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Speaker 1: Welcome to the Bloomberg p m L Podcast. I'm pim Fox.

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Speaker 1: Along with my co host Lisa A. Bramowitz. Each day

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Speaker 1: we bring you the most important, noteworthy, and useful interviews

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Speaker 1: for you and your money, whether you're at the grocery

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Speaker 1: store or the trading floor. Find the Bloomberg p m

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Speaker 1: L Podcast on Apple Podcasts, SoundCloud, and Bloomberg dot com.

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Speaker 1: Natural gas futures surging today the most at one point

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Speaker 1: since October. Now just the most in a year, but

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Speaker 1: still seeing people start to price in the cold spell

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Speaker 1: that we're expecting pretty soon. Joining us now to talk

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Speaker 1: about that as well as what's going on with you

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Speaker 1: around is Stephen Short, President of the Short Group. Steven,

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Speaker 1: thank you so much for being with us. Let's start

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Speaker 1: with natural gas. How much further do you expect prices

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Speaker 1: here to rise? I'll tell you what the disguised the

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Speaker 1: limit in natural gas. The natural gas market has been

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Speaker 1: getting a major flag for better part of the last

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Speaker 1: year that something is not right in the complex. The

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Speaker 1: bears and the perma bears in this market have continued

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Speaker 1: to trump at the fact that we have record production.

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Speaker 1: No doubt there. It is a fact we do have

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Speaker 1: record production. But what's also a fact is we do

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Speaker 1: not have enough gas in underground storage. So we are

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Speaker 1: going into this winter with the lowest inventories since two

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Speaker 1: thousand and five, about fift below the ten year average.

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Speaker 1: So what I've been asking readers of my daily report

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Speaker 1: over the past year, if we have all this production,

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Speaker 1: why don't we have greater supplies now? Their response is

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Speaker 1: going to be, well, we had a very hot summer,

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Speaker 1: so we had a live demand for gas th run

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Speaker 1: our air conditioners fair enough, but we also had the

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Speaker 1: third largest draw out in inventories last winter, and last

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Speaker 1: winter was one of the third warmest winters or in

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Speaker 1: the bottom third winters as far as heating demand is concerned,

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Speaker 1: over the last one hundred and twenty four years. So

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Speaker 1: the bottom line year is demand is keeping pace with

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Speaker 1: record production. Now that we get this cold front moving

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Speaker 1: in all of a sudden, now we're gonna start drawing

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Speaker 1: down inventories of low inventories to begin with sooner rather

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Speaker 1: than later, and the market is finally waking up to

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Speaker 1: this event. Stephen Short, is it also possible that because

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Speaker 1: the cost of natural gas has been low for so

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Speaker 1: long that oh, I was just gonna say that has

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Speaker 1: been low for so long and you have had a

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Speaker 1: switch over from higher cost types of electricity generation that

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Speaker 1: now that you're locked into natural gas, it makes sense

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Speaker 1: for them to maintain this price advantage. Absolutely there there

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Speaker 1: is a situation now where we continue to put all

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Speaker 1: of our eggs into one basket. Uh, We're we're working

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Speaker 1: down our fleet of nuclear generation. Coal is regardless, regardless

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Speaker 1: of the designs, where the intent of this administration, coal

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Speaker 1: is only going one way. So you're only real choices

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Speaker 1: a b to you. And look, I think wind is

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Speaker 1: a wonderful thing. I think solar and specific market areas

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Speaker 1: southern California, the Southwest so forth are great and help

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Speaker 1: contribute UH through power generation. But at the end of

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Speaker 1: the day, when we're talking about dispatchable energy, natural gas

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Speaker 1: and natural guests alone is your only real choice. And

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Speaker 1: when we continue to grow our demand being here domestically, commercially,

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Speaker 1: in industrial or as we're seeing now with the burgeoning

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Speaker 1: l en G market and of course at large exports

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Speaker 1: now via pipeline going into Mexico, we have a situation where, yes,

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Speaker 1: natural gas prices have been so depressed for so long,

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Speaker 1: right now the massive production is masking the fact that

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Speaker 1: and no one wants really wants to seem to focus

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Speaker 1: on the rising demand for natural gas. Natural gas prices

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Speaker 1: are cheap, very cheap compared to say oil, But I

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Speaker 1: don't expect that the last any time into the foreseeable future.

