WEBVTT - Arm IPO, Choice Hotels, Banks, and Microsoft (Podcast) 0:00:00.840 --> 0:00:04.000 Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside 0:00:04.040 --> 0:00:05.280 my co host Matt Miller. 0:00:05.640 --> 0:00:09.600 Every business day we bring you interviews from CEOs, market pros, 0:00:09.720 --> 0:00:13.600 and Bloomberg experts, along with essential market moving news. 0:00:14.160 --> 0:00:17.279 Find the Bloomberg Markets Podcast on Apple Podcasts or wherever 0:00:17.360 --> 0:00:21.279 you listen to podcasts, and at Bloomberg dot com slash podcast. Hey, 0:00:21.320 --> 0:00:24.360 we actually have an IPO to talk about, a big 0:00:24.400 --> 0:00:26.759 one coming up here. We want to get right to it. 0:00:26.800 --> 0:00:29.240 Billy Lipschultz, he covers all that IPO stuff and all 0:00:29.280 --> 0:00:32.680 the new market stuff for Bloomberg News. He joined us 0:00:32.680 --> 0:00:35.360 here in our Bloomberg Interactive Broker studio. All right, so, 0:00:35.479 --> 0:00:41.120 Bailly arm, it's part of the soft bank. They need 0:00:41.159 --> 0:00:45.880 to convince the market that as a chip designer, they 0:00:45.960 --> 0:00:50.440 are a great play on AI. How did they do that? 0:00:50.880 --> 0:00:53.920 The big sales pitch is being in AI, being in 0:00:53.960 --> 0:00:57.240 machine learning, being in and we looked at the filings 0:00:58.040 --> 0:01:02.360 the company actually only mentioned AI about fifty times. But 0:01:02.440 --> 0:01:04.839 the big focus will be when they're talking to investors 0:01:05.240 --> 0:01:08.800 is how they can get and become really a staple 0:01:08.880 --> 0:01:12.000 of those chips that are going to increasingly be used 0:01:12.160 --> 0:01:14.440 to bring AI to things like your cell phone and 0:01:14.480 --> 0:01:18.880 be able to incorporate their technology into data centers, which 0:01:18.880 --> 0:01:21.800 obviously are very very lucrative for the technology in the 0:01:21.840 --> 0:01:23.600 semiconductor space now. 0:01:23.640 --> 0:01:27.319 So the challenge there for sorry rot but is because 0:01:27.360 --> 0:01:29.600 the challenge is, if I'm sitting on the other side 0:01:29.600 --> 0:01:32.000 of the table or I'm at the Rubber Chicken lunch 0:01:32.000 --> 0:01:34.760 in New York, my thing is, but you guys aren't. 0:01:35.160 --> 0:01:37.600 So I have to believe that you aren't now really 0:01:37.640 --> 0:01:40.479 an AI play, but I have to believe that you're 0:01:40.480 --> 0:01:41.480 going to get there right. 0:01:41.680 --> 0:01:44.600 Yeah, And they, according to their data, are in something 0:01:44.640 --> 0:01:47.640 like ninety nine percent of smartphones. So their whole pitch 0:01:47.680 --> 0:01:50.200 is that smartphone market is drying. We've seen that play 0:01:50.240 --> 0:01:53.360 out with earnings from Qualcom, earnings from Apple. Well, now 0:01:53.360 --> 0:01:54.960 they're trying to skate to where the puck's going to 0:01:55.000 --> 0:01:57.560 be data centers AI and being able to use their 0:01:57.600 --> 0:02:01.559 technology and have customers used their blueprints, which they sell, 0:02:01.680 --> 0:02:06.360 collect royalties, some nice royalties off of other companies using that, 0:02:06.400 --> 0:02:09.120 and that's kind of where they're trying to position themselves, 0:02:09.360 --> 0:02:12.160 really not saying in video is one of their many customers, 0:02:12.200 --> 0:02:14.200 but they name dropped in Vida a few times as 0:02:14.240 --> 0:02:17.280 people who they're operating and working with and letting them 0:02:17.400 --> 0:02:19.000 use some of their AI technologies. 0:02:19.400 --> 0:02:22.600 So what has in Nvidia said about ARM? I mean, 0:02:23.240 --> 0:02:26.679 aren't the two pretty closely connected more than just sort 0:02:26.720 --> 0:02:29.840 of a customer relationship. 