WEBVTT - Baird's Loeb: Hotel REITS At Risk From Brexit Travel Cuts (AUD)

0:00:04.040 --> 0:00:08.600
<v Speaker 1>Broadcasting live to New York, Bloomberg eleven to Washington, d C,

0:00:08.840 --> 0:00:14.400
<v Speaker 1>bloom to Boston, Bloomberg twelve, to San Francisco, Bloomberg nine

0:00:14.440 --> 0:00:18.000
<v Speaker 1>six to the country sis XM Channel one nineteen, and

0:00:18.120 --> 0:00:22.040
<v Speaker 1>around the globe the Bloomberg Radio plus append Bloomberg dot Com.

0:00:22.239 --> 0:00:26.440
<v Speaker 1>This is taking stock. Do you know what the biggest

0:00:26.600 --> 0:00:31.120
<v Speaker 1>unknown for hotel reads here in the United States is now?

0:00:31.960 --> 0:00:35.240
<v Speaker 1>According to our guests coming up on taking Stock, it's

0:00:35.320 --> 0:00:40.720
<v Speaker 1>inbound international travel implications inbound into the US that is

0:00:41.000 --> 0:00:44.240
<v Speaker 1>following the Brexit vote. I'm Kathleen Hayes, my co host

0:00:44.280 --> 0:00:47.040
<v Speaker 1>Pim Fox on vacation this week, and I'm sure he

0:00:47.120 --> 0:00:49.280
<v Speaker 1>loves travel. He's very sorry. I'm sure that he's missing

0:00:49.360 --> 0:00:53.280
<v Speaker 1>David Loebs, senior hotel industry research channelist from Robert W.

0:00:53.479 --> 0:00:56.440
<v Speaker 1>Baird and Co. In Milwaukee. David was also going to

0:00:56.520 --> 0:00:58.920
<v Speaker 1>talk to us about summer travel what that means for

0:00:59.040 --> 0:01:01.600
<v Speaker 1>some of the big reads and hotel chains. Let's get

0:01:01.600 --> 0:01:04.319
<v Speaker 1>to Catherine Cowdrie now she's in the Bloomberg newsroom with

0:01:04.360 --> 0:01:07.640
<v Speaker 1>a Bloomberg business flash. Thank you, Kathleen and Bloomberg. Taking

0:01:07.720 --> 0:01:10.360
<v Speaker 1>Zoc is brought to you by National realty providers have

0:01:10.400 --> 0:01:15.000
<v Speaker 1>one satisfaction guaranteed New York City Realty Investments see them

0:01:15.000 --> 0:01:18.360
<v Speaker 1>at n r I a dot net. This stock market

0:01:18.400 --> 0:01:20.520
<v Speaker 1>is climbing for the first time since Britain voted to

0:01:20.560 --> 0:01:24.560
<v Speaker 1>withdraw from the European Union. There's speculation that policymakers will

0:01:24.600 --> 0:01:28.280
<v Speaker 1>take steps to limit any economic fallout. Investors are also

0:01:28.360 --> 0:01:32.080
<v Speaker 1>encouraged by some US data. Consumer confidence improved in June.

0:01:32.080 --> 0:01:35.679
<v Speaker 1>Bloomberg's Annydale Jude Ice has the details. The Conference Board's

0:01:35.720 --> 0:01:40.800
<v Speaker 1>Consumer Confidence INEX advanced to this month, the highest since October.

0:01:41.040 --> 0:01:44.960
<v Speaker 1>Americans were more confident about current economic conditions as well

0:01:45.000 --> 0:01:49.040
<v Speaker 1>as the months ahead. Separately, revised government data show GDP

0:01:49.200 --> 0:01:51.640
<v Speaker 1>expanded at a one point one percent annual rate in

0:01:51.680 --> 0:01:54.760
<v Speaker 1>the first quarter, the weakest showing in a year. April

0:01:54.760 --> 0:01:58.000
<v Speaker 1>home prices meantime rose five point four percent year over year.

0:01:58.160 --> 0:02:01.040
<v Speaker 1>According to S and P. K. Schiller at the Bloomberg

0:02:01.080 --> 0:02:05.040
<v Speaker 1>First Word Desk Judici Sploomberg Radio, we check the markets

0:02:05.080 --> 0:02:07.800
<v Speaker 1>every fifteen minutes throughout the trading day. Down industrial averages

0:02:07.840 --> 0:02:10.360
<v Speaker 1>up two hundred twenty points one point three percent. Trading

0:02:10.400 --> 0:02:13.920
<v Speaker 1>at seventeen thousand, three hundred sixty SMP five fundered up

0:02:13.960 --> 0:02:16.239
<v Speaker 1>thirty points one and a half percent, trading at two

0:02:16.240 --> 0:02:19.119
<v Speaker 1>thousand thirty Then as Zack is higher by eighty six

0:02:19.120 --> 0:02:22.200
<v Speaker 1>points one point nine percent, trading at forty six eighty less.

