you know, or what this allegedly means that you know, 0:01:31.400 --> 0:01:33.920 Donald people are saying Donald Trump thinks he should be 0:01:33.920 --> 0:01:37.600 in the room. Is you know, he's if he wins, 0:01:37.640 --> 0:01:40.360 he will get to choose a new FED chair. The 0:01:40.440 --> 0:01:44.200 Treasury Secretary meets on behalf of the administration with the 0:01:44.200 --> 0:01:47.920 FED chair every week, so the administration's opinion is known. 0:01:48.360 --> 0:01:51.200 And you know, I've written and talked quite a lot 0:01:51.240 --> 0:01:54.120 about I already think politics are in the FED because 0:01:54.120 --> 0:01:56.000 I think Jennet Yellen's taken over the FED. 0:01:56.480 --> 0:01:59.120 Well, Scott though, when it comes to what Trump is saying, 0:01:59.520 --> 0:02:02.280 and Evans really doubled down this yesterday and CNN, he 0:02:02.360 --> 0:02:05.840 said that fundamentally it should be a political decision, agree 0:02:05.920 --> 0:02:09.239 or disagree. Doesn't that thwart the independence. 0:02:08.639 --> 0:02:09.400 Of this institution? 0:02:09.520 --> 0:02:11.560 And have we seen that in the pants pass under 0:02:11.639 --> 0:02:13.640 Nixon and it didn't exactly work. 0:02:14.080 --> 0:02:16.800 Well, I think again, I think it's all up to 0:02:16.880 --> 0:02:23.680 the FED chair. And you know, again, the president he 0:02:24.000 --> 0:02:27.440 or she always has input. You know, we saw from 0:02:27.480 --> 0:02:31.400 Joe Biden State of the Union, I expecting a FED cut. 0:02:31.440 --> 0:02:33.720 We saw a week later in Philadelphia. I'm expecting a 0:02:33.760 --> 0:02:36.960 FED cut. Then the inflation numbers got hot. I'm expecting 0:02:36.960 --> 0:02:40.160 a FED cut just a little later. So you know, again, 0:02:41.200 --> 0:02:44.840 presidents make their wishes known. And you know, I do 0:02:44.919 --> 0:02:47.400 want to comment. I think this Wall Street Journal piece 0:02:47.720 --> 0:02:51.080 that referenced a ten page document, I would challenge them 0:02:51.280 --> 0:02:53.680 to produce that ten page document. I do not believe 0:02:53.680 --> 0:02:54.600 that document exists. 0:02:54.680 --> 0:02:56.280 Okay, Well, I just want to dig into something that 0:02:56.320 --> 0:02:58.600 you said. You think that Jenny Yellen has already taken. 0:02:58.360 --> 0:02:58.920 Over the FED. 0:02:59.280 --> 0:03:01.560 I how much this is really in reference to the 0:03:01.560 --> 0:03:03.840 fact that the Treasure Department has been selling a disproportionate 0:03:03.840 --> 0:03:06.359 amount of tea bills, so people say it's been offsetting 0:03:06.760 --> 0:03:10.000 some of the quantity of tightening, as well as what 0:03:10.040 --> 0:03:13.440 we're seeing with respect to rate hikes over the past 0:03:13.520 --> 0:03:14.200 few years. 0:03:14.760 --> 0:03:17.120 How much do you believe that the FED is. 0:03:17.120 --> 0:03:20.120 Way more political than people expect and that that is 0:03:20.160 --> 0:03:22.320 something that you can trade around. 0:03:22.000 --> 0:03:25.240 Even Well, look what I've been able to trade around, 0:03:25.480 --> 0:03:32.639 and we'll go back your question on Yellen Treasury highly political. Unfortunately, 0:03:32.680 --> 0:03:36.200 Secretary Yellen has thrust herself into the middle of campaign 0:03:36.240 --> 0:03:39.880 in a very inappropriate way. She gave a highly politicized 0:03:39.920 --> 0:03:43.320 speech in Arizona a couple of months ago. She was 0:03:43.360 --> 0:03:47.400 standing on stage with the governor of Pennsylvania campaigning for 0:03:47.480 --> 0:03:52.960 Kamala Harris, who is not even her president. Two weeks ago, 0:03:53.280 --> 0:03:59.280 so it is politicized. The quarterly refunding schedule was changed 0:03:59.560 --> 0:04:03.160 for the first time ever. They gave Ford guidance. So 0:04:03.360 --> 0:04:05.480 how do you know what the conditions are going to be? 0:04:05.880 --> 0:04:08.920 Why do you have a treasury borrowing committee if you 0:04:09.000 --> 0:04:10.640 are going to give forward guidance? 