0:02:29.560 --> 0:02:31.960 And Video was set up to buy the company a 0:02:32.000 --> 0:02:34.800 few years ago and that deal fell apart. The big 0:02:34.800 --> 0:02:37.840 thing when you look at some of these Bloomberg reports 0:02:37.880 --> 0:02:41.160 is that ARM is talking to what they're framing as 0:02:41.240 --> 0:02:45.200 strategic investors in Vidia, according to Bloomberg reports, among those 0:02:45.240 --> 0:02:48.400 potential investors alongside the likes of Amazon and Intel, to 0:02:48.400 --> 0:02:50.520 actually buy into the IPO. So you're trying to look 0:02:50.560 --> 0:02:53.520 at the way ARMS positioning itself to benefit from not 0:02:53.560 --> 0:02:56.560 only selling to these customers and benefiting from their sales, 0:02:56.600 --> 0:02:58.840 but also getting them to buy into the stock, which 0:02:59.200 --> 0:03:03.919 creates kind of that familial environment for soft Bank, which 0:03:03.919 --> 0:03:06.519 has had a pretty rough go losing thirty billion dollars 0:03:06.600 --> 0:03:06.960 last year. 0:03:07.000 --> 0:03:08.480 Yeah, this would be a big home run for them. 0:03:08.680 --> 0:03:11.480 Great great story related to this on the Bloomberg terminal 0:03:11.560 --> 0:03:15.240 by my buddy Alex Barinka and min Yng Lee. It 0:03:15.360 --> 0:03:19.359 says ARM needed thirty five hundred words to explain it's 0:03:19.480 --> 0:03:23.520 China risk before IPO. Wow, So they've got a China 0:03:23.560 --> 0:03:25.760 risk here, So I guess investors have to get what 0:03:25.919 --> 0:03:26.480 is that risk? 0:03:26.560 --> 0:03:29.799 I guess ARM laid out that they generate about a 0:03:29.880 --> 0:03:33.000 quarter of their revenue from China and that's driven by 0:03:33.240 --> 0:03:36.360 ARM China, a unit that basically them in soft Bank 0:03:36.360 --> 0:03:39.080 are partnered with but they don't control. So there's uncertainty 0:03:39.120 --> 0:03:42.480 around slowing demand in China, which we've been seeing play out. 0:03:42.520 --> 0:03:45.200 We've seen in the filing that the company's royalties coming 0:03:45.200 --> 0:03:47.680 from China actually slowed in the last fiscal year. 0:03:47.720 --> 0:03:49.520 They warned that could continue to slow. 0:03:49.720 --> 0:03:52.160 And that's all on top of geopolitical risk with the 0:03:52.280 --> 0:03:56.200 US UK anything going on as it relates to China 0:03:56.680 --> 0:03:58.400 in Western countries. And you look at some of the 0:03:58.440 --> 0:04:01.320 reactions we've seen from Bloomberg and two eligence really laying 0:04:01.320 --> 0:04:06.000 out that China risks paired with slumping smartphone and consumer 0:04:06.040 --> 0:04:09.240 electronic sales, those are the key concerns for investors going 0:04:09.280 --> 0:04:10.920 through that's filing that hit yesterday evening. 0:04:11.400 --> 0:04:13.480 By the way, in terms of the proceeds, this is 0:04:13.480 --> 0:04:16.720 a sixty to seventy billion dollar valuation right as far 0:04:16.760 --> 0:04:20.240 as we've reported as far as we've reported, which means 0:04:20.279 --> 0:04:21.640 what they walk away. 0:04:21.480 --> 0:04:22.880 With soft Bank. 0:04:23.279 --> 0:04:25.480 Last week reported soft Bank would walk away with the 0:04:25.480 --> 0:04:27.680 eight to ten billion dollars because they bought back the 0:04:27.720 --> 0:04:30.920 remaining twenty five percent from their own vision fund, so 0:04:30.960 --> 0:04:33.920 they are selling shares into the open market eight to ten. 0:04:33.960 --> 0:04:35.599 We've been reporting that maybe it's going to be a 0:04:35.600 --> 0:04:38.120 bit lower because now they own the entirety of the company, 0:04:38.400 --> 0:04:40.560 So soft Bank actually brings in all of the sales 0:04:40.560 --> 0:04:42.000 and none of that money is going. 0:04:41.800 --> 0:04:45.920 To exactly that's the point. So none of these proceeds 0:04:46.000 --> 0:04:50.280 go get reinvested into arms business. Yep, that's an important point. 