WEBVTT - Active Investing, Super Bowl Ads, Winter Travel Forecast 0:00:02.520 --> 0:00:09.560 Bloomberg Audio Studios, podcasts, radio news. This is Bloomberg BusinessWeek 0:00:09.880 --> 0:00:13.560 with Carol Masser and Tim Steneveek on Bloomberg Radio. 0:00:13.880 --> 0:00:16.880 Hey Carol, before I do anything when it comes to ETFs, 0:00:17.320 --> 0:00:19.320 I get in touch with the folks at Bloomberg Intelligence 0:00:19.760 --> 0:00:22.919 because they know everything when it comes to ETF. So 0:00:22.920 --> 0:00:26.200 shout out to BI ETF analyst James Seyfert, who pointed 0:00:26.200 --> 0:00:28.480 me to a recent note that he wrote that says 0:00:28.520 --> 0:00:30.720 ETFs are on track to overtake mutual fund peers and 0:00:30.760 --> 0:00:33.199 assets within a decade. And then there's the question of 0:00:33.240 --> 0:00:35.519 passive versus active, because when we talk about ETFs, we 0:00:35.520 --> 0:00:39.400 talk about oftentimes index funds. Passive ETFs dominate. Here's some 0:00:39.479 --> 0:00:42.760 numbers from Bloomberg Intelligence five hundred and ninety five billion 0:00:42.800 --> 0:00:46.519 dollars in twenty twenty four. But don't shrug off those 0:00:46.560 --> 0:00:49.520 active equity ETFs because they're booming too, inflows exceeding thirty 0:00:49.520 --> 0:00:51.800 five billion dollars each quarter in twenty twenty four. 0:00:51.880 --> 0:00:53.640 It makes me wonder do we need to have mutual funds. 0:00:53.640 --> 0:00:55.440 I always wonder about this, although people have said the 0:00:55.480 --> 0:00:56.880 reason why you need mutual funds, you. 0:00:56.880 --> 0:00:59.960 See mutual funds to moving to become ETFs. 0:00:59.480 --> 0:01:01.800 Incre right increasingly. All right, let's get into it with 0:01:01.880 --> 0:01:05.960 Eli Horton, and senior portfolio manager at TCW's Active ETF Investments. 0:01:05.959 --> 0:01:08.000 He joins us from Los Angeles. Eli, good to have 0:01:08.040 --> 0:01:10.959 you here. First of all, in terms of active versus passive, 0:01:11.000 --> 0:01:12.959 where do you see the new money flowing into and 0:01:13.000 --> 0:01:15.840 where do you guys think about focusing more of your 0:01:15.840 --> 0:01:17.880 efforts going forward in terms of fun creation. 0:01:19.319 --> 0:01:20.680 Well, it's nice to be here. 0:01:20.760 --> 0:01:21.399 Thanks for having me. 0:01:22.520 --> 0:01:28.520 Look at TCW. We have we've really identified the ETF 0:01:28.600 --> 0:01:33.240 rapper is very compelling from a tax perspective. We also 0:01:33.440 --> 0:01:37.520 are seeing a really incredible opportunity on the active investing side. 0:01:37.840 --> 0:01:40.679 I would highlight this is one of the best stock 0:01:40.760 --> 0:01:43.959 picking markets that I've certainly seen in my career. We're 0:01:43.959 --> 0:01:48.400 seeing significant levels of concentration, really the highest levels of 0:01:48.400 --> 0:01:52.640 concentration in about a century. We're also seeing mediful levels 0:01:52.640 --> 0:01:57.480 of dispersion in stocks, significant volatility. That's really our best 0:01:57.480 --> 0:02:00.000 friend when it comes to being an active store. 0:02:01.560 --> 0:02:05.560 Okay, so in terms of active stock picking, how do 0:02:05.640 --> 0:02:08.720 you see that going into somebody's portfolio if their portfolio 0:02:08.880 --> 0:02:13.040 is dominated by index funds. Eric Belchunis at Bloomberg Intelligence 0:02:13.040 --> 0:02:15.440 loves to call it the hot sauce effect. You know, 0:02:15.440 --> 0:02:17.160 it's like you have the boring S and P five 0:02:17.240 --> 0:02:20.720 hundred ETF for the you know, VTI Total stock Market 0:02:20.720 --> 0:02:23.040 Index from Vanguard or something like that, and then maybe 0:02:23.040 --> 0:02:26.480 you throw in like an ARC fund for three percent 0:02:26.639 --> 0:02:28.839 of your portfolio or something. How do you think about it? 0:02:29.919 --> 0:02:31.800 We look, you can look at the S and P 0:02:31.880 --> 0:02:34.399 five hundred and look at the concentration at the top 0:02:34.400 --> 0:02:36.960 of that index. You know, over thirty five percent is 0:02:37.000 --> 0:02:41.880 really in in ten companies, and so while many investors 0:02:42.280 --> 0:02:45.840 think they own a very diversified basket, there's a lot 0:02:45.880 --> 0:02:49.960 more concentration than folks think. A couple of strategies that 0:02:50.000 --> 0:02:53.840 we manage here at TCW. One invest in the energy transformation, 0:02:55.080 --> 0:02:57.800 the other invest in the reshoring of supply chains and 0:02:57.840 --> 0:03:02.080 bringing manufacturing back to the US. These are actively managed 0:03:02.400 --> 0:03:06.960 twenty to thirty stock portfolios investing in multi decade mega themes. 0:03:07.600 --> 0:03:11.600 And you wouldn't actually find those structural themes represented very 0:03:11.639 --> 0:03:14.000 high highly in the SB five hundred at all. You 0:03:14.040 --> 0:03:16.840 probably have somewhere between eight to twelve percent exposure. So 0:03:17.880 --> 0:03:21.600 I think that is extremely complementary too many investors, and 0:03:21.639 --> 0:03:25.360 it also provides that active stock picking, which, like I 0:03:25.360 --> 0:03:27.840 said earlier, I think this is one of the most 0:03:27.880 --> 0:03:30.040 favorable markets I've seen in my career for stock picking. 0:03:30.280 --> 0:03:33.079 Yeah. Interesting, all right, So thematics make a difference, right, 0:03:33.120 --> 0:03:35.440 And I am curious about the thematics that you think 0:03:35.480 --> 0:03:40.520 are going to be most appropriate in this environment or 0:03:40.600 --> 0:03:44.000 is it just everything, just everything, or not necessarily? 0:03:44.920 --> 0:03:48.760 Well, I think you have to be very selective and 0:03:49.000 --> 0:03:52.240 avoid fads and look for we'll call it mega themes 0:03:52.320 --> 0:03:57.400 or mega trends, themes that will be multiple decades in durations. 0:03:57.680 --> 0:04:01.040 So I'll hit one the energy information. So we have 0:04:01.400 --> 0:04:05.360 a strategy that we call transformed systems the ticker's power 0:04:05.360 --> 0:04:10.040 at PWRD, and we're investing in the migration of the 0:04:10.080 --> 0:04:14.440 world's energy system from a fossil fuel system to renewable energy. 0:04:14.600 --> 0:04:18.120 We are probably twenty years in to this process, and 0:04:18.160 --> 0:04:20.520 if you just look at where power and energy are 0:04:20.560 --> 0:04:23.960 source from, only about fifteen to twenty percent is truly 0:04:24.000 --> 0:04:26.680 renewable and the rest is hydrocarbon based. So even twenty 0:04:26.760 --> 0:04:29.520 years in, we're nowhere close to the endgame and the 0:04:29.520 --> 0:04:33.360 world's investing about two trillion dollars per year to migrate 0:04:33.800 --> 0:04:36.600 towards this end state. That two trillion dollars is growing 0:04:36.640 --> 0:04:39.840 every single year. It's largely non discretionary, and it's creating 0:04:39.839 --> 0:04:44.120 tremendous opportunities, whether it's the power and electrical grid, transportation, 0:04:44.960 --> 0:04:49.520 commercial services, a variety of different businesses. Again going back 0:04:49.520 --> 0:04:51.920 to my earlier comments, many of these companies are old 0:04:51.920 --> 0:04:55.280 economy companies unless represented in the broader markets. And this 0:04:55.320 --> 0:04:57.240 is a theme where you've got a nice tailwind at 0:04:57.240 --> 0:05:01.160 your back for decades. That's one of the examples I highlight. 0:05:01.320 --> 0:05:04.200 Yeah, I'm looking at PWRD, as you said, the TCW 0:05:04.279 --> 0:05:09.240 Transformation Systems ETF. It's up about thirty two percent in 0:05:09.279 --> 0:05:12.400 the past year, up about eight percent so far year 0:05:12.440 --> 0:05:14.719 to date. And if I look at some of the holdings, 0:05:14.839 --> 0:05:20.240 it is it's ge it's Airbus, it's Vistra, which we 0:05:20.320 --> 0:05:23.480 know has been a big you know, been rewarded by 0:05:23.560 --> 0:05:28.680 the AI spend in terms of the energy expectations Union Pacific. 