0:04:11.800 --> 0:04:13.080 So to come back to the FED. 0:04:13.440 --> 0:04:17.240 Look, you know the FED, I think they try to 0:04:17.320 --> 0:04:18.520 keep politics out of it. 0:04:18.640 --> 0:04:20.080 We all have biases. 0:04:20.440 --> 0:04:23.279 Ninety three percent of this people at the FED or 0:04:23.320 --> 0:04:30.880 registered Democrats. But you know, I think in general that 0:04:33.040 --> 0:04:37.480 you know, they are doing what they can with what 0:04:37.520 --> 0:04:40.440 they've got. You know, your question in terms of you know, 0:04:40.440 --> 0:04:43.440 how do I trade around that. I've actually had very 0:04:43.440 --> 0:04:47.799 good luck this year trading against the FED that anytime 0:04:47.839 --> 0:04:51.520 they publish their so called dot plot, the SEP, the 0:04:51.560 --> 0:04:55.760 summary of economic projections, they've been wrong. So for all 0:04:56.560 --> 0:04:59.840 year they had three rate cuts. They know, ident think 0:05:00.160 --> 0:05:03.240 be three rate cuts. Then at the GYM meeting they 0:05:03.279 --> 0:05:06.080 published that there would only be one rate cut, and 0:05:06.640 --> 0:05:09.840 they we traded against that, and that's proving to be 0:05:09.880 --> 0:05:14.800 wrong because now the market's pricing in three, you know, 0:05:14.880 --> 0:05:16.600 maybe three jumbo rate cuts. 0:05:17.600 --> 0:05:19.720 Scott, if we could look into some policy that has 0:05:19.720 --> 0:05:23.559 to do with the Fed and the Treasury, it's well 0:05:23.600 --> 0:05:25.680 known that you're one of these individuals that talks to 0:05:25.720 --> 0:05:28.839 the former president potentially could be part of his future 0:05:28.880 --> 0:05:31.120 team if there's Trump two point zero. He gave an 0:05:31.120 --> 0:05:33.599 interview a business week and talked about a week or dollar. 0:05:34.080 --> 0:05:35.479 How would he see that through? 0:05:37.360 --> 0:05:42.400 Look, I think that's a preference, not a goal that 0:05:43.120 --> 0:05:46.480 I think he believes. And again, you know, I think 0:05:46.520 --> 0:05:50.880 about it more in terms of our other currencies undervalued. 0:05:51.240 --> 0:05:55.200 You know, is there some kind of a manipulation you know, 0:05:55.360 --> 0:05:58.880 i e. The Bank of Japan running excuse me, ultra 0:05:58.960 --> 0:06:02.440 loose monetary pol se for twelve years and doing a 0:06:02.480 --> 0:06:07.000 gigantic appreciation of the yen where it goes to a 0:06:07.400 --> 0:06:12.080 fifty year under evaluation. Is there something that the Chinese 0:06:12.160 --> 0:06:17.640 are doing with their trade policy that is causing an 0:06:17.760 --> 0:06:24.160 artificially weak the RMB, you know, versus a strong dollars. So, 0:06:24.520 --> 0:06:29.520 you know, I think remedying these under evaluations as opposed 0:06:29.520 --> 0:06:33.760 to remedying a strong dollar is a better way to 0:06:33.760 --> 0:06:34.280 think about it. 0:06:34.320 --> 0:06:36.360 Well, probably no one would like that more than Japan. 