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Speaker 1: I just I thinking, of course, about the former t

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Speaker 1: x U or Energy Future, about how they basically did

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Speaker 1: this huge leverage BIO when natural gas prices were more

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Speaker 1: than fifteen dollars uh, and now they're treading below four dollars.

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Speaker 1: Do you see us going back to that fifteen dollar level?

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Speaker 1: Should things play out the way you expect heading into

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Speaker 1: your No, no, absolutely not. If we have to remember

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Speaker 1: the natural guess Priver Surgeon, this is when everyone, every

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Speaker 1: expert back in the two early two thousands thought the

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Speaker 1: United States was running out of natural gas. So all

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Speaker 1: of that fifteen dollar plus natural gas occurred before the

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Speaker 1: quote unquote shale gale. So we certainly have the problem.

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Speaker 1: What's been keeping gas prices so low for so long

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Speaker 1: is the fact that we're producing so much of it.

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Speaker 1: For instance, when Hurricane can Tune in two thousand five

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Speaker 1: ripped apart the southern U the shallow water Gulf of Mexico.

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Speaker 1: One fifth of the lower forty eight gas came from

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Speaker 1: that one market area and it was decimated by a hurricane.

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Speaker 1: Now less than four percent comes from that market area,

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Speaker 1: and a third comes from the Appalachian basin. So we've

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Speaker 1: had a glut in Pennsylvania, Ohio, West Virginia because we

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Speaker 1: did not have enough pipeline capacity to move that gas

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Speaker 1: into specific demand market areas. That is working itself out

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Speaker 1: right now. So we're looking at for the next couple

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Speaker 1: of years still a very volatile market, but we will ease.

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Speaker 1: But as we begin to open up access to that market,

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Speaker 1: prices will naturally rise. But no, we are going nowhere

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Speaker 1: near the fact of when we had ten eleven, twelve

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Speaker 1: fift natural gas. That's not on the table at this point,

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Speaker 1: but certainly sub three dollar gas, which is what we

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Speaker 1: had for most of this summer. Those days are are

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Speaker 1: going to be few and far in between. As I said,

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Speaker 1: into the fore foreseeable future, Stephen Short. If an investor

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Speaker 1: says I like what he says, it makes sense. I

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Speaker 1: want to go long natural gas. I want to capture

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Speaker 1: some of this increase. Will these price increases dropped to

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Speaker 1: the bottom line of companies such as Range Resources, is

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Speaker 1: e QT Resources, e o G Resources. Will they benefit absolutely? Uh,

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Speaker 1: they're clearly these are depending on the specific basin their end.

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Speaker 1: These are companies similar to oil. What what was the

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Speaker 1: big concern three or four years ago when oil prices

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Speaker 1: crashed to twenty five dollars a barrel. The producers can't compete.

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Speaker 1: But what has happened over the past three, three or

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Speaker 1: four years The producer has learned to compete. So, whereas

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Speaker 1: it's still hard to make oil a profit at thirty

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Speaker 1: dollars a barrel, companies are certainly making profits at five

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Speaker 1: dollars a barrel as the efficient skis have improved. And

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Speaker 1: it's the same situation in natural gas. Natural gas has

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Speaker 1: been even in the longer bear market that than oil

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Speaker 1: up until this past year. So certainly the producers are

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Speaker 1: more efficient and therefore we'll be able to squeeze out margins.

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Speaker 1: Anything above three dollars thirty cents is certainly going to

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Speaker 1: be a very nice return for these companies. Stephen, before

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Speaker 1: we let you go, I do want to get your

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Speaker 1: thoughts quickly on the price of crew it especially in

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Speaker 1: light of the Iranian sanctions that went back into effect. Today,

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Speaker 1: prices of of of West Texas are increasing by about

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Speaker 1: a percent, and I'm just wondering how much is that

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Speaker 1: due to the sanctions. Do you think that it's all

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Speaker 1: been priced in at this point? What's your take it

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Speaker 1: was priced in. What happened with oil is it was

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Speaker 1: an absolute bubble. We got through this summer one of

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Speaker 1: the strong the strongest demand seasons ever for oil. We

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Speaker 1: lost access to Canadian rol because of an outage either

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Speaker 1: an upgrader up in Calgary. We were exporting for the

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Speaker 1: first time oil and large amounts, and yet we came

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Speaker 1: through the summer relatively unscathed. But between the late summer

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Speaker 1: and September, we saw a massive rally and crude all prices.

