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Baird's Loeb: Hotel REITS At Risk From Brexit Travel Cuts (AUD) · Bloomberg Intelligence

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  Speaker 1: This is taking stock. Do you know what the biggest
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  Speaker 1: unknown for hotel reads here in the United States is now?
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  Speaker 1: According to our guests coming up on taking Stock, it's
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  Speaker 1: inbound international travel implications inbound into the US that is
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  Speaker 1: following the Brexit vote. I'm Kathleen Hayes, my co host
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  Speaker 1: Pim Fox on vacation this week, and I'm sure he
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  Speaker 1: loves travel. He's very sorry. I'm sure that he's missing
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  Speaker 1: David Loebs, senior hotel industry research channelist from Robert W.
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  Speaker 1: Baird and Co. In Milwaukee. David was also going to
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  Speaker 1: talk to us about summer travel what that means for
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  Speaker 1: some of the big reads and hotel chains. Let's get
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  Speaker 1: is climbing for the first time since Britain voted to
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  Speaker 1: thousand thirty Then as Zack is higher by eighty six
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  Speaker 1: points one point nine percent, trading at forty six eighty less.
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  Speaker 1: news of two explosions taking place at Istanbul's International Auditurk Airport.
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  Speaker 1: they become available. That's a Bloomberg Business flash. This is
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  Speaker 1: taking stock with pin Box and Katholeenks on Bloomberg Radio.
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  Speaker 1: It's far too earlier, earlier to talk about the dust
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  Speaker 1: settling after the political earthquake caused by the UK's vote
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  Speaker 1: to leave the European Union, but already people are saying
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  Speaker 1: that there are important industries and companies that will be affected.
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  Speaker 1: David loebe joins US now. He's senior hotel industry research
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  Speaker 1: analyst at Robert W. Baard and Co. In Milwaukee. He
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  Speaker 1: covers hotel rates and he says there could be some
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  Speaker 1: very powerful effects fallout on these rates after this big
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  Speaker 1: Brexit vote. David, welcome to the show. Thank you glad
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  Speaker 1: to be here. So hotel rates are going to suffer.
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  Speaker 1: Why because there will be too many people working on
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  Speaker 1: the Brexit and what it's going to mean. Because the
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  Speaker 1: city of London will be hurt, and the kind of
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  Speaker 1: people with the money in their could just hop in
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  Speaker 1: a plane and go on a business trip or even
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  Speaker 1: a vacation are not going to be doing it. I
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  Speaker 1: think the biggest impact on the hotel industry, both on
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  Speaker 1: the hotel brands and on the hotel roots, will be
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  Speaker 1: because of the changes in the value of currency. So
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  Speaker 1: if you look at the drop in the pound for
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  Speaker 1: UK travelers looking to vacation in New York or come
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  Speaker 1: on a business trip to anywhere in the US, it's
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  Speaker 1: much more expensive today than it was last Thursday. That
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  Speaker 1: I think is the biggest direct impact. I think we
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  Speaker 1: will also see secondary impacts with businesses cutting back on
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  Speaker 1: on what are essentially the easiest variable expense to cut,
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  Speaker 1: which is business travel, until they understand the economic implications
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  Speaker 1: of this boat, what the timeline is likely to be,
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  Speaker 1: and how it may directly impact their business. So give
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  Speaker 1: us give us even you know, hold that thumb up
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  Speaker 1: screen your eye, just even some rough sense of how
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  Speaker 1: much travel from Europe or even more broadly around the world.
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  Speaker 1: Because again, if I'm a business I could have an
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  Speaker 1: office in Shanghai, same thing. I could still feel like,
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  Speaker 1: I gotta wonder what's going to happen with the Brexit,
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  Speaker 1: what it's going to do in my company? How much?
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  Speaker 1: How much is that a part of how the reds
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  Speaker 1: and the hotels that are in those reds are are
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  Speaker 1: doing business with these important parts of the world. Well,
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  Speaker 1: I think you're you're absolutely onto something here. We live
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  Speaker 1: in a global world, and there's a lot of travel
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  Speaker 1: from all regions of the world to all other regions
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  Speaker 1: of the world in the in the US, it's not
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  Speaker 1: just inbound travel from the UK or from the EU.
