WEBVTT - Fed's Half-Point Hike, Hospitality Continues Recovery 0:00:01.760 --> 0:00:04.400 This is Bloomberg Business Week. I'm Karl Masser and I'm 0:00:04.440 --> 0:00:07.280 Bloomberg Quick Takes Tim Stanovik. We're here every day bringing 0:00:07.280 --> 0:00:09.800 you the latest news from the world of business and finance, 0:00:09.800 --> 0:00:13.640 plus technology, politics, economics, all harnessing the power of Business 0:00:13.640 --> 0:00:17.119 Week reporters and editors, not to mention our journalists and 0:00:17.120 --> 0:00:19.960 analyst in more than one twenty countries. You can download 0:00:20.000 --> 0:00:23.200 Bloomberg Business Week at iTunes, SoundCloud, or Bloomberg dot Com. 0:00:23.360 --> 0:00:25.120 You can also listen to our radio show at two 0:00:25.160 --> 0:00:27.840 pm Eastern Time on Bloomberg Radio, or watch us on 0:00:27.880 --> 0:00:31.840 YouTube search Bloomberg Global News. Well you all know our 0:00:31.880 --> 0:00:34.600 next guest. He's an executive producer and the star of 0:00:34.680 --> 0:00:38.320 Bar Rescue, where he helps transform struggling small businesses. He's 0:00:38.360 --> 0:00:41.199 also a New York Times bestselling author. He's also got 0:00:41.200 --> 0:00:43.720 a new book out. It's called The Power of Conflict. 0:00:43.840 --> 0:00:46.879 Speak your mind and get the results you want. John Taffer, 0:00:47.200 --> 0:00:48.400 it is good to have you with us in the 0:00:48.400 --> 0:00:51.520 Bloomberg Interactive Broker Studio. How are you. I'm doing great, guys, 0:00:51.520 --> 0:00:53.520 Good to see you. Yeah, it's good to see you. 0:00:53.520 --> 0:00:55.400 You know. I want to start with with with the 0:00:55.440 --> 0:00:57.920 economy because given what you do, you have such a 0:00:57.920 --> 0:01:00.640 good look at small businesses. You talk to so many 0:01:00.680 --> 0:01:03.280 small business owners. You have a good understanding of their sentiment, 0:01:03.320 --> 0:01:05.520 how they're feeling, how they're doing. You've talked to us 0:01:05.520 --> 0:01:07.440 a lot about that. But I want to start with J. 0:01:07.560 --> 0:01:11.160 Powell and the fedhairs comments earlier today. The economy is 0:01:11.200 --> 0:01:14.880 resiling at the economy is strong, uh. Inflation is high, yes, 0:01:14.920 --> 0:01:17.240 but the labor market is so tight that the economy 0:01:17.280 --> 0:01:21.600 can withstand higher interest rates. How do you see things? Well, 0:01:21.640 --> 0:01:24.480 you know, I think that those are fine public relations statements, 0:01:24.520 --> 0:01:26.679 but I think the lives that people are living in 0:01:26.680 --> 0:01:30.080 the worlds that I travel are telling them otherwise. You know, 0:01:30.120 --> 0:01:33.000 they're seeing day to day differences in their economics, day 0:01:33.000 --> 0:01:36.560 to day differences and their perceived security, day to day 0:01:36.600 --> 0:01:39.640 differences in in so many areas of their lives that 0:01:39.959 --> 0:01:45.679 cause fear and concern that there isn't unsettling, if you will, 0:01:46.080 --> 0:01:50.880 disruption to too moving in positive ways. And I say 0:01:50.920 --> 0:01:53.120 that in a very very broad sense. I see that 0:01:53.200 --> 0:01:56.080 investors are holding back right, They're concerned the corporate tax 0:01:56.160 --> 0:01:58.440 rates might go up. There's a lot of things going 0:01:58.480 --> 0:02:01.480 on around us that is causing a predictability. You know, 0:02:01.520 --> 0:02:04.840 I see employees being concerned with their workplace. I see 0:02:04.840 --> 0:02:07.960 them reassessing their careers and their jobs. We see people 0:02:08.040 --> 0:02:10.400 quitting their jobs at higher rates than ever before. But 0:02:10.480 --> 0:02:13.400 yet a huge percentage of American workers don't have more 0:02:13.440 --> 0:02:15.720 than a thousand dollars in the bank, but yet they're 0:02:15.760 --> 0:02:19.160 quitting jobs. Something has happened that I think has struck 0:02:19.200 --> 0:02:22.080 the nerve of our country, which is changing the behavior 0:02:22.520 --> 0:02:25.280 of our workforce. And I think it's a very powerful 0:02:25.360 --> 0:02:27.640 dynamic that we have to overcome the next two years. 