0:04:50.040 --> 0:04:53.400 And it goes back to soft Bank being able to 0:04:53.440 --> 0:04:55.599 take that cash and redeploy it to some of the 0:04:55.640 --> 0:04:59.200 other startups that they've tried to back and are looking 0:04:59.200 --> 0:05:00.000 to back and try to. 0:05:00.000 --> 0:05:03.400 All Right, here's another thing. I wonder what our reporting 0:05:03.400 --> 0:05:05.880 is showing, because last quarter day the company had little 0:05:05.880 --> 0:05:09.279 to know revenue growth dropped about one percent year. Okay, 0:05:09.360 --> 0:05:12.360 so give you that background. Is there any view coming 0:05:12.440 --> 0:05:13.680 from the street on valuation? 0:05:13.839 --> 0:05:18.000 Yet we saw in yours truly reported on this, we 0:05:18.040 --> 0:05:21.920 saw a burnstea note laying out expectations around forty billion. 0:05:21.960 --> 0:05:24.719 That was last month when we crunched the numbers looking 0:05:24.760 --> 0:05:28.680 at some comps they've We've been taught hearing investors in 0:05:28.720 --> 0:05:31.520 Wall Street talking up Synopsis and Cadence as better comps. 0:05:31.640 --> 0:05:33.479 When you look at a price of sales trailing on 0:05:33.520 --> 0:05:35.520 a twelve month average, evaluation comes. 0:05:35.320 --> 0:05:37.960 Closer to thirty two to forty three billion, So and 0:05:38.000 --> 0:05:40.360 the company is looking for what sixty to seventy as 0:05:40.360 --> 0:05:42.640 far as we've and they bought back that bit spread there. 0:05:42.680 --> 0:05:45.600 My friend, Well, they also bought back with that repurchase 0:05:45.680 --> 0:05:49.040 from SoftBank, they paid about sixteen billion for that twenty 0:05:49.040 --> 0:05:51.560 five percent stake, so sixty four billion dollars baked in. 0:05:51.800 --> 0:05:54.000 But the one thing that was interesting in the filing 0:05:54.400 --> 0:05:57.320 is SoftBank's warns, and this is verbatim. Investors are cautioned 0:05:57.320 --> 0:06:00.360 that the purchase price paid may not be indicative of 0:06:00.480 --> 0:06:05.400 it is not intended to reflect expectations regarding the completed deal. 0:06:05.839 --> 0:06:09.560 So they basically are warning that they paid sixty evaluation 0:06:09.640 --> 0:06:12.560 of sixty four billion, forget that that's part of a 0:06:12.560 --> 0:06:15.839 different deal. Don't worry about ascribing that valuation money, because 0:06:15.839 --> 0:06:17.800 that's the first place I would go to exactly, and 0:06:17.839 --> 0:06:20.800 that's what we're talking to investors and people who want. 0:06:20.680 --> 0:06:23.279 It's not going to be an easy deal, is it. 0:06:23.279 --> 0:06:24.520 It's going to be a fascinating deal. 0:06:24.600 --> 0:06:26.880 I mean, we've talked about at length about the dearth 0:06:26.920 --> 0:06:29.240 of IPOs, and the one view that I've been getting 0:06:29.279 --> 0:06:31.200 from a number of my sources is that arm is 0:06:31.240 --> 0:06:33.359 the type of company and they've stuck to their plans 0:06:33.400 --> 0:06:35.800 to go public this year that could really go public 0:06:35.800 --> 0:06:38.839 in most any market. It was public once before, back 0:06:38.839 --> 0:06:41.240 in twenty sixteen. Soft Bank took it private. It's more 0:06:41.279 --> 0:06:44.240 of an almost pe style play as opposed to your 0:06:44.279 --> 0:06:47.279 traditional money burning VC. 0:06:47.240 --> 0:06:49.200 Backed company, and it's the only game in town if 0:06:49.200 --> 0:06:52.880 you want access to a new issue. If it does well, 0:06:53.000 --> 0:06:55.480 I guess there'll be a cascade of IPOs that follow. 