0:05:28.880 --> 0:05:32.080 So it's kind of a so what's the theme there. 0:05:32.080 --> 0:05:36.640 It's just anybody that's impacted by the move towards renewables. 0:05:38.040 --> 0:05:41.200 So the point I think we should try to drive 0:05:41.240 --> 0:05:45.800 home here is that investing in the energy transformation requires 0:05:45.920 --> 0:05:50.920 a much broader subset of businesses and value chains and 0:05:50.960 --> 0:05:54.080 systems than most think. It's not just energy, it's not 0:05:54.200 --> 0:05:59.640 just batteries when solar, there is so much more that 0:05:59.680 --> 0:06:02.640 goes to play here. So you mentioned THISRA is a 0:06:02.640 --> 0:06:08.039 generator of power, not gas nuclear. Our grid needs to 0:06:08.040 --> 0:06:11.120 be expanded massively. We're short power. This RA is enabling 0:06:11.160 --> 0:06:14.920 the transformation. You mentioned GE. Most folks wouldn't think of 0:06:15.080 --> 0:06:17.960 an aerospace engine company as being part of the energy transformation, 0:06:18.320 --> 0:06:23.359 but GE makes one of the premiere engines that go 0:06:23.480 --> 0:06:25.800 on the planes we all fly around. It burns twenty 0:06:25.839 --> 0:06:28.719 percent less fuel. That's obviously great for the environment, but 0:06:28.800 --> 0:06:32.560 it is extremely valuable to the airline customers. We're spending 0:06:32.600 --> 0:06:34.800 a third of their operating cost on fuel. So we've 0:06:34.839 --> 0:06:38.640 got a power producer, an aerospace engine supplier, a variety 0:06:38.720 --> 0:06:42.600 of other types of companies that are actually vital to 0:06:42.720 --> 0:06:47.159 transforming the systems or our energy system, if you will. 0:06:47.480 --> 0:06:51.000 It's much bigger than just traditional energy or renewal energy. 0:06:51.440 --> 0:06:55.800 You've also got waste management services in there as well. 0:06:56.760 --> 0:06:59.400 We like talking trash here. We've talked to the folks 0:06:59.400 --> 0:07:02.839 at some of these huge companies Republic Services that are listed. 0:07:03.960 --> 0:07:07.360 What's the opportunity that you say, We. 0:07:07.360 --> 0:07:10.800 Love talking trash too, and Republic has been one. It's 0:07:10.800 --> 0:07:14.080 been one of our large investments since inception of the 0:07:14.080 --> 0:07:19.480 strategy three years ago. Amongst other merits that Republic has 0:07:19.480 --> 0:07:21.960 that make it such a great business, it is actually 0:07:22.040 --> 0:07:26.600 taking its landfills, and inside these landfills there's a bunch 0:07:26.640 --> 0:07:30.640 of biograded, more biodegradable material that emits gases, primarily methan. 0:07:31.280 --> 0:07:37.640 Republic can capture and capture that gas, run some industrial 0:07:37.680 --> 0:07:40.880 processes on it, and out the other side comes renewable 0:07:40.960 --> 0:07:44.240 natural gas. So they're literally taking trash turn it into 0:07:44.320 --> 0:07:46.840 natural gas that can then be sold into the market 0:07:47.440 --> 0:07:50.760 perfectly circular. The net IRRs on these projects are in 0:07:50.800 --> 0:07:53.400 excess of fifty to sixty percent, so it's very high 0:07:53.480 --> 0:07:56.600 value business and no one ever thinks about that when 0:07:56.640 --> 0:07:58.920 you think about Republic's business, but it's actually very important 0:07:58.920 --> 0:08:02.120 for the energy transformation, very valuable to the stock and 0:08:02.160 --> 0:08:05.600 so we've been proud owners of Republic for a few years. 