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Speaker 1: That was purely speculation going ahead into the RAND sanctions,

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Speaker 1: because oil was rallying when oil demand. Refiners are in

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Speaker 1: their maintenance season. Oil demand is at its weakest. We've

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Speaker 1: since had a six correction, so oil prices are right

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Speaker 1: back to where they wore before. That bubble was Infla,

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Speaker 1: so we had that that that peak, and now we've

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Speaker 1: had the EBB in oil prices are now searching out

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Speaker 1: of bottom. We're probably right now looking Brent crude in

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Speaker 1: the low seventies, uh w G in the low sixties,

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Speaker 1: were probably searching out the bottom right here. In the

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Speaker 1: weeks ahead, demand is going to start to pick up again,

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Speaker 1: as he was, Refiners come out of maiden season, we

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Speaker 1: go into the holiday season, so we're looking at probably

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Speaker 1: a support of the market right now. We've got to

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Speaker 1: leave it there. Thanks very much, Stephen Short, president of

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Speaker 1: the Short Group based in Villanova, Pennsylvania. Price of oil

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Speaker 1: on the Nymex down seventeen per cent since the beginning

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Speaker 1: of October. Oil the Middle East, Saudi Arabia, Iran's President

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Speaker 1: Hassan Rohani said quote America wanted to cut to zero

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Speaker 1: Iran's oil sales, but we will continue to sell our

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Speaker 1: oil to break sanctions. He went on to say that

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Speaker 1: we are in a situation of war against the bullying enemy,

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Speaker 1: and that's us more about the region and these topics.

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Speaker 1: As Ambassador Adam Arelli, he is the former U. S

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Speaker 1: Ambassador to Bahrain and the former deputy spokesman of the U. S.

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Speaker 1: State Department. He joins us from Washington. Ambassador, really, thank

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Speaker 1: you very much for being with us. What are your

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Speaker 1: thoughts about the imposition the reimposition rather of U S

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Speaker 1: sanctions against Iran. I think it's a very big deal. Um,

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Speaker 1: this sanctions regime that the Trump administration has put into effect.

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Speaker 1: I think it's much much harder, much more comprehensive than

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Speaker 1: previous Thanks sanks in regimes. And I think it's going

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Speaker 1: to take a huge fight out of the Iranian economy. Ambassador, Really,

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Speaker 1: I'm wondering whether you think that it's going to have

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Speaker 1: positive effects, positive meaning the effects that the United States

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Speaker 1: intends with respect to imposing these hardships on Iran. Yes

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Speaker 1: and no. Um, I think in the short term it

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Speaker 1: will have the desired effect of squeezing the Iranian regime financially,

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Speaker 1: denying it resources that it uses to fund terror and

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Speaker 1: and and home and instability around the region. But over

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Speaker 1: the long term, the broader goal is to change your

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Speaker 1: running and behavior. More more broadly, I'm I'm a little

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Speaker 1: bit skeptical of that for a couple of reasons. Uh.

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Speaker 1: Number one, because, as Rohani says, they they're not bad

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Speaker 1: at getting around sanctions or at surviving under very stringent sanctions.

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Speaker 1: And number two, Um, you know, look, they're going to

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Speaker 1: try and wait out the Trump administration and there's there's

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Speaker 1: in two years. Actually in one day you might have

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Speaker 1: a democratic congress, which which makes it more difficult to

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Speaker 1: impose sanctions or to follow through on them. And look,

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Speaker 1: at the end of the day, what is it going

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Speaker 1: to take to get Iran to change the regime is

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Speaker 1: the regime has committed to this course. I don't think

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Speaker 1: you're going to have a change in policy or a

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Speaker 1: change in behavior unless you have a change in the regime,

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Speaker 1: and the sanctions aren't going to produce that. At the

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Speaker 1: same time that President Ruhani came out with his comments

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Speaker 1: about the sanctions, Iranian state television was showing footage of

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Speaker 1: defense drills taking place in the country's north, and Iran

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Speaker 1: has also launched its largest war games. What does that

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Speaker 1: tell you about the position of the Iranian government? I think,

