Sign New York Banking Credit Memo Free

Industry sign banking new york credit memo free

[Music] good afternoon everyone i would uh reiterate susan's comment about the podcast i uh re-listened to my discussion with peter linneman uh from last week on my air pods working out a day before yesterday and it was a wonderful way to listen to the uh huge amount of data that peter and i uh poured through last wednesday we're going to focus on the hospitality industry today with my guest stephanie linhardt's but before we dive into marriott and what's going on in hospitality and when stephanie thinks all of us will hit the road again i want to mention a few issues that peter and i discussed last week with a couple updates at the end of last week's call peter said it's a golden age for multi-family and many of you heard peter run through a hypothetical multi-family investment buying a property at a four to five cap rate and financing it with uh 2.8 percent debt two things are happening that are challenging or changing that investment thesis the first is that cap rates in multifamily continue to compress so the 425 cap rate is headed very quickly towards a 4.0 cap rate in many markets across the country and the other uh piece is that the cost of debt has risen quite significantly over the past week due to the sell-off in the bond market after tuesday's election results in georgia while the 10-year has rallied today to 1.10 percent we saw a 1.15 percent 10-year yesterday which has driven uh financing costs from the 2.80 percent that peter mentions in the linnemann letter which was published at the end of 2020 up to 3.40 percent to 3.60 today so while that's still exceedingly cheap debt uh the no-brainer investment thesis of buying at a 425 cap rate and financing at 2.8 percent debt is now more like buying at a 4 cap rate and financing at 3.5 uh furthering peter's thesis on it's a golden era for multi-family costar reported this morning that net multi-family absorption in q4 was 70 000 units which was the best fourth quarter absorption rate for multifamily since 2000 and well above the historic average of 45 000 units uh not surprisingly dallas fort worth continues to lead the country for the third consecutive quarter with 5 000 units of net absorption followed by atlanta and houston close behind somewhat surprisingly in the costar data today even the large coastal gateway cities such as boston new york washington and los angeles actually posted positive net absorption in q4 mostly due to reducing rents to stabilize occupancy numbers during our discussion peter and i also talked about the health of the banking system and how credit card defaults reached a historically low level in q3 of 1.3 percent in doing my homework for my discussion with stephanie today i was somewhat surprised to read that str projects that every hospitality development in the united states that has been under construction during the pandemic will deliver but that actually makes perfect sense if you think about it because the banking system is flush with capital and therefore they don't have any credit issues in their portfolio today so they'll work with developers to finish development even in the most challenged commercial real estate asset class of hospitality and while peter gave his perspective on president biden's economic team and policies we did not discuss last week's elections in georgia and the changing control in the united states senate a couple thoughts there everyone's expecting an adjustment to the stimulus bill increasing the checks from six hundred dollars to two thousand dollars this adjustment will clearly be beneficial in the short term to spending rent collections and the overall health of the economy which is reflected in the stock market's performance over the past week and the sell-off in the bond market there is significant concern that corporate and individual tax rates may go up with the biden administration and is clearly way too early to handicap when and to what degree rates change i will point out two things that i believe are important to keep in mind when president trump was elected in 2016 his administration's number one priority was tax reform and with their absolute focus on that issue and control of both the house and the senate they passed their tax legislation in december of 2017 and rates changed in 2018. we're in the midst of a pandemic which is clearly president-elect biden's number one priority when his administration has the opportunity to turn their focus to broader policy matters is very much to be determined which likely means any change the tax code is a 2022 issue at the earliest and second there has been a lot of concern about 1031 exchanges and carried interest again it's anyone's guess whether those two issues are front and center when the debate begins on tax policy but i would point out that chuck schumer now leads the u.s senate and while senator schumer is a self-proclaimed progressive democrat he does come from the state of new york where the commercial real estate and private equity industries have significant influence my final point before i begin my discussion with stephanie next wednesday is my mother's birthday so happy birthday mom it is also inauguration day where for centuries we have watched the reinstatement or orderly transfer of power in our country we were going to hold our webcast next week since the swearing-in ceremony will be finished prior to the webcast but after the events of last week we're going to skip next wednesday and hopefully watch the peaceful inauguration of our next president we will be back the following wednesday to discuss retail with john ferner president of the largest retailer in the world walmart so now to stephanie um thank you stephanie for joining me today on the walker webcast um you are clearly one of the most influential female executives in america and as group president consumer operations technology and emerging businesses at marriott you are responsible for brand management sales marketing revenue management distribution customer experience and innovation information technology and digital i'm not exactly sure if there's anything else to do at marriott other than all of those things but suffice it to say you've got a huge job that is responsible for not only the here and the now but where marriott and the hospitality industry are going tomorrow so let's start by backing up for a moment you grew up in a bar with four brothers how did that childhood shape the corporate executive you are today well thank you willie and uh first of all thank you for having me today on your webcast it's it's wonderful to be here i very much enjoyed watching every many of your webcasts on wednesday but um that's funny you say i grew up in a bar to some extent you're right about that so i grew up in washington dc and my family owned and operated a small boutique hotel the phoenix park hotel on capitol hill