Dream Hotel Group CEO Optimistic On Travel

Pandemic is on its back foot as vaccinations continue to rise. And then of course we have from the CDC yesterday relaxed mask requirements and that is good news for a lot of business. And Taylor, you're saying you can't even get a spot in a pilates class in the city, right, I know, you know, they're booked at full capacity and everyone is jammed back. I had to hurry and rush to get my spots, So, like everyone else, that is

good to hear. So I'd say another group of businesses that need this economy to reopen is the hotel business. Let's talk about that. J Stein. He's the chief executive officer for the Dream Hotel Group. Jake, thanks so much for joining us here. I would love to get your thoughts as to where we are right now with your hotel business visa v maybe six months ago. Thanks Paul Tell, Thanks thanks for having me on. Yeah, so good progress for the last six months. Nationally, New York City just

starting to make some progress. As you know. We're opening up a two new uh two new hotels this month or reopening i should say, the Dream Midtown and the Dream Downtown. Dream Midtown actually opens today. So we're thrilled to uh here with the with the staff and welcoming back employees that have been furloughed for over a year. It's just so nice to see their faces. And we'll do the same thing about ten days later for the

Dream Downtown crew. And then we have two more hotels that are closed, the Chat Wall and the Time, which we hope to have open maybe in the next sixty days as well. So a lot of things moving to New York. UH. Still a long way to go to build. The occupancy is back up to reasonable levels, but certainly you're starting to see a little bit of light at

the end of shun office point. You know, it was interesting we heard from Airbnb last night, UH and and really highlighting that the urban tourists has not quite come back. We're still doing a lot of vacation homes outside big cities. When are you hoping that that urban tourist really does come back? Yeah, I would disagree with that. I mean, I certainly not back to the sense where they're back all the way, but certainly it is moving in in

other markets. New York is just starting, but Miami is I'm sure you've heard stories is very strong in our urban product of the dream of South Beach. The dream in Nashville really started to bounce back. UH pootain beverage very strong, but also on the room side, back over levels now UH and the dream in Hollywood as well. We're seeing good traction in l A starting to uh to move. So I think that you are starting to

see people coming back to the urban centers. UH and as museum start to uh reopen and larger percentages, baseball games and and all those kinds of things. Certainly with restaurants and a lot of relaxation there on the amount of people, it's a big attraction to come to New York and certainly when we get Broadway open in September, UH, it's gonna be game changing. So, Jay, what is your expectation for New York New York. I'm sure those are

obviously key key properties for you. How do you expect the occupancy to ramp up based only maybe some of your experience and some of your other markets. Yeah, it's a little tough to say. Nobody really knows. I'm optimistic. I think people want to come to New York one just you know, for the fun of it. But you know, there's eight million people that people need to come and visit Um that they haven't seen him a long time, family and friends, So I think we may be a

little surprised. And beautiful weather, uh this was always one of the best times of the year to be in the city. I think we'll start to see the numbers rebound and hopefully by the fall we start creeping back up into those uh six. You know, we will normally run here in New York, which is twenty higher than the rest of the country. So it's just a very different in general. You know, we have to talk about

the labor shortage going on right now. Are your employees coming back to work or do you have to incentivize them with higher pay? You know, we're just starting here in New York, so we haven't had too much difficulty, but we're bringing back from a very small staff where you know, we'll probably only be in the twenty occupancy range in the first month, so that's you know, a third of what we normally do, and so there'll be a much much, much fewer employees than normal. But nationally, Uh,

it's very difficult getting employees. And I'm sure you're hearing that every day. Uh. And it was talking something about markets before COVID, you know, don't get me wrong, um, but now and I'm sure it has to do with the enhanced unemployment and stimulus and things like that certainly play a part of it. Um. So your labor is a very very uh difficult aspect for our industry right now. What is the business like in your Miami hotel? Is

it back to normal? I see, I see watched the news every night for months and these people are parting like there is no pandemic. So how's your hotel doing down there? Yeah? So I wouldn't say it's like there's no pandemic. I mean you do see those that's what you see on TV because they interviewed certain people but I was there yesterday. I was at the dream In in Miami for the whole day. I was in the