0:08:05.600 --> 0:08:05.800 Now. 0:08:05.920 --> 0:08:08.520 What's the can you just take me through as portfolio manager, 0:08:08.560 --> 0:08:11.840 your process for adding to a stock, adding a stock, 0:08:12.440 --> 0:08:15.400 selling a stock, or removing a stock, like what goes 0:08:15.440 --> 0:08:17.280 into that look. 0:08:17.360 --> 0:08:20.520 So at the end of the day, our investment process 0:08:20.800 --> 0:08:25.040 is one that we strive to have be repeatable, teachable, 0:08:25.120 --> 0:08:29.280 proven through cycles. It's very fundamentally oriented, very bottoms up driven, 0:08:29.800 --> 0:08:33.600 and we're looking for companies that are misunderstood or have 0:08:33.679 --> 0:08:37.400 secular growth opportunities that the market's not appreciating. And when 0:08:37.400 --> 0:08:39.760 we find a great business where we think there's an 0:08:39.800 --> 0:08:43.760 asymmetrical range of outcomes where rewared really offsets risk by 0:08:43.920 --> 0:08:48.240 large magnitude, you'll see us express conviction in the form 0:08:48.240 --> 0:08:51.640 of sizing, and so businesses like Republic or ge where 0:08:51.640 --> 0:08:55.320 we are extremely optimistic about the multi year prospects will 0:08:55.320 --> 0:08:58.719 make them large investments in the portfolio. I believe as 0:08:58.760 --> 0:09:02.440 an investor that type of concentration and sizing is how 0:09:02.480 --> 0:09:03.600 you beat the market through the cycle. 0:09:04.760 --> 0:09:06.280 All right, we're gonna leave it on that note. Listen, 0:09:06.320 --> 0:09:08.840 there's so much happening in the energy space, so really 0:09:08.920 --> 0:09:11.280 kind of cool to see your perspective and take on 0:09:11.360 --> 0:09:14.240 all of this. Eli, Thank you. Eli Horton, Senior portfolio 0:09:14.280 --> 0:09:18.880 manager at TCW's active ETF Investments joining us from Los 0:09:18.920 --> 0:09:20.000 Angeles Opening. 0:09:20.080 --> 0:09:22.280 I had a commercial at last night's Super Bowl, and 0:09:22.280 --> 0:09:24.040 by the way, the cost of those ads risen to 0:09:24.120 --> 0:09:26.920 a record of over eight million dollars. A Week pointed 0:09:26.920 --> 0:09:29.880 out that Duncan, Pfizer, T Mobile, Nike, Jeep and others 0:09:29.920 --> 0:09:32.480 are among the companies that spent the most opting for 0:09:32.520 --> 0:09:34.440 some sixty and ninety seconds. 0:09:34.080 --> 0:09:36.319 At spot Duncan Spot was long. 0:09:36.800 --> 0:09:39.079 The boy band one No, the. 0:09:39.000 --> 0:09:41.320 One where what's his name was in the that of 0:09:42.240 --> 0:09:44.040 coffee beans. Okay, but with. 0:09:45.400 --> 0:09:47.800 Yeah, I don't know, Okay, no idea what you're talking about. 0:09:47.840 --> 0:09:50.199 But Ben ben Affleck, you know. 0:09:50.160 --> 0:09:53.800 You know, I guess Doug Zarkin is going. 0:09:53.720 --> 0:09:55.440 To the bathroom during the Super Bowl. I'm just going 0:09:55.520 --> 0:09:57.040 to say, you can't watch all the commercials. 0:09:57.160 --> 0:09:59.599 Doug Zarget is chief brand officer of Modern Performance and 0:09:59.640 --> 0:10:01.760 Recovery Brands. It's a holding company that counts the Good 0:10:01.800 --> 0:10:04.760 feed Store, IMG Source, Stretched and Compression out the mung 0:10:04.880 --> 0:10:08.120 Its brands. Doug's also held executive roles in marketing at Leuksotica, 0:10:08.160 --> 0:10:10.960 Avon and Victoria's Secret and more. He's also the author 0:10:11.000 --> 0:10:13.079 of Moving Your Brand out of the Friend zone, he 0:10:13.160 --> 0:10:16.400 joins us from New York. Doug, is that money well spent? 0:10:16.440 --> 0:10:18.360 Carol can't doesn't even remember the duncan. 0:10:18.080 --> 0:10:21.120 At I do remember, so I can't remember the actor 0:10:21.160 --> 0:10:25.000 who was also in it, the Jeremy Stu was it Jeremy. 0:10:24.679 --> 0:10:26.600 Strong in the Jermy Strong from Succession? 0:10:26.720 --> 0:10:30.240 Yeah, eight eight million dollars for a thirty second spot 0:10:30.400 --> 0:10:33.560 is actually the most cost fish and media buy on 0:10:33.640 --> 0:10:35.640 the planet because it reaches about one hundred and twenty 0:10:35.640 --> 0:10:38.400 five million people. The challenge is you got to go bigger, 0:10:38.440 --> 0:10:41.360 go home. You have to be either really sentimental in 0:10:41.360 --> 0:10:44.600 teer jerky or really over the top funny because consumers, 0:10:44.640 --> 0:10:46.840 and I talk about this in my book, make emotional 0:10:46.880 --> 0:10:49.520 decisions before they make rational choices. And the commercials that 0:10:49.520 --> 0:10:52.400 we're talking about today were either very emotional on one 0:10:52.440 --> 0:10:53.439 side or the other side. 0:10:53.240 --> 0:10:53.600 Of the aisle. 