Speaker 1: Welcome to the Bloomberg p m L Podcast. I'm pim Fox.
Speaker 1: Along with my co host Lisa A. Bramowitz. Each day
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Speaker 1: Natural gas futures surging today the most at one point
Speaker 1: since October. Now just the most in a year, but
Speaker 1: still seeing people start to price in the cold spell
Speaker 1: that we're expecting pretty soon. Joining us now to talk
Speaker 1: about that as well as what's going on with you
Speaker 1: around is Stephen Short, President of the Short Group. Steven,
Speaker 1: thank you so much for being with us. Let's start
Speaker 1: with natural gas. How much further do you expect prices
Speaker 1: here to rise? I'll tell you what the disguised the
Speaker 1: limit in natural gas. The natural gas market has been
Speaker 1: getting a major flag for better part of the last
Speaker 1: year that something is not right in the complex. The
Speaker 1: bears and the perma bears in this market have continued
Speaker 1: to trump at the fact that we have record production.
Speaker 1: No doubt there. It is a fact we do have
Speaker 1: record production. But what's also a fact is we do
Speaker 1: not have enough gas in underground storage. So we are
Speaker 1: going into this winter with the lowest inventories since two
Speaker 1: thousand and five, about fift below the ten year average.
Speaker 1: So what I've been asking readers of my daily report
Speaker 1: over the past year, if we have all this production,
Speaker 1: why don't we have greater supplies now? Their response is
Speaker 1: going to be, well, we had a very hot summer,
Speaker 1: so we had a live demand for gas th run
Speaker 1: our air conditioners fair enough, but we also had the
Speaker 1: third largest draw out in inventories last winter, and last
Speaker 1: winter was one of the third warmest winters or in
Speaker 1: the bottom third winters as far as heating demand is concerned,
Speaker 1: over the last one hundred and twenty four years. So
Speaker 1: the bottom line year is demand is keeping pace with
Speaker 1: record production. Now that we get this cold front moving
Speaker 1: in all of a sudden, now we're gonna start drawing
Speaker 1: down inventories of low inventories to begin with sooner rather
Speaker 1: than later, and the market is finally waking up to
Speaker 1: this event. Stephen Short, is it also possible that because
Speaker 1: the cost of natural gas has been low for so
Speaker 1: long that oh, I was just gonna say that has
Speaker 1: been low for so long and you have had a
Speaker 1: switch over from higher cost types of electricity generation that
Speaker 1: now that you're locked into natural gas, it makes sense
Speaker 1: for them to maintain this price advantage. Absolutely there there
Speaker 1: is a situation now where we continue to put all
Speaker 1: of our eggs into one basket. Uh, We're we're working
Speaker 1: down our fleet of nuclear generation. Coal is regardless, regardless
Speaker 1: of the designs, where the intent of this administration, coal
Speaker 1: is only going one way. So you're only real choices
Speaker 1: a b to you. And look, I think wind is
Speaker 1: a wonderful thing. I think solar and specific market areas
Speaker 1: southern California, the Southwest so forth are great and help
Speaker 1: contribute UH through power generation. But at the end of
Speaker 1: the day, when we're talking about dispatchable energy, natural gas
Speaker 1: and natural guests alone is your only real choice. And
Speaker 1: when we continue to grow our demand being here domestically, commercially,
Speaker 1: in industrial or as we're seeing now with the burgeoning
Speaker 1: l en G market and of course at large exports
Speaker 1: now via pipeline going into Mexico, we have a situation where, yes,
Speaker 1: natural gas prices have been so depressed for so long,
Speaker 1: right now the massive production is masking the fact that
Speaker 1: and no one wants really wants to seem to focus
Speaker 1: on the rising demand for natural gas. Natural gas prices
Speaker 1: are cheap, very cheap compared to say oil, But I
Speaker 1: don't expect that the last any time into the foreseeable future.
Speaker 1: I just I thinking, of course, about the former t
Speaker 1: x U or Energy Future, about how they basically did
Speaker 1: this huge leverage BIO when natural gas prices were more
Speaker 1: than fifteen dollars uh, and now they're treading below four dollars.
Speaker 1: Do you see us going back to that fifteen dollar level?