0:06:56.480 --> 0:06:59.200 Yes and no. We're expecting potentially Instacart to flip their 0:06:59.279 --> 0:07:01.719 S one sometime as early as this week. Clay Vio's 0:07:01.760 --> 0:07:04.280 another company. The big thing that I've been talking to 0:07:04.480 --> 0:07:10.040 my contacts, their view is fourth quarter twenty twenty three 0:07:10.040 --> 0:07:12.360 will be interesting with some of these big companies that 0:07:12.560 --> 0:07:14.720 probably should have or could go at most anytime. But 0:07:14.720 --> 0:07:16.640 the big focus is going to be early twenty twenty 0:07:16.680 --> 0:07:18.480 four when you're going to get more of those sweet 0:07:18.480 --> 0:07:19.320 spot IPOs. 0:07:19.640 --> 0:07:24.960 Just on a different topic completely. We were talking and 0:07:25.040 --> 0:07:27.880 have been talking for a long time with Ira Jersey 0:07:27.880 --> 0:07:31.040 about soccer, and I know messis come here, so it's 0:07:31.040 --> 0:07:35.120 pretty exciting for a sport that otherwise is just deadly 0:07:35.160 --> 0:07:41.800 boring to watch. Why doesn't professional lacrosse get a big 0:07:41.800 --> 0:07:43.960 pick up in this country? And I ask you, Bailey, 0:07:44.120 --> 0:07:48.600 because I've noticed that you were a lacrosse beat reporter 0:07:48.680 --> 0:07:49.520 at Citrus TV. 0:07:50.200 --> 0:07:50.400 Yeah. 0:07:50.440 --> 0:07:53.360 Man, I cut my teeth at at Syracuse University covering 0:07:53.360 --> 0:07:56.680 which I still view is probably the best men's lacrosse 0:07:56.720 --> 0:07:58.600 college team that did not win a national title. 0:07:58.640 --> 0:08:01.800 They were absolutely stacked. Yeah, And back when we were kids, 0:08:01.840 --> 0:08:03.600 that was it. It was Em and Jane Johns Hopkins 0:08:03.680 --> 0:08:06.040 and then now everybody plays its big tens all getting 0:08:06.040 --> 0:08:06.480 in on it. No. 0:08:06.560 --> 0:08:08.760 But that's interesting, Matt, because coming from the West Coast, 0:08:08.880 --> 0:08:09.680 I knew like two. 0:08:09.600 --> 0:08:10.760 People who played lacrosse. 0:08:10.800 --> 0:08:14.320 It was a rich kid San Diego sport that being 0:08:14.320 --> 0:08:16.600 east of LA was like, we play football, that's what 0:08:16.960 --> 0:08:17.400 men do. 0:08:17.720 --> 0:08:20.080 And in Ohio, by the way, same thing. Growing up 0:08:20.120 --> 0:08:22.960 in Ohio lacrosse with something only kids in like New 0:08:23.080 --> 0:08:26.440 Jersey and Connecticut played. But now at you know the 0:08:26.440 --> 0:08:28.240 schools that I all the schools I got kicked out 0:08:28.280 --> 0:08:30.600 of in Central Ohio, they all play lacrosse. 0:08:30.760 --> 0:08:33.480 Well, it's accelerating. The issue is in the this is 0:08:33.520 --> 0:08:33.959 the pitch. 0:08:34.000 --> 0:08:36.280 And I did a small stint covering sports here at 0:08:36.280 --> 0:08:39.800 Bloomberg and sports business is lacrosse is going to be 0:08:40.480 --> 0:08:43.000 gaining from parents who maybe don't want their kids to 0:08:43.000 --> 0:08:46.360 play football for fear of injuries, head injuries. The issue, 0:08:46.480 --> 0:08:49.160 the one kind of drawing factor is and the reason 0:08:49.480 --> 0:08:51.120 it's compared to hockey is it's. 0:08:51.000 --> 0:08:52.000 Not a cheap sport. 0:08:52.080 --> 0:08:54.199 There aren't a lot of fields to play. So if 0:08:54.200 --> 0:08:55.959 you don't have a tremendous amount of income where you 0:08:56.000 --> 0:08:58.520 can find a stick in a ball and find someone 0:08:58.520 --> 0:09:01.200 to play with, you can't go pick up and play 0:09:01.400 --> 0:09:03.960 like soccer, football or basketball where there's a court or 0:09:04.000 --> 0:09:05.160 there's just a grass field. 0:09:05.160 --> 0:09:07.000 You end the number one high school team in the 0:09:07.040 --> 0:09:09.720 country this year, the Lawrenceville School. Thank you very much, 0:09:10.400 --> 0:09:13.040 Thank you Bailly good stuff. Bell Leadership's covers the markets. 0:09:14.120 --> 0:09:17.520 You're listening to the team. Ken's a live program Bloomberg 0:09:17.600 --> 0:09:21.000 Markets weekdays at ten am Eastern on Bloomberg dot com, 0:09:21.040 --> 0:09:24.160 the iHeartRadio app, and the Bloomberg Business App, or listen 0:09:24.240 --> 0:09:26.480 on demand wherever you get your podcasts. 