0:06:36.480 --> 0:06:38.200 I mean, they have not liked the weakness that they've 0:06:38.200 --> 0:06:40.960 seen in their currency. So do you foresee something like 0:06:41.400 --> 0:06:43.760 Applaza accord? Is that what we should be looking at? 0:06:43.760 --> 0:06:46.920 Should there be a Trump administration with these against specific currencies? 0:06:46.960 --> 0:06:50.640 Remember en to right size some of the equilibrium that 0:06:50.680 --> 0:06:51.359 you're talking about? 0:06:51.600 --> 0:06:54.480 Well, is your question? Should there be a mar Lago accord? 0:06:55.000 --> 0:06:56.960 So we can call it that way? 0:06:57.000 --> 0:06:57.040 Not? 0:06:57.680 --> 0:07:02.240 Well, I think that's what it would be called. That I. 0:07:03.920 --> 0:07:10.880 Could see, you know, something or a policy specifically targeted 0:07:11.080 --> 0:07:14.920 at the different countries that are in violation, you know, 0:07:14.960 --> 0:07:19.560 maybe rather than a global thing like Plasa loub was. 0:07:20.160 --> 0:07:23.480 You know, if you go back and look, I've studied 0:07:23.480 --> 0:07:27.000 this a lot. What's different this time is if you 0:07:27.000 --> 0:07:28.640 go back and look at the history of the Plaza 0:07:28.720 --> 0:07:32.800 coord the Lover accord, Soviet Union was never mentioned because 0:07:32.880 --> 0:07:36.480 their economy was so small, you know, so you had 0:07:36.920 --> 0:07:41.440 a security threat and then an economic threat. Now with China, 0:07:42.720 --> 0:07:45.200 I think we should view China as both a security 0:07:45.200 --> 0:07:48.160 threat and an economic threat. And it is going to 0:07:48.200 --> 0:07:51.880 require a lot more finesse with them just because they 0:07:51.880 --> 0:07:54.360 are such a big part of the global economy. So 0:07:54.440 --> 0:07:57.560 you don't want to upset the apple cart, but you 0:07:57.640 --> 0:08:00.160 want to be proven in terms of supply chains and 0:08:00.280 --> 0:08:01.240 national security. 0:08:01.640 --> 0:08:04.040 How do you then view a week dollar though, if 0:08:04.160 --> 0:08:06.560 Trump is saying that he's going to put the walls 0:08:06.560 --> 0:08:08.680 for the tariffs ten percent ring around the United States, 0:08:08.680 --> 0:08:11.720 sixty percent of imports coming from China, as well as 0:08:11.920 --> 0:08:13.920 what he says mass deportations. 0:08:14.120 --> 0:08:19.240 Right, So, I think we've discussed this before. President Trump 0:08:19.280 --> 0:08:22.160 speaks in a different way than many politicians. He speaks 0:08:22.880 --> 0:08:25.400 like a New York City real estate developer, and I 0:08:25.440 --> 0:08:29.880 think that is the opening the gambit. You know, I've 0:08:29.960 --> 0:08:34.360 used the term it is a maximalist negotiating position. I 0:08:34.800 --> 0:08:38.280 think a lot of the analysis around this in terms 0:08:38.280 --> 0:08:42.440 of inflation has been quite sloppy. You know, at our firm, 0:08:42.600 --> 0:08:48.200 we try to have better models, and you know our 0:08:48.320 --> 0:08:53.000 models show that a those are maximalist positions and be 0:08:53.400 --> 0:08:55.920 everything that I've seen, you know, in cell Side Research 0:08:56.040 --> 0:08:59.400 and other firms and commentators, you know, assumes that there 0:08:59.440 --> 0:09:02.520 is a jump on day one, which will not happen. 