Remote Work Allows Travelers to Stay Away Longer

You're listening to Bloomberg Business Week with Carol Messer and Tim Stenebek on Bloomberg Radio.

People are going on vacation, folks. We are in the thick of summer. We heard from the US airlines too over the past week or so. United just yesterday, latest major US carrier to benefit from strength and global travel.

Yeah, aren't you going overseas?

I'm going to Spain next week.

See, So everybody's on vacation.

Not looking forward to it.

Why so hot? Oh?

I know, it's hot. It's yeah, it's going to be rough.

I want to go to Alaska. Do you want to go to the Arctic right now? I need to be somewhere.

Cool, Fyi.

It's melting.

Yeah, I know, but at least it's still chilly.

All right, So let's get to it. Let's talk about vacationing, demand and pricing. I'm curious what our next guest to see. Montage International founder, chairman and CEO, Alan Firstman is with us on Zoom in Maui. Montage is a luxury hospital to that, but at a luxury hospitality management company.

Try that again. It's got properties in California, Mexico, Bahamas and more.

Alan.

Nice to be talking with you again.

How are you.

I think it's been about a year. Talk about great.

Great to be back.

Well, great to have you. How busy are you? Guys? What are you seeing?

We were We're in the middle of summer, busy summer. The resorts have been the place to escape the heat and enjoy the relaxation, seeing a lot of families traveling and an exciting time for us.

So what's it like out there? I mean, I Hawaii is like a bucket list place for me. I've also seen Mawana like a thousand times.

He has a young daughter, Maui.

The name Maui has a special place in my heart. But it's hot here. I can't imagine wanting to go outside. What's it like there?

Well, here, it's it's it's tropical beautiful. I mean, the beaches and the pools amazing. I'm here with five grandchildren and extended family. It's it's it's just a great opportunity to work a little bit in the more and relax and enjoy the afternoons with the family.

But eighty one degrees, Matt, Oh, that's nice humidity.

I'm just trying to get to what this heat wave and what these air quality issues. What kind of effect has that had on travel?

Well, I mean there's an escape to markets that aren't as hot I would imagine, and it's important that those areas that are hot are taking all the necessary precautions to make sure the staff stays hydrated and there's plenty of water stations for guests. We've taken some additional steps of late to make sure that there's plenty of water everywhere. But hotels and resources are a good place generally to escape the heat.

All right, So let's like we said, it's about a year since we last talked with you. Give me an idea. You say, great, everything is a good place to be, But give me an idea in terms of demand and pricing.

What it's like.

Is demand up from a year ago? Is it down from a year ago? What's pricing light? Is it a pricing like in terms of deals?

Is I saw I will say, allan, we saw AMX today. They had record volumes, but since they had such difficult comps because last year was so great, the market was a little bit disappointed.

Yeah, I think pricing might have has come down a little bit over the highs of last year when you think about so much of the luxury travel heading to Europe and other markets that have opened up that weren't available a year ago, but well above conditions pre pandemic. So we're seeing some relatively strong numbers still. So that's a very positive sign, and we're just seeing that there's continued demand for highly differentiated special places.

What about for you guys specifically, right you're involved in the management of these properties. Do you have the workers you need or are you again having to pay up for them?

Well, we've had to pay up. There's been certainly a rise in costs, and again it's been market by market. Some markets have been less difficult to attract labor, but it's an important component of what we do. You've seen though, part of the price increases that have been passed on to guests have come from the need to pay up both for wages and for cost of goods. There's that's been the story of the inflationary time period we've been

Are there any have trend shifted at all, you know, pre pandemic to now in terms of where people want to go, what they want to do, what they're budgeting. I mean, are they focused more on vacations, because certainly I think a lot of employees are focused more on life in the work life balance.

Yeah, I think so, And I think the advent of being able to work remotely means doesn't mean working just remotely from home. Why not extend your stay at a vacation destination at longer and there's a lot of combination. I'll work a little bit, but I'll also be enjoying. So we're seeing longer length of stays as a result of the need not to get back to the office as promptly as we may have years a few years back.

Ell where are people going?

Because you guys have properties in Los Cabos, Mexico, obviously, in Hawaii where you guys are Utah, Laguna Beach, California. I know I'm leaving stuff out other places.

Big Big Guy, Montana, for example, it's it's such a such a cool temperature wise and otherwise get away. And when we opened there a year ago, essentially the first luxury hotel in that market. It's opened up a new market. And and in the case of Big Sky, you're an hour from Yellowstone and you get to experience the park but also the luxury amenities, the outdoor lifestyle. So we're seeing some newer destinations like Big Sky Montana, and certainly

Also close to Bozeman, so it's an easy, uh drive from the airport. And I have to say, my family, we go skiing in Big Sky. Love that big backcountry. You know, nice off piece of powder, very cool.

It looks gorgeous.

Can I ask you, Unlus, you've got a very exclusive resort on the backside of the mountain. Sounds like Yellowstone.

Okay, sold sold?

Is it the in the Bahamas, there's a forty eight acre private island resort and community that I guess you can rent out.

No, we're under construction there. We're building abbocos called Montage Key private Island. We're selling real estate there now homes, amazing homes on the on the ocean front, and building building the resort. Well, we should open the end of twenty four to early twenty five, and it will be an amazing destination, easily accessible the entire East Coast, and it'll be a truly global destination, very special resort under construction.

Allen, what's the rates? How is the rates picture affected that? Because I when you say that, I think, well, I want to buy a house there, But then I realized I don't want a seven percent mortgage. I guess those people maybe pay cash.

Yes, I think there's the buyer for that. Markets is less interest rates sensitive.

Yeah, sorry, Matt, Hey, listen twenty years in that you guys are happy twentieth anniversary. What do you think about You talk about the you know, the development you're doing in the Bahamas, but how do you think about what's to come.

The next twenty years.

Now we've got fourteen hotels open today, seven montages and seven pendries, so we have the two luxury brands. We have another twelve projects that are either under construction or in design right now, and of those eight are pendries and four are montages. And we're seeing some real international growth. Initially we were mostly North America. Now we're expanding globally. We've announced a couple of projects in the Middle East.

Sounds like you're moving ahead. You're not worried about a recession. Are those higher rates?

Is that fair? Just got about thirty seconds or tell me, yeah, we are.

But high interst rates are concerning obviously for capitalizing new projects. It's obviously a big concern, and we're hopeful that we've seen the height of the interest rates. But we are very optimistic. We build hotels for generations to come, so we'll withstand small blips if they happen which are due to happen.

So cool, you know, to think that a kid from New Milford could go to Gettysburg. Then he runs the Phoenician, then he runs the Bolagio, and now you found this great big business. I think it's a super a super cool, story inspiring dream.

I've got to say how fortunate I've been and how I'm truly lucky.

Well, enjoy Maui and always good to check in with you. Alan Firstman, founder, chairman and CEO of Montage International joining us, as we said from Hawaii,