0:09:28.240 --> 0:09:30.960 Paul Sweeney Live here in our Bloomberg Interactive Broker Studio. 0:09:30.960 --> 0:09:33.600 We're doing that streaming thing on YouTube, So just head 0:09:33.600 --> 0:09:36.839 over to YouTube dot com and hip Bloomberg Radio will 0:09:36.840 --> 0:09:39.280 get you where you need to go to. That'll work on. 0:09:39.160 --> 0:09:42.679 YouTube dot com and search Bloomberg Radio. There you go. 0:09:43.000 --> 0:09:44.600 You're into this thing. You know what's going on. 0:09:44.600 --> 0:09:45.959 Here stream us live. 0:09:46.040 --> 0:09:48.800 Let's talk about the hotel business, particularly the extended stay 0:09:49.480 --> 0:09:50.880 part of the business, which is probably a part of 0:09:50.880 --> 0:09:54.199 the business we don't talk about enough. And Skazafava joins us. 0:09:54.400 --> 0:09:57.160 She's the general manager and senior vice president of Extended 0:09:57.200 --> 0:10:00.960 Stay brands at Choice Hotels. Troyti, of course, is a 0:10:01.000 --> 0:10:05.400 New York Stock Exchange listed company. Ce HH is the 0:10:05.440 --> 0:10:08.079 ticker to load into your Bloomberg Professional Service and thanks 0:10:08.080 --> 0:10:09.959 so much for joining us. We appreciate you coming in 0:10:10.040 --> 0:10:13.640 all the way from Rockville, Maryland. Talk to us about 0:10:13.640 --> 0:10:16.959 the extended stay business. What are the drivers of your 0:10:17.040 --> 0:10:20.040 business and what are the trends been I guess over 0:10:20.040 --> 0:10:22.080 the last several years as the world's kind of reinvented 0:10:22.120 --> 0:10:22.800 itself a little bit. 0:10:22.880 --> 0:10:25.959 Yeah, no, that's great. So extended say caters primarily to 0:10:26.040 --> 0:10:30.280 non discretionaries day so think traveling nurses, construction crews. So 0:10:30.440 --> 0:10:32.160 we have a lot of tailwinds coming to us with 0:10:32.160 --> 0:10:34.680 the Infrastructure Bill, the Chips Act, etc. So we see 0:10:34.720 --> 0:10:37.360 a lot of demand in our future ahead of us 0:10:37.400 --> 0:10:39.319 at this point in time, I would say the one 0:10:39.320 --> 0:10:42.600 thing about the extended day brands is that they're pretty resilient. 0:10:42.640 --> 0:10:45.840 So even in face of recessions and pandemics, we tend 0:10:45.880 --> 0:10:49.120 to have an occupancy premium over the rest of traditional hotels. 0:10:49.640 --> 0:10:51.200 So even right now in the first half of the year, 0:10:51.880 --> 0:10:56.199 economy extended day has a nineteen percent occupancy point percentage 0:10:56.280 --> 0:10:59.920 over just regular economy transient hotels. So it's a very 0:11:00.120 --> 0:11:01.400 resilient business model. 0:11:02.120 --> 0:11:05.359 I guess your biggest competitor right now would be Airbnb. 0:11:05.559 --> 0:11:07.320 Is that fair to say? I mean, if I was 0:11:07.360 --> 0:11:09.079 going to go someplace and I had to stay there 0:11:09.120 --> 0:11:11.840 for two weeks, that would be sorry to say, my 0:11:11.880 --> 0:11:12.640 first thought. 0:11:13.559 --> 0:11:14.720 Yeah, I think Airbnb. 0:11:14.840 --> 0:11:16.640 Though when we look at that their price points are 0:11:16.679 --> 0:11:18.840 a little bit different, and those guests don't tend to 0:11:18.840 --> 0:11:22.120 look for kind of the standard guest experience that we 0:11:22.320 --> 0:11:25.200 provide across that. So the way we think about extended 0:11:25.240 --> 0:11:27.480 s A is that it's apartment like amenities with a 0:11:27.520 --> 0:11:29.720 hotel of a flexibility. So you still get the services, 0:11:29.760 --> 0:11:32.160 the cleaning, it's ed rad that you would expect from 0:11:32.160 --> 0:11:34.320 a hotel, but you have a full size kitchen in 0:11:34.360 --> 0:11:36.720 