0:02:27.840 --> 0:02:30.680 And it's not spoken about enough. You know, John, I'm 0:02:30.680 --> 0:02:33.720 curious you read on sort of the bar and restaurant 0:02:33.760 --> 0:02:38.200 industry writ large. I mean, one of the saddest things. Obviously, 0:02:38.240 --> 0:02:40.640 the sickness and the loss of life was the saddest 0:02:40.639 --> 0:02:43.600 thing of the pandemic. But to see all these really 0:02:43.639 --> 0:02:46.520 hard working bar and restaurant owners, you know, the small 0:02:46.520 --> 0:02:50.080 mom and pop shops, really struggle with the lockdowns and 0:02:50.120 --> 0:02:53.160 the closure. Where where is the industry right now? Is 0:02:53.200 --> 0:02:55.799 it almost back to where it should be or is 0:02:55.840 --> 0:02:57.400 there still a lot of room to go? Well, you 0:02:57.440 --> 0:02:59.160 know it's interesting is when you say that I think 0:02:59.160 --> 0:03:02.000 of the restaurants to existed for seventy eight years that 0:03:02.040 --> 0:03:05.919 went down in a pandemic. Four generations of ownership and 0:03:06.120 --> 0:03:09.120 they didn't make it through the pandemic. You know, generally speaking, 0:03:09.160 --> 0:03:13.400 the industry is up twenty revenues above pre pandemic levels. 0:03:14.160 --> 0:03:16.280 So you know, look at the quarter Las Vegas head, 0:03:16.320 --> 0:03:18.680 I live in Las Vegas. The casinos had a great quarter. 0:03:18.760 --> 0:03:21.240 So we talked about that pent up demand and how 0:03:21.280 --> 0:03:23.720 long would it take people to came back. They came back. 0:03:24.240 --> 0:03:27.280 So from a top line standpoint, the industry is looking great. 0:03:27.320 --> 0:03:30.040 Here's the issue. We're losing brand equity because we can't 0:03:30.080 --> 0:03:34.079 get employees to serve people properly. Obviously, the inflationary impact 0:03:34.160 --> 0:03:38.040 is huge upon our prime costs, food costs, and beverage costs. 0:03:38.080 --> 0:03:41.400 So we see the revenue opportunity is greater than we've 0:03:41.440 --> 0:03:45.640 experienced in years, but seizing those revenues is really a challenge. 0:03:46.080 --> 0:03:48.880 So companies that are so service oriented now are not 0:03:48.960 --> 0:03:52.560 achieving their own standards of service that are so important 0:03:52.560 --> 0:03:55.600 to their brand equity. That's scary, John, What would you 0:03:55.640 --> 0:03:58.160 say to somebody who said, wait a second, people in 0:03:58.160 --> 0:04:01.880 the service industry low way workers have been left behind 0:04:01.960 --> 0:04:04.240 for so many years. It's about time that they saw 0:04:05.400 --> 0:04:08.800 better conditions or wage increases. You know better than anyone. 0:04:08.840 --> 0:04:12.120 This is really really tough work and they deserve higher 0:04:12.160 --> 0:04:15.280 pay now, of course they do. And you know, I'm 0:04:15.320 --> 0:04:19.600 all for increasing their wage, but I'm in a supportive 0:04:19.640 --> 0:04:22.160 of doing it in steps. You know, I don't think that, 0:04:22.279 --> 0:04:25.200 for example, states that have employeed tip credit, you bring 0:04:25.240 --> 0:04:27.359 them up to fifteen dollars an hour, that's a six 0:04:27.520 --> 0:04:32.320 hundred percent increase in pay overnight. No business can sustain that. 0:04:32.800 --> 0:04:34.960 So let's bring it up in three or four steps. 0:04:35.040 --> 0:04:37.640 Let's get it there over two years. Let's allow the 0:04:37.680 --> 0:04:40.679 industry to adjust as we go. But I completely agree 0:04:40.680 --> 0:04:43.600 if we're going to retain employees and turn my industry 0:04:43.640 --> 0:04:46.560 back into a career based industry, we need to get 0:04:46.560 --> 0:04:48.960 it to that level. But I also want to highlight 0:04:49.240 --> 0:04:51.280 that if you're a waiter in a good steakhouse, you're 0:04:51.320 --> 0:04:53.720 making yourself well over a thousand dollars a week in 0:04:53.760 --> 0:04:57.200 many steakhouses, So there are those in the industry who 0:04:57.200 --> 0:04:59.480 make an awful out of money as well. So some 