and a variety of different restaurants over the years the most famous of which is the dubliner irish restaurant in par uh which has been a washington institution for decades and so i did grow up working in the business in the hotel and the restaurants along with not just my four younger brothers but i also have a younger sister um so we all we all started in the business at an early age and in terms of shaping me as an as an executive when i think about the leadership skills i most admire and strive for and seeing the leaders that um i really look up to i think about um empathy being a good listener making tough decisions even when you don't have all the information hard work and i learned a lot of those watching my dad um in his business over the years i think most the one i probably learned the most from him about was empathy and caring about the people that work in your business and that was just so fundamental to who he was and how how he ran his business i should mention that i also learned a lot from my mother you know raising six kids as a full-time job too 24 7 just like the restaurant business and learn patience and perseverance and a lot of things from her as well but when i think about um growing up in a bar as you said one of the things that stands out the most to me is watching how much fun my dad had at work every day i mean he just loved it you've got a you got a bar on capitol hill and you've got all sorts of characters and interesting people coming in and i just observed him loving what he did every day and i said that's what i want to do whatever i do um i want to enjoy it the way i see my dad enjoy his job so yeah it was a lot of fun you talk about watching your father and the funny hat at work um the other piece to it is that it's a very dynamic setting being in both the hospitality industry as well as in the food and beverage industry and clearly that underpins everything that you do every day talk for a moment about eq understanding people and human nature because given the responsibilities you have at marriott it would seem to be that you learned a lot of skills growing up having watched your father manage not only the good times but also the bad times yeah i mean you know back to what i think are the most important leadership skills i mean we you know they really many of them most of them are tied to eq and it is about being able to have empathy for and and listen to your team and you make a great point not just in in good times and easy times but in really difficult times and certainly this year in the hotel business and the restaurant business has been really really tough i know today we're going to talk mostly about marriott um and the broader industry but i've seen my family go through a lot at my my younger brother gavin your twin um he has a number of restaurants in washington dc and they've gone through a lot as well and i've seen um him navigate that brilliantly by taking care of his people it really gets down to taking care of the people that work in your business because in hospitality they're the ones who take care of the guests so and and and the people that come into your establishment so i couldn't agree with you more that um eq is critical in all businesses but particularly in the hospitality space so most of our listeners won't won't understand what you just said about your brother gavin being my twin uh to to those listening um three of stephanie's brothers have worked with me at walker and dunlop and uh her fourth brother gavin uh has a striking resemblance or i have a striking resemblance to gavin and we've often uh joked that uh gavin and i were uh twins separated at birth and so that was where the twin comment comes from um but on that stephanie just as you're talking about the challenges in this economy you you also sit on the board of home depot talk for a moment and i wasn't going to get to this until much later but it works right now talk for a moment about the kind of the the dichotomy or the changes where you're sitting there one moment looking at the numbers at marriott and the next moment looking at the numbers at home depot and how challenging that has been for you to sort of look at one business that has been really struggling in another business that this pandemic has just made take off sure of course yeah i mean it's like living in two different universes almost so i joined the board of home depot uh a number of years ago absolutely terrific company and when i share some of the numbers from marriott you'll see how they're in such sharp contrast to the numbers at home depot but you know one day i'd be on a marriott board meeting we were talking to our board constantly throughout this crisis as you can imagine but on the flip side the home depot board me was meeting quite frequently too because they were having the opposite experience that we were having at marriott in travel and tourism their sales were just going through the roof and their demand was incredible as a matter of fact um in the second and third quarter of 2020 they had 25 comp store sales which is really remarkable for a retailer of their size some of their best performance in 20 years double digit increases and number of customers and transactions and average ticket size and they had to pivot on a dime to do things like curbside pickup in a way that they've never done before and really scale up their digital channels incredibly so it was you know it is just as it was really really challenging for home depot to react to the incredible increase in demand on i mean i'd rather be on that side of the equation than where we were but you know they also spent well over a billion dollars on enhanced benefits and pay you know quick home depot story as marriott was going through the worst of it i picked up the phone and called the ceo home depot and really remarkably he and the head of it for home depot set up a separate micro site where marriott employees who were furloughed and out of work could apply for jobs at home depot because they had such a demand for um needing additional employees so it really was incredible for them to do that but it you're absolutely right willie it was like living in two different worlds for a while so let me pull you back to the uh the world that has numbers that aren't quite like home depots today the the hospitality world so uh as i mentioned previously dr peter linderman was on the webcast last week and um his calculation is that um occupancy u.s hotel occupancy in 2020 ended the year around 47 percent uh his projection is that it will be flat in 2021 and that uh but at the same time while occupancy stays around that 50 percent his projection is that revpar was down 50 in 2020 and is off only 20 to 30 percent in 2021. so given those numbers how do they stack up to marriott and marriott's experience and then more importantly the projection for 2021 are we at sort of half occupancy throughout the year do you