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  Speaker 1: It's traveled from everywhere and within the US. So I
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  Speaker 1: think businesses that are are focused on global markets are
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  Speaker 1: reassessing or pulling back, are stalling their decisions. That doesn't
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  Speaker 1: mean I'm calling for a downturn in demand. We've already
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  Speaker 1: seen a slowdown in demand for hotels, but I think
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  Speaker 1: it will take a while before we see exactly how
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  Speaker 1: this how this plays out. But I think there will
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  Speaker 1: be there will be domestic implications as as companies look
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  Speaker 1: what this means to their business, and as they slow
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  Speaker 1: down and reassess, they will send fewer people on the road,
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  Speaker 1: whether that's going from Cleveland to Washington, d C. Or
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  Speaker 1: from Paris to New York, and those those cuts will
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  Speaker 1: have some impact on the industry. I just have to
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  Speaker 1: ask you slow down in demand. Uh the shutting down
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  Speaker 1: the Waldorf Historia and I'll granted an older hotel, but uh,
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  Speaker 1: you know, gosh, just one of those look at books,
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  Speaker 1: look at movies. The Waldor is such a big part
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  Speaker 1: of New York City, Manhattan a condo rebuild? Uh is this?
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  Speaker 1: Are they a hotel that was out of step with
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  Speaker 1: the times? Or why didn't somebody step up to say no, no, no,
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  Speaker 1: I'll buy it. Maybe I get a better deal. I mean,
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  Speaker 1: I get it a little bit cheap and and fix
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  Speaker 1: it up and restore to its gloria and make a
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  Speaker 1: lot of money. The Waldorf is an iconic hotel, There's
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  Speaker 1: no question. It also sits on a full square block
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  Speaker 1: on Park Avenue right near Grand Central Station, a fantastic location,
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  Speaker 1: and I think the opportunity for the owner to put
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  Speaker 1: condominiums into that building is just so much that it
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  Speaker 1: offsets the fact that that it's such an iconic hotel.
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  Speaker 1: It will come back as a hotel just as a
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  Speaker 1: much smaller hotel, perhaps five or six hundred rooms, less
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  Speaker 1: than half of what it was before. So uh, it's interesting.
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  Speaker 1: That's that's the supply side of the equation, and New
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  Speaker 1: York has seen a lot of new rooms and taking
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  Speaker 1: some rooms out for three years and then permanently for
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  Speaker 1: more than half of those rooms will certainly have a
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  Speaker 1: slight positive impact on that market. But I think the
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  Speaker 1: remaining rooms will be more representative of the iconic stature
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  Speaker 1: of that hotel than a lot of the rooms that
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  Speaker 1: are exist today in that building. Okay, in a nutshell,
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  Speaker 1: final question, summer travel, what are you seeing? What's important
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  Speaker 1: of you? Already seen a bit of a slowdown on demand.
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  Speaker 1: What's gonna happen this summer? Well, leisure travel is a
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  Speaker 1: real bright spot, and the second bright spot has been grouped,
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  Speaker 1: although even group is showing some signs of of corporate cutback.
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  Speaker 1: So I think your your news broadcast mentioned this crushed
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  Speaker 1: to join the t s A pre check program. Airports
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  Speaker 1: are busies, busy, airlines are busy. I think hotels that
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  Speaker 1: cater to leisure travelers will be very busy this summer.
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  Speaker 1: Group activity is looking actually very strong this summer. The
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  Speaker 1: big wild card that on that is corporate transient travel,
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  Speaker 1: and I think that will be a little bit slower.
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  Speaker 1: So net and now we may be flatish or slightly
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  Speaker 1: up this summer in terms of hotel occupancy, but I
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  Speaker 1: think particularly at national parks and tourist sites. All right,
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  Speaker 1: thanks so much to David Loeb, but senior hotel industry
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  Speaker 1: research analyst at Robert W. Baird and Co. He's based
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  Speaker 1: in Milwaukee. He says that there could be a reduction
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  Speaker 1: in inbound foreign travel to the United States a lot,
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  Speaker 1: because you know what your currency tanks. That makes it
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  Speaker 1: a lot more expensive to buy a plane ticket. I'm
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  Speaker 1: Caffeine Hayes, and this is taking Stock on Blum Radio.
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  Speaker 1: Coming up on taking Stock Peter Cheer from Brain Capital.
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  Speaker 1: He's going to tell us why he thinks maybe the
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  Speaker 1: worst outcome from the Brexit vote is what could be
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  Speaker 1: facing the stock market.