Durham unscripted yesterday a day before that. And I've been traveling all over all over to all about properties, but Miami is definitely the highest demand right now. UM. You know, people eating indoors without masks, That's the same thing you have in New York City. So it's not like it's you know, the wild wild West that day, the way people describe it, it's really not. What's it been like traveling on the planes and stuff. Um, for the most plot, I've been on a lot of flights, four flights in

the last three days, UM. And last week I was on four flights as well. I was in Louisville, I was in Nashville, UM, went through Atlanta, went through Detroit. UM. So yeah, there's a lot of people. I was shocked. I had to go through Charlotte yesterday. It looked completely normal in the terminal, right, Okay, alright, busy, most people being very courteous and wearing the mask for people taking

a little little little bit of liberties with that. All right, all right, well hopefully, well we can continue this reopening in a safe way and and get folks back out there. J Stein, chief executive officer of the Dream Hotel Group. They're opening one of the New York properties today and another one on the twenty six, So that's good to see properties here in New York City coming back. This

is Bloomberg. It seems like the discussion has moved from the pandemic, two vaccinations, and now this week it seems to be mask or no mask. That seems to be where the conversation is going. Let's get the latest on all of these issues with Lawrence Soer. We always appreciate her giving us some time every week. Lawrence Sowers is socio Professor of Emergency Medicine that the Johns Hopkins School

of Medicine. I should know that the Bloomberg School of Public Health at Johns Hopkins is supported by Michael Lare Bloomberg, founder of Bloomberg LP and Bloomberg Philanthropies, and this radio and TV operation. So, Lauren, we're having the CDC update there. I guess their mask mandate, so if you're fully vaccinated, you don't really have to wear mass in most situations.

Do you think that's the right message? Yeah, I think, Um, you know, the CDC is continuing to get data and and that is in turn influencing their policies, and we're seeing it happened rapidly, right like in real time. I think for me, the message doesn't change much as as we think about how we are going to actually evaluate whether people are vaccinated or not. And so until we have a system in which we have higher coverage, we

have lower incidents and we know who's vaccinated. I don't see this UM changing at least my personal behavior and probably many cities, states, and and and companies behaviors and policies on masking. Lauren, can you help me understand how do eight fully vaccinated members of the Yankees baseball team test positive for COVID? Yeah, it's a great question. I

think what we're seeing is breakthrough cases. And so what we're going to look to hear from the Yankees or from um, you know, the health departments that's going to be managing those breakthrough cases, is was it a variant strain? UM? What vaccine did the Yankees use? UM? What were what were their contacts? Like? UM that contact tracing is going

to become very important, and and did they become sick. Um, and that those are all going to be important questions that we as we continue to evaluate both our vaccine efficacy and how we strategize the use of these other public health activities like masking, like social distancing. Um, these breakthrough cases become important, you know, data points that we will continue to use to influence our policy. Lauren, do

you think you know? I was just looking at a story talking about a story on air about wind Resorts, the casino company they're reopening and they're dropping their mask mandate and they're basically saying it's on the honor system. To me, I guess that's probably how it has to go, don't you think? And how do you think about the

vaccinative folks versus non vaccinati folks and identifying one another. Yeah, I think it's a really hard question, um, And I think it ends up being where you, as the individual, have to make that choice about whether or not you're comfortable wearing your mask if you've been vaccinated, you know, taking off your mask if you've been vaccinated, and also if you're even comfortable being in places where masks aren't

required anymore. Um, it's going to be a really hard and new space for the public and local governments and businesses to navigate. UM. I think the honor system is all we have right now, UM and until we find a sort of ethical and appropriate way to do this otherwise that's what we're going to be stuck with. But I do think that, UM, there are going to be people who just don't want to wear a mask ask anymore, UM, and we'll make that decision because they feel like they