Speaker 1: Should things play out the way you expect heading into
Speaker 1: your No, no, absolutely not. If we have to remember
Speaker 1: the natural guess Priver Surgeon, this is when everyone, every
Speaker 1: expert back in the two early two thousands thought the
Speaker 1: United States was running out of natural gas. So all
Speaker 1: of that fifteen dollar plus natural gas occurred before the
Speaker 1: quote unquote shale gale. So we certainly have the problem.
Speaker 1: What's been keeping gas prices so low for so long
Speaker 1: is the fact that we're producing so much of it.
Speaker 1: For instance, when Hurricane can Tune in two thousand five
Speaker 1: ripped apart the southern U the shallow water Gulf of Mexico.
Speaker 1: One fifth of the lower forty eight gas came from
Speaker 1: that one market area and it was decimated by a hurricane.
Speaker 1: Now less than four percent comes from that market area,
Speaker 1: and a third comes from the Appalachian basin. So we've
Speaker 1: had a glut in Pennsylvania, Ohio, West Virginia because we
Speaker 1: did not have enough pipeline capacity to move that gas
Speaker 1: into specific demand market areas. That is working itself out
Speaker 1: right now. So we're looking at for the next couple
Speaker 1: of years still a very volatile market, but we will ease.
Speaker 1: But as we begin to open up access to that market,
Speaker 1: prices will naturally rise. But no, we are going nowhere
Speaker 1: near the fact of when we had ten eleven, twelve
Speaker 1: fift natural gas. That's not on the table at this point,
Speaker 1: but certainly sub three dollar gas, which is what we
Speaker 1: had for most of this summer. Those days are are
Speaker 1: going to be few and far in between. As I said,
Speaker 1: into the fore foreseeable future, Stephen Short. If an investor
Speaker 1: says I like what he says, it makes sense. I
Speaker 1: want to go long natural gas. I want to capture
Speaker 1: some of this increase. Will these price increases dropped to
Speaker 1: the bottom line of companies such as Range Resources, is
Speaker 1: e QT Resources, e o G Resources. Will they benefit absolutely? Uh,
Speaker 1: they're clearly these are depending on the specific basin their end.
Speaker 1: These are companies similar to oil. What what was the
Speaker 1: big concern three or four years ago when oil prices
Speaker 1: crashed to twenty five dollars a barrel. The producers can't compete.
Speaker 1: But what has happened over the past three, three or
Speaker 1: four years The producer has learned to compete. So, whereas
Speaker 1: it's still hard to make oil a profit at thirty
Speaker 1: dollars a barrel, companies are certainly making profits at five
Speaker 1: dollars a barrel as the efficient skis have improved. And
Speaker 1: it's the same situation in natural gas. Natural gas has
Speaker 1: been even in the longer bear market that than oil
Speaker 1: up until this past year. So certainly the producers are
Speaker 1: more efficient and therefore we'll be able to squeeze out margins.
Speaker 1: Anything above three dollars thirty cents is certainly going to
Speaker 1: be a very nice return for these companies. Stephen, before
Speaker 1: we let you go, I do want to get your
Speaker 1: thoughts quickly on the price of crew it especially in
Speaker 1: light of the Iranian sanctions that went back into effect. Today,
Speaker 1: prices of of of West Texas are increasing by about
Speaker 1: a percent, and I'm just wondering how much is that
Speaker 1: due to the sanctions. Do you think that it's all
Speaker 1: been priced in at this point? What's your take it
Speaker 1: was priced in. What happened with oil is it was
Speaker 1: an absolute bubble. We got through this summer one of
Speaker 1: the strong the strongest demand seasons ever for oil. We
Speaker 1: lost access to Canadian rol because of an outage either
Speaker 1: an upgrader up in Calgary. We were exporting for the
Speaker 1: first time oil and large amounts, and yet we came
Speaker 1: through the summer relatively unscathed. But between the late summer
Speaker 1: and September, we saw a massive rally and crude all prices.