think the occupancy level numbers trend up and on revpar 20 to 30 percent off of where they were 2019 or do you think they improved him beyond that so let's let's start with 2020 and just um ground everyone a little bit on our performance which is reflective of you know um how the industry suffered in 2020 so um just as a quick quick context so marriott international bought starwood hotels and resorts in 2016 becoming the world's largest hotel company 30 brands and we're in 145 different countries so there are some trends that differ by different regions of the world um but you know marriott's 93 year old country his um company pardon me has been around many years and has seen bad times before but nothing like this so as a little context after 9 11 on marriott's worst quarter um was negative 15 our red car was down 15 during the 2008 and 2009 financial crisis our worst quarter was negative 25 that was the worst during this crisis our worst quarter was down 85 percent um there was buns when we were down 90 percent with single digit occupancy in our hotels the matter of fact in the worst of it 25 of our hotels were completely shuttered so on 2020 was was so challenging and like nothing we'd ever seen that said from the lows of april that was really the the worst of it things did get better each month in 2020 and in each quarter as a matter of fact in q3 of 2020 our worldwide red par was only down 66 percent um and while still quite challenging that was a 19 percentage point improvement from the quarter before on and a lot of that was driven by leisure demand that we saw during the summer to drive two markets and i should mention by the way that currently 95 of our hotels are open it's closer to 98 in north america so our hotels are back open now but the um the things kept getting better and better every month and every quarter and i'd say they've really kind of plateaued now towards the latter part of the year as the virus you've seen the virus come back in in many countries not just the united states i should also mention that in terms of the recovery in 2020 the trajectory of the improvements really did differ around the world china would be a good example of that china is marriott's second largest market and um you know they they've been leading the recovery as a matter of fact in the third quarter of 2020 china's leisure bookings were higher than they were the year before now part of that is because no one's leaving china right and they are not goi g to thailand for vacations and things like that but so china really did lead the um lead the recovery in 2020. so that's a little bit about um about 2020. we haven't released our fourth quarter results yet or our projections for 21 but you know we're looking at the same um industry forecast everybody's looking at whether it's str cbre pwc etc and seeing that 2021 will be better but it will still be down you know in any in the 30s down in the 30s depending on who you look at versus 2019 so it's going to get better but it's going to be um it's going to be a while and a little while until we get back to those um to those peak numbers so stephanie on that back to those peak numbers so the occupancy level in 2019 in the u.s was 66.3 percent um projections are that we don't get back there until around 2023 so we got 21 and 22 to get through before we get back to that unlike the aviation industry we're putting an airplane up into the sky if you don't have a load factor that's getting close to 70 percent you're losing money on it where can the hospitality industry sort of you know turn a profit not to the levels previously but i mean is it a is it a 50 occupancy number is it a 60 occupancy number what's the sort of back of the envelope in your industry that says you get to that and we can we're not we're not we're not tuning it like we were in 2019 and you may want to debate with me about whether you were toning it in 2019 but the point being is 66.3 was a very healthy hospitality market in 2019 and we don't expect to get back there for some time where do we settle in between here and there yeah i mean to your first question if i'm understanding it correctly kind of like what's the break even for occupancy when do you start to make make money in the hotel business and that's there's not a straightforward answer to that i mean rough back of the envelope depends to select service hotel i'd say you start breaking even covering your operating costs at 35 40 percent occupancy higher on you know 50 percent 40s 50s if you're a full service hotel of course it depends on what kind of abr you're getting right what kind of rate you're getting and if that's in normal pricing situations you know things the rates can be depressed in these extraordinary times so um that's kind of you know back of the envelope a rough break even um i think i'm i'm hopeful that we'll get back to higher levels before 2023 but the honest answer is nobody knows i can tell you um we are i believe there's tremendous pent-up demand for travel both leisure and business and we're hearing that from our customers from our marriott envoy loyalty members from our top corporate accounts so there's no doubt it will take a while to recover and you know the way i see it it will be domestic leisure first short haul trips you know medium regional um borders will open up with international business and big group needing business coming back last but i hope it's before 2023 but it certainly won't be um it certainly won't be this year so i want to i want to dive into rates and group travel and com conventions and all that in a moment but before we move to sort of the future and what you're seeing coming down the the road i want to close off on the the pandemic for a moment uh and talk about the video that your ceo arnie sorensen uh put out to all married employees back in the in the depths of the pandemic and when i was in business school there was a case study on jim burke at johnson and johnson when they did the tylenol recall and it was the seminal case study on crisis management and since 1982 when that case study was written if you want to figure out how to be transparent with your clients and uh pull medicine off the shelf create a tamper-proof seal and get back into business and have your sales rebound dramatically that's the the seminal case study i think that arnie's video in the depths of the pandemic will be viewed similar to jim burke's case study at j j of how to effectively communicate crisis management and difficult times in corporate america you had a huge role in both the scripting of that and the production of it um first do you believe uh do you agree with me that it's going to be a seminal video if you will and second of all can you give us a little bit of insight as it relates to what you all were trying to accomplish and why it was so impactful i'm sure absolutely um i i agree with you it was a remarkable video and that's all arnie that's you