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Speaker 1: well a couple of things. Number One, the Iranian government

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Speaker 1: obviously is defiant. They've got to put a brave face

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Speaker 1: on a bad situation. But to me, what's more telling

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Speaker 1: is what's happening inside Iran. And basically, you've had uninterrupted

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Speaker 1: protests by key sectors of the Iranian population since December

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Speaker 1: of nineteen of two thousands and seventeen uh the fact

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Speaker 1: of the matter is that Iran is in uh in

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Speaker 1: crisis of the people are rejecting the legitimacy of the

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Speaker 1: clerical regime which is ruled since the Irani A Revolution

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Speaker 1: in nineteen nine. So what you see coming out of Iran,

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Speaker 1: I think is more intended for a foreign audience than

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Speaker 1: a domestic audience, and domestically they've gotten real problems. Ambassador,

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Speaker 1: given your role as an ambassador, I'm wondering from the

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Speaker 1: United States perspective, what imposing these sanctions unilaterally does to

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Speaker 1: international relations. You know that European Union countries, a variety

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Speaker 1: of them have come out against the reimposition of these sanctions. Well,

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Speaker 1: I guess it depends on which which allies you're talking about.

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Speaker 1: The Middle Our Middle Eastern allies that the Arabia, Bahrain

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Speaker 1: where I was ambassador uh, the United Arab Emirates, Egypt

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Speaker 1: and others are greeting these sanctions with high fives all

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Speaker 1: the way around, because they're the ones that are most

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Speaker 1: at threat from Iran. The Europeans, You're right, it's a

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Speaker 1: little much more ambivalent about it. They don't They don't

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Speaker 1: like sanctions as a as a weapon. They see them

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Speaker 1: as a last resort. They're concerned that this will drive

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Speaker 1: Iran out of the nuclear agreement uh, and they will

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Speaker 1: resume their nuclear program. But at the end of the day,

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Speaker 1: the Europeans are going to have a choice to make

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Speaker 1: between the US market of three trillion and the Iranian

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Speaker 1: market of twenty billions. That's a pretty obvious choice to make. Ambassador.

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Speaker 1: One of the reasons we're focused on Iran is not

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Speaker 1: just oil sanctions, but also the conflict and the ongoing

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Speaker 1: tension between Iran and Saudi Arabia. Can you give us

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Speaker 1: any thoughts about the position of Saudi Crown Prince Mohammed

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Speaker 1: bin Salmon. Is he secure in his position? I think so. Um.

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Speaker 1: You know, the king, King, who is the ultimate authority

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Speaker 1: in Saudi Arabia, has has doubled down on his on

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Speaker 1: the kron Prince, his son. Uh. I don't see a

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Speaker 1: lot of internal opposition to the to the Kron Prince,

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Speaker 1: certainly not sufficient to dislodge him. And look again, at

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Speaker 1: the end of the day, there are two geostrategic pillars

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Speaker 1: of the Middle East, Iran and Saudi Arabia. We have

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Speaker 1: cast our lot with Saudi Arabia. I think that's a

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Speaker 1: smart move uh. And look, they're going to be critical

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Speaker 1: to making these sanctions work by increasing production to make

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Speaker 1: up for a shortfall in Iranian exports. Ambassador, do you

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Speaker 1: expect regime change at some point in the near future

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Speaker 1: in Iran? You know, the administration has been very careful

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Speaker 1: to say that regime change is not our policy. Uh.

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Speaker 1: But everything they're doing, I think is designed to create

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Speaker 1: the condition to where by the Iranian stake matters into

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Speaker 1: their own hand and and change course. Can you just

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Speaker 1: tell us briefly your perspective about Turkey and the role

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Speaker 1: that it is playing in the Middle East. Currently, Turkey

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Speaker 1: is playing a very disruptive and negative role in the

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Speaker 1: Middle East. They are, first of all, they're ruled by

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Speaker 1: a president who is more of a more of a

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Speaker 1: dictator and an authoritarian than almost anybody in the region

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Speaker 1: Number one. Number two, He is motivated by political by

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Speaker 1: religious ideology. He seeks to establish himself as the primary

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Speaker 1: influence of Sunni Islam, and he is challenging Saudi Arabia

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Speaker 1: in that role. Um. I don't think that Turkey is

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Speaker 1: playing a positive role, and they're certainly not acting as

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Speaker 1: a good ally of the United States. Ambassador Adam Morelli,

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Speaker 1: thank you so much for being with us. This eighty

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Speaker 1: three billion dollars of US government bonds and notes are

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Speaker 1: going to be sold, a record and it comes in

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Speaker 1: a sort of perilous time considering the mid term elections.