0:02:22.200 --> 0:02:24.639
<v Speaker 1>Texas intermediate crude oil of a dollar fifty five of

0:02:24.720 --> 0:02:27.400
<v Speaker 1>barrel three point three percent to forty seven eighty eight

0:02:27.680 --> 0:02:30.959
<v Speaker 1>spickled down six dollars ninety cents. Again's at thirteen seventeen

0:02:31.040 --> 0:02:33.799
<v Speaker 1>eighty ten year treasury down four thirty seconds with the

0:02:33.840 --> 0:02:37.840
<v Speaker 1>yield of one point four five percent. It's three thirty

0:02:37.880 --> 0:02:39.679
<v Speaker 1>two on Well Street. Let's get an update if some

0:02:39.760 --> 0:02:42.079
<v Speaker 1>of the other stories were following today right here on

0:02:42.200 --> 0:02:47.560
<v Speaker 1>Bloomberg Radio. Thank you, Catherine from the Bloomberg Newsroom. I'm

0:02:47.600 --> 0:02:50.080
<v Speaker 1>Jill Schneider. This news update is brought to you by

0:02:50.120 --> 0:02:53.600
<v Speaker 1>the Jeep Grand Cherokee, the most awarded suv ever. The

0:02:53.680 --> 0:02:56.799
<v Speaker 1>Grand Cherokee continues to raise the bar with its luxurious

0:02:56.880 --> 0:03:00.800
<v Speaker 1>interior and legendary four by four capability. Drive one at

0:03:00.800 --> 0:03:04.240
<v Speaker 1>your local Jeep dealer today. Speaking during a campaign stop

0:03:04.360 --> 0:03:09.119
<v Speaker 1>in Denver today, presumptive Democratic presidential nominee Hillary Clinton commented

0:03:09.200 --> 0:03:12.080
<v Speaker 1>on the House Republican's final report on the two thousand

0:03:12.120 --> 0:03:17.120
<v Speaker 1>twelve Benghazi attacks. No one has thought more about or

0:03:17.240 --> 0:03:21.760
<v Speaker 1>lost more sleep over the lives that we lost the

0:03:21.840 --> 0:03:25.720
<v Speaker 1>four Americans, which was devastating. Clinton also said it's clear

0:03:25.840 --> 0:03:28.840
<v Speaker 1>that it's time to move on. Giving an economic address

0:03:28.919 --> 0:03:33.320
<v Speaker 1>in Moness in Pennsylvania today, likely Republican presidential nominee Donald

0:03:33.360 --> 0:03:36.200
<v Speaker 1>Trump said the American dream will be possible for more

0:03:36.320 --> 0:03:41.240
<v Speaker 1>people once he is in the White House. You to

0:03:41.400 --> 0:03:45.840
<v Speaker 1>imagine a much better life and a life where you

0:03:46.000 --> 0:03:51.120
<v Speaker 1>can believe in the American dream again. Right now, you

0:03:51.360 --> 0:03:54.920
<v Speaker 1>can't do that. Trump also accused Hillary Clinton of killing

0:03:54.960 --> 0:03:57.800
<v Speaker 1>American jobs through deals she made during her time as

0:03:57.800 --> 0:04:00.560
<v Speaker 1>Secretary of State. People who want to apply for the

0:04:00.640 --> 0:04:03.200
<v Speaker 1>t s AS pre check program may soon have an

0:04:03.240 --> 0:04:06.480
<v Speaker 1>easier time of it. The agency is opening three temporary

0:04:06.640 --> 0:04:10.240
<v Speaker 1>enrollment centers at penn Station and at hotels near JFK

0:04:10.480 --> 0:04:13.720
<v Speaker 1>and Newark airports. The move follows increased demand for the

0:04:13.800 --> 0:04:17.880
<v Speaker 1>airport security program, which lets passengers get through checkpoints more quickly.

0:04:18.480 --> 0:04:21.080
<v Speaker 1>Global News twenty four hours a day, powered by more

0:04:21.120 --> 0:04:24.560
<v Speaker 1>than twenty d journalists and analysts in more than one

0:04:24.640 --> 0:04:28.200
<v Speaker 1>hundred twenty countries from the Bloomberg Newsroom I'm Jill Schneider

0:04:28.360 --> 0:04:31.960
<v Speaker 1>and this is Bloomberg. Catherine, thank you, and we're getting

0:04:32.000 --> 0:04:36.440
<v Speaker 1>news of two explosions taking place at Istanbul's International Auditurk Airport.