know all arne he's just he's a tremendous ceo a tremendous leader and on that video that when i think over a million people have seen it on youtube it gives the outside world a little peek of what we get to see with arnie every day but what i think was so remarkable about that video and why it touched you in the way it did willie is i think be just if you step back and think about it and by the way i should for those who didn't see it i should mention something important about this video is arnie um was diagnosed with pancreatic cancer in late 19 and when he was in the middle of his treatment we did the video and he was bald um he's doing great by the way he's in great health now but he um was bald and some people said well do you want to do a video when you're bald and you you know you're you're not looking at your best and he said yes and i think that's the right decision because he doesn't do memos to his to the employees for the most part he does videos and he gets out on the road and he talks to people so a memo just wouldn't be arnie um so he did the video but it was kind of striking to see him look that way and again i know i know you saw it and i'm sure many of your listeners did but what was extraordinary extraordinary about that video and i agree is that he was open and honest and transparent right first of all he told everybody exactly what was going on with our business very straightforward about that and he was very straightforward about the really tough decisions that we have to make as um you know we have 750 000 employees at marriott international 96 of them work at a hotel hundreds of thousands of employees were either furloughed or put on reduced work weeks 70 of corporate headquarters was furloughed so he was very honest about the measures that we needed to take um he talked about how the fact that mr marriott and arnie both took zero salary in 2020 um his direct reports we took a 50 salary cut as as we all should have um and but the best part about the video is he ended with hope i mentioned china leading the recovery even in march china was starting to show green shoots and he highlighted that we're going to get through this and china is an example of when you get the virus under control demand comes back people love travel and so i really think he did a remarkable job in that video of showing transparency honesty emotion and most importantly hope that was the best part of it so i thought it was a remarkable um way to communicate and it's just one example honestly just one example of how he navigated this crisis and i i feel the leadership team at marriott i was honored to work with all of them um of course arnie at the top of the list but mr marriott and my peers as well it was a it was it was an it was an important piece for for him to get out so early in the crisis too so thank you for thank you for recognizing that and noticing it yeah but on that just as it relates to the 50 pay cut that you and other senior executives took um you know during the great financial crisis you're in the banking sector banks messed up banks had a big role in us getting into a financial crisis they were losing lots of money and so pay cuts firing all that kind of stuff you totally got that and anyone who would kind of push back on that you're sort of like what do you what what memo didn't you read but you guys didn't bring the pandemic and probably 2020 has been more work for you and your colleagues than ever before how do you how do you sell a 50 pay cut that you guys didn't ask for do anything to bring about and um are working harder than you've ever worked yeah i mean honestly really i think it's 100 appropriate i mean look what our company was going through you know hundreds of thousands of job losses um many people on on with that were furloughed had a more significant pay cut than we did right i mean so it was just completely appropriate and it gets back to a core part of marriott's culture which is taking care of our associates you take care of the associate the associate takes care of the customer the customer comes back again and again and when your employees are your most important asset that's what you do you know one one quick story on that in addition to retailers like home depot and people like cvs and kroger also help us um place employees but one of my favorite stories from the pandemic and it's an example of from crisis comes creativity is you know we have 23 call centers around the world on our largest one in omaha nebraska no one was calling us to make hotel reservations at the same time the state of new york was couldn't keep up with their unemployment claims it was out of control and they couldn't keep up with it so we with the help of deloitte in between worked with the state of new york trained our agents in omaha on the software to process unemployment checks for the state of new york we saved 700 jobs they they were not furloughed at all during the pandemic um they worked the whole time we helped um thousands of people in new york get their unemployment checks desperately needed unemployment checks and it was a win-win and it was an example actually uh speaking of uh you know crisis creating creativity or necessity being the mother of invention you know we have started thinking maybe this can be a new business for us you know that we could take to and do after the pandemic but it was just an example of i think the way marriott handled this i mean there's so many stories of you know we did a big program rooms for responders we gave free hotel rooms to health care workers um gave food and linen to hospitals i mean it was as hard as 2020 was really it was our culture was shining through the whole time and back to your original question on pay cuts that's our culture that's that's what we should have done um and and it was completely appropriate so um just talking about first of all i can only imagine someone who was calling filing for unemployment benefits couldn't believe the quality of service they got by the luck of going into a marriott-run uh call center in nebraska rather than going to some of the some of the other state-run uh call centers um so that's pretty neat to hear you're talking about employment numbers so the hospitality sector uh travel and leisure lost by far the most jobs during the pandemic down 8.3 million but then as you mentioned previously from april through november you added back almost 5 million jobs but that's still a loss of 3.4 million jobs in the hospital travel and leisure sectors and that is by far the most jobs lost as you look at the resurgence in demand how challenging is is it going to be to both find and train labor and does this give you the opportunity to think about doing things differently as you rehire those people yeah let's start a little bit with you know talking about the numbers you're right they're pretty dramatic and from a global perspective uh if you look at what the world