your room, you have some of those larger spaces and 0:11:36.760 --> 0:11:40.120 suites versus a small traditional hotel room. 0:11:40.559 --> 0:11:45.760 So are you primarily a franchise company? Okay? So how 0:11:45.800 --> 0:11:48.000 do you grow your business in terms? Is it simply 0:11:48.000 --> 0:11:50.720 going after and recruiting franchises? How does that work? How 0:11:50.720 --> 0:11:51.760 does that growth? Yeah? 0:11:51.760 --> 0:11:53.920 Absolutely, But I think developers at this point I'm are 0:11:53.960 --> 0:11:56.320 looking at extends as one of the hottest segments within 0:11:56.360 --> 0:11:58.160 the lodging industry. And really it's a hedge. It's a 0:11:58.200 --> 0:12:01.520 really different type of asset class than additional hotel. So 0:12:01.600 --> 0:12:04.600 over the last couple of years, even even during twenty twenty, 0:12:04.920 --> 0:12:07.640 Woodspring Suits a our largest brand. They ran gopu margins 0:12:07.640 --> 0:12:09.360 of fifty percent and they've gone up from there. So 0:12:09.440 --> 0:12:11.920 last year we were on average at sixty percent, So 0:12:11.960 --> 0:12:13.920 smart money is really kind of chasing us at this 0:12:13.920 --> 0:12:15.840 point in time and wanting to get into the segment. 0:12:16.040 --> 0:12:18.600 We've been able to capitalize on that. We've had over 0:12:18.720 --> 0:12:20.720 fifty percent more openings in the first half of this 0:12:20.800 --> 0:12:22.559 year than we did last year. We've grown our pipeline 0:12:22.600 --> 0:12:24.560 seventeen percent just in the first half of this year. 0:12:25.360 --> 0:12:27.760 So while we are, yes, of course going after some 0:12:27.800 --> 0:12:30.679 of the larger developers, they are certainly seeking us out 0:12:30.679 --> 0:12:31.000 as well. 0:12:32.000 --> 0:12:35.480 So does the does the change in work from home 0:12:35.600 --> 0:12:37.679 or the evolution of the way we work have a 0:12:37.679 --> 0:12:38.840 big effect on your business? 0:12:38.960 --> 0:12:40.959 Yeah, we've seen a lot of stays now where I mean, 0:12:41.040 --> 0:12:42.680 I hate the word leisure, but where you get the 0:12:42.679 --> 0:12:44.640 business traveler right and they're staying for five days and 0:12:44.640 --> 0:12:45.280 then they tack on. 0:12:45.240 --> 0:12:47.760 Wait, is that a word if people use, I mean, we. 0:12:47.679 --> 0:12:50.719 Do in the industry, Yeah, leisure, leisure, businessiness. 0:12:50.840 --> 0:12:55.160 Sure, leisure. I cannot believe that you're allowed to use 0:12:55.200 --> 0:12:56.000 that word. 0:12:56.800 --> 0:12:59.920 Somebody standard industry jargon. For sure, it was, yeah, but 0:13:00.120 --> 0:13:03.200 that certainly has changed. And then honestly, they're reshoring of 0:13:03.200 --> 0:13:06.360 a American manufacturing has also been a great tail wind 0:13:06.360 --> 0:13:07.840 for us at this point in time. So any of 0:13:07.880 --> 0:13:10.480 those large semiconductor plants that you're starting to see you 0:13:10.520 --> 0:13:12.640 move in, battery plants, et cetera, are also creating a 0:13:12.679 --> 0:13:14.600 lot of demand for the extended day segment. 0:13:15.120 --> 0:13:17.640 How about I mean, can I build a hotel these days? 0:13:17.640 --> 0:13:19.840 I mean the banks are just pulling back on lending 0:13:19.840 --> 0:13:22.680 across this across the board. How does that impact I 0:13:22.679 --> 0:13:23.920 guess you're franchisees. 