0:04:59.680 --> 0:05:01.680 are do well, some we're not doing as well. I 0:05:01.680 --> 0:05:03.680 think as an industry. We need to step up. You 0:05:03.760 --> 0:05:06.359 made a really interesting comment, um, you know, saying that 0:05:06.360 --> 0:05:09.480 we live in interesting times these days. Um, what brings 0:05:09.480 --> 0:05:10.960 you to that? I mean, I don't think anyone would 0:05:11.000 --> 0:05:12.440 argue with that, but what's top of mind for you? 0:05:12.839 --> 0:05:15.880 You know, I'm one Look, I took cultural anthropology in college, 0:05:15.880 --> 0:05:19.520 so I've always been one who studied behavior, human behavior. 0:05:19.760 --> 0:05:22.200 As a business person, I'm one who tries to change 0:05:22.279 --> 0:05:24.799 human behavior, right, I want to market you to buy things, 0:05:24.839 --> 0:05:28.400 and so I'm a real student of human behavior. And 0:05:28.520 --> 0:05:31.880 the past two years I see, you know, decisive changes 0:05:32.440 --> 0:05:35.560 in our behavior as a society. The way we interact 0:05:35.600 --> 0:05:37.560 with each other, the way we interact with businesses, the 0:05:37.600 --> 0:05:42.040 way we can complete transactions, the traffic discycles. There are 0:05:42.080 --> 0:05:46.359 so many changes around us that it creates a certain unpredictability. 0:05:46.440 --> 0:05:49.039 Are people being more respectful? There was this moment where 0:05:49.480 --> 0:05:51.120 I think there was a sense of unity early on 0:05:51.160 --> 0:05:53.440 in the pandemic, where you know, here in New York City, 0:05:53.480 --> 0:05:55.599 we would go out on our you know, open our 0:05:55.640 --> 0:05:58.120 windows and bang pots and pans at seven pm for 0:05:58.160 --> 0:06:01.400 healthcare workers each night. There was this idea that we 0:06:01.400 --> 0:06:03.160 were all in it together. Do you see that in 0:06:03.200 --> 0:06:06.200 your industry. I do. I certainly, because we're also seeing 0:06:06.279 --> 0:06:08.640 videos of you know, people getting kicked off of airplanes, dragging, 0:06:08.680 --> 0:06:11.360 you know, dragging, kicking, and screaming. I think that togetherness 0:06:11.400 --> 0:06:13.080 is sort of eroded a little bit, that we sort 0:06:13.080 --> 0:06:15.520 of experienced the earlier middle part of the pandemic. And 0:06:15.520 --> 0:06:16.960 that's one of the reasons why I wrote the book. 0:06:17.320 --> 0:06:21.280 You know, people today engage in conflict without dignity, and 0:06:21.279 --> 0:06:24.280 and it's the loss of dignity that has really destroyed 0:06:24.279 --> 0:06:27.560 our political landscape and destroyed our professional landscape in very 0:06:27.560 --> 0:06:30.719 many ways. So when I wrote the book, I realized, 0:06:30.760 --> 0:06:32.719 you know, I've done two hundred and thirty episodes of 0:06:32.720 --> 0:06:35.440 Our Rescue, the last hundred and fifty or so. I 0:06:35.480 --> 0:06:38.400 haven't been angry. When you see me angry, I'm being deliberate. 0:06:39.080 --> 0:06:42.320 I'm being manipulative. I have a purpose, and I'm using 0:06:42.400 --> 0:06:45.760 conflict as a tool to achieve an objective. And I 0:06:45.800 --> 0:06:48.480 started to realize, Wow, conflict is a dirty word that 0:06:48.520 --> 0:06:51.440 shouldn't be tim I'm trying to speed read this here, 0:06:51.520 --> 0:06:53.720 but I can I open up the page one thirteen. 0:06:53.760 --> 0:06:56.000 I can tell I like this book already. Let me 0:06:56.040 --> 0:06:58.800 just read the line here. There's never a show where 0:06:58.839 --> 0:07:03.360 I don't yell John. I mean, people know that, right. 0:07:03.520 --> 0:07:06.080 He's referring to the show Bar Rescue, the Big Hits show. 0:07:06.560 --> 0:07:08.920 There's always that moment when I need to shock and 0:07:09.040 --> 0:07:12.640 owner into changing an unhealthy pattern, you know, John, and 0:07:12.760 --> 0:07:14.840 correct me if I'm wrong. But I get the impression 0:07:15.120 --> 0:07:18.040 that the bar and restaurant industry is one where there 0:07:18.120 --> 0:07:20.920 is a lot of you know, sort of heated moments 0:07:20.920 --> 0:07:23.880 and yelling and conflicts that everyone seems to go home 0:07:23.920 --> 0:07:25.720 and forget about it, have a drink, come back the 0:07:25.760 --> 0:07:27.640 next day and their friends again. I don't know if 0:07:27.680 --> 0:07:29.760 that's a I think that's a safe and you know 0:07:29.760 --> 0:07:32.040 what it is, we get packed, right, if there's this 0:07:32.160 --> 0:07:34.400 high energy, we're in the weeds, we're fighting, we're fighting. 