travel and tourism council put out globally they'll be about over 121 million jobs lost and over 3.4 trillion in global gdp um and some of the numbers you were quoting i know were for part of the year but the full year numbers in north america will be closer to 14 million jobs lost because of the pandemic um so the job loss has been pretty incredible and i think it's important to note something that doesn't get talked about as much as i think it should be talked about is that there's very high participation of women minorities and youth in the travel and tourism sector as a matter of fact two times um in terms of um as many youth work in our sector and so the um the other interesting thing about travel and tourism is that 83 percent of the businesses in travel or small businesses 60 owned by women so um i think that when we think about the job loss and economic impact of this pandemic particularly in my industry this virus is potentially erasing years of economic progress that women have made and i think is threatening to leave some long-lasting uh damage as a matter of fact mckenzie just put out their women in workplace study for 2020 and um said that this could set women back half a decade and they're calling it perhaps the first female recession so i think there's some underlying trends as a matter of fact you and i were talking about this the other day when the job reports came out on on friday the december job reports uh there was 140 000 jobs lost net all women negative 156 000 for women plus 16 000 for men now men of course lost jobs too um there's churn in those numbers so i on the job loss front i do think it's important to note and underscore who's being most impacted and i think that governments can and absolutely must recognize that travel and tourism is a source of growth um it is a mechanism to further um enhance equality and to reduce poverty so i think on you know the job loss front the the it was pretty pretty remarkable but now to move forward we need to get our hotels open and staff up again um and um that's um that's what we're focused on now is getting people back to work on substantially the same is it essentially the same playbook stephanie or are there any things that you're doing differently so you know uh previously there was a doorman at the at the marriott you know downtown wherever and you're saying you know what we don't need to put that person back in that job we're going to use automation or actually given the change in the pandemic of what customers want we're going to add here and subtract there is has there been any change in the dynamic of hospitality given the pandemic i mean nothing too terribly significant i will say there's been the adoption of technology has been supercharged particularly things like mobile check-in and check-out and using your phone as a key we really um you know really supercharge those efforts i don't think it's at the point yet where it's going to mean we're going to have you know fewer front desk uh associates checking people in or fewer doormen but we do need to be conscious of it's always a balancing act adding costs back to our hotels as you know and i'm sure most of your listeners know marriott owns very few of our hotels we need to be conscious of the cost pressure our owners and franchisees are under on and be very thoughtful as we bring costs back into the business at the same time willie as people start coming back to our hotels and if you're paying you know 600 a night to stay at a ritz carlton you expect us to have our brand standards there right you expect the restaurants to be open and you expect the spa to be open and your room to be cleaned every night etc so it's going to be a balancing act between customers expectations and and rightfully so their demands on and how we bring costs back into the business but i i don't think there's any major fundamental shift yet in automation of services yet i mean that you know that may come over time but i don't think the pandemic at least from my lens has supercharged anything significantly so scott mccartney who is an author of the wall street journal's the middle seat which focuses on travel and leisure wrote last week that hotels and prime destinations will seem maddeningly expensive as we get out of the pandemic and people start to travel around the country first of all were you able over the christmas holidays to charge maddeningly expensive rates anywhere across the country and then second of all what's your suggestion to those listening as it relates to we want to go on a summer vacation in june and i haven't booked it yet because i'm afraid that we'll still be in lockdown yeah no i mean throughout this whole thing we've tried to maintain a discipline approach to pricing during the year um but you know we know that the the steep drop in demand wasn't a pricing problem wasn't a pricing re ated problem so slashing pricing was not the way to create demand um so where possible on the pricing front we've tried to maintain coveted pre-covered level pricing where we can um i'll give you an example of that and then i'll answer your question on the resort front you know every year we price our corporate accounts you know the deloitte's accentures mckinsey bcg et cetera they get pricing at our hotels for the year and what they all agreed to do or most of them to do was just to roll over the pricing from 2020 to 21 right like not go through that whole process again so just to illustrate the point that we're trying to maintain integrity in our pricing and how we think about this um but in high demand markets mountains uh you know ski resorts uh beaches etc you know we've been able to charge like we did pre the pandemic you know what the higher rates i mean um we have limited and perishable inventory so that's how revenue management works and when there's high demand you're able to charge higher rates um and so that that's pretty much the same as it was before at the ritz carlton bachelor gulch as an example near your near your home other markets where things really fell off um you know it was we had to lower our rates because it's supply demand competitive actions but um i i'd say again trying to be disciplined in your pricing during something like this is very important so what's your take on returning to the office and returning to travel because the the there are plenty of of differing opinions on a return to the office that some people say we're in remote work forever and people are never going to get back to the same office environment we knew and there are also a lot of people who say that that last minute trip to go have a business meeting and flying from new york to la and spending the night at one of your hotels is a thing of the past and that people will get on zoom and have that that that meeting virtually rather than uh booking the last minute travel ticket and the last minute hotel which obviously are a huge component of the