0:10:54.400 --> 0:10:58.120 When did it like it becomes socially acceptable for celebrities 0:10:58.160 --> 0:11:02.360 to do whatever they to do anything for money? Because 0:11:02.440 --> 0:11:04.120 I was I was part of the generation Carrol and 0:11:04.120 --> 0:11:05.760 I you know, I think you probably remember this, like 0:11:05.800 --> 0:11:08.000 the whole concept of selling out. Yeah, it was like 0:11:08.040 --> 0:11:10.160 a thing. Oh yeah, that doesn't exist anymore. When did 0:11:10.200 --> 0:11:10.600 that happen. 0:11:10.679 --> 0:11:13.400 No, and brand's like being I feel like affiliated with celebrities. 0:11:13.800 --> 0:11:16.360 Yeah, it used to be a dirty little secret. 0:11:16.400 --> 0:11:18.520 They would go overseas and they would shoot a commercial, 0:11:18.559 --> 0:11:21.880 you know, Oscar winners would maintain their creative integrity. Well, 0:11:21.920 --> 0:11:23.679 creative integrity started to go out the window when the 0:11:23.679 --> 0:11:26.920 paychecks started to be seven and eight figures. When you're 0:11:26.920 --> 0:11:30.200 seeing George Clooney do an espresso commercial, I scratch grait, 0:11:30.200 --> 0:11:32.640 you're going on the money must be really good. And 0:11:32.679 --> 0:11:36.200 I would say this because you can doesn't mean you should. 0:11:36.280 --> 0:11:39.040 And I mean that specifically with celebrities. If it's not 0:11:39.440 --> 0:11:43.280 adding real value to your brand message, you're just sticking 0:11:43.280 --> 0:11:45.440 them in and you're paying a huge out of pocket 0:11:45.480 --> 0:11:47.960 cost for what may not add to the story or 0:11:47.960 --> 0:11:49.200 the memorability of your ad. 0:11:50.200 --> 0:11:52.520 Yeah, I have to say I do stop when there's 0:11:52.520 --> 0:11:55.679 a celebrity. You know what's interesting. I think of kind 0:11:55.679 --> 0:11:57.559 of like all the fashion magazines when they were still 0:11:57.600 --> 0:11:59.120 you know, I mean some of them were still in print, 0:11:59.160 --> 0:12:01.080 a lot of them, but like a Vogue or something, 0:12:01.400 --> 0:12:05.720 and it became no longer that models like the supermodel 0:12:05.760 --> 0:12:08.920 era of how many years ago, But it was celebrities 0:12:08.960 --> 0:12:11.440 that are on in Style magazine was always a celebrity 0:12:11.480 --> 0:12:13.640 on the cover. It really wasn't models anymore, and it's 0:12:13.720 --> 0:12:17.520 just speaks to the power of the celebrity. I don't know, 0:12:17.920 --> 0:12:20.240 I feel like the last couple of Super Bowls, the 0:12:20.280 --> 0:12:22.480 commercials were really, really boring. I thought they were more 0:12:22.520 --> 0:12:23.400 interesting last night. 0:12:24.440 --> 0:12:26.240 You know, there were some definite big winners, you know. 0:12:26.280 --> 0:12:28.839 I think the NFL came out huge, yes with their 0:12:28.960 --> 0:12:33.560 girls played flag football, really strong, emotional spot, the Laze 0:12:33.640 --> 0:12:36.600 Little Farmer spot where the girl plants the potato and 0:12:36.720 --> 0:12:38.440 raises the potato to be a potato chip. 0:12:38.679 --> 0:12:40.960 Super sweet, super sweet. 0:12:41.440 --> 0:12:43.360 But then there were some that kind of jumped the shark, 0:12:43.600 --> 0:12:47.079 you know, bud Light with Shane Gillison, post Malone. That's 0:12:47.120 --> 0:12:48.960 an example of because you could, I don't know if 0:12:49.000 --> 0:12:51.240 you should. You know, what did they add to the story. 0:12:51.600 --> 0:12:54.520 And if there's another commercial with Peyton Manning or Tom 0:12:54.559 --> 0:12:56.920 Brady in it, I honestly mayor shoot myself. 0:12:57.280 --> 0:12:59.240 It is so over the top. 0:13:00.040 --> 0:13:02.120 But there were some definite big winners. I think everybody 0:13:02.200 --> 0:13:03.880 loved the Mission Impossible trailer. 