0:09:03.679 --> 0:09:03.920 You know. 0:09:04.320 --> 0:09:07.280 I have been spoken to the President, spoken to his team, 0:09:07.840 --> 0:09:11.160 and I think everyone is on board with a kind 0:09:11.200 --> 0:09:15.800 of Ford guidance or a phased in tariff. So, you know, 0:09:16.520 --> 0:09:21.960 here's president she Here's sixty percent, might be two and 0:09:21.960 --> 0:09:24.480 a half percent a month for twenty four months, tell 0:09:24.559 --> 0:09:27.439 us when you've had enough, and you know, at the 0:09:27.520 --> 0:09:31.200 end of the day, I think that Donald Trump views 0:09:31.280 --> 0:09:35.400 tariffs as a way not to you know, as an 0:09:35.520 --> 0:09:38.920 ind too free trade. You know, if you bring down 0:09:38.960 --> 0:09:40.880 your tariffs, we will bring down ours. 0:09:41.000 --> 0:09:41.160 You know. 0:09:41.280 --> 0:09:44.400 Recall that at the G seven meeting when he was president, 0:09:45.040 --> 0:09:48.160 he left Ottawa to go to North Korea, and on 0:09:48.240 --> 0:09:51.120 the way out the door he said to all the leaders, 0:09:51.240 --> 0:09:52.800 I'll get rid of my terraffs if you get rid 0:09:52.840 --> 0:09:53.360 of yours. 0:09:53.640 --> 0:09:56.400 So I think he views like the terraffs. 0:09:56.480 --> 0:09:59.440 As you know, kind of negotiating is almost almost like 0:09:59.679 --> 0:10:01.199 a sanctions policy. 0:10:01.800 --> 0:10:04.920 Well, Scott Besant of Key Square Group, will you be 0:10:04.920 --> 0:10:07.200 living in Connecticut or will you be living in Washington, 0:10:07.280 --> 0:10:10.000 d C. Next year we will find out Scott best. 0:10:10.120 --> 0:10:11.760 You'll have to come back of Key Square Group. 0:10:20.840 --> 0:10:24.640 Eric Resdant, co founder of KSL Capital Partners, is focusing 0:10:24.679 --> 0:10:27.360 on the consumer and the outlook for travel and joins 0:10:27.400 --> 0:10:29.559 us now and Eric first, so. 0:10:29.640 --> 0:10:31.440 Great to have you on the show. Thank you for 0:10:31.480 --> 0:10:34.520 being here. Thank you and your firm. 0:10:34.320 --> 0:10:37.679 Overseas tons of some of the most popular names that 0:10:37.720 --> 0:10:40.920 people go and visit, whether it is you know, the 0:10:41.160 --> 0:10:44.880 Icon Passes of ski Lovers, or whether it is the 0:10:44.960 --> 0:10:48.000 Marriott's and the Riz Carlton's and the Four Seasons that 0:10:48.040 --> 0:10:51.360 people attend. Do you think that there is too much 0:10:51.400 --> 0:10:55.520 pessimism right now about this sort of pace of spending, 0:10:55.600 --> 0:10:58.160 particularly on the discretionary front. 0:10:58.360 --> 0:11:02.800 I think there's too much reaction, too much reaction, reactionary 0:11:05.400 --> 0:11:08.120 thoughts happening based upon short term data when you look 0:11:08.160 --> 0:11:09.800 long term. And I'm really here to thank you for 0:11:09.840 --> 0:11:11.280 being a customer of the Icon Pass. 0:11:12.440 --> 0:11:13.240 I'm on a swing. 0:11:13.480 --> 0:11:15.800 I'm on a swing thanking each one of our customers personally, 0:11:15.840 --> 0:11:17.360 and this is my morning to thank you. 0:11:17.360 --> 0:11:19.000 You can call him up if you've got an icon 0:11:19.080 --> 0:11:20.319 past and that's right, I'm here. 0:11:20.600 --> 0:11:22.559 Feel free to call me, no problem at all. 0:11:22.640 --> 0:11:27.160 Okay, but the long term trends for travel are really positive. 0:11:27.320 --> 0:11:31.360 People don't realize how actually resilient travel is even in 0:11:31.360 --> 0:11:33.760 the face of economic volatility. 0:11:34.360 --> 0:11:36.000 We make what you were just saying, we have to 0:11:36.000 --> 0:11:36.800 embrace the mess. 0:11:36.960 --> 0:11:40.200 Life's messy, as you were saying, and the reality is 0:11:40.240 --> 0:11:41.400 in that mess, what do you want to do? You 0:11:41.400 --> 0:11:43.240 want to escape, You want to be able to have 0:11:44.480 --> 0:11:47.200 special memories and experiences with your friends and family. So 0:11:47.240 --> 0:11:49.920 we see the long term trends being favorable, we do 0:11:50.000 --> 0:11:53.319 see the same type of softening of trends. 