profits for both the airlines as well as the hotel industry do you think that comes back or you think that's a thing of the past you know i you know as i mentioned earlier i'm i'm very um bullish on the demand for travel and business travel specifically is what you're talking about i think it would be naive to say there won't be any change to the way people work and travel after coven 19. and you think about it i mean it was a great worldwide experiment i'm working from home and and everyone knows how to use zoom in teams now so to say that there'll be no impact i think would be naive that being said i do think business travel will come back too um maybe not as quite as strong and maybe not as fast but i know i've heard you really say this and other people that you know when will you start traveling again as soon as my competitor does right you know you know when uh you know when that sales person's there showing the you know showing the love and the desire to get the business that you know you're going to be right there behind him right or you'll be probably be there first knowing you they'll be right there behind you but so that kind of business i think will definitely come back um other more internal meetings and things like that may be a little bit slower right so i think it depends on what type of business travel but we talk to our top um 10 accounts all the time as you can imagine so again deployed accenture ibm mckinsey microsoft i can go on um and i think to just zoom out for a second none of them have yet formally revised their travel policies to allow business travel most of them all of them are really in a place where it's client requested only business critical but they are all working on it first they're working on getting people back to their offices to your point getting people back to the office and then business travel will follow from there um again i go back to china a lot as an example because when the virus gets under control or when the vaccine gets rolled out even more importantly business comes back business travel meetings convention they all came back in china a little bit less than the year before but pretty strong so i do believe that business travel will come back um you know it's it's worth noting most people don't know this that leisure travel though as a segment is actually twice as big as business travel and growing at a faster rate um so um that is important to keep in mind that when you think about a company like ours it's also about 500 resorts so the pie of travel is quite large business is significant to your point it's quite profitable that's who's buying the first class seats and the business class seats on the airlines but i think business travel will come back um i think um it will just be towards the you know the middle to latter part of this year is when we'll start to start to see some more travel talk about the difference between leisure travel business travel and then group travel because clearly convention hotels there are no conventions going on right now and i saw a stat this morning from str where uh in january of last year on group bookings there were 6.9 million group bookings in the united states in january of of 2020 that dropped down to a low of 486 000 in april and had recovered on group bookings back to 1.4 million by october but still we're talking about 6.9 million down to 1.4 million what's your sense on conventions and group bookings for 2021 and when your big convention hotels start to see people taking space yeah i think that convention and group business will will come back on the later side although i will say when we look at what we have group business we have on the books for the latter part of this year um most of our meetings are holding strong um so i think we'll see it come back um but but slowly one thing we're seeing a lot of williams hybrid meetings is where you're seeing people hold meetings i think we'll see this come back first is they'll have um you know maybe half the people there live or a quarter of the people live and then use technology to zoom in or microsoft teams whatever technology they use to participate in the meeting uh so i think we'll see um it will be towards the latter part of the recovery where we'll see groups and conventions come back in full force in the interim i think we'll start seeing more and more hybrid meetings but really it really does all come down to the vaccine in my opinion when we poll our meeting planners and when we talk to them um they all say when the we need the vaccine right the vaccine is one we're going to feel really confident on having on having meetings as a matter of fact we pulled our top meeting planners 96 of them said um as it related to the vaccine and booking groups again that it was either a moderate factor or a significant factor as a matter of fact 60 of meeting planners said having a vaccine rolled out was a significant factor in booking a group meeting i think that you know i think one of the key things is when we get i don't know 30 40 of the most vulnerable people get the vaccine that's going to be a turning point too it doesn't have to be 100 i don't think to see people start traveling and booking meetings i think when we get to that tipping point of the most vulnerable uh we'll we'll start to see the tide turn so i've got um two significant walker and off events in 2021 our annual summer conference in sun valley which is in july and then our all company meeting which is at your newly redone sheridan right here in downtown denver in october give me your odds that i'm able to pull off the walker and dunlop summer conference in july and then the odds for me pulling off the walker nilap ball company meeting in october i i think you'll be able to do it i do i think we're going to get on our act together with the vaccine and get it rolled out and i think by this summer you'll be able to have your meetings i really do and um i i'm i'm honestly really bullish about it and again now maybe you'll have a few people that don't want to make the trip right and maybe you use technology to zoom them in um that could happen but i think the bulk of the people will be able to attend your meeting and i think those who can't for some reason you can use technology to include them these hybrid meetings are working out quite well um i mean they're not exactly the same as having everybody there live of course so i think you'll be able to do it um great uh so if you if you think about someone showing up at one of your properties today i was reading an article about airline capacity in the united states and the fact that they're all the major airlines are now flying bigger planes on domestic routes because they're not doing international so the the number of triple sevens flying in the united states last january was there were 450 flights in this january there are 1100 flights on triple sevens in in the united states so if you happen to be