0:13:24.320 --> 0:13:26.840 Yeah, so we're the only company that has two entry 0:13:26.840 --> 0:13:29.960 points into extended day for both the economy segment and 0:13:29.960 --> 0:13:32.679 the mid scale segment. So what we've done knowing that 0:13:32.760 --> 0:13:34.760 new constructional lending is a challenge, right, and some of 0:13:34.760 --> 0:13:37.600 our franchisees can can get that they have community banks, 0:13:37.600 --> 0:13:39.959 that they've got local relationships, proven track records, and so 0:13:40.000 --> 0:13:42.720 they're still getting that lending. But a lot of folks 0:13:43.520 --> 0:13:46.160 where we have markets that have no extended stay to supply, 0:13:46.280 --> 0:13:49.280 there's a ton of traditional hotels. We came up with 0:13:49.280 --> 0:13:51.400 a really innovative solution that we call kitchen in a Box. 0:13:51.480 --> 0:13:56.120 So we worked with engineers, architects, the trades, mechanical, electrical, plumbing, 0:13:56.160 --> 0:13:58.000 et cetera, and came up with this concept where you 0:13:58.040 --> 0:14:01.559 can take a traditional hotel room and into an extended 0:14:01.600 --> 0:14:03.959 stay room, and we have twenty of those transformations going 0:14:03.960 --> 0:14:04.720 on across the country. 0:14:04.840 --> 0:14:06.600 What's an extended stay room entail? 0:14:07.120 --> 0:14:09.600 So you must have a full sized kitchen, full size kitchen, 0:14:09.640 --> 0:14:11.560 full sized kitchen, okay. And the way that we like 0:14:11.600 --> 0:14:13.800 to think about it is guests use these rooms for 0:14:14.000 --> 0:14:17.120 both workplay, me space. Right. They need to be flexible 0:14:17.160 --> 0:14:19.640 spaces so that it's more kind of like your home, 0:14:19.720 --> 0:14:21.960 even thoughtful things like you know, you want a larger 0:14:22.040 --> 0:14:23.480 vanity in the bathroom because you're going to be there 0:14:23.520 --> 0:14:24.560 for many weeks. You want to be able to put 0:14:24.560 --> 0:14:27.280 all yourself out right. So that's how we think about 0:14:27.400 --> 0:14:29.360 designing that with the consumer first and how they're going 0:14:29.400 --> 0:14:30.200 to use that space. 0:14:30.480 --> 0:14:34.880 How have labor costs been because I know, you know, 0:14:35.040 --> 0:14:37.880 in the pandemic, or even at the end of the pandemic, 0:14:38.360 --> 0:14:42.440 Paul and I would interview hoteliers. How do you say 0:14:42.480 --> 0:14:46.160 that hoteliers, that's pretty good. Yeah, And they told us, 0:14:46.280 --> 0:14:48.520 you know, it's very difficult to get people to come 0:14:48.560 --> 0:14:48.920 to work. 0:14:49.040 --> 0:14:49.320 Yeah. 0:14:49.400 --> 0:14:52.280 So the beauty of extended day is in the economy 0:14:52.320 --> 0:14:54.920 segment in particular, there's only six or seven full time employees. 0:14:55.000 --> 0:14:56.640 And the reason that is is because we only do 0:14:56.680 --> 0:15:00.680 housekeeping bi weekly, so the labor model is super light 0:15:00.720 --> 0:15:03.160 in these hotels, which also enables those high margins that 0:15:03.200 --> 0:15:05.880 I spoke about earlier. So yes, we are not immune 0:15:05.880 --> 0:15:07.960 to that, but it certainly lends itself a little bit 0:15:07.960 --> 0:15:09.320 easier than what you're seeing in traditionally. 0:15:09.320 --> 0:15:14.120 I see though, so extended stay facilities are not housed 0:15:14.240 --> 0:15:18.680 within your traditional hotel facilities. They're actually completely separate. 0:15:19.080 --> 0:15:24.320 Yeah so yeah, So so take a Woodspring Speets for instance. Prototype. 0:15:24.400 --> 0:15:27.440 Prototype is one hundred and twenty two rooms and they 0:15:27.440 --> 0:15:31.280 come standard with the kitchens, et cetera. There's also guest laundry, 0:15:31.760 --> 0:15:34.200 fitness facilities, et cetera, so that you can really maintain 0:15:34.240 --> 0:15:36.840 your lifestyle there, so you would not see them withinside 0:15:36.840 --> 0:15:37.800 a traditional hotel. 0:15:38.080 --> 0:15:40.120 But no, like restaurants or any that type of this 0:15:40.120 --> 0:15:43.360 is just stays. Okay, Yeah, who do you compete against? 0:15:43.360 --> 0:15:43.560 Really? 0:15:43.600 --> 0:15:45.520 Matt mentioned Airbnb, but on the in terms of the 0:15:45.560 --> 0:15:47.480 traditional extended stay, who's the company? 