can independent of their vaccine status. And so people who feel less safe, UM, people like frontline health workers, people like other frontline workers, like restaurants, plantation, things like that, are going to be affected by this to a degree. And similar news Paul Las Vegas stands also saying that they are not requiring vaccinated guests to wear masks. So Vegas Vegas leading the way. Vegas is open, baby, That's all you have to to say. Lauren, just sort of

square with me. Maybe some of the mixed messages. I was on an airplane and they said no up and through at least September. For now, you have to wear a mask. AM track some of the subways. So we're getting some of the CDC guidance. But then of course, if you're on an airplane, the rules are a little different.

But how is the coordination going. Yeah, I think we have some work to do in the coordination setting, exactly as you're suggesting, and a lot of it is about communication messaging, so UM, we don't really know the full

data on airplanes and the risk of transmission. There's been a lot of work done in the Space team with other public transportation areas like subway, cars and trains, and so when you're in those close quarters, masking does still seem appropriate, and we're continuing to learn about those spaces

as these sort of natural experiments happen. UM. But I think the reason you're still seeing that requirement UM and those policies is because we don't fully understand the transmission dynamics in that space, and because we know that they're that people can't really truly sit, you know, six ft apart that we we want to keep them masked and safe as safe as possible, and this is a relatively easy,

relatively harmless way to do that. We appreciate you coming in every week, Lauren and helping us kind of really understand what's going on with this pandemic and with the vaccines. Laurence Soer, social Professor of Emergency Medicine at the Johns Hopkins School of Medicine. And I should know it again that the Blue School of Public Health is supported by Michael Bloomberg, founder Bloomberg LP, Bloomberg Philanthropies, and Bloomberg Radio

and Television. Well, if you can flashback just you know, four or five days ago, the market was really concerned about inflation and not just the transitory kind as well. But uh, and that was some really weakness in the market. We've had a couple of days very strong rebounds here, kind of climbing back some of those losses from the earlier in the week. But the questions where do we go from here? Let's check in with Jeff Carbon and

he's co founder and managing partner of Cornerstone. Well, if they have got one point two billion dollars in assets under management, so Jeff, kind of a seesaw type of week here. Started off very week, had some real concerns about maybe this economy is overheating. That might prompt the Fed to step in a little bit, but not so much of the past couple of days. What are your thoughts here? Yeah, no, good morningful. Yeah, we certainly the

predominant risk of inflation. And uh, it certainly started the week off and kind of maybe we were going we were coming down that roller coaster and now we're moving back up. Right. Was still down probably two and a half percent for the week, but we've had a good recovery um from the early part. And yeah, like I think, as you mentioned, it was that fear of the market maybe was expecting transitory risk and we were not on that court. We think there's more concern of inflationary pressure.

But beyond that, you've got to look at you know, the FED and what the FED is gonna do. And it's almost that Goldilocks theory, right, because the FED is under the pressure of if they let the market overheat too much, we get too much inflation, inflation runs hot. Um, if they move too slow, we're a little bit behind and things fall, and you know, they gotta just do it just right, right. We needed to be perfect. And it's going to be that induced FED induced language. Right,

we gotta see what they're gonna say. It's gonna as the importance that we're watching right now. You know, Jeff, you you're hitting on a point that I want to go next. I read a Bloomberg opinion article from Muhammad hillary In earlier this week, and he hinted that the FED is really doing us a disservice by insisting and insisting and insisting in that inflation is transitory and leaving

no room for anything else. And he comes out and says that instead of looking at a single baseline, they should be looking at a range of scenarios and not be holding this single baseline to a degree of conviction that isn't supported right now in some of the data. Is the FED doing us a little bit of a disservice? I believe so. And I you know, watch Mohammed and talk to him and really keep a close eye on