on one of those and you're sitting in first class on triple seven it's a lot nicer than first class in a 737. if i show up at one of your properties today am i uh is is it junior suite a junior suite or um am i gonna find my way to a nicer room just because you guys are doing sort of capacity management and making sure that you're getting people into the capacity you have yeah i mean i'd say on average there's a higher percentage of our guests who are getting and experiencing upgrades because we have more suites and upgrades to give given the situation and of course we always focus on our marriott bomboy elites as the first to get those upgrades um so i think we are seeing a higher percentage but it's a little bit tricky in a lot of our hotels we kind of have an artificial restriction on upgrades to the junior suite because a hotel may have an entire wing closed or three floors closed either because they have to to save money or the government is the restrictions on the size of the on the property in terms of how many rooms they can have open so i think that um in some markets um in some markets back are very busy new year's week and fort lauderdale was at 80 um miami was at 85 percent so you know it's kind of the same situation with upgrades and suites in that situation as it was pre-covered so but on average yes a higher percentage of our guests are probably getting upgraded particularly our marriott bomboy members because there's just more capacity and talk about bon voy for a moment because clearly one of the main reasons why um operators choose marriott to manage their hotels for them is your rewards program and and if you will driving uh driving customers to those hotels um i've been bon voy elite for quite some time and i'm pretty sure i'm not qualifying for bon boy elite from my travel in 2020 given i've spent a fraction of the number of nights in a hotel this year than i typically would what are you doing with people as it relates to elite status and and then i want to take that from what are you doing with people to how how important is it that you get the miles back and going and using that as an inducement for people to travel and stay at your hotels absolutely um marriott bomboy really is the cornerstone of our consumer strategy we have 145 million marriott bombay members now since we merged marriott rewards and spg a few years ago um and they're again our most important customers as it relates to our elites of course you can't earn it's very hard to earn elite status in 2020 when you're not traveling so we did a bunch of things we cut the number of nights that are required to become elite we allowed people to get an extension and carry their status over for an extra year we extended points expiration for our elites um our top elites as you know get things like free suite night awards we extended those so we did a lot of things to say you know we we understand the situation and we're going to extend your status um into 21 or into 22. um we also did a lot of things for our marriott bombing members in terms of earning points to your question on that front you know you may not be traveling but our most loyal married up envoy members many of them have our co-brand credit card so we did things like 10 times points on gas and groceries you may not be staying in hotels but you're buying gas and groceries so how can we give you extra points for that um you know we did a lot of things for our elites to to make sure they understood how valuable they um they were to us um so yeah marry up envoy really is the backbone of our strategy but you know kind of zooming out and it's also i often think of mary up on what's the vessel for our 30 brands the key to marry up on boy is great hotel brands if you don't have good great hotel brands who wants to be in mariapp envoy right and who wants to get our credit card for that matter so so you talk about brands let me just jump in here for two seconds you talk about brands and you guys as you mentioned previously acquired starwood you now have 30 brands um i went and looked in you know gm gm only has 10 car brands do you really need 30 brands or does this reduction in usage allow you to kind of take a look at what is really needed by the consumer and we know those brands down or do you actually think it goes the other way in that they're actually 45 brands because there's some millennial population that will you know like some brand that's exactly to what he or she uh would like yeah i mean we got to 30 brands really by buying starwood got us to 30. they had 11 brands so we added them to our to our 19 brands so i don't i don't think we have too many brands um as a matter of fact i wouldn't be surprised if you know buy or start another brand because the key and this was the really the impetus for the starwood uh purchase in many ways in today's day and age size scale choice it all matters um and so the more brands and choices we have for consumers the the more attractive maria bonvoy is and um so i think that in all those brands by the way those 11 starwood brands that we bought all the investment had been already put into setting them up they had loyal customers it's not like we started 11 new brands we purchased existing brands that had consumer loyalty so the other reason i think having more brands depth in choice and size and scale matters is investing in technology i mean there's digital players in travel now airbnb you know we we need to have size and scale to invest in technology also you know that's why it matters if you're bigger now in terms of your investment capacity so i don't think 30 brands is too many um and as a matter of fact we're adding um more offerings to our customers even outside of uh hotels on with a new business we launched last year homes and villas by marriott international next year ritz carlton yachts will sail their first ship will sail next year it's already sold out with three more ships under construction so again i think of i think about growing brands and offerings for our customers not the other way around if you need anyone to trial run one of those risk carlton yacht experiences please feel free to call me up and ask me if you want some consumer feedback on that absolutely so you talked about airbnb stephanie uh i look back at an interview that david rubinstein did with chris nasetta and arne back in 2014 and david's first question at the economic club of washington to chris and arne was uh there's this company called airbnb and uh this uh this guy brian chesky uh and everyone's talking about this and kind of sharing homes and this and that what do you think and chris not arnie but chris sat there and said i don't think it's going to be that disruptive to either of my business or arnie's business i'm not that worried and as you know at the end of 2020 airbnb went public at a market cap of 83 billion dollars which is more than hilton and marriott combined so i guess the