0:04:36.839 --> 0:04:40.160
<v Speaker 1>That's according to Turkey's Interior Ministry. The ministry says a

0:04:40.279 --> 0:04:43.040
<v Speaker 1>number of people were injured. They're still not sure what

0:04:43.200 --> 0:04:46.320
<v Speaker 1>cause the explosions. That's not immediately clear. And I witness

0:04:46.360 --> 0:04:49.240
<v Speaker 1>told CNN Turk Television that the blast took place shortly

0:04:49.320 --> 0:04:53.040
<v Speaker 1>after gunfire between police officers and unknown people near the

0:04:53.160 --> 0:04:56.080
<v Speaker 1>airports car park. And we will have more details as

0:04:56.160 --> 0:05:01.760
<v Speaker 1>they become available. That's a Bloomberg Business flash. This is

0:05:01.839 --> 0:05:06.320
<v Speaker 1>taking stock with pin Box and Katholeenks on Bloomberg Radio.

0:05:06.920 --> 0:05:10.680
<v Speaker 1>It's far too earlier, earlier to talk about the dust

0:05:10.960 --> 0:05:16.320
<v Speaker 1>settling after the political earthquake caused by the UK's vote

0:05:16.400 --> 0:05:20.239
<v Speaker 1>to leave the European Union, but already people are saying

0:05:20.320 --> 0:05:24.320
<v Speaker 1>that there are important industries and companies that will be affected.

0:05:24.839 --> 0:05:28.680
<v Speaker 1>David loebe joins US now. He's senior hotel industry research

0:05:28.760 --> 0:05:33.120
<v Speaker 1>analyst at Robert W. Baard and Co. In Milwaukee. He

0:05:33.680 --> 0:05:37.000
<v Speaker 1>covers hotel rates and he says there could be some

0:05:37.240 --> 0:05:42.640
<v Speaker 1>very powerful effects fallout on these rates after this big

0:05:42.880 --> 0:05:45.880
<v Speaker 1>Brexit vote. David, welcome to the show. Thank you glad

0:05:45.880 --> 0:05:49.520
<v Speaker 1>to be here. So hotel rates are going to suffer.

0:05:49.760 --> 0:05:53.640
<v Speaker 1>Why because there will be too many people working on

0:05:53.800 --> 0:05:56.680
<v Speaker 1>the Brexit and what it's going to mean. Because the

0:05:56.760 --> 0:05:58.440
<v Speaker 1>city of London will be hurt, and the kind of

0:05:58.520 --> 0:06:00.720
<v Speaker 1>people with the money in their could just hop in

0:06:00.800 --> 0:06:02.720
<v Speaker 1>a plane and go on a business trip or even

0:06:02.960 --> 0:06:05.720
<v Speaker 1>a vacation are not going to be doing it. I

0:06:05.800 --> 0:06:08.600
<v Speaker 1>think the biggest impact on the hotel industry, both on

0:06:08.640 --> 0:06:11.240
<v Speaker 1>the hotel brands and on the hotel roots, will be

0:06:11.360 --> 0:06:13.880
<v Speaker 1>because of the changes in the value of currency. So

0:06:14.000 --> 0:06:16.480
<v Speaker 1>if you look at the drop in the pound for

0:06:16.920 --> 0:06:21.080
<v Speaker 1>UK travelers looking to vacation in New York or come

0:06:21.120 --> 0:06:23.560
<v Speaker 1>on a business trip to anywhere in the US, it's

0:06:23.640 --> 0:06:27.200
<v Speaker 1>much more expensive today than it was last Thursday. That

0:06:27.360 --> 0:06:29.920
<v Speaker 1>I think is the biggest direct impact. I think we

0:06:30.000 --> 0:06:34.480
<v Speaker 1>will also see secondary impacts with businesses cutting back on

0:06:35.200 --> 0:06:38.280
<v Speaker 1>on what are essentially the easiest variable expense to cut,

0:06:38.360 --> 0:06:42.600
<v Speaker 1>which is business travel, until they understand the economic implications

0:06:42.680 --> 0:06:45.080
<v Speaker 1>of this boat, what the timeline is likely to be,

0:06:45.240 --> 0:06:48.720
<v Speaker 1>and how it may directly impact their business. So give

0:06:48.800 --> 0:06:51.200
<v Speaker 1>us give us even you know, hold that thumb up

0:06:51.240 --> 0:06:55.160
<v Speaker 1>screen your eye, just even some rough sense of how

0:06:55.720 --> 0:06:59.799
<v Speaker 1>much travel from Europe or even more broadly around the world.