0:11:53.360 --> 0:11:54.760 Still fine, still. 0:11:54.480 --> 0:11:56.800 Good, but it's not as robust growth in some of 0:11:56.840 --> 0:11:59.080 the segments that we invest in that we saw over 0:11:59.080 --> 0:12:00.720 the last two years coming out of COVID. 0:12:00.800 --> 0:12:02.320 I guess there's a bigger question. 0:12:02.360 --> 0:12:05.000 We were talking about this with Neila Richardson of ADP. 0:12:04.840 --> 0:12:06.400 Earlier this morning, and she. 0:12:06.440 --> 0:12:08.840 Was talking about how the pace of job creation is 0:12:08.840 --> 0:12:11.760 actually still above twenty nineteen. You can point to similar 0:12:11.800 --> 0:12:14.400 types of trends and travel. People still spending more on 0:12:14.440 --> 0:12:18.480 travel now than say twenty nineteen. Is this the new 0:12:18.520 --> 0:12:22.120 normal where we can expect more spending and an accelerated pace, 0:12:22.520 --> 0:12:24.600 or are we going back to the old normal where 0:12:24.600 --> 0:12:28.160 people actually had to work, well, they have. 0:12:28.080 --> 0:12:29.320 To work things an interesting one. 0:12:29.320 --> 0:12:32.040 I do think that the trend of remote work, of 0:12:32.080 --> 0:12:34.440 people having leisure trips. We were just talking about this 0:12:34.520 --> 0:12:37.280 on the break, combining purposes of trips. I think that's 0:12:37.320 --> 0:12:39.360 all positive for travel because when you want to combine things, 0:12:39.360 --> 0:12:41.559 what do you tend to do. You're combining something that's 0:12:41.880 --> 0:12:45.360 vacation oriented or recreation oriented with what you're doing at work. 0:12:45.400 --> 0:12:49.440 So we see skier visits, for example, are growing more 0:12:49.520 --> 0:12:51.360 rapidly midweek than they are on the weekends. 0:12:51.440 --> 0:12:51.920 Well, that's a. 0:12:51.880 --> 0:12:54.200 Better experience for the guests, it's better for everybody. 0:12:54.200 --> 0:12:55.640 I'm not sure about people saying. 0:12:55.440 --> 0:12:57.320 They're working from home on Friday if we know that 0:12:57.360 --> 0:12:59.600 skier visits are op disproportionately on Fridays. 0:12:59.720 --> 0:13:01.880 But be that as it may, we're pro that. 0:13:02.720 --> 0:13:06.319 So I think the new normal is, you know, we're 0:13:06.360 --> 0:13:08.439 all on all the time. We want to combine purposes 0:13:08.440 --> 0:13:10.160 and be more efficient with what we do. So I 0:13:10.160 --> 0:13:13.160 think in the end that's probably good. It probably creates 0:13:13.200 --> 0:13:15.960 more balance for people and for us. It creates more 0:13:16.360 --> 0:13:19.040 opportunity for them to vacation and recreate and do those 0:13:19.040 --> 0:13:21.560 things that we certainly like to invest behind. 0:13:21.720 --> 0:13:23.560 So the vision of someone like with their laptop on 0:13:23.559 --> 0:13:25.880 a ski lift, blurring out the background, saying don't pay 0:13:25.920 --> 0:13:28.400 attention to the wings, the winds swinging back and forth, 0:13:28.559 --> 0:13:31.480 and what you're saying. Okay, so you're talking about this 0:13:31.720 --> 0:13:34.280 the trend and the spend and how much that is normalizing. 0:13:34.360 --> 0:13:37.120 What about just what people expect when they go to 0:13:37.160 --> 0:13:40.960 a luxury hotel. Has something fundamentally changed after the COVID 0:13:40.960 --> 0:13:42.480 era of not being able to get it out and 0:13:42.520 --> 0:13:44.760 they now want something different with their hotel experience that 0:13:44.800 --> 0:13:45.600 they didn't before. 