question is you still not worried about airbnb um well let me let me start by first saying i think that airbnb really has built an admirable platform and i think it's great to see them become a public company marriott's been a public company since 1953. um but i you know airbnb is still just one player in a larger travel in h spitality industry you know they are and right now they're very focused on one sliver home rentals and rooms within homes before the pandemic they were getting more into hotels and experiences and they have stated at least for now they're doubling down on their core business and home rentals um so and by the way home rentals have been around for a long time i know airbnb gets a lot of the press but there's others in this space vrbo booking.com um so again i i admire the the platform that they built i'll let investors comment on their market cap uh versus me me doing that you know the reason we got into the business i've always believed that this is a segment of the business we should play in in the right way so we launched homes and villas by marriott international in last year um it is relatively small compared to our hotel business and the reason we did it is we saw a gap with airbnb and the other players just overwhelming amount of choice no branding no curation we said we want to play in the premium and luxury part of this segment we're only going to do business with professionally managed homes so you have to be managed by what's called an hmc home management company kind of like what we do for hotels so we will only and we have very very strict standards you have to have full home uh certain amenities design aesthetic washer dryer etc the best part about our offering than that is though you can earn and burn marry up on void points and i should note that 95 of the people staying in our homes are married up on board members and it's really part of again the flywheel and the ecosystem of being part of our travel platform i think we have hands down the best hotel brands in the industry now and we have them at all price points right people stay at ritz carlton's for certain stay occasions and the same guests will stay at a courtyard for their you know their kids soccer tournament right the same guest well those same guests human beings sometimes want to rent a home and now we believe with the offering of home rentals i mean why would you ever join another hotel loyalty program if you can you know give us all your business and leisure travel for hotels and then earn points to rent a home in tuscany right so i think that our homes and villas business is while relatively small i should note we started with 2 000 homes and we're up to something like 25 000. so again it will always be small compared to airbnb but it will be a critical um part of the marriott bomb voy value proposition so um again airbnb i think admirable platform and why'd you start that business in europe just real quick why europe versus the us was there something unique about the way that people have either interest in it or the the leasing laws that made it so that europe because i know you started in four european countries and you're not in the states with it yet no we aren't we so we our pilot was in europe you're absolutely right about that but then we launched the business in the us europe and the caribbean so now we're in those three places yep okay so um my final question to you and and um if uh if your answer goes a little long forgive me because i've got one of these technology restarts that in three minutes and 46 seconds my computer is going to self-destruct and shut off on me so that's as long as i've got on this webcast um but if we think forward stephanie to five years from now and the pandemic is hopefully um nothing more than an unfortunate memory to most of us and to those people who have lost loved ones obviously far more significant in their memory but thinking as it relates to the travel and leisure industry and our hospitality experience i'm going to go check into a married hotel in january of 2026. what's going to be different about my experience um i think that there will be um you know continued use of technology that'll probably be the biggest thing i think you'll see more people doing things like mobile checking and mobile checkout the hotel industry was kind of behind the airline industry in that regard so i think there'll be a a more aggressive adoption of technology in our hotels will be the most fundamental change that you'll see um i think we will all get better at using data to personalize the guest experience i think every year we'll get you know data is the new oil and we have so much data on our customers used appropriately with all the privacy rules being followed i think you'll see enhanced personalization and customization in our hotels going forward but i can promise you one thing that won't change and that is um the warm welcome that you get when you come to our hotels the way we treat our guests on you know the first class hospitality that we provide um that will um that will be the same if not get better by 2026. and will the experience when i go to a resort location will there be more things to do because as i think about the competitive landscape of you versus an airbnb if i am just going for the four walls and nice space that you know that that's a do i want to sit in a suite in one of your beautiful hotels uh or do i want to be in a home that's a good trade-off but if you're adding into that the great pool the great experience the ability to go on a horseback ride on the beach or whatever the case might be that might be an additional pull so do you think there's added services that come to destination uh for for vacations absolutely um i don't want to lose you before i say this but we absolutely we've started a whole tours and activities business that where you can also earn and burn bon voy points i should note that marriott's a lot more than four walls we are actually the largest spa operator in the world um one of the largest restaurant operators we've launched an all-inclusive business that will grow in the years ahead so we will continue to have more offerings in our resort and destinations on tours activities spa golf all sorts of different offerings you'll just see that continue to grow in the future well stephanie it has been a real pleasure and i'm deeply thankful to you for spending an hour with me to talk about the hospitality industry congratulations on all you have done at marriott congratulations on getting through an extremely challenging year uh please give arnie my best and my best to your wonderful family and to uh brendan and colin let's keep on cranking buddies um thank you stephanie have a great day to everybody else on the webcast have a terrific next two weeks we'll see you back when we have jon firmer from uh walmart on to talk about the retail industry in two weeks thanks and have a great day