Speaker 1: That was purely speculation going ahead into the RAND sanctions,
Speaker 1: because oil was rallying when oil demand. Refiners are in
Speaker 1: their maintenance season. Oil demand is at its weakest. We've
Speaker 1: since had a six correction, so oil prices are right
Speaker 1: back to where they wore before. That bubble was Infla,
Speaker 1: so we had that that that peak, and now we've
Speaker 1: had the EBB in oil prices are now searching out
Speaker 1: of bottom. We're probably right now looking Brent crude in
Speaker 1: the low seventies, uh w G in the low sixties,
Speaker 1: were probably searching out the bottom right here. In the
Speaker 1: weeks ahead, demand is going to start to pick up again,
Speaker 1: as he was, Refiners come out of maiden season, we
Speaker 1: go into the holiday season, so we're looking at probably
Speaker 1: a support of the market right now. We've got to
Speaker 1: leave it there. Thanks very much, Stephen Short, president of
Speaker 1: the Short Group based in Villanova, Pennsylvania. Price of oil
Speaker 1: on the Nymex down seventeen per cent since the beginning
Speaker 1: of October. Oil the Middle East, Saudi Arabia, Iran's President
Speaker 1: Hassan Rohani said quote America wanted to cut to zero
Speaker 1: Iran's oil sales, but we will continue to sell our
Speaker 1: oil to break sanctions. He went on to say that
Speaker 1: we are in a situation of war against the bullying enemy,
Speaker 1: and that's us more about the region and these topics.
Speaker 1: As Ambassador Adam Arelli, he is the former U. S
Speaker 1: Ambassador to Bahrain and the former deputy spokesman of the U. S.
Speaker 1: State Department. He joins us from Washington. Ambassador, really, thank
Speaker 1: you very much for being with us. What are your
Speaker 1: thoughts about the imposition the reimposition rather of U S
Speaker 1: sanctions against Iran. I think it's a very big deal. Um,
Speaker 1: this sanctions regime that the Trump administration has put into effect.
Speaker 1: I think it's much much harder, much more comprehensive than
Speaker 1: previous Thanks sanks in regimes. And I think it's going
Speaker 1: to take a huge fight out of the Iranian economy. Ambassador, Really,
Speaker 1: I'm wondering whether you think that it's going to have
Speaker 1: positive effects, positive meaning the effects that the United States
Speaker 1: intends with respect to imposing these hardships on Iran. Yes
Speaker 1: and no. Um, I think in the short term it
Speaker 1: will have the desired effect of squeezing the Iranian regime financially,
Speaker 1: denying it resources that it uses to fund terror and
Speaker 1: and and home and instability around the region. But over
Speaker 1: the long term, the broader goal is to change your
Speaker 1: running and behavior. More more broadly, I'm I'm a little
Speaker 1: bit skeptical of that for a couple of reasons. Uh.
Speaker 1: Number one, because, as Rohani says, they they're not bad
Speaker 1: at getting around sanctions or at surviving under very stringent sanctions.
Speaker 1: And number two, Um, you know, look, they're going to
Speaker 1: try and wait out the Trump administration and there's there's
Speaker 1: in two years. Actually in one day you might have
Speaker 1: a democratic congress, which which makes it more difficult to
Speaker 1: impose sanctions or to follow through on them. And look,
Speaker 1: at the end of the day, what is it going
Speaker 1: to take to get Iran to change the regime is
Speaker 1: the regime has committed to this course. I don't think
Speaker 1: you're going to have a change in policy or a
Speaker 1: change in behavior unless you have a change in the regime,
Speaker 1: and the sanctions aren't going to produce that. At the
Speaker 1: same time that President Ruhani came out with his comments
Speaker 1: about the sanctions, Iranian state television was showing footage of
Speaker 1: defense drills taking place in the country's north, and Iran
Speaker 1: has also launched its largest war games. What does that
Speaker 1: tell you about the position of the Iranian government? I think,
Speaker 1: well a couple of things. Number One, the Iranian government
Speaker 1: obviously is defiant. They've got to put a brave face
Speaker 1: on a bad situation. But to me, what's more telling
Speaker 1: is what's happening inside Iran. And basically, you've had uninterrupted
Speaker 1: protests by key sectors of the Iranian population since December
Speaker 1: of nineteen of two thousands and seventeen uh the fact
Speaker 1: of the matter is that Iran is in uh in
Speaker 1: crisis of the people are rejecting the legitimacy of the
Speaker 1: clerical regime which is ruled since the Irani A Revolution
Speaker 1: in nineteen nine. So what you see coming out of Iran,
Speaker 1: I think is more intended for a foreign audience than
Speaker 1: a domestic audience, and domestically they've gotten real problems. Ambassador,
Speaker 1: given your role as an ambassador, I'm wondering from the
Speaker 1: United States perspective, what imposing these sanctions unilaterally does to
Speaker 1: international relations. You know that European Union countries, a variety
Speaker 1: of them have come out against the reimposition of these sanctions. Well,
Speaker 1: I guess it depends on which which allies you're talking about.