0:07:00.000 --> 0:07:02.000
<v Speaker 1>Because again, if I'm a business I could have an

0:07:02.040 --> 0:07:04.720
<v Speaker 1>office in Shanghai, same thing. I could still feel like,

0:07:04.880 --> 0:07:06.880
<v Speaker 1>I gotta wonder what's going to happen with the Brexit,

0:07:07.080 --> 0:07:09.120
<v Speaker 1>what it's going to do in my company? How much?

0:07:09.240 --> 0:07:13.160
<v Speaker 1>How much is that a part of how the reds

0:07:13.320 --> 0:07:16.320
<v Speaker 1>and the hotels that are in those reds are are

0:07:16.560 --> 0:07:19.800
<v Speaker 1>doing business with these important parts of the world. Well,

0:07:20.480 --> 0:07:23.200
<v Speaker 1>I think you're you're absolutely onto something here. We live

0:07:23.240 --> 0:07:25.960
<v Speaker 1>in a global world, and there's a lot of travel

0:07:26.160 --> 0:07:28.520
<v Speaker 1>from all regions of the world to all other regions

0:07:28.560 --> 0:07:31.000
<v Speaker 1>of the world in the in the US, it's not

0:07:31.360 --> 0:07:33.920
<v Speaker 1>just inbound travel from the UK or from the EU.

0:07:34.360 --> 0:07:37.440
<v Speaker 1>It's traveled from everywhere and within the US. So I

0:07:37.480 --> 0:07:41.840
<v Speaker 1>think businesses that are are focused on global markets are

0:07:42.080 --> 0:07:45.680
<v Speaker 1>reassessing or pulling back, are stalling their decisions. That doesn't

0:07:45.720 --> 0:07:48.600
<v Speaker 1>mean I'm calling for a downturn in demand. We've already

0:07:48.640 --> 0:07:51.760
<v Speaker 1>seen a slowdown in demand for hotels, but I think

0:07:51.800 --> 0:07:53.480
<v Speaker 1>it will take a while before we see exactly how

0:07:53.600 --> 0:07:56.040
<v Speaker 1>this how this plays out. But I think there will

0:07:56.120 --> 0:07:59.880
<v Speaker 1>be there will be domestic implications as as companies look

0:08:00.120 --> 0:08:02.360
<v Speaker 1>what this means to their business, and as they slow

0:08:02.480 --> 0:08:05.840
<v Speaker 1>down and reassess, they will send fewer people on the road,

0:08:05.920 --> 0:08:10.360
<v Speaker 1>whether that's going from Cleveland to Washington, d C. Or

0:08:10.560 --> 0:08:13.840
<v Speaker 1>from Paris to New York, and those those cuts will

0:08:13.920 --> 0:08:17.200
<v Speaker 1>have some impact on the industry. I just have to

0:08:17.320 --> 0:08:21.640
<v Speaker 1>ask you slow down in demand. Uh the shutting down

0:08:21.720 --> 0:08:25.720
<v Speaker 1>the Waldorf Historia and I'll granted an older hotel, but uh,

0:08:26.480 --> 0:08:29.679
<v Speaker 1>you know, gosh, just one of those look at books,

0:08:29.720 --> 0:08:31.600
<v Speaker 1>look at movies. The Waldor is such a big part

0:08:31.720 --> 0:08:36.559
<v Speaker 1>of New York City, Manhattan a condo rebuild? Uh is this?

0:08:37.080 --> 0:08:38.959
<v Speaker 1>Are they a hotel that was out of step with

0:08:39.040 --> 0:08:43.079
<v Speaker 1>the times? Or why didn't somebody step up to say no, no, no,

0:08:43.200 --> 0:08:44.920
<v Speaker 1>I'll buy it. Maybe I get a better deal. I mean,

0:08:44.920 --> 0:08:46.760
<v Speaker 1>I get it a little bit cheap and and fix

0:08:46.800 --> 0:08:48.439
<v Speaker 1>it up and restore to its gloria and make a

0:08:48.480 --> 0:08:52.120
<v Speaker 1>lot of money. The Waldorf is an iconic hotel, There's

0:08:52.160 --> 0:08:55.600
<v Speaker 1>no question. It also sits on a full square block

0:08:56.120 --> 0:08:59.920
<v Speaker 1>on Park Avenue right near Grand Central Station, a fantastic location,

0:09:00.040 --> 0:09:03.760
<v Speaker 1>and I think the opportunity for the owner to put

0:09:03.840 --> 0:09:07.800
<v Speaker 1>condominiums into that building is just so much that it

0:09:08.000 --> 0:09:11.320
<v Speaker 1>offsets the fact that that it's such an iconic hotel.