what he does, because he's brilliant. So in the FED and the FEDS forgetting that every major crash in history has been preceded by the FED tightening right and there. So the language is so going back to the messaging is so important. Um, you know, we've taped, we've continued to taper, what a undred and twenty billion dollars per month. We can probably start pulling off the I mean that the economy is heating, it's heated, up right, we've had

that big recover. We can certainly lay off the put a little bit of the take off the gas a bit and maybe start by tapering little um. Maybe not immediately, but we need to have the plan to do so, because yeah, this is that trend and we don't transitory inflation is not there go you know, look at the gas pumps, look at food. We can see the you know, some of the with other commodities, whether it be corn

et cetera. The prices are rising. So inflation is definitely out there a lot stronger than there that they may be seeing. So we definitely have a different different opinion between the Treasury Secretary Yelling and Jerome Powell UH on the FED. So we're we're we're seeing more inflationary pressure and we're starting to get concerned about it right now, and that's why we're backing off a bit. We're taking some of the UH high A BEATA positions and going

a little bit more conservative right now. All right, talk to us, Jeff about where you're going, where you think your clients should be going. If in fact, uh we are you know, kind of facing potentially some tapering, if not outright rate increases. Yeah. Uh yeah, so so Paul, we've been you know, I think when I sent some notes, you know, we've been moving a little little bit out of those uh uh reopening trades. Although Norwegian Cruise Line this morning is having a really good day and but

at the same time you were seeing Disney not so good. Right, So we've really moved away from some of those reopening um and high data positions, trying to go a little higher quality. We're moving up, you know, quality, big names, higher market cap, and really important for us is cash flow, right we want to see really good cash flows. Where do you go What sectors we like? Continue to like industrials. We still like the financials, especially regionals and some brokerage.

We do think that's a good space in this economy. Uh. Energy, and we're adding some healthcare back in at this point. Are you moving up in credit quality as well? Absolutely? Yeah, we're definitely better quality. I think it's high quality around the across the board, right, Um. The you know, you can move on from credit quality not just in our equity positions, but credit quality within the bonds that we're

holding as well. And you know with the bond market, that's that's the toughest place to be right now with I think we got the aggregate bond index down what two and a half percent for the year. Um, we're losing money, and then um on our on the bond side,

and then try to find some place in cash. It's that losing money safely positioned because inflation is somewhere you call it one seven to two, and we're getting into banks list than you know, if we're lucky ten basis points, if if we could find it somewhere, so it's it's definitely a fixed income market is a is a tough tough place to be right now. All right, Jeff, Hey, thanks so much for joining us. We really appreciate getting your thoughts on these markets here. Jeff Carbone he's co

founder and managing partner for Cornerstone Wealth. Again, we started off this market on this week on a very down note, uh, retracing some of those losses here in the past couple of days. We'll keep you up to date on those markets right now that we want to talk crypto. What a wild week it's been for crypto. Taylor, It's almost been like the Elon Musk effect. Does he does Elon

like crypto does Elon not like crypto? And I think we're back to Elon likes crypto, but certainly been a volatile week for the crypto space, and I suspect people that traffic there and trade there and invest there are are used to that. John Wu he's a president of Ava Labs. Uh. He joins us once again to kind of get us the latest on what is going on

with crypto. And I guess one of the interesting stories John was, you know, Ellen initially saying maybe I'm not really supporting crypto because the whole E s G issue, it takes too much power to mind crypto. What's your

view of that whole storyline, Hey, Paul, Hey Taylor. So you know, Elon has a flair for the dramatic, obviously, but that statement where he said he's no longer accepting bitcoin for transactions in terms of buying Tesla actually was killing three birds with one stone, and it was quite brilliant on his part, because there's no one buying Tesla's

right now using bitcoin. There's tax implications and and obviously when there are transactions happening, you do need to you know, mind and validate and secure all of this, and that does require a lot of energy. So in one statement, he basically kept his green initiative. He also did not hurt his testla sales and he really, like you know, was actually kind of a brilliant statement, and he's got that flare for the dramatic, so good for him. Um,