Speaker 1: The Middle Our Middle Eastern allies that the Arabia, Bahrain
Speaker 1: where I was ambassador uh, the United Arab Emirates, Egypt
Speaker 1: and others are greeting these sanctions with high fives all
Speaker 1: the way around, because they're the ones that are most
Speaker 1: at threat from Iran. The Europeans, You're right, it's a
Speaker 1: little much more ambivalent about it. They don't They don't
Speaker 1: like sanctions as a as a weapon. They see them
Speaker 1: as a last resort. They're concerned that this will drive
Speaker 1: Iran out of the nuclear agreement uh, and they will
Speaker 1: resume their nuclear program. But at the end of the day,
Speaker 1: the Europeans are going to have a choice to make
Speaker 1: between the US market of three trillion and the Iranian
Speaker 1: market of twenty billions. That's a pretty obvious choice to make. Ambassador.
Speaker 1: One of the reasons we're focused on Iran is not
Speaker 1: just oil sanctions, but also the conflict and the ongoing
Speaker 1: tension between Iran and Saudi Arabia. Can you give us
Speaker 1: any thoughts about the position of Saudi Crown Prince Mohammed
Speaker 1: bin Salmon. Is he secure in his position? I think so. Um.
Speaker 1: You know, the king, King, who is the ultimate authority
Speaker 1: in Saudi Arabia, has has doubled down on his on
Speaker 1: the kron Prince, his son. Uh. I don't see a
Speaker 1: lot of internal opposition to the to the Kron Prince,
Speaker 1: certainly not sufficient to dislodge him. And look again, at
Speaker 1: the end of the day, there are two geostrategic pillars
Speaker 1: of the Middle East, Iran and Saudi Arabia. We have
Speaker 1: cast our lot with Saudi Arabia. I think that's a
Speaker 1: smart move uh. And look, they're going to be critical
Speaker 1: to making these sanctions work by increasing production to make
Speaker 1: up for a shortfall in Iranian exports. Ambassador, do you
Speaker 1: expect regime change at some point in the near future
Speaker 1: in Iran? You know, the administration has been very careful
Speaker 1: to say that regime change is not our policy. Uh.
Speaker 1: But everything they're doing, I think is designed to create
Speaker 1: the condition to where by the Iranian stake matters into
Speaker 1: their own hand and and change course. Can you just
Speaker 1: tell us briefly your perspective about Turkey and the role
Speaker 1: that it is playing in the Middle East. Currently, Turkey
Speaker 1: is playing a very disruptive and negative role in the
Speaker 1: Middle East. They are, first of all, they're ruled by
Speaker 1: a president who is more of a more of a
Speaker 1: dictator and an authoritarian than almost anybody in the region
Speaker 1: Number one. Number two, He is motivated by political by
Speaker 1: religious ideology. He seeks to establish himself as the primary
Speaker 1: influence of Sunni Islam, and he is challenging Saudi Arabia
Speaker 1: in that role. Um. I don't think that Turkey is
Speaker 1: playing a positive role, and they're certainly not acting as
Speaker 1: a good ally of the United States. Ambassador Adam Morelli,
Speaker 1: thank you so much for being with us. This eighty
Speaker 1: three billion dollars of US government bonds and notes are
Speaker 1: going to be sold, a record and it comes in
Speaker 1: a sort of perilous time considering the mid term elections.
Speaker 1: Joining us down to discuss John Others, senior editor for
Speaker 1: Bloomberg Markets and a recent acquire of Bloomberg's from the
Speaker 1: Financial Times, long time Financial Times columnists. We're very very
Speaker 1: happy to have you, John, Thank you so much for
Speaker 1: being here. So let's just start with that this record
Speaker 1: amount of US debt sales, government debt sales at a
Speaker 1: time when the midterm elections are kind of injecting quite
Speaker 1: a bit of uncertainty here. Yes, it's it's very concerning.
Speaker 1: I mean my latest column, I drew the analogy with
Speaker 1: the shark from Jaws. You know, if you're worried about
Speaker 1: the stock market, then you should be worried about bond yields.