0:13:04.720 --> 0:13:05.920 That was a big, big win. 0:13:06.679 --> 0:13:09.840 The Stellar ar twa ad with David Beckham and Matt 0:13:09.920 --> 0:13:12.240 Damon really really funny. 0:13:13.120 --> 0:13:14.040 Oh it was great. 0:13:14.200 --> 0:13:14.440 Yeah. 0:13:14.480 --> 0:13:16.800 The only thing is I think we're over the joke 0:13:16.880 --> 0:13:19.840 of the Matt and Ben relationship. Duncan played into it 0:13:19.880 --> 0:13:22.240 in the duncan Ad you were talking about. Yeah, Stellar 0:13:22.320 --> 0:13:25.320 ar twa played into it. There's a lot more ways 0:13:25.320 --> 0:13:27.360 to skin a cap and going to that old tried 0:13:27.480 --> 0:13:29.040 true gag of Matt and Ben. 0:13:29.280 --> 0:13:30.960 But there were some real big winners last night. 0:13:31.080 --> 0:13:34.800 He does some big losers thirty seconds left. If if 0:13:34.840 --> 0:13:37.319 it's such a great ROI for eight million dollars, why 0:13:37.360 --> 0:13:38.960 are they only charging eight million dollars? 0:13:40.480 --> 0:13:42.720 Because it's eight million dollars, it's still a pretty darn 0:13:42.760 --> 0:13:45.240 big number. Because it is a go big or go home, 0:13:45.280 --> 0:13:48.040 you risk it. It's a highly visible but it is 0:13:48.040 --> 0:13:51.080 also a highly critical opportunity. People are going to lambast 0:13:51.120 --> 0:13:53.000 you if it's bad, and they're going to tell you 0:13:53.040 --> 0:13:55.000 it's really good. If it's really good, you win bigger, 0:13:55.040 --> 0:13:56.040 you lose big on the Super Bowl. 0:13:56.120 --> 0:13:57.520 What I also thought was interesting, and I know we're 0:13:57.600 --> 0:13:59.600 running out of time, but something like the Nike spot 0:13:59.600 --> 0:14:02.360 and women and in sports like we are wondering whether 0:14:02.480 --> 0:14:06.600 corporations are rolling back on diversity and inclusion and efforts 0:14:06.640 --> 0:14:09.800 and being very careful with the new administration. Some would 0:14:09.840 --> 0:14:11.560 say that they are, but it was interesting to see 0:14:11.600 --> 0:14:14.439 something like that Nike spot very you know, behind women 0:14:14.640 --> 0:14:16.360 and behind women in sports just quickly. 0:14:16.480 --> 0:14:18.680 So a great opportunity for companies to show their values 0:14:18.720 --> 0:14:20.080 to the consumers all over the world. 0:14:20.160 --> 0:14:22.360 All right, good stuff, Hey, this was fun, Doug, Thank 0:14:22.360 --> 0:14:24.440 you so much. Doug Zarkin. He's chief brand officer at 0:14:24.440 --> 0:14:27.680 Modern Performance and Recovery Brands. Joining us in New York City. 0:14:27.680 --> 0:14:30.200 You are listening and watching Bloomberg Business Week, Carol Master 0:14:30.280 --> 0:14:31.120 of Timstead back. 0:14:35.640 --> 0:14:38.240 From Algeria to the Seychelles to the Upper East Side 0:14:38.280 --> 0:14:40.920 and everything in between. Our Bloomberg Pursuits team has got 0:14:40.960 --> 0:14:43.760 you covered. Check out the magazines where to Go in 0:14:43.760 --> 0:14:46.600 twenty twenty five interactive feature. It gives you personalized month 0:14:46.640 --> 0:14:50.239 by month estimates for hotel and flight costs alongside each recommendation. 0:14:50.360 --> 0:14:52.040 It's super fun to play with. We did it and 0:14:52.120 --> 0:14:53.680 we've done a deep dive into it. So if you 0:14:53.760 --> 0:14:55.680 missed it, you can just check out our podcast feed 0:14:55.680 --> 0:14:57.240 because it's got some pretty cool stuff. Well. 0:14:57.240 --> 0:14:59.200 For more on travel this year, we're joined by Haley Berg, 0:14:59.280 --> 0:15:02.480 lead economists travel app Hopper. She joins us from Boston. 0:15:02.800 --> 0:15:05.920 They have done some serious number crunching over at Hopper 0:15:06.080 --> 0:15:09.240 this year. Hayley, what can you tell us about the 0:15:09.280 --> 0:15:12.840 American consumer in twenty twenty five and how much we're 0:15:12.880 --> 0:15:14.120 going to spend on travel? 