But his point is correct. There is a lot of wasteful spend when you have bitcoing and mining, and that's because you basically for every transaction you ultimately need to secure, validating,

create a next block. Right now, the energy consumption in the bitcoin ecosystem is roughly one thirty terot watts an hour per year, and people have said that's the equosal of the consumption of countries like Argentina or Norway, So that's a lot of consumption, and a lot of that is carbon footprints that are just you know, not very green. So he has a lot of good points. What's even worse is the way this works is it's not necessary.

You know, the proof of work concept for mining and bitcoin is you have to solve math problems in order to have the right to create the next block. But the way it's set up, it's almost like a lottery system. So the more chances you have, the more likely you're rewarded bitcoin and given the right to create the next block. Now that means you need more computing power, you need more hardware, and you need to consume more energy. This is all useless work. There is no reason for this

is just mining companies competing against each other. It doesn't make the securing and the validating and transactions and creating a next block more efficient. Unfortunately, a lot of this just useless work. John Though there was some pushback after the Elon Musk tweet, many people who are bullish on crypto.

I believe Mike Novograps Right of Galaxy, someone that we speak with frequently, a lot of other millionaires and billionaires and investors said that, yeah, it might use some carbon now, but the future is renewable energy and we're working on getting there. Does that have any validation to it that eventually it can become a positive renewable way to mine. It's better, but even if it's renewable, it's still displacing um the use for other things that you need to

consume energy. So it's better, for sure, and there is carbon, there's wind power, but it's still displacing you know, um, the need for the use energy for other things. So, John, you mentioned you mentioned that the current way that crypto is being mine is not the most efficient. What are some more efficient ways that you think this industry needs

to go towards. Well, I think a lot of the newer blockchains are using a proof of stake method, which is a much more an improved way of doing things because it's literally like one million of the times more efficient, um. And instead of using physical hardware and mining and using energy to secure and validate, you're effectively putting your coin

or putting up you know, security pots. I think of it for the right to vote and the right to secure the blocks and the transactions, and that is literally so much more efficient way, and there's no useless work, so to speak. John, you mentioned something at the beginning of your first answer about the tax implications, and this brings up the question about what is bitcoin? What is the real value? Is it a store of value or

is it a form of payment? And that tax issue this week has brought up a lot of conversations about well, maybe that's why you don't use it to pay. You keep it as a store of value, right, What is the use case for bitcoin, it is a store of value. It is the it's taking share from the nine trillion dollars of gold that's out there, and that is the number one use case. There are new blockchains that are far more efficient, more green, and have the ability for utility.

There's a buddy ecosystem of other blockchains that have actual use cases on top of their blockchains. John, if one of our listeners wanted to get exposure to just this whole crypto thing, how would you recommend they do it? Do they buy a piece of bitcoin? Is there? What do you think is the best way to do that? Well, Listen, I still agree with Mike no regrets that bitcoin is

going to go a lot higher. Um, you know, bitcoin right now is still used to the store of value, and you know the whole space is two trillion dollars and and bitcoins again, gold is nine trillion, And every single last year I think there was um close to like fifty billion dollars in new influence to gold and a lot of that is going to come into bitcoin over the over the years. So, first of all, I still agree with him that bitcoin is going to go higher.

But to get exposure to the states more and more people are now looking below the folds and speak on like when you search it is not just about daycoin. There there are other blockchain ecosystems that are actually thriving.