Speaker 1: And that ultimately has been the story for the last
Speaker 1: twelve months or so, that every time people think that
Speaker 1: it's safe to go back in the water, you get
Speaker 1: a reminder from the bond market that that it's being
Speaker 1: asked to bite off an all a lot, that the
Speaker 1: Fed is actually into true QT and that the government
Speaker 1: is needing to fund a very aggressive tax cut. So
Speaker 1: what's the worst case scenario for bond investors this week?
Speaker 1: My faint, faint hunch if you look at the past,
Speaker 1: there is there is this urban myth that that congressional
Speaker 1: gridlock is good for the stock market, which actually doesn't
Speaker 1: hold water, but it is good for the bond market.
Speaker 1: And there's a clear enough reason why that might be
Speaker 1: the case. That administrations in the last two years before
Speaker 1: before a presidential election plainly have an incentive to prime
Speaker 1: the pump uh and and borrow more. And if you
Speaker 1: have gridlock, if you have a majority against the administration
Speaker 1: in the House, then plainly they're going to try to
Speaker 1: stop them doing that. That is good for bonds. I suspect.
Speaker 1: I think you're right. The degree of supply we're seeing
Speaker 1: at the moment is going to get very problematic. Indeed
Speaker 1: for the bond market. We are now possibly in the
Speaker 1: really weird Allison ones are and situation where a democratic
Speaker 1: majority in the House possibly were probably one of the
Speaker 1: most left wing democratic majorities in generations, would be good
Speaker 1: for the bond market because they're not going to let
Speaker 1: another irresponsible tax cuts happen. They're probably going to play
Speaker 1: politics and not let the Trump administration spend all that
Speaker 1: it like, all that it would like to spend on.
Speaker 1: So I feel slightly strange saying this because you wouldn't
Speaker 1: normally regards the rise of a fairly left wing democratic
Speaker 1: leadership group to the House as being good for the
Speaker 1: bond market. But I suspect at this point it might
Speaker 1: be if money becomes more expensive, doesn't that help inflate
Speaker 1: away the debt? I suppose it does, but you still
Speaker 1: need to issue plenty more of it in the in
Speaker 1: the in the first case, I mean, are you talk
Speaker 1: about isn't there but isn't there already appetite for treasuries?
Speaker 1: I mean, you know, you got back into history and
Speaker 1: people have been talking about how high interest rates are
Speaker 1: going to kill everything. You go back to two there
Speaker 1: were fourteen percent, and the world didn't come to an end.
Speaker 1: The world didn't come to an end. The process of
Speaker 1: getting to fourteen percent from five or six percent or
Speaker 1: wherever we were in the early seventies wasn't particularly good
Speaker 1: for the stock market and wasn't particularly good for the economy. Uh,
Speaker 1: I'm not. I'm not saying they're bad in their own right.
Speaker 1: Markets a balancing mechanisms. You've you've got to try to
Speaker 1: clear markets. You've got to reconcile, find some equilibrium. The
Speaker 1: journey to an equilibrium that will deal with whatever in
Speaker 1: balance you have at the moment may well be very painful.
Speaker 1: I'm not suggesting I personally think that the interest rates
Speaker 1: will have to be higher than than they are at present,
Speaker 1: and that that ultimately will be in the long term
Speaker 1: interests of our children, grandchildren, whatever kind of political term
Speaker 1: you want to use. In the short term, it might
Speaker 1: hurt if you have and to want to make money
Speaker 1: in the stock market. Well, one thing that I'm struggling
Speaker 1: to understand is how the trade war that seems to
Speaker 1: be ongoing between the US and China effects bonds, because
Speaker 1: on one hand, it raises the price of certain goods.
Speaker 1: On the other hand, it does seem to tamp down growth,
Speaker 1: which is actually a headwind for inflation, and thus would
Speaker 1: seem to suggest you would have a bid for bonds.
Speaker 1: So when you sort of equal everything out, is sort
Speaker 1: of protectionism and a trade war good for bonds or
Speaker 1: bad for bonds, Well, you've got to throw in one
Speaker 1: other aspect as well, which is the the demand for
Speaker 1: treasuries from China. If China is making making much less
Speaker 1: in the way of a surplus, it's buying fewer treasuries um.