0:15:15.840 --> 0:15:17.800 Well, the answer is most consumers are going to be 0:15:17.840 --> 0:15:21.000 spending a lot on travel, and if they aren't spending 0:15:21.040 --> 0:15:23.720 the same as they did last year, they're expanding it. 0:15:24.280 --> 0:15:27.920 We found that more than half of Americans planned to 0:15:27.960 --> 0:15:30.640 spend at least the same amount as they did last 0:15:30.720 --> 0:15:35.440 year on travel hotels, airfare, activities, and about twenty three percent, 0:15:35.520 --> 0:15:38.880 so almost one in four are going to spend even more. 0:15:39.360 --> 0:15:44.880 And that's true across income ranges, across ages of those travelers. 0:15:45.000 --> 0:15:51.480 Expansion is in the air. Who's traveling, young people. 0:15:51.400 --> 0:15:52.080 Old people. 0:15:52.320 --> 0:15:55.840 Everyone is hitting the skies and staying. We are seeing 0:15:55.920 --> 0:15:59.760 the greatest growth from younger travelers gen Z who are 0:15:59.760 --> 0:16:03.920 built wealth, millennials who are enjoying some wealth. But we 0:16:04.080 --> 0:16:09.040 are also seeing that retiree ages boomers, they're spending more 0:16:09.080 --> 0:16:13.080 on premium, they're taking those end of the career trips. 0:16:13.080 --> 0:16:15.200 So really, expenditures coming from everywhere. 0:16:15.360 --> 0:16:18.280 Got to say one of our colleagues, who will remain nameless, 0:16:18.360 --> 0:16:21.840 just took an amazing trip that took eighteen hours to 0:16:21.920 --> 0:16:26.640 get there. Incredible remote resort. We're not going to say 0:16:26.640 --> 0:16:28.640 who because we keep secrets around here. 0:16:28.880 --> 0:16:31.840 Well, he does talk about it on a new podcast, 0:16:32.360 --> 0:16:35.680 a new edition of his Hot Pursuit podcast. So I 0:16:35.760 --> 0:16:36.840 just want to give a little. 0:16:36.600 --> 0:16:39.400 Matt miller'er outed. I'm just going to tell you he's 0:16:39.400 --> 0:16:39.960 going to talk. 0:16:39.800 --> 0:16:42.800 About it on the podcast, so apparently. 0:16:42.400 --> 0:16:44.840 But it's pretty remarkable and it looks like a really 0:16:44.840 --> 0:16:47.920 cool thing. No kids, no kids came along, just see 0:16:47.920 --> 0:16:50.440 and his wife. So sorry, Matt, We just like laid 0:16:50.480 --> 0:16:54.920 it out for everybody. It is interesting that that's continuing. 0:16:55.000 --> 0:16:57.440 Are there certain parts of the world where people are 0:16:57.480 --> 0:17:00.440 going increasingly? Like we've talked about Japan has been a 0:17:00.440 --> 0:17:03.120 pretty hot spot, right everybody went to Italy? Was it 0:17:03.240 --> 0:17:06.520 last summer? There's summer summer before. Where are people going? 0:17:07.840 --> 0:17:11.480 Well, Matt's not alone. Ends of the Earth destinations are 0:17:11.600 --> 0:17:17.600 actually one of the fastest growing segments. Patagonia greenland destinations 0:17:17.640 --> 0:17:19.960 that take a very long time to get to and 0:17:20.119 --> 0:17:24.280 are difficult to traverse, are definitely growing in popularity. But 0:17:24.480 --> 0:17:27.360 also some more mainstream destinations. You know, at this time 0:17:27.400 --> 0:17:31.160 of year, it's a lot of Caribbean destinations this summer. 0:17:31.200 --> 0:17:34.240 We are expecting to see an uptick in demand for 0:17:34.520 --> 0:17:39.200 Bangkok after The White Lotus premieres later this month. We've 0:17:39.280 --> 0:17:41.719 seen in the past couple of years, as each season 0:17:41.720 --> 0:17:44.680 of that show releases, it's followed by a huge surgeon 0:17:44.720 --> 0:17:47.600 demand for where they filmed. So we are seeing ends 0:17:47.640 --> 0:17:49.560 of the Earth, but also some more of those mainstream 0:17:49.560 --> 0:17:53.240 destinations in Japan. Nothing is stopping the demand in Japan. 0:17:53.400 --> 0:17:56.639 It remains the number one international destination seeing growth. 0:17:57.560 --> 0:17:59.560 That's pretty amazing because I was going to say, Carol, 0:17:59.600 --> 0:18:01.359 did mention that you've told us about Japan, but it 0:18:01.359 --> 0:18:02.960 was last time you were on with us you said Japan. 