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Speaker 1: Joining us down to discuss John Others, senior editor for

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Speaker 1: Bloomberg Markets and a recent acquire of Bloomberg's from the

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Speaker 1: Financial Times, long time Financial Times columnists. We're very very

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Speaker 1: happy to have you, John, Thank you so much for

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Speaker 1: being here. So let's just start with that this record

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Speaker 1: amount of US debt sales, government debt sales at a

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Speaker 1: time when the midterm elections are kind of injecting quite

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Speaker 1: a bit of uncertainty here. Yes, it's it's very concerning.

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Speaker 1: I mean my latest column, I drew the analogy with

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Speaker 1: the shark from Jaws. You know, if you're worried about

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Speaker 1: the stock market, then you should be worried about bond yields.

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Speaker 1: And that ultimately has been the story for the last

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Speaker 1: twelve months or so, that every time people think that

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Speaker 1: it's safe to go back in the water, you get

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Speaker 1: a reminder from the bond market that that it's being

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Speaker 1: asked to bite off an all a lot, that the

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Speaker 1: Fed is actually into true QT and that the government

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Speaker 1: is needing to fund a very aggressive tax cut. So

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Speaker 1: what's the worst case scenario for bond investors this week?

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Speaker 1: My faint, faint hunch if you look at the past,

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Speaker 1: there is there is this urban myth that that congressional

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Speaker 1: gridlock is good for the stock market, which actually doesn't

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Speaker 1: hold water, but it is good for the bond market.

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Speaker 1: And there's a clear enough reason why that might be

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Speaker 1: the case. That administrations in the last two years before

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Speaker 1: before a presidential election plainly have an incentive to prime

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Speaker 1: the pump uh and and borrow more. And if you

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Speaker 1: have gridlock, if you have a majority against the administration

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Speaker 1: in the House, then plainly they're going to try to

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Speaker 1: stop them doing that. That is good for bonds. I suspect.

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Speaker 1: I think you're right. The degree of supply we're seeing

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Speaker 1: at the moment is going to get very problematic. Indeed

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Speaker 1: for the bond market. We are now possibly in the

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Speaker 1: really weird Allison ones are and situation where a democratic

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Speaker 1: majority in the House possibly were probably one of the

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Speaker 1: most left wing democratic majorities in generations, would be good

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Speaker 1: for the bond market because they're not going to let

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Speaker 1: another irresponsible tax cuts happen. They're probably going to play

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Speaker 1: politics and not let the Trump administration spend all that

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Speaker 1: it like, all that it would like to spend on.

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Speaker 1: So I feel slightly strange saying this because you wouldn't

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Speaker 1: normally regards the rise of a fairly left wing democratic

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Speaker 1: leadership group to the House as being good for the

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Speaker 1: bond market. But I suspect at this point it might

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Speaker 1: be if money becomes more expensive, doesn't that help inflate

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Speaker 1: away the debt? I suppose it does, but you still

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Speaker 1: need to issue plenty more of it in the in

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Speaker 1: the in the first case, I mean, are you talk

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Speaker 1: about isn't there but isn't there already appetite for treasuries?

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Speaker 1: I mean, you know, you got back into history and

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Speaker 1: people have been talking about how high interest rates are

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Speaker 1: going to kill everything. You go back to two there

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Speaker 1: were fourteen percent, and the world didn't come to an end.

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Speaker 1: The world didn't come to an end. The process of

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Speaker 1: getting to fourteen percent from five or six percent or

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Speaker 1: wherever we were in the early seventies wasn't particularly good

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Speaker 1: for the stock market and wasn't particularly good for the economy. Uh,

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Speaker 1: I'm not. I'm not saying they're bad in their own right.

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Speaker 1: Markets a balancing mechanisms. You've you've got to try to

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Speaker 1: clear markets. You've got to reconcile, find some equilibrium. The

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Speaker 1: journey to an equilibrium that will deal with whatever in

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Speaker 1: balance you have at the moment may well be very painful.