Speaker 1: So that you know, there are a number of different
Speaker 1: factors that that feed in there my ultimate suspicion. My
Speaker 1: suspicion is that we have a trade war if China
Speaker 1: feels strong enough to have one. And if you have
Speaker 1: a trade war, then that ultimately is very probably good
Speaker 1: for bonds for bad reasons, that they become a haven
Speaker 1: and people are getting out of risk assets. The reason
Speaker 1: we might not have a trade warm. There is an
Speaker 1: analogy here, I think with Reagan and Gorbatov and and
Speaker 1: the Cold War in the eighties. There are two arguments
Speaker 1: about One is that Reagan won the Cold War by
Speaker 1: being aggressive and building up arms. The other argument he
Speaker 1: is lucky because he happened to be there when the
Speaker 1: Soviet Union, which was already about to collapse under its
Speaker 1: own contradictions, did indeed collapse under its own contradictions. It
Speaker 1: is possible looking at how the Chinese government is now
Speaker 1: obviously anxious about credit, talking about Minsky moments um very
Speaker 1: obviously very concerned about this, but resulting to um more stimulus,
Speaker 1: it's possible that that that's that Trump could be lucky
Speaker 1: like Reagan was. Thanks very much for being with us.
Speaker 1: We're lucky to have you, John Authors as the senior
Speaker 1: editor for Bloomberg Markets. You're listening to Bloomberg Markets with
Speaker 1: Pim Fox and Lisa Braunwitz on Bloomberg Radio. We're broadcasting
Speaker 1: from the Bloomberg Interactor Broker's studios, and the topic now
Speaker 1: is hotels and hotel development. Joining us as an expert
Speaker 1: is Gilda Perez Alvarado, the chief executive of America's Hotels
Speaker 1: and Hospitality group for J A. L. Some people may
Speaker 1: know it as Jones Lang Lasal. Thank you very much
Speaker 1: for joining us. Tell us a little bit about J
Speaker 1: L L and it's participation in the hotel industry, because
Speaker 1: many people look at j A J L. L as brokers,
Speaker 1: but they don't know that you've got a big remit
Speaker 1: when it comes to the hospitality industry. That's right, So
Speaker 1: first of all, thank you for having me. In terms
Speaker 1: of what jail us, you are absolutely correct. We are
Speaker 1: investment advisors, so our investment sales where we represent sellers
Speaker 1: on an exclusive basis as our bread and butter. But
Speaker 1: in addition to that, we also facilitate financing and we
Speaker 1: have a very big strategic advisory and asset management division. Okay,
Speaker 1: So right now, given sort of some of the softening
Speaker 1: that we're seeing in commercial real estate prices, given the
Speaker 1: fact that we did see that glut of hotels in
Speaker 1: New York City, where are you seeing the biggest opportunities
Speaker 1: for your clients YIELDA, So definitely New York. We are
Speaker 1: now in the midst of a recovery story. This is
Speaker 1: a surprise because New York was number one territory that
Speaker 1: people said was overbuilt, overbuilt with hotels. It's listen, it's
Speaker 1: the most resilient market worldwide. We have Ciena tremendous amount
Speaker 1: of inventory come in over fift of new room supply.
Speaker 1: Uh you and I were speaking earlier. There's also the
Speaker 1: shadow inventory that is being propelled by Airbnb. But having
Speaker 1: said that all of the new rooms have been absorbed,
Speaker 1: demand is at an time high and we're finally seeing
Speaker 1: recovery at the bottom line. Do you see that there's
Speaker 1: going to be a consolidation as this recovery takes hold
Speaker 1: because there are all these new concepts, the live work concept. Uh,
Speaker 1: this has been something for example, the student hotels offering
Speaker 1: of both accommodations but also student housing and workspaces. Absolutely,
Speaker 1: you know, like with every other industry, bigger is better.
Speaker 1: So we are definitely expecting more consolidation on the traditional
Speaker 1: operator side. But you know, to the point that you
Speaker 1: just raised, there's a conversion right now towards flexible usage
Speaker 1: of real estate. And so yes, um, student accommodations. Look
Speaker 1: at what we works is doing. They have, we work,
Speaker 1: we live, we stay, uh shortly, we play. I mean
Speaker 1: that's everything. We grow. You've seen sile and hare the childcare,
Speaker 1: which I thought was great. Can you imagine if there
Speaker 1: was childcare in every office? Anyway, moving right along, you
Speaker 1: know that I'm wondering about Airbnb. You mentioned it, but
Speaker 1: what about some of these profound disruptions the entire industry.