0:07:34.400 --> 0:07:36.440 Then finally it mellows out at the end of the 0:07:36.560 --> 0:07:38.760 night and everybody comes back to war again the next time. 0:07:39.160 --> 0:07:42.360 Because you know what's incredible about the bar industry. For example, 0:07:42.400 --> 0:07:45.480 the average bar will do sevent of its revenue sixteen 0:07:45.520 --> 0:07:50.320 hours a week. Wow, just that. So it's a crunch. 0:07:50.520 --> 0:07:52.840 You know, it's it's high pressure. But I wonder, and 0:07:52.880 --> 0:07:54.760 I know you've looked at sort of not just the 0:07:54.800 --> 0:07:57.360 bar and restaurant industry, you sort of looked at conflicts 0:07:57.400 --> 0:08:01.320 in other business I mean, does conflict translate into all 0:08:01.360 --> 0:08:03.960 businesses or is it sort of you know, taboo to 0:08:04.160 --> 0:08:07.120 to sort of engage conflict and and and sort of 0:08:07.360 --> 0:08:10.240 you know, is the risk greater than the reward in 0:08:10.280 --> 0:08:12.880 other industries? You know? I think, I think the conflict 0:08:12.960 --> 0:08:16.680 is a critical aspect to every industry. But but what 0:08:16.880 --> 0:08:19.600 is conflict? It's perceived as a dirty word. You see, 0:08:19.920 --> 0:08:22.840 if you want to win in conflict in business, in 0:08:22.880 --> 0:08:26.160 professional relationships, in any aspect of your life with another 0:08:26.240 --> 0:08:29.320 human being, we succeed when we pulled them in, not 0:08:29.400 --> 0:08:33.360 when we pushed them away. Success always comes, whether it's 0:08:33.360 --> 0:08:36.439 pulling an employee and pulling your boss in, pulling your 0:08:36.440 --> 0:08:40.160 spouse in. So conflict can't push people away, it needs 0:08:40.200 --> 0:08:42.800 to pull them in. So that's what the book is about, 0:08:42.880 --> 0:08:46.280 is engaging in meaningful conflict, positive conflict. I love the 0:08:46.320 --> 0:08:48.640 Disney story that's in the book. You know, tell us 0:08:48.640 --> 0:08:51.360 about that Roy had the checkbook, Walt had the ideas. 0:08:51.720 --> 0:08:54.520 Walt's ideas would have made him go broke if Roy 0:08:54.559 --> 0:08:56.240 didn't have the check book, and they would talk about 0:08:56.240 --> 0:08:58.480 it all the time. There's a famous story where Walt 0:08:58.520 --> 0:09:00.400 went out of town on a business trip for two days. 0:09:00.400 --> 0:09:02.040 He had spent all the money in the company. When 0:09:02.040 --> 0:09:05.240 he came home, Royce sold his car. But the greatest 0:09:05.280 --> 0:09:07.839 story of all was snow White, the movie and new 0:09:07.840 --> 0:09:10.319 with flickers in snow White a defect in the film. 0:09:10.720 --> 0:09:12.600 So Walt goes to Roy and says, I gotta fix 0:09:12.640 --> 0:09:15.680 the film. It's a hundred and fifty thousand hours. Roy says, no, 0:09:16.240 --> 0:09:18.920 you're not fixing the film. Well, they never fix the film, 0:09:18.920 --> 0:09:21.200 and if you watch snow White to this day, those 0:09:21.240 --> 0:09:25.160 flickers are still in it. If budget doesn't manage creativity, 0:09:25.520 --> 0:09:29.400 there'll be no money for creativity. It's the conflict between 0:09:29.440 --> 0:09:32.720 those two elements of the business that create that success, 0:09:32.760 --> 0:09:35.920 if you will, that governance on either side, the big 0:09:35.960 --> 0:09:40.079 idea that creates the budget allocation, and the budget realities 0:09:40.080 --> 0:09:44.000 that limits the creative exercises. That's a conflict that drives 0:09:44.120 --> 0:09:47.160 every business China. Unlike you, I think Tim's gone about 0:09:47.200 --> 0:09:50.000 one million TV and radio shows without yelling at anyone. 