Of the labs the place I work at, the software company that that launched the lance the blockchain, we already have a more even more efficient than a therem in terms of a greenness if you will, and and has the characteristics that we all desire for better utility, which is scale, no latency whatsoever, and closing a transaction as well as the ability to have very low prices for

a transaction. So for investor, I would definitely look at new things that are coming up that are inflecting right now because part of the reason, let's be honest, fall people want to get into this because they seemed the great terms in some of the top coins. And that's really like the first two right now, Etherory and Bitcoin. But if you want to find the next ones, you've got to look at who's got the most utility go forward and they should look um, you know, be a

little to top two. John, it was interesting the timing of all of this. We did here yesterday that Colonial Pipeline did indeed pay their ransom of five million dollars to get that pipeline back up and running, and while they paid it in crypto, And we had a conversation earlier with Tim O'Brien of our Bloomberg opinion saying that other people indeed have paid, and they've all been requesting bitcoin and cryptos. Everyone says, well, there's a form of payment,

there's a paper trail, so it's actually really good. But I'm not seeing anyone who's paying ransom and crypto being brought to justice here. Is there a paper trail then? If so, why are ransom attackers asking to be paid in crypto? Well, there is some it's pseudonymity, it's not true anonymity, and it is global, so it makes it, you know, a little separated from other financial systems. So

does because it's border lists. It's harder for jurisdictions to go after certain people, but it is you can if you really want to do the work. Attach um the actual people behind it um just like any other form of human my understanding, looking at studies done from very reputable firms, the percentage of fraud as in crypto is really not more than any other system it just gets highlighted because of the crypto nature and the association of the early days. Hey, John wall Street and has a

new sheriff in town, Gary Ginstler at the SEC. This is a mark when I think about crypto that is just crying out for some regulation that we're just one blow up away from somebody saying, hey, is somebody looking at this? What do you think? How do you think the regulatory framework is going to develop a evolve around all things crypto going forward? So having been in the space for a long time, the regulatory framework has actually already evolved and it's getting better every single day. There's

no doubt. There's still a lot of gray area, and uh, the Gary and the new SEC commissioners need to continue to give guidance. But I think we're getting better every single day. I mean remember in two thousand seventeen with the I c oh boom um that led to the SEC coming in to finding what needs to be done, and things are done a lot better than they used to be. So it is getting better every single day.

But the industry is still relatively new. Um. You know, bitcoin has been around for eleven years, etheriums only have been around for like less than half of that, and then you have all of these new coins. But the more important thing is there's a lot of development, and Paul, you know, that's the same as the Internet days and the early adopters for the Internet usage was really not

the best people, if you will. However, as that show the capabilities and the potential of the Internet, same way, uh, the early guys and crypto have done it, and the potential for the future use cases and disinniation and the positive utility that have come out of this. More and more intellectual capital is moving into the space. Some of the smartest and brightest kids from various great universities are coming to me every single day and wanting to join

our firm and other similar firms. So just like we couldn't figure out in the late nineties, when we can have streaming video, a lot of things that we can't figure out exactly right now, they're on the com Hey, John, thanks so much for joining us. We really appreciate you taking your time. You always help us kind of get a little bit more clarity on the crypto market. Is new to so many people. John Wu president of Ava Labs. They're based in New York, City and he's been doing

this for a long time, and uh, it's interesting. You know what's happened. One of the things during the pandemic, um Taylor, is my increased use of electronic banking. Okay, well, okay, so thank you, I know. And it's just you're kind of forced to and you get more and more comfortable with it, as we all do with all the new apps and new technologies. But be interesting to see how

crypto comes into, you know, the consumer experience. I was joking on TV yesterday in the afternoon hours and my dad texted me and said, okay, give me your thoughts on krypto, and I thought, oh, that might be the cell signal. Dad's getting involved here. But no, all joking aside, I mean more and more mainstream, right. We talked about coin base, Paul and trying to make it easy. Thanks

for listening to the Bloomberg Markets podcast. You can subscribe and listen to interviews with Apple Podcasts or whatever podcast platform you for her. I'm Matt Miller. I'm on Twitter at Matt Miller N seventy three and on Fall Sweeney, I'm on Twitter at pt Sweeney. Before the podcast, you can always catch US worldwide at Bloomberg Radio,