0:13:46.200 --> 0:13:47.080 I think that's fair. 0:13:47.240 --> 0:13:49.760 I think they want to have more than just your 0:13:49.760 --> 0:13:53.040 basic hotel experience. During COVID, we saw an expectation that 0:13:53.160 --> 0:13:56.640 it's okay to reduce services at hotels. Right We couldn't staff, 0:13:56.679 --> 0:13:59.280 we didn't want to have physical contact, so we eliminated 0:13:59.320 --> 0:14:02.000 some of those things. That type of expectation has now 0:14:02.040 --> 0:14:04.800 come back. But the guest wants more than that. They 0:14:04.800 --> 0:14:07.440 want to be able to go on a trip. Business 0:14:07.480 --> 0:14:09.199 travel is different, but for leisure travel, they want to 0:14:09.200 --> 0:14:10.720 be able to go on a trip and have more meaning. 0:14:10.960 --> 0:14:12.920 So for some that meaning is well and it's oriented 0:14:12.960 --> 0:14:14.880 and they want to do it could be as simple 0:14:14.880 --> 0:14:16.319 as a spot treat mean, it could be something that's 0:14:16.320 --> 0:14:19.520 more holistic in terms of in terms of mental health, 0:14:19.680 --> 0:14:22.320 or it could be something physical. Right, So I think 0:14:22.360 --> 0:14:24.520 the consumer they just want more. 0:14:24.400 --> 0:14:26.440 Out of everything that they do. 0:14:26.640 --> 0:14:28.480 They want to feel that that's value. 0:14:28.800 --> 0:14:31.200 What does that mean for the Airbnbs of the world. 0:14:31.240 --> 0:14:33.280 Where do they fit into that? Because they're not exactly 0:14:33.280 --> 0:14:34.480 providing that kind of service. 0:14:34.560 --> 0:14:34.880 They're not. 0:14:34.960 --> 0:14:37.600 I mean those look Airbnb and others in that business. 0:14:37.640 --> 0:14:40.240 They are trying to wrap around experiences. And you see, 0:14:40.280 --> 0:14:43.960 experiences is a watchword that you hear on whether it's 0:14:43.960 --> 0:14:49.040 earnings calls, or you see in consumer conversations. But I 0:14:49.040 --> 0:14:52.640 think Airbnb has that challenge, which is it's great if 0:14:52.640 --> 0:14:55.120 you're in a city because I don't need the restaurant 0:14:55.160 --> 0:14:58.400 necessarily or retail experience to be in my hotel in 0:14:58.440 --> 0:15:01.120 New York City. It's the city is my is my canvas, 0:15:01.200 --> 0:15:03.160 is my resort. But you know, if you're in a 0:15:03.160 --> 0:15:05.640 resort destination, you want those amenities that you know. On 0:15:05.680 --> 0:15:08.160 the one hand, Airbnb offers wonderful value because you're getting 0:15:08.200 --> 0:15:09.760 more space and you can cook your own meals. 0:15:09.800 --> 0:15:13.360 And congregate easily at your home, but it doesn't have 0:15:13.400 --> 0:15:13.960 the amenities. 0:15:13.960 --> 0:15:15.480 And I think they're trying to address that and I 0:15:15.520 --> 0:15:17.600 think I think they'll have some success doing that, which 0:15:17.640 --> 0:15:19.200 is which is good for the consumer and I think 0:15:19.240 --> 0:15:19.920 good for the business. 