0:09:11.480 --> 0:09:13.559
<v Speaker 1>It will come back as a hotel just as a

0:09:13.640 --> 0:09:16.680
<v Speaker 1>much smaller hotel, perhaps five or six hundred rooms, less

0:09:16.679 --> 0:09:20.600
<v Speaker 1>than half of what it was before. So uh, it's interesting.

0:09:20.679 --> 0:09:23.120
<v Speaker 1>That's that's the supply side of the equation, and New

0:09:23.200 --> 0:09:25.240
<v Speaker 1>York has seen a lot of new rooms and taking

0:09:25.320 --> 0:09:28.160
<v Speaker 1>some rooms out for three years and then permanently for

0:09:28.400 --> 0:09:30.959
<v Speaker 1>more than half of those rooms will certainly have a

0:09:31.080 --> 0:09:33.640
<v Speaker 1>slight positive impact on that market. But I think the

0:09:33.720 --> 0:09:37.600
<v Speaker 1>remaining rooms will be more representative of the iconic stature

0:09:38.200 --> 0:09:41.599
<v Speaker 1>of that hotel than a lot of the rooms that

0:09:41.679 --> 0:09:44.920
<v Speaker 1>are exist today in that building. Okay, in a nutshell,

0:09:45.280 --> 0:09:49.760
<v Speaker 1>final question, summer travel, what are you seeing? What's important

0:09:49.800 --> 0:09:51.560
<v Speaker 1>of you? Already seen a bit of a slowdown on demand.

0:09:51.600 --> 0:09:54.400
<v Speaker 1>What's gonna happen this summer? Well, leisure travel is a

0:09:54.480 --> 0:09:57.439
<v Speaker 1>real bright spot, and the second bright spot has been grouped,

0:09:57.480 --> 0:10:01.480
<v Speaker 1>although even group is showing some signs of of corporate cutback.

0:10:01.960 --> 0:10:05.600
<v Speaker 1>So I think your your news broadcast mentioned this crushed

0:10:05.640 --> 0:10:08.240
<v Speaker 1>to join the t s A pre check program. Airports

0:10:08.280 --> 0:10:11.559
<v Speaker 1>are busies, busy, airlines are busy. I think hotels that

0:10:11.760 --> 0:10:14.120
<v Speaker 1>cater to leisure travelers will be very busy this summer.

0:10:14.480 --> 0:10:17.400
<v Speaker 1>Group activity is looking actually very strong this summer. The

0:10:17.440 --> 0:10:20.880
<v Speaker 1>big wild card that on that is corporate transient travel,

0:10:20.920 --> 0:10:22.600
<v Speaker 1>and I think that will be a little bit slower.

0:10:22.679 --> 0:10:25.400
<v Speaker 1>So net and now we may be flatish or slightly

0:10:25.480 --> 0:10:28.000
<v Speaker 1>up this summer in terms of hotel occupancy, but I

0:10:28.080 --> 0:10:33.040
<v Speaker 1>think particularly at national parks and tourist sites. All right,

0:10:33.320 --> 0:10:36.840
<v Speaker 1>thanks so much to David Loeb, but senior hotel industry

0:10:36.880 --> 0:10:41.480
<v Speaker 1>research analyst at Robert W. Baird and Co. He's based

0:10:41.600 --> 0:10:45.920
<v Speaker 1>in Milwaukee. He says that there could be a reduction

0:10:46.040 --> 0:10:49.080
<v Speaker 1>in inbound foreign travel to the United States a lot,

0:10:49.200 --> 0:10:51.719
<v Speaker 1>because you know what your currency tanks. That makes it

0:10:51.760 --> 0:10:54.719
<v Speaker 1>a lot more expensive to buy a plane ticket. I'm

0:10:54.800 --> 0:10:57.920
<v Speaker 1>Caffeine Hayes, and this is taking Stock on Blum Radio.

0:11:01.360 --> 0:11:06.360
<v Speaker 1>Coming up on taking Stock Peter Cheer from Brain Capital.

0:11:07.120 --> 0:11:09.199
<v Speaker 1>He's going to tell us why he thinks maybe the

0:11:09.240 --> 0:11:11.760
<v Speaker 1>worst outcome from the Brexit vote is what could be

0:11:11.960 --> 0:11:13.160
<v Speaker 1>facing the stock market.