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Speaker 1: I'm not suggesting I personally think that the interest rates

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Speaker 1: will have to be higher than than they are at present,

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Speaker 1: and that that ultimately will be in the long term

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Speaker 1: interests of our children, grandchildren, whatever kind of political term

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Speaker 1: you want to use. In the short term, it might

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Speaker 1: hurt if you have and to want to make money

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Speaker 1: in the stock market. Well, one thing that I'm struggling

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Speaker 1: to understand is how the trade war that seems to

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Speaker 1: be ongoing between the US and China effects bonds, because

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Speaker 1: on one hand, it raises the price of certain goods.

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Speaker 1: On the other hand, it does seem to tamp down growth,

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Speaker 1: which is actually a headwind for inflation, and thus would

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Speaker 1: seem to suggest you would have a bid for bonds.

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Speaker 1: So when you sort of equal everything out, is sort

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Speaker 1: of protectionism and a trade war good for bonds or

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Speaker 1: bad for bonds, Well, you've got to throw in one

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Speaker 1: other aspect as well, which is the the demand for

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Speaker 1: treasuries from China. If China is making making much less

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Speaker 1: in the way of a surplus, it's buying fewer treasuries um.

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Speaker 1: So that you know, there are a number of different

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Speaker 1: factors that that feed in there my ultimate suspicion. My

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Speaker 1: suspicion is that we have a trade war if China

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Speaker 1: feels strong enough to have one. And if you have

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Speaker 1: a trade war, then that ultimately is very probably good

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Speaker 1: for bonds for bad reasons, that they become a haven

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Speaker 1: and people are getting out of risk assets. The reason

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Speaker 1: we might not have a trade warm. There is an

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Speaker 1: analogy here, I think with Reagan and Gorbatov and and

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Speaker 1: the Cold War in the eighties. There are two arguments

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Speaker 1: about One is that Reagan won the Cold War by

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Speaker 1: being aggressive and building up arms. The other argument he

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Speaker 1: is lucky because he happened to be there when the

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Speaker 1: Soviet Union, which was already about to collapse under its

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Speaker 1: own contradictions, did indeed collapse under its own contradictions. It

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Speaker 1: is possible looking at how the Chinese government is now

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Speaker 1: obviously anxious about credit, talking about Minsky moments um very

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Speaker 1: obviously very concerned about this, but resulting to um more stimulus,

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Speaker 1: it's possible that that that's that Trump could be lucky

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Speaker 1: like Reagan was. Thanks very much for being with us.

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Speaker 1: We're lucky to have you, John Authors as the senior

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Speaker 1: editor for Bloomberg Markets. You're listening to Bloomberg Markets with

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Speaker 1: Pim Fox and Lisa Braunwitz on Bloomberg Radio. We're broadcasting

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Speaker 1: from the Bloomberg Interactor Broker's studios, and the topic now

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Speaker 1: is hotels and hotel development. Joining us as an expert

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Speaker 1: is Gilda Perez Alvarado, the chief executive of America's Hotels

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Speaker 1: and Hospitality group for J A. L. Some people may

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Speaker 1: know it as Jones Lang Lasal. Thank you very much

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Speaker 1: for joining us. Tell us a little bit about J

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Speaker 1: L L and it's participation in the hotel industry, because

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Speaker 1: many people look at j A J L. L as brokers,

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Speaker 1: but they don't know that you've got a big remit

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Speaker 1: when it comes to the hospitality industry. That's right, So

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Speaker 1: first of all, thank you for having me. In terms

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Speaker 1: of what jail us, you are absolutely correct. We are

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Speaker 1: investment advisors, so our investment sales where we represent sellers

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Speaker 1: on an exclusive basis as our bread and butter. But

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Speaker 1: in addition to that, we also facilitate financing and we

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Speaker 1: have a very big strategic advisory and asset management division. Okay,

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Speaker 1: So right now, given sort of some of the softening

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Speaker 1: that we're seeing in commercial real estate prices, given the

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Speaker 1: fact that we did see that glut of hotels in

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Speaker 1: New York City, where are you seeing the biggest opportunities

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Speaker 1: for your clients YIELDA, So definitely New York. We are

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Speaker 1: now in the midst of a recovery story. This is

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Speaker 1: a surprise because New York was number one territory that

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Speaker 1: people said was overbuilt, overbuilt with hotels. It's listen, it's

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Speaker 1: the most resilient market worldwide. We have Ciena tremendous amount

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Speaker 1: of inventory come in over fift of new room supply.