0:15:19.960 --> 0:15:21.680 Where travelers going right now. 0:15:22.200 --> 0:15:24.000 I mean you're seeing a bit of an ecotomy and 0:15:24.040 --> 0:15:26.960 that Europe is hot, Japan is hot. Recurrency is part 0:15:27.000 --> 0:15:29.640 of that. Part of that is you took international away. 0:15:29.920 --> 0:15:32.000 What happens when you take something away from someone, you know, 0:15:32.240 --> 0:15:34.160 I mean, if you have if you're a parent of teenagers, 0:15:34.160 --> 0:15:36.200 you realize this, you take something away, they want it more. 0:15:36.480 --> 0:15:39.920 And COVID took international travel, especially away from US. And 0:15:40.040 --> 0:15:42.280 with currency being or the US dollar being strong and 0:15:42.320 --> 0:15:45.360 foreign currency is being a bit weaker, combined with coming 0:15:45.360 --> 0:15:48.560 out of COVID, you're seeing a lot of the luxury consumer. 0:15:48.240 --> 0:15:49.840 Want to go to Europe, want to go to Japan. 0:15:50.160 --> 0:15:53.960 And so that's creating, you know, kind of a normal 0:15:54.240 --> 0:15:57.920 or not yet a normalization of travel patterns. I expect 0:15:57.920 --> 0:16:01.000 that you'll we're seeing in some segments, but thensumers, you know, 0:16:01.360 --> 0:16:05.440 the affordable, the more budget contrast consumer is cutting back 0:16:05.480 --> 0:16:07.720 a bit more right now. The luxury consumer is going 0:16:07.760 --> 0:16:11.920 more abroad. Witness at least going abroad last week, but. 0:16:13.440 --> 0:16:14.360 Not out. 0:16:14.360 --> 0:16:16.600 You're there, But it's okay, everyone's doing it this morning, so. 0:16:16.560 --> 0:16:18.240 Why not can stay back to vacation. It's what we 0:16:18.280 --> 0:16:18.880 all do, okay. 0:16:19.520 --> 0:16:22.600 So you're seeing a real bifurcation and where consumers are 0:16:22.600 --> 0:16:23.400 going a bit. 0:16:23.440 --> 0:16:25.920 If you look at like select service spending for hotels, 0:16:26.280 --> 0:16:29.600 those trends are a bit softer than the higher end. 0:16:29.800 --> 0:16:32.240 In the last year, you saw red par for more 0:16:32.320 --> 0:16:35.640 luxury travel to be positive still three four percent, while 0:16:35.800 --> 0:16:39.320 select service red pars down. I think that's indicative of that. 0:16:39.480 --> 0:16:43.400 But again, it's not dramatic, right These are evolutionary, not 0:16:43.440 --> 0:16:48.600 revolutionary shifts and consumer behavior that we're seeing normal normal volatility, 0:16:48.640 --> 0:16:49.880 not abnormal volatility. 0:16:49.960 --> 0:16:51.720 One thing that you have is a really good lens 0:16:51.880 --> 0:16:55.040 on what the balance sheet equation really looks like right now, 0:16:55.160 --> 0:16:57.360 especially at a time where we are talking about. 0:16:57.320 --> 0:16:58.880 Increasing oil prices. 0:16:58.880 --> 0:17:01.640 Maybe on the margins you see increasing commodity prices. You 0:17:01.680 --> 0:17:04.119 talk about how suddenly workers and that sort of consumer 0:17:04.160 --> 0:17:07.640 experience is much more important how much a margin's getting squeezed. 0:17:08.720 --> 0:17:10.720 If if you look over the last four years or 0:17:10.800 --> 0:17:13.080 I guess now five years since pre COVID twenty nineteen, 0:17:13.800 --> 0:17:15.960 margins for our margins are up. 0:17:16.200 --> 0:17:18.000 We've been able to We've been able to move. 0:17:17.880 --> 0:17:20.520 Price more than our costs, even though costs are up 0:17:20.560 --> 0:17:22.639 a lot, right, I mean, the average worker wages in 0:17:22.680 --> 0:17:24.920 our sector are probably twenty percent in the last four years, 0:17:25.080 --> 0:17:26.760 which is a lot. A price is up twenty to 0:17:26.760 --> 0:17:30.399 twenty five percent, so that equation still works. I think 0:17:30.520 --> 0:17:35.960 if you have less distinctive properties or less distinctive experiences, 0:17:36.080 --> 0:17:38.159 you don't have that same pricing power, and margins are 0:17:38.200 --> 0:17:39.120 being hit more. 0:17:39.000 --> 0:17:39.840 And that's a challenge. 