0:18:03.119 --> 0:18:04.679 The time before that you were on with us, you 0:18:04.680 --> 0:18:08.160 said Japan, Kaylee, what's the next Japan. By the way, 0:18:08.400 --> 0:18:09.320 what's the next Japan? 0:18:11.119 --> 0:18:13.920 It could be Bangkok. You know, we haven't had one 0:18:13.960 --> 0:18:17.680 of these set jetting destinations that it's what we call 0:18:17.720 --> 0:18:21.040 them when media drives where people travel. We haven't had 0:18:21.040 --> 0:18:21.360 one in. 0:18:21.280 --> 0:18:21.960 A few years. 0:18:22.000 --> 0:18:24.800 We saw Croatia, we saw Iceland. With the Game of 0:18:24.880 --> 0:18:28.760 Throne series, We've seen Yellowstone with that series, driving to 0:18:28.800 --> 0:18:31.760 band to Montana, so it might be Thailand that's up next. 0:18:33.119 --> 0:18:35.760 Very cool you say that like all different ages, but 0:18:35.800 --> 0:18:39.600 are people looking I mean for like value, are their deals? 0:18:39.640 --> 0:18:42.080 Are they booking in advance to get the best prices? 0:18:42.359 --> 0:18:44.280 What else can you tell us about the state of 0:18:44.320 --> 0:18:47.240 the consumer. They're obviously, as you're saying, or traveling, but 0:18:47.320 --> 0:18:49.960 I am curious if increasingly we're seeing people looking for 0:18:49.960 --> 0:18:50.359 a deal. 0:18:51.880 --> 0:18:56.120 Absolutely, we track what we call deal seeking behavior when 0:18:56.200 --> 0:18:59.439 people are booking, how often they're checking the price before 0:18:59.440 --> 0:19:03.320 they book. And what's really interesting is that about two 0:19:03.359 --> 0:19:07.760 thirds of travelers are checking multiple websites or apps at 0:19:07.840 --> 0:19:11.480 least three or more before they actually make their travel bookings. 0:19:11.560 --> 0:19:14.919 And that shows us that there is price sensitivity. But 0:19:15.000 --> 0:19:17.560 on the flip side, we've heard from the airlines, we've 0:19:17.560 --> 0:19:20.919 heard from the hotels that this demand for premium is 0:19:21.040 --> 0:19:23.840 just not exhausted yet, it's still growing. And I am 0:19:23.920 --> 0:19:27.040 seeing that as well. We have these price sensitive customers 0:19:27.359 --> 0:19:30.760 who are checking multiple sites, really doing their homework, but 0:19:30.800 --> 0:19:35.240 they're also willing to pay extra for things like flexibility, 0:19:35.600 --> 0:19:39.680 disruption protection, a room with a view or a hotel 0:19:39.760 --> 0:19:42.320 with a nice restaurant. So it's a little bit of 0:19:42.359 --> 0:19:45.679 a balancing act. The youngest travelers are definitely the most 0:19:45.720 --> 0:19:49.000 price sensitive, but there is a balance between how price 0:19:49.040 --> 0:19:52.439 sensitive Americans are and how much they're just trying to 0:19:52.640 --> 0:19:54.800 kind of hack that budget to get the most out 0:19:54.840 --> 0:19:55.080 of it. 0:19:55.160 --> 0:19:57.879 And yet, according to your research, the folks at the 0:19:57.920 --> 0:20:01.560 lower end of the income spectrum expected to spend more 0:20:01.800 --> 0:20:05.159 on travel this year. What's the explanation for that? 0:20:06.320 --> 0:20:09.440 About twenty two percent of the households earning the least 0:20:09.480 --> 0:20:13.199 in the US are actually expanding this expanding their travel 0:20:13.200 --> 0:20:16.239 expenditure next year. And I think a big part of 0:20:16.240 --> 0:20:19.920 that is getting more out of their existing or a 0:20:19.960 --> 0:20:25.160 slightly bigger budget. But also it's this shift that travel 0:20:25.160 --> 0:20:28.880 and experiences are what households want to spend on once 0:20:28.920 --> 0:20:32.639 they've paid for their needs, and that's why they're continuing 0:20:32.680 --> 0:20:34.080 to expand this travel budget. 0:20:34.200 --> 0:20:37.080 Hey, where do cruises come into this? We caught up 0:20:37.119 --> 0:20:40.520 with the CEO of Royal Caribbean and they reported a 0:20:40.520 --> 0:20:46.240 full year profit forecast that blew away past street I 0:20:46.240 --> 0:20:50.119