0:15:47.600 --> 0:15:49.080 Yeah? Well, I mean we're starting to see a lot 0:15:49.120 --> 0:15:51.480 of new competitors come into the space. So Marriotte, Hill 0:15:51.520 --> 0:15:53.960 and High have all really brand launches at this point 0:15:53.960 --> 0:15:55.800 in time. I think for us though we've been in 0:15:55.800 --> 0:15:57.800 the space for a really long time. We acquired Woodspring 0:15:57.880 --> 0:16:00.640 Suites back in twenty eighteen have kind of re invigorated 0:16:00.640 --> 0:16:03.520 the segment. We have over four hundred open and operating 0:16:03.520 --> 0:16:06.480 extended stay hotels right now, with another three hundred in 0:16:06.520 --> 0:16:07.080 the pipeline. 0:16:07.120 --> 0:16:10.000 And where those are the regional areas that you guys 0:16:10.000 --> 0:16:12.240 are focusing on, or I mean coast to coast. 0:16:12.280 --> 0:16:13.840 We certainly see a lot of demand right now in 0:16:13.840 --> 0:16:16.640 Texas and Florida. The relocation has been big for us 0:16:16.680 --> 0:16:19.360 as well. So think places like Boise, Idaho that are 0:16:19.520 --> 0:16:22.400 just growing kind of urban areas at this point in time. 0:16:22.640 --> 0:16:23.640 Talk to us about rowing. 0:16:24.200 --> 0:16:30.040 Yeah, she's in the Athletic Hall of Fame. I mean, 0:16:30.280 --> 0:16:30.680 no joke. 0:16:30.760 --> 0:16:32.680 What's a Coxswaine? Is that the one that says stroke, 0:16:32.760 --> 0:16:33.400 stroke or go. 0:16:34.320 --> 0:16:37.000 It's a little more sophisticated. So you actually have a 0:16:37.040 --> 0:16:40.600 microphone and there are speakers underneath the seat, right, and 0:16:40.680 --> 0:16:42.560 so I can whisper and the crew would be able 0:16:42.560 --> 0:16:44.960 to hear you. But yes, I steered the boat and 0:16:45.040 --> 0:16:47.480 then you made sure that we were making race moves. 0:16:47.520 --> 0:16:49.640 What are you should in the front though right in 0:16:49.680 --> 0:16:52.200 the back so you can see. I see. So you 0:16:52.240 --> 0:16:55.400 actually do steer literally literally and then you're the motivator 0:16:55.440 --> 0:16:58.400 of the crew. Correct, absolutely, So what's the athletic Hall 0:16:58.400 --> 0:17:01.000 of Fame? Like, do you have like your jersey there or. 0:17:01.080 --> 0:17:03.520 I have met my plaque and it's you know, on 0:17:03.560 --> 0:17:05.440 the riverfront. So we have our boat house out there. 0:17:05.480 --> 0:17:08.800 So that's what river is washing it Chester River. So 0:17:08.880 --> 0:17:09.440 in Maryland. 0:17:09.800 --> 0:17:12.240 Yeah, I don't know anybody who rose. 0:17:13.080 --> 0:17:14.200 Uh yeah, I know some. 0:17:14.560 --> 0:17:14.960 I know some. 0:17:15.400 --> 0:17:16.920 I actually only know women who row. 0:17:17.640 --> 0:17:20.080 But it's a big D three so it's huge. 0:17:20.160 --> 0:17:20.879 Yeah, it's huge. 0:17:20.920 --> 0:17:22.960 I mean I know a lot of Boston women who 0:17:23.040 --> 0:17:24.119 row in the Charles. 0:17:24.160 --> 0:17:27.480 That's amazing. We we we came in third, I want 0:17:27.480 --> 0:17:29.200 to say one of the years on the Charles. And 0:17:29.280 --> 0:17:30.919 of course it's a big tradition to throw the Coxon 0:17:30.960 --> 0:17:31.480 in if you win. 0:17:32.640 --> 0:17:36.440 All right, good stuff and Skazafava, general manager and Senior 0:17:36.520 --> 0:17:39.520 VP of Extended Stay Brands at Choice Hotels. 0:17:39.760 --> 0:17:42.879 You're listening to the tape Cat's are Live program Bloomberg 0:17:42.960 --> 0:17:46.560 Markets weekdays at ten am Eastern on Bloomberg Radio, the 0:17:46.600 --> 0:17:49.840 tune in app, Bloomberg dot Com, and the Bloomberg Business App. 0:17:49.880 --> 0:17:52.679 You can also listen live on Amazon Alexa from our 0:17:52.720 --> 0:17:57.800 flagship New York station. Just say Alexa play Bloomberg eleven thirty. 0:17:58.800 --> 0:18:01.399