0:17:39.880 --> 0:17:41.919 I think right now, if you look at urban hotels, 0:17:41.960 --> 0:17:44.280 their margins are under a lot of pressure. Still it's 0:17:44.280 --> 0:17:46.320 getting better as the business traveler has. 0:17:46.160 --> 0:17:48.800 Been coming back, but it's something to watch out for. 0:17:49.000 --> 0:17:51.320 Are you seeing hotels trying to spend to be able 0:17:51.640 --> 0:17:54.080 to deliver that and then what does that mean for margins? 0:17:54.080 --> 0:17:55.840 If in order to get the larger margins you need 0:17:55.880 --> 0:17:57.480 to have this all around experience, But to get the 0:17:57.480 --> 0:17:59.919 all around experience, you have to build a lot of capability. 0:18:01.000 --> 0:18:03.119 Like everything, it's a paradox in life. I mean, you 0:18:03.160 --> 0:18:05.160 have to be able to do two things at once, right, 0:18:05.200 --> 0:18:08.159 And so I think hotels that have the ability to 0:18:08.280 --> 0:18:11.359 spend on the consumer experience to create more differentiation and 0:18:11.359 --> 0:18:14.640 therefore justify a higher price to that consumer because they're 0:18:14.680 --> 0:18:15.560 providing that value. 0:18:15.600 --> 0:18:17.480 They're doing that. I think you see that. 0:18:18.200 --> 0:18:20.800 But other hotels that don't have that ability, I think 0:18:20.800 --> 0:18:24.119 they're seeing more more challenges. We're seeing that. We've got 0:18:24.160 --> 0:18:27.880 some wonderful resorts in Italy and St. Bart's that they 0:18:27.920 --> 0:18:31.120 put tremendous emphasis on the consumer and guest experience, investing 0:18:31.119 --> 0:18:36.000 in SPA programming, wellness, off site activities, picking up from 0:18:36.000 --> 0:18:39.240 the airport and with a great car. 0:18:39.160 --> 0:18:39.840 Those types of things. 0:18:39.880 --> 0:18:43.240 At the luxury end, right, they're seeing prices that are 0:18:43.680 --> 0:18:47.040 exceptionally high and still able to push prices at the 0:18:47.080 --> 0:18:51.359 other end, you know, if you're a non more nondescript hotel. 0:18:51.440 --> 0:18:53.679 I mean, it's tougher today because the consumer is being 0:18:53.680 --> 0:18:55.159 more discerning and how they spend their money. 0:18:55.320 --> 0:18:58.160 So you talk about bleasure, which is a difficult word 0:18:58.200 --> 0:18:59.320 for me to get my head around. 0:18:59.520 --> 0:19:02.320 Bleasure, it's fun to say, actually, and how. 0:19:02.160 --> 0:19:05.800 Increasingly businesses are mixing business with leisure. 0:19:06.160 --> 0:19:06.879 What's your life like? 0:19:06.920 --> 0:19:09.080 I mean, do you basically just go around and just 0:19:09.520 --> 0:19:13.439 experience the different experiences that you're properly and you just 0:19:13.480 --> 0:19:15.040 basically go there and you say, you know, I need 0:19:15.040 --> 0:19:17.520 a spa treatment to really understand the value that you're providing. 0:19:17.760 --> 0:19:19.800 That massage wasn't quite as good as it should have been. 0:19:19.880 --> 0:19:21.800 I need to do another one, exactly. Yeah, it's a 0:19:21.800 --> 0:19:22.199 lot of that. 0:19:22.480 --> 0:19:25.840 Yeah, it's not as interesting, just as you would like 0:19:25.920 --> 0:19:30.480 to believe. Business trips do tend to be to probably 0:19:30.840 --> 0:19:33.399 some more leisure arning to destinations than most. 0:19:33.480 --> 0:19:34.760 So it's fortunate in that regard. 0:19:35.000 --> 0:19:38.560 I spent a lot of time talking to the leaders 0:19:38.560 --> 0:19:41.760