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Speaker 1: Uh you and I were speaking earlier. There's also the

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Speaker 1: shadow inventory that is being propelled by Airbnb. But having

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Speaker 1: said that all of the new rooms have been absorbed,

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Speaker 1: demand is at an time high and we're finally seeing

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Speaker 1: recovery at the bottom line. Do you see that there's

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Speaker 1: going to be a consolidation as this recovery takes hold

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Speaker 1: because there are all these new concepts, the live work concept. Uh,

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Speaker 1: this has been something for example, the student hotels offering

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Speaker 1: of both accommodations but also student housing and workspaces. Absolutely,

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Speaker 1: you know, like with every other industry, bigger is better.

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Speaker 1: So we are definitely expecting more consolidation on the traditional

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Speaker 1: operator side. But you know, to the point that you

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Speaker 1: just raised, there's a conversion right now towards flexible usage

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Speaker 1: of real estate. And so yes, um, student accommodations. Look

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Speaker 1: at what we works is doing. They have, we work,

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Speaker 1: we live, we stay, uh shortly, we play. I mean

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Speaker 1: that's everything. We grow. You've seen sile and hare the childcare,

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Speaker 1: which I thought was great. Can you imagine if there

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Speaker 1: was childcare in every office? Anyway, moving right along, you

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Speaker 1: know that I'm wondering about Airbnb. You mentioned it, but

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Speaker 1: what about some of these profound disruptions the entire industry.

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Speaker 1: How much have they already affected valuations? And what do

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Speaker 1: you expect going forward? Um, listen, no one's been able

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Speaker 1: to measure the direct impact of Airbnb and too hospitality. Now,

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Speaker 1: one of the big impacts that we've had in New

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Speaker 1: York is typically before Airbnb, we had a hundred and

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Speaker 1: eighties sold out nights. When that happens, now the amount

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Speaker 1: of supply of Airbnb, the faucet just turns on, the

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Speaker 1: top turns on, so you could have in any one

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Speaker 1: night from twenty to forty rooms just come in the market.

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Speaker 1: Now there's more regulation from um you know, from the city,

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Speaker 1: from the public side looking into Airbnb, and to be honest,

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Speaker 1: it's been a great wake up call for the hospitality industry.

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Speaker 1: You know, disruption is good. We need to you know,

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Speaker 1: move on and people are now more focused on experiences,

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00:25:43,760 --> 00:25:46,880
Speaker 1: which is where Airbnb sells. Can we just go through

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00:25:46,920 --> 00:25:49,000
Speaker 1: some of the major markets, because you have a lot

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Speaker 1: of international experience. You ran the j A L business

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00:25:51,920 --> 00:25:55,800
Speaker 1: out of Madrid. Where where are the best markets? Right now?

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00:25:56,640 --> 00:25:59,720
Speaker 1: Our investors are focused on the markets with the most liquidity.

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00:26:00,040 --> 00:26:02,399
Speaker 1: So in the United States, that be your New York's,

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00:26:02,440 --> 00:26:05,320
Speaker 1: that'd be your San Francisco, l a people of Hawaii.

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00:26:05,400 --> 00:26:09,119
Speaker 1: Right now. In Europe it's all about the UK. It's London.

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00:26:09,200 --> 00:26:12,479
Speaker 1: It's really interesting despite Brexit, so you know, with the

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00:26:12,480 --> 00:26:15,000
Speaker 1: devaluation of the pound, you have tourism on the rise,

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00:26:15,000 --> 00:26:18,240
Speaker 1: so hotels are actually doing quite well. Western Europe is

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00:26:18,280 --> 00:26:22,240
Speaker 1: extremely important there's investors that have a resort theory as well,

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00:26:22,320 --> 00:26:26,280
Speaker 1: so Mediterranean Spanish resorts to be more specific, and then

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00:26:26,359 --> 00:26:29,920
Speaker 1: Hong Kong and Singapore definitely top picks. I'm just wondering.