0:09:50.000 --> 0:09:51.560 I don't know. We gotta get them what we do. 0:09:51.679 --> 0:09:52.839 I don't know what to do to get tim to 0:09:52.880 --> 0:09:54.840 yell at me. Yeah, that's that's the trip. Well, it's 0:09:54.880 --> 0:09:57.080 it's true. Though. It actually makes me think about, you know, 0:09:57.160 --> 0:09:59.400 my own management style or or my own style of 0:09:59.440 --> 0:10:02.360 being managed. I wonder about the idea of the squeaky mouse, 0:10:02.480 --> 0:10:05.000 you know, getting the cheese, or the squeaky wheel getting 0:10:05.000 --> 0:10:07.240 the grease. How do you do this in a way 0:10:07.280 --> 0:10:10.720 that isn't alienating to people, Because when people hear conflict, 0:10:11.080 --> 0:10:15.360 that's a dirty word, especially in an environment where people 0:10:15.400 --> 0:10:17.800 want to be liked. Yeah, you know, I think that 0:10:17.800 --> 0:10:20.120 that's the shame. And that's exactly why I wrote the book. 0:10:20.440 --> 0:10:23.640 It's completely non political, takes no sides on any political 0:10:23.640 --> 0:10:27.080 issues whatsoever. But I put forth the following premise, we 0:10:27.120 --> 0:10:30.560 as a society have forgotten how to engage in positive conflict, 0:10:31.360 --> 0:10:35.160 the disrespect online, the taking of people's dignity. Even in 0:10:35.160 --> 0:10:38.000 the political world. They're saying things to each other years 0:10:38.000 --> 0:10:40.600 ago they would have never said to each other. So, 0:10:40.720 --> 0:10:44.679 if in fact, we hold our beliefs to ourselves, I'm 0:10:44.720 --> 0:10:48.439 concerned our beliefs are going to disappear. So we can't 0:10:48.440 --> 0:10:50.440 be silent. We need to stick off of the things 0:10:50.440 --> 0:10:53.040 that are meaningful to us. So I want to empower people, 0:10:53.400 --> 0:10:56.520 to teach them how to engage in meaningful conflict that 0:10:56.720 --> 0:11:01.439 isn't disruptive but is constructive. So it's all the premise 0:11:01.480 --> 0:11:04.560 of opening up people's minds, fighting for the values that 0:11:04.640 --> 0:11:07.440 you believe. In bar Rescues not really the model because 0:11:07.480 --> 0:11:09.960 in bar Rescue, at these sixty or ninety days working 0:11:10.000 --> 0:11:12.640 four days, I'm a raving maniac. There's a clock ticking 0:11:12.640 --> 0:11:15.280 in my head every minute. I don't have time for 0:11:15.320 --> 0:11:16.720 you to get on a bust him. You gotta get 0:11:16.760 --> 0:11:19.120 on the bus right now, you know. So, So these 0:11:19.120 --> 0:11:22.120 are the things that that create a difference in the 0:11:22.240 --> 0:11:24.960 real world. No, you don't scream at people that way 0:11:25.000 --> 0:11:27.240 that alienates them. You pull them in. You do things 0:11:27.320 --> 0:11:29.280 like put your hand on your chin, on your chin 0:11:29.320 --> 0:11:32.160 when they're talking to you, so they see you engaged. 0:11:32.679 --> 0:11:37.959 Great conflict creates great engagement, and great engagement is never bad. 0:11:38.480 --> 0:11:40.720 You know, John, There's there's sort of a power dynamic 0:11:40.760 --> 0:11:43.240 involved though. Two you know, I imagine, um, you know, 0:11:43.880 --> 0:11:45.800 a manager of a restaurant or a bar can get 0:11:45.800 --> 0:11:47.840 away with yelling at the bus boy. The bus boy 0:11:47.960 --> 0:11:51.040 can't get away as much with yelling at the boss. 0:11:51.040 --> 0:11:54.240 Am I reading that wrong, is it? I wonder least 0:11:54.240 --> 0:11:56.559 the word yelling, because if I was that bus boy, 0:11:56.559 --> 0:11:58.320 I would pull the manager over and say, boy, we 0:11:58.360 --> 0:12:00.360 both want to have a great restaurant, don't we. I 0:12:00.400 --> 0:12:01.960 got a couple of ideas that I think would make 0:12:01.960 --> 0:12:06.400 the restaurant better, and suddenly they're engaged in meaningful dialogue 0:12:06.440 --> 0:12:09.800 about something that the manager might not agree with. So again, 0:12:10.000 --> 0:12:14.319 conflict isn't yelling. Conflict is communicative. But conflict always should 0:12:14.320 --> 0:12:17.440 have a purpose. You know, I used to fight with 