Speaker 1: How much have they already affected valuations? And what do
Speaker 1: you expect going forward? Um, listen, no one's been able
Speaker 1: to measure the direct impact of Airbnb and too hospitality. Now,
Speaker 1: one of the big impacts that we've had in New
Speaker 1: York is typically before Airbnb, we had a hundred and
Speaker 1: eighties sold out nights. When that happens, now the amount
Speaker 1: of supply of Airbnb, the faucet just turns on, the
Speaker 1: top turns on, so you could have in any one
Speaker 1: night from twenty to forty rooms just come in the market.
Speaker 1: Now there's more regulation from um you know, from the city,
Speaker 1: from the public side looking into Airbnb, and to be honest,
Speaker 1: it's been a great wake up call for the hospitality industry.
Speaker 1: You know, disruption is good. We need to you know,
Speaker 1: move on and people are now more focused on experiences,
Speaker 1: which is where Airbnb sells. Can we just go through
Speaker 1: some of the major markets, because you have a lot
Speaker 1: of international experience. You ran the j A L business
Speaker 1: out of Madrid. Where where are the best markets? Right now?
Speaker 1: Our investors are focused on the markets with the most liquidity.
Speaker 1: So in the United States, that be your New York's,
Speaker 1: that'd be your San Francisco, l a people of Hawaii.
Speaker 1: Right now. In Europe it's all about the UK. It's London.
Speaker 1: It's really interesting despite Brexit, so you know, with the
Speaker 1: devaluation of the pound, you have tourism on the rise,
Speaker 1: so hotels are actually doing quite well. Western Europe is
Speaker 1: extremely important there's investors that have a resort theory as well,
Speaker 1: so Mediterranean Spanish resorts to be more specific, and then
Speaker 1: Hong Kong and Singapore definitely top picks. I'm just wondering.
Speaker 1: We do talk a lot here about the sort of
Speaker 1: geopolitical backdrop here of rising tensions and concerns about borders,
Speaker 1: and I'm wondering how that has affected tourism, if at all,
Speaker 1: and shifts the landscape for hotels and hospitality. To be honest,
Speaker 1: at least, we have not seen a major decrease or
Speaker 1: a major impact on on tourism. In fact, we're at
Speaker 1: all time record highs. I think from an investment perspective,
Speaker 1: it does play a very big role. So you know,
Speaker 1: old chips are on the US table right now. We
Speaker 1: have the strongest macroeconomic fundamentals out of any other mature
Speaker 1: market in the world, and so investors do want to
Speaker 1: keep on investing in the United States despite what is
Speaker 1: happening from a geopolitical level. Is there a specific metric
Speaker 1: or number that if you want to understand the hotel
Speaker 1: business you need to pay attention to. I mean cap
Speaker 1: rates for commercial real estate. Is it room nights, is
Speaker 1: it occupancy levels. What's the one thing that you should
Speaker 1: begin to understand if you want to be an expert
Speaker 1: in this. So for us, it's a combination of factors,
Speaker 1: but first one rough par revenue per available room. It's
Speaker 1: extremely important price per keys. We've seen a reset in
Speaker 1: some of the major markets New York in particular because
Speaker 1: of what we mentioned before from additional supply. UH cap
Speaker 1: rates are also important, but PIM to be honest, it
Speaker 1: varies across the sector, right, so we can have international
Speaker 1: investors be very happy buying luxury product at zero to
Speaker 1: negative yields and having you know, kind of the value
Speaker 1: buyer wanting to look at select service or economy at
Speaker 1: six seven or more. Thank you so much for being
Speaker 1: with us. Really interesting. Thank you so much. Hilda Perez Alvarado.
Speaker 1: She's chief executive of the America's Hotels and Hospitality group
Speaker 1: for J L L. Jones Lang LaSalle, Inc. Talking about
Speaker 1: all things hospitals and hospitality. Thanks for listening to the
Speaker 1: Bloomberg p m L podcast. You can subscribe and listen
Speaker 1: to interviews at Apple Podcasts, SoundCloud, or whatever podcast platform
Speaker 1: you prefer. I'm pim Fox. I'm on Twitter at pim
Speaker 1: fox I'm on Twitter at Lisa Abramo. It's one before
Speaker 1: the podcast. You can always catch us worldwide on Bloomberg
Speaker 1: Radio