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00:26:30,000 --> 00:26:31,919
Speaker 1: We do talk a lot here about the sort of

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00:26:31,960 --> 00:26:36,800
Speaker 1: geopolitical backdrop here of rising tensions and concerns about borders,

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00:26:36,840 --> 00:26:40,640
Speaker 1: and I'm wondering how that has affected tourism, if at all,

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00:26:41,000 --> 00:26:44,639
Speaker 1: and shifts the landscape for hotels and hospitality. To be honest,

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00:26:44,800 --> 00:26:48,520
Speaker 1: at least, we have not seen a major decrease or

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00:26:48,560 --> 00:26:51,879
Speaker 1: a major impact on on tourism. In fact, we're at

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00:26:51,880 --> 00:26:55,160
Speaker 1: all time record highs. I think from an investment perspective,

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00:26:55,200 --> 00:26:57,800
Speaker 1: it does play a very big role. So you know,

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00:26:58,040 --> 00:27:00,240
Speaker 1: old chips are on the US table right now. We

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00:27:00,280 --> 00:27:03,439
Speaker 1: have the strongest macroeconomic fundamentals out of any other mature

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00:27:03,480 --> 00:27:06,400
Speaker 1: market in the world, and so investors do want to

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00:27:06,480 --> 00:27:08,960
Speaker 1: keep on investing in the United States despite what is

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00:27:09,000 --> 00:27:14,760
Speaker 1: happening from a geopolitical level. Is there a specific metric

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00:27:15,040 --> 00:27:18,520
Speaker 1: or number that if you want to understand the hotel

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00:27:18,560 --> 00:27:20,920
Speaker 1: business you need to pay attention to. I mean cap

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00:27:21,040 --> 00:27:25,000
Speaker 1: rates for commercial real estate. Is it room nights, is

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00:27:25,040 --> 00:27:28,720
Speaker 1: it occupancy levels. What's the one thing that you should

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00:27:28,760 --> 00:27:31,199
Speaker 1: begin to understand if you want to be an expert

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00:27:31,200 --> 00:27:33,520
Speaker 1: in this. So for us, it's a combination of factors,

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00:27:33,560 --> 00:27:36,160
Speaker 1: but first one rough par revenue per available room. It's

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00:27:36,160 --> 00:27:39,520
Speaker 1: extremely important price per keys. We've seen a reset in

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00:27:39,560 --> 00:27:42,200
Speaker 1: some of the major markets New York in particular because

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00:27:42,200 --> 00:27:45,840
Speaker 1: of what we mentioned before from additional supply. UH cap

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00:27:45,920 --> 00:27:48,840
Speaker 1: rates are also important, but PIM to be honest, it

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00:27:48,960 --> 00:27:52,199
Speaker 1: varies across the sector, right, so we can have international

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00:27:52,200 --> 00:27:55,879
Speaker 1: investors be very happy buying luxury product at zero to

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00:27:56,160 --> 00:27:59,600
Speaker 1: negative yields and having you know, kind of the value

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00:27:59,600 --> 00:28:03,760
Speaker 1: buyer wanting to look at select service or economy at

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Speaker 1: six seven or more. Thank you so much for being

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Speaker 1: with us. Really interesting. Thank you so much. Hilda Perez Alvarado.

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00:28:10,600 --> 00:28:14,160
Speaker 1: She's chief executive of the America's Hotels and Hospitality group

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00:28:14,240 --> 00:28:18,359
Speaker 1: for J L L. Jones Lang LaSalle, Inc. Talking about

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00:28:18,440 --> 00:28:23,240
Speaker 1: all things hospitals and hospitality. Thanks for listening to the

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00:28:23,240 --> 00:28:26,320
Speaker 1: Bloomberg p m L podcast. You can subscribe and listen

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00:28:26,359 --> 00:28:30,520
Speaker 1: to interviews at Apple Podcasts, SoundCloud, or whatever podcast platform

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00:28:30,560 --> 00:28:34,040
Speaker 1: you prefer. I'm pim Fox. I'm on Twitter at pim

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00:28:34,080 --> 00:28:37,679
Speaker 1: fox I'm on Twitter at Lisa Abramo. It's one before

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00:28:37,680 --> 00:28:40,600
Speaker 1: the podcast. You can always catch us worldwide on Bloomberg

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00:28:40,680 --> 00:28:40,960
Speaker 1: Radio