0:12:17.480 --> 0:12:20.840 the politicians during the last presidential elections. Think of how 0:12:20.880 --> 0:12:25.439 many arguments and conflicts to our over trivial things Nascar 0:12:25.920 --> 0:12:29.000 and crazy things that why are we fighting about things 0:12:29.000 --> 0:12:30.920 that don't mean it? But John, it's it doesn't seem 0:12:30.960 --> 0:12:33.200 like it's getting any better. No, That's why I felt 0:12:33.200 --> 0:12:34.960 I really how to write this book. I'm trying to 0:12:35.000 --> 0:12:39.079 bring dignity to the premise of conflict and respect. You know, 0:12:39.120 --> 0:12:41.400 it's interesting. One of the I think it's the biggest 0:12:41.400 --> 0:12:44.840 headphone in the world. Bridgewater Associates is famous for exactly 0:12:44.880 --> 0:12:48.320 what you're talking about. They have a culture where they 0:12:48.400 --> 0:12:51.000 really try to knock each other down a peg, and 0:12:51.040 --> 0:12:52.880 that might be a harsh way of saying it, but 0:12:53.280 --> 0:12:58.880 constructive criticism is very much part of the transparency. Transparency 0:12:59.120 --> 0:13:01.400 part of their culture, part of their culture. So is 0:13:01.640 --> 0:13:03.720 I guess it depends to some degree what the culture 0:13:03.720 --> 0:13:05.800 in your company is to you know, if if it 0:13:05.800 --> 0:13:09.480 should more companies sort of embrace that benefits of conflict 0:13:09.520 --> 0:13:12.200 and debating. Uh. You know, it seems to be what 0:13:12.400 --> 0:13:14.040 one of the messages you're trying to get through here. 0:13:14.080 --> 0:13:16.040 You know, it's interesting you can have a company where 0:13:16.120 --> 0:13:18.640 that type of high energy engagement is a part of 0:13:18.640 --> 0:13:22.239 the company, and then you hire somebody who's quiet, who's submissive, 0:13:22.480 --> 0:13:24.959 who doesn't engage in those kind of ways, and they 0:13:25.000 --> 0:13:27.600 get fired because they don't fit in that culture. It 0:13:27.679 --> 0:13:30.000 goes both ways. But I would tell you the most 0:13:30.040 --> 0:13:34.320 innovative companies in the world have elements of conflict, you know, 0:13:34.400 --> 0:13:36.360 and it is push and pull. And look at a 0:13:36.400 --> 0:13:39.760 great coach of a sports team. If he's a great coach, 0:13:39.800 --> 0:13:42.040 he'll get you to perform better than you even thought 0:13:42.080 --> 0:13:45.880 you could, right, and he does that forcefully. It is 0:13:45.920 --> 0:13:47.880 so great to have you joined us, and especially in 0:13:47.960 --> 0:13:50.719 person here really feels like returning your corner with these 0:13:50.760 --> 0:13:52.719 in person guests. It's fun to have everyone back in 0:13:52.760 --> 0:13:55.440 the studio. John Taffer is the host and executive producer 0:13:55.440 --> 0:13:58.480 of Bar Rescue with Us in the Bloomberg Interactive Broker Studio. 0:13:58.559 --> 0:14:01.160 His new book is called The Power of Conflict. Speak 0:14:01.200 --> 0:14:04.400 your mind and get the results that you want. You're 0:14:04.440 --> 0:14:08.439 listening to Bloomberg Business Week with Carol Messer and Bloomberg 0:14:08.480 --> 0:14:12.400 Quick Takes Tim Stinovic on Bloomberg Radio. Let's get a 0:14:12.440 --> 0:14:15.360 view on the macro environment, specifically when it comes to travel. 0:14:15.640 --> 0:14:17.520 We're gonna speak to Axel He for the CEO of 0:14:17.520 --> 0:14:20.240 tree Vago. He joins us on the phone via Zoom 0:14:20.240 --> 0:14:24.000 from Germany, shares the hotel search and travel search platform, 0:14:24.080 --> 0:14:26.040 hitting a fifty two week low today after the company 0:14:26.040 --> 0:14:28.400 reported a lost per share for the first quarter that 0:14:28.480 --> 0:14:31.640 missed the average analyst estimate. Axel, good to have you 0:14:31.640 --> 0:14:34.680 back with us. Was today's miss Was that all about 0:14:34.760 --> 0:14:37.920 concern in Europe? And was that related to Russia's invasion 0:14:37.960 --> 0:14:42.360 of Ukraine? Not really, to be honest, I mean from 0:14:42.360 --> 0:14:44.520 our prospective, we didn't miss the numbers. I guess it's 0:14:44.640 --> 0:14:48.000 very difficult to to predict from the outside what the 0:14:48.040 --> 0:14:51.160 trend is looking like and there is one one one 0:14:51.200 --> 0:14:54.000 of the facts that is in the numbers, which is UM. 0:14:54.040 --> 0:14:57.440 It's basically a fine from a very old investigation that 0:14:57.480 --> 0:15:01.600 has been going on for many years in Australia. Well accellent. 0:15:01.840 --> 0:15:05.080 What's your read on the traveler? The health of the traveler? 0:15:06.360 --> 0:15:12.080 Writ large these days? Has that demand to take vacations, 0:15:12.120 --> 0:15:15.760 to take air travel recovered to sort of the pre 0:15:16.040 --> 0:15:18.760 pandemic level. There's a sense that it's even stronger. That 0:15:18.880 --> 0:15:21.960 there was a big bottleneck of demand for vacation and 0:15:22.000 --> 0:15:26.040 travel and that we're seeing even perhaps stronger, stronger impulse 0:15:26.120 --> 0:15:28.720 to travel. Is that Do your numbers suggest that as well? 0:15:28.840 --> 0:15:32.760 Or is that off? Yeah, it's it's UM. It depends 0:15:32.840 --> 0:15:34.920 very much to which segment of the travel market you're 0:15:34.920 --> 0:15:37.080 looking at. I mean, generally speaking, we've seen it as 0:15:37.120 --> 0:15:39.520 the last two summers as well. There is a huge 0:15:39.520 --> 0:15:42.840 desire to together rest and to to break out of 0:15:42.880 --> 0:15:46.200 the daily routine, even stronger coming out of a time 0:15:46.240 --> 0:15:51.320 of restrictions and lockdown. So the classical family vacation, going 0:15:51.320 --> 0:15:54.680 to the beach, going to the mountains UM sees hugely 0:15:54.760 --> 0:15:57.280 mount UM and if you're strong in that business, you 0:15:57.360 --> 0:16:02.560 see numbers that are at or above levels. Um. The 0:16:02.600 --> 0:16:05.440 traditional city trips where you go to I don't know, 0:16:05.520 --> 0:16:09.360 the Broadway, music, etcetera. Are now slowly coming back, and 0:16:09.440 --> 0:16:12.720 for that, obviously we needed the restrictions to to be lifted. 0:16:13.480 --> 0:16:17.120 And then the last segment, the business travel is obviously lagging, 0:16:17.760 --> 0:16:20.240 and depending on your business makes you you see more 0:16:20.280 --> 0:16:22.920 or less recovery. But what what we see as very 0:16:22.920 --> 0:16:25.760 positive that we think that we are now in a 0:16:25.880 --> 0:16:29.800 in a situation where we really see fundamental recovery and 0:16:29.880 --> 0:16:32.720 really a gradual improvement, whereas the last two years were 0:16:33.160 --> 0:16:35.720 very much an up and down. It does not feel 0:16:35.760 --> 0:16:38.240 like the business traveler here in the United States axel 0:16:39.200 --> 0:16:41.960 is struggling. I perhaps it's just because I just got 0:16:42.000 --> 0:16:44.120 back from the Milk and Institute Global Conference and it 0:16:44.240 --> 0:16:47.560 was truly back to nineteen levels, uh, you know, for 0:16:47.600 --> 0:16:51.520 the first time since the pandemic. But everyone I talked 0:16:51.520 --> 0:16:55.240 to you had trouble finding flights to and from and 0:16:55.480 --> 0:16:58.440 we booked some travel in the upcoming months and we're 0:16:58.480 --> 0:17:00.920 having trouble even finding flights. And I'm wondering if it's 0:17:00.920 --> 0:17:04.520 because flights are being uh managing a different way. They're 0:17:04.600 --> 0:17:07.520 they're reducing the number of them, or if it's because 0:17:07.560 --> 0:17:10.280 we're seeing a different level of business travel here in 0:17:10.280 --> 0:17:14.160 the US than you are in Europe. Yeah, I think 0:17:14.600 --> 0:17:17.280 you're at a very interesting point. I mean there there 0:17:17.440 --> 0:17:21.080 is is now with the demand coming back, we do 0:17:21.200 --> 0:17:26.000 experience supply shortages and there are a couple of factors. Um. 0:17:26.240 --> 0:17:30.200 There there are labor shortages everywhere, um, and I'm sure 0:17:30.240 --> 0:17:33.440 you've seen it in hotels, at the airport, security checks, 0:17:33.480 --> 0:17:37.879 ground handling, all of the above everything and so so 0:17:37.960 --> 0:17:43.000 that is reducing the capacity that that is on offer. Um. 0:17:43.040 --> 0:17:45.400 The other thing is that depending on the routes that 0:17:45.440 --> 0:17:49.720 you're you're taking by by air, there is also less capacity. 0:17:49.760 --> 0:17:52.399 And I guess the airlines are to a certain extent 0:17:52.480 --> 0:17:56.840 more disciplines to put in particularly longhold routes again back 0:17:56.880 --> 0:18:01.480 to service and have also decommissioned quite quite a few planes. 0:18:02.160 --> 0:18:05.320 So again it depends very much on on the destination 0:18:05.320 --> 0:18:08.040 of the specific trip. But but overall in Europe, I 0:18:08.080 --> 0:18:10.879 would say that that that business travel is definitely not 0:18:10.920 --> 0:18:12.960 back to where it used to be, and and given 0:18:13.000 --> 0:18:16.600 what we are seeing in the US, it is neither um. 0:18:16.640 --> 0:18:20.320 But obviously it is coming back. Actcell Trovaco had a 0:18:20.440 --> 0:18:26.040 nice string of several quarters of profitability before the pandemic, 0:18:26.119 --> 0:18:30.320 and then obviously the pandemic UH in two when it 0:18:30.320 --> 0:18:35.159 really started affecting travel UH sent company back to a loss, 0:18:35.560 --> 0:18:38.000 then another couple of quarters last year at the end 0:18:38.040 --> 0:18:41.280 of the year back to profitability. Is any sense of 0:18:41.320 --> 0:18:49.440 when sort of we can see consistent positive earnings from Trivago? Yeah, 0:18:49.520 --> 0:18:51.800 it's I mean, I guess we we were. We were 0:18:52.240 --> 0:18:55.800 fortunate in a way that we realized that the pandemic 0:18:55.840 --> 0:19:00.280 would not be a temporary problem, but really a problem 0:19:00.320 --> 0:19:02.399 that would stay with us for multiple years. So we 0:19:03.320 --> 0:19:07.040 um we cut our costs very early, already April twenty 0:19:07.119 --> 0:19:10.160 in the pandemic and as a result managed to come 0:19:10.160 --> 0:19:12.439 out of it with a positive cash flow. So the 0:19:12.480 --> 0:19:16.240 lower cost base has helped us a lot to really 0:19:16.400 --> 0:19:20.800 manage and navigate through the very very tough times in 0:19:20.840 --> 0:19:25.400 the pandemic. And and now we and and also most 0:19:25.400 --> 0:19:29.879 of the other online players are obviously investing into into 0:19:29.920 --> 0:19:34.520 winning back the customers, into giving travelers confidence to travel. 0:19:35.200 --> 0:19:38.280 So there are investment quarters ahead of us, and you 0:19:38.320 --> 0:19:41.360 can really see that with many companies, and I guess 0:19:41.200 --> 0:19:44.800 it will take it will take a few quarters and 0:19:44.840 --> 0:19:47.040 perhaps even a few years to get to a market 0:19:47.119 --> 0:19:51.160 that is truly stable. Um. But yeah, but we will, 0:19:51.200 --> 0:19:54.080 we will. We will invest into marketing this summer for sure. 0:19:54.600 --> 0:19:57.760 Actual last minute that we have with you, getting getting 0:19:57.760 --> 0:20:00.040 back to what we learned from executives from around the 0:20:00.040 --> 0:20:02.880 world at milk in just a couple of days ago, 0:20:03.480 --> 0:20:05.600 it seemed to be there was cautious optimism here in 0:20:05.600 --> 0:20:08.119 the US, but there was some serious concern about Europe, 0:20:08.160 --> 0:20:15.119 specifically about the health of the European consumer. What's your take, Yeah, 0:20:15.840 --> 0:20:18.560 it's a difficult question. I think the biggest concern that 0:20:18.600 --> 0:20:21.399 I would have is it's really it's global, which is 0:20:22.000 --> 0:20:24.720 is the skyrocketing inflation and and like I said, that's 0:20:24.720 --> 0:20:29.200 where where you you're starting before we start the discussion. 0:20:29.760 --> 0:20:32.800 That is is obviously a concern and it puts pressure 0:20:32.920 --> 0:20:39.280 on on people around the globe. But but other than that, yeah, 0:20:39.359 --> 0:20:41.800 I I do believe that there is not that much 0:20:41.800 --> 0:20:45.040 of a